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Will GLP-1 Demand Drive MCK's Top Line This Earnings Season?
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Key Takeaways
{\"0\":\"MCK\'s U.S. Pharmaceutical segment likely drove Q1 top-line growth, led by GLP-1 and specialty drugs.\",\"1\":\"Lower COVID-19 vaccine volumes and formulary changes may have tempered MCK\'s segmental sales momentum.\",\"2\":\"Margin pressures from low-margin GLP-1 sales and higher costs could limit MCK\'s Q1 earnings upside.\"}
McKesson Corporation (MCK - Free Report) is scheduled to report first-quarter fiscal 2026 results on Aug. 6, after market close.
The company delivered an earnings surprise of 3.16% in the last reported quarter. Its earnings beat estimates in three of the trailing four quarters and missed once, delivering an average surprise of 3.93%.
McKesson’s revenue growth has been driven largely by the rapid adoption of GLP-1 weight loss drugs and sustained demand for branded pharmaceuticals, both of which have fueled sales over the past several quarters. Additionally, the rising demand for specialty pharmaceuticals has contributed significantly to revenue expansion.
A rebound in primary care visits has also supported top-line growth in the last two reported quarters. Furthermore, the company’s investment in expanding distribution centers and integrating artificial intelligence (AI) into its services and products has recently bolstered revenues. However, earnings remain affected by the higher cost of sales, primarily due to increased sales of lower-margin products.
Q1 Estimates
The Zacks Consensus Estimate for earnings is pegged at $8.23 per share, implying an improvement of 4.4% year over year. The consensus mark for revenues is pegged at $96.1 billion, indicating a surge of 21.2% year over year.
Factors Likely to Have Driven Q1 Segmental Performance
U.S. Pharmaceutical
McKesson derives a substantial share of its revenues from its U.S. Pharmaceutical segment, which distributes medications and healthcare products nationwide. Prescription volume — a key performance metric for the segment — likely continued its steady growth from the prior quarter. This growth was probably fueled by strong demand for specialty pharmaceuticals, especially oncology treatments, which are likely to have played a major role in boosting first-quarter prescription activity.
In the fiscal third quarter, MCK added access and affordability support for pharma brands that span across 30 indications and more than 12 therapeutic areas. This should have aided the top line in the soon-to-be-reported quarter.
The rising popularity of GLP-1 medications in the United States also likely contributed to McKesson’s revenue growth by increasing shipment volumes of these high-demand drugs. Furthermore, the company's continued investment in expanding its distribution network and operations in Canada likely provided additional support during the first quarter.
On the downside, the sale of its European operations likely had a negative impact on sales. In September, McKesson divested its Canadian subsidiaries Rexall and Well.ca as part of its broader strategy to streamline its portfolio and concentrate on high-growth areas like oncology and biopharma services. These divestments are expected to have further impacted sales in the yet-to-be-reported quarter.
Meanwhile, lower distribution volumes of COVID-19 vaccines and a decline in certain brand volumes due to formulary changes by a retail national account customer might have weighed on the segmental performance. The lower margin for GLP-1 medications must have continued to hurt the gross margin during the quarter.
Our estimate for this segment’s revenues is pegged at $86.7 billion, indicating an improvement of 21% from the prior-year level.
Prescription Technology Solutions
This segment connects patients, pharmacies, providers, pharmacy benefit managers, health plans and biopharma companies, and solves medication access, affordability and adherence challenges for patients.
Revenues are likely to have been driven by a strong demand for technology services. Additionally, the growing demand for access solutions, supported by newly launched products, is expected to have persisted in the first quarter. However, lower contributions from third-party logistics businesses might have negatively impacted the segmental income.
Our top-line estimate for the Prescription Technology Solutions segment is pegged at $1.31 billion, implying a 5.7% improvement year over year.
Medical Surgical Solutions
The Medical-Surgical Solutions segment delivers medical-surgical supply distribution, logistics, and related services to healthcare providers. Over the past few quarters, the segment has seen a sequential rebound in primary care visits, a trend that likely continued into the first quarter. This continued recovery is expected to have supported increased volume in specialty pharmaceuticals.
Although recovery in care visits looks promising, the patient volume might have acted as a headwind amid less demand for illness season products. The segmental result may also reflect unfavorable customer mix and product demand shifts in the primary care channel.
Our top-line estimate for the Medical Surgical Solutions segment is pegged at $2.74 billion, implying a 3.9% improvement year over year.
A weaker illness season this fiscal year (compared with the previous year) is likely to have acted as a headwind for operating profit growth during the first quarter. Meanwhile, interest expenses followed multiple rate hikes over the past couple of years, which must have hurt the bottom line.
Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: McKesson has an Earnings ESP of -0.92%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #2.
Stocks to Consider
Cardinal Health, Inc. (CAH - Free Report) , CorMedix Inc. (CRMD - Free Report) and The Cooper Companies (COO - Free Report) are a few medical stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.
Cardinal Health has an Earnings ESP of +0.72% and a Zacks Rank of 2 at present. CAH has an estimated long-term growth rate of 10.9%.
Cardinal Health’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 10.3%.
CorMedix has an Earnings ESP of +27.12% and a Zacks Rank #1 at present. CRMD has an estimated growth rate of 70.1% for 2026.
CorMedix’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 25.8%.
The Cooper Companies has an Earnings ESP of +0.14% and a Zacks Rank of 2 at present. COO has an estimated long-term growth rate of 10.1%.
The Cooper Companies' earnings surpassed estimates in three of the trailing four quarters and met once, with the average surprise being 3.18%.
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Will GLP-1 Demand Drive MCK's Top Line This Earnings Season?
Key Takeaways
McKesson Corporation (MCK - Free Report) is scheduled to report first-quarter fiscal 2026 results on Aug. 6, after market close.
The company delivered an earnings surprise of 3.16% in the last reported quarter. Its earnings beat estimates in three of the trailing four quarters and missed once, delivering an average surprise of 3.93%.
McKesson’s revenue growth has been driven largely by the rapid adoption of GLP-1 weight loss drugs and sustained demand for branded pharmaceuticals, both of which have fueled sales over the past several quarters. Additionally, the rising demand for specialty pharmaceuticals has contributed significantly to revenue expansion.
A rebound in primary care visits has also supported top-line growth in the last two reported quarters. Furthermore, the company’s investment in expanding distribution centers and integrating artificial intelligence (AI) into its services and products has recently bolstered revenues. However, earnings remain affected by the higher cost of sales, primarily due to increased sales of lower-margin products.
Q1 Estimates
The Zacks Consensus Estimate for earnings is pegged at $8.23 per share, implying an improvement of 4.4% year over year. The consensus mark for revenues is pegged at $96.1 billion, indicating a surge of 21.2% year over year.
Factors Likely to Have Driven Q1 Segmental Performance
U.S. Pharmaceutical
McKesson derives a substantial share of its revenues from its U.S. Pharmaceutical segment, which distributes medications and healthcare products nationwide. Prescription volume — a key performance metric for the segment — likely continued its steady growth from the prior quarter. This growth was probably fueled by strong demand for specialty pharmaceuticals, especially oncology treatments, which are likely to have played a major role in boosting first-quarter prescription activity.
In the fiscal third quarter, MCK added access and affordability support for pharma brands that span across 30 indications and more than 12 therapeutic areas. This should have aided the top line in the soon-to-be-reported quarter.
The rising popularity of GLP-1 medications in the United States also likely contributed to McKesson’s revenue growth by increasing shipment volumes of these high-demand drugs. Furthermore, the company's continued investment in expanding its distribution network and operations in Canada likely provided additional support during the first quarter.
On the downside, the sale of its European operations likely had a negative impact on sales. In September, McKesson divested its Canadian subsidiaries Rexall and Well.ca as part of its broader strategy to streamline its portfolio and concentrate on high-growth areas like oncology and biopharma services. These divestments are expected to have further impacted sales in the yet-to-be-reported quarter.
Meanwhile, lower distribution volumes of COVID-19 vaccines and a decline in certain brand volumes due to formulary changes by a retail national account customer might have weighed on the segmental performance. The lower margin for GLP-1 medications must have continued to hurt the gross margin during the quarter.
Our estimate for this segment’s revenues is pegged at $86.7 billion, indicating an improvement of 21% from the prior-year level.
Prescription Technology Solutions
This segment connects patients, pharmacies, providers, pharmacy benefit managers, health plans and biopharma companies, and solves medication access, affordability and adherence challenges for patients.
Revenues are likely to have been driven by a strong demand for technology services. Additionally, the growing demand for access solutions, supported by newly launched products, is expected to have persisted in the first quarter. However, lower contributions from third-party logistics businesses might have negatively impacted the segmental income.
Our top-line estimate for the Prescription Technology Solutions segment is pegged at $1.31 billion, implying a 5.7% improvement year over year.
Medical Surgical Solutions
The Medical-Surgical Solutions segment delivers medical-surgical supply distribution, logistics, and related services to healthcare providers. Over the past few quarters, the segment has seen a sequential rebound in primary care visits, a trend that likely continued into the first quarter. This continued recovery is expected to have supported increased volume in specialty pharmaceuticals.
Although recovery in care visits looks promising, the patient volume might have acted as a headwind amid less demand for illness season products. The segmental result may also reflect unfavorable customer mix and product demand shifts in the primary care channel.
Our top-line estimate for the Medical Surgical Solutions segment is pegged at $2.74 billion, implying a 3.9% improvement year over year.
A weaker illness season this fiscal year (compared with the previous year) is likely to have acted as a headwind for operating profit growth during the first quarter. Meanwhile, interest expenses followed multiple rate hikes over the past couple of years, which must have hurt the bottom line.
McKesson Corporation Price and EPS Surprise
McKesson Corporation price-eps-surprise | McKesson Corporation Quote
What Our Quantitative Model Suggests
Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: McKesson has an Earnings ESP of -0.92%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #2.
Stocks to Consider
Cardinal Health, Inc. (CAH - Free Report) , CorMedix Inc. (CRMD - Free Report) and The Cooper Companies (COO - Free Report) are a few medical stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.
Cardinal Health has an Earnings ESP of +0.72% and a Zacks Rank of 2 at present. CAH has an estimated long-term growth rate of 10.9%.
Cardinal Health’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 10.3%.
CorMedix has an Earnings ESP of +27.12% and a Zacks Rank #1 at present. CRMD has an estimated growth rate of 70.1% for 2026.
CorMedix’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 25.8%.
The Cooper Companies has an Earnings ESP of +0.14% and a Zacks Rank of 2 at present. COO has an estimated long-term growth rate of 10.1%.
The Cooper Companies' earnings surpassed estimates in three of the trailing four quarters and met once, with the average surprise being 3.18%.