MCKESSON CORP

Overview of Consolidated Results:

Revenues

Revenues increased for the three and six months ended September 30, 2025 compared to the same prior year periods, primarily due to market growth in our North American Pharmaceutical segment, including higher volumes largely from retail national account customers. Market growth includes growing drug utilization and newly launched products, partially offset by branded to generic drug conversion. Revenues for the three and six months ended September 30, 2025 was also favorably impacted by growth in our Oncology & Multispecialty segment primarily due to higher specialty pharmaceutical sales.

Gross Profit

Gross profit increased for the three and six months ended September 30, 2025 compared to the same prior year periods primarily due to growth in our Oncology & Multispecialty segment, driven by the addition of providers in practice management and growth of specialty pharmaceuticals, and in our Prescription Technology Solutions segment, driven by higher volumes.

We recognized immaterial gainsand$63 million for the three months ended September 30, 2025 and 2024, respectively, and $8 million and $153 million for the six months ended September 30, 2025 and 2024, respectively, related to our share of antitrust legal settlements. We recognized these amounts within "Cost of sales" in the Condensed Consolidated Statements of Operations within our North American Pharmaceutical segment.

Gross profit for the three and six months ended September 30, 2024 was impacted by restructuring charges of $63 million related to a broad set of initiatives to drive operational efficiencies and increase cost optimization efforts as discussed in Financial Note 3, “Restructuring, Impairment, and Related Charges, Net,” to the accompanying condensed consolidated financial statements included in this Quarterly Report. We recorded this amount related to impairment of inventories within "Cost of sales" in the Condensed Consolidated Statements of Operations within our North American Pharmaceutical segment.

Total Operating Expenses

A summary of the components of our total operating expenses for the three and six months ended September 30, 2025 and 2024 is as follows:

•Selling, distribution, general, and administrative expenses (“SDG&A”): consists of personnel costs, transportation costs, depreciation and amortization, lease costs, professional fee expenses, administrative expenses, provision for bad debts and related recoveries, remeasurement charges to fair value less costs to sell, and other general charges.

•Claims and litigation charges, net: These charges include adjustments for estimated probable settlements related to our controlled substance monitoring and reporting, and opioid-related claims, as well as any applicable income items or credit adjustments due to subsequent changes in estimates. Legal fees to defend claims, which are expensed as incurred, are included within SDG&A.

•Restructuring, impairment, and related charges, net: Charges recorded under this component include those incurred for programs in which we change our operations, the scope of a business undertaken by our business units, or the manner in which that business is conducted, as well as long-lived asset impairments.

For the three and six months ended September 30, 2025, total operating expenses and total operating expenses as a percentage of revenues decreased compared to the same prior year periods. Total operating expenses were impacted by the following significant items:

•SDG&A for the three and six months ended September 30, 2024 includes charges of $643 million to remeasure the sale of our Rexall and Well.ca businesses in Canada (“Canadian retail disposal group”) to fair value less costs to sell. The remeasurement adjustment includes a $15 million loss related to the accumulated other comprehensive loss balances associated with this disposal. Of the total charges recorded during the period, $593 million were included within our North American Pharmaceutical segment and $50 million were included within Corporate expenses, net;

•SDG&A for the three and six months ended September 30, 2025 was impacted by lower operating expenses from the completed divestiture of our Canadian retail disposal group in fiscal 2025, as discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures,” to the accompanying condensed consolidated financial statements in this Quarterly Report;

•SDG&A for the six months ended September 30, 2025 includes a provision for bad debts of $189 million, and for the three and six months ended September 30, 2024 includes a credit of $203 million related to the bankruptcy of Rite Aid;

•SDG&A for the six months ended September 30, 2025 was impacted by higher operating expenses related to the acquisitions completed during the first half of fiscal 2026, as discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures,” to the accompanying condensed consolidated financial statements in this Quarterly Report;

•Claims and litigation charges, net primarily consists of a charge of $108 million for the six months ended September 30, 2024 related to our estimated liability for opioid-related claims as discussed in more detail in Financial Note 11, “Commitments and Contingent Liabilities,” to the accompanying condensed consolidated financial statements included in this Quarterly Report; and

•Restructuring, impairment, and related charges, net were $63 million and $171 million for the three months ended September 30, 2025 and 2024, respectively, and $110 million and $181 million for the six months ended September 30, 2025 and 2024, respectively, as discussed below under “Restructuring Initiatives.”

Goodwill Impairment

We evaluate goodwill for impairment on an annual basis in the first fiscal quarter, and at an interim date if indicators of potential impairment exist. The annual impairment testing performed in fiscal 2026 and fiscal 2025 did not indicate any impairment of goodwill, and no goodwill impairment charges were recorded during the three and six months ended September 30, 2025 and 2024. However, other risks, expenses, and future developments, such as government actions, increased regulatory uncertainty, and material changes in key market assumptions limit our ability to estimate projected cash flows, which could adversely affect the fair value of various reporting units in future periods.

For additional disclosure of our policy regarding goodwill, refer to the “Critical Accounting Estimates” section within Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II of our 2025 Annual Report.

Restructuring Initiatives

We recorded restructuring, impairment, and related charges of $63 million and $171 million for the three months ended September 30, 2025 and 2024, respectively, and $110 million and $181 million for the six months ended September 30, 2025 and 2024, respectively. These charges were included in “Restructuring, impairment, and related charges, net” in the Condensed Consolidated Statements of Operations.

During the second quarter of fiscal 2025, we approved enterprise-wide initiatives to modernize and accelerate our technology service operating model, which were intended to improve business continuity, compliance, operating efficiency and advance investments to streamline the organization. These initiatives include cost reduction efforts and support other rationalization efforts within Corporate, and the Medical-Surgical Solutions and North American Pharmaceutical segments to help realize long-term sustainable growth. We anticipate total charges related to these initiatives of $650 million to $700 million, consisting primarily of employee severance and other employee-related costs as well as facility, exit, and other related costs, including long-lived asset impairments. These programs are anticipated to be substantially complete in fiscal 2028. We recorded charges of $52 million and $90 million for the three and six months ended September 30, 2025, respectively, and $227 million for the three and six months ended September 30, 2024 related to these initiatives, which primarily includes severance and other employee-related costs as well as facility exit and other related costs, including long-lived asset impairments and a $63 million related to inventory impairments recorded within “Cost of sales” in the Condensed Consolidated Statements of Operations.

Refer to Financial Note 3, “Restructuring, Impairment, and Related Charges, Net,” to the accompanying condensed consolidated financial statements included in this Quarterly Report for further information on our restructuring initiatives.

Other Income, Net

Other income, net for the three and six months ended September 30, 2025 compared to the same prior year periods was impacted by net gains from certain investments in our equity securities and a favorable impact from interest income. Other income, net for the six months ended September 30, 2025 compared to the same prior year period was impacted by a prior year net gain of $95 million related to our investments in equity securities of certain U.S. growth stage companies in the healthcare industry, partially offset by a prior year loss of $43 million related to one of our equity method investments.

Interest Expense

Interest expense decreased for the three and six months ended September 30, 2025 compared to the same prior year periods primarily due to changes in our derivative portfolio in fiscal 2026 and increased capitalized interest from higher capital spending, partially offset by interest from increased average balances of the Company’s loan portfolio in fiscal 2026. Interest expense may fluctuate based on timing, amounts, and interest rates of term debt repaid and new term debt issued, as well as amounts incurred associated with financing fees. Refer to Financial Note 8, “Debt and Financing Activities,” to the accompanying condensed consolidated financial statements included in this Quarterly Report for more information.

Income Tax Expense

For the three months ended September 30, 2025 and 2024, we recorded income tax expense of $232 million and $247 million, respectively. For the six months ended September 30, 2025 and 2024, we recorded income tax expense of $452 million and $371 million, respectively. Our reported income tax rates were 16.6% and 46.3% for the three months ended September 30, 2025 and 2024, respectively, and 18.5% and 22.9% for the six months ended September 30, 2025 and 2024, respectively.

Fluctuations in our reported income tax rates are primarily due to changes in our business mix of earnings among various taxing jurisdictions and discrete tax items recognized in the quarters. Refer to Financial Note 4, “Income Taxes,” to the accompanying condensed consolidated financial statements included in this Quarterly Report for more information.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law, introducing modifications to various U.S. federal tax provisions. We have evaluated the implications of the legislation and concluded that the provisions of the OBBBA are not expected to have a material impact on our consolidated financial position, results of operations, or cash flows.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests for the three and six months ended September 30, 2025 and 2024 primarily represents the proportionate results of third-party equity interests in ClarusONE Sourcing Services LLP, Vantage Oncology Holdings, LLC, and SCRI Oncology, LLC.

Noncontrolling interests with redemption features, such as put rights, that are not solely within our control are considered redeemable noncontrolling interests. During the six months ended September 30, 2025, we initially recognized redeemable noncontrolling interests of $700 million and $25 million related to our acquisitions of Core Ventures and PRISM Vision, respectively. As a result of the quarterly valuation process, we recorded an adjustment to the redemption value of the redeemable noncontrolling interests of $2 million for PRISM Vision and $45 million for Core Ventures. Redeemable noncontrolling interests are presented outside of stockholders’ deficit in the Company’s Condensed Consolidated Balance Sheet. Refer to the “Selected Measures of Liquidity and Capital Resources” section of this Financial Review and Financial Note 5, “Redeemable Noncontrolling Interests and Noncontrolling Interests,” to the accompanying condensed consolidated financial statements included in this Quarterly Report for more information on changes to our redeemable and noncontrolling interests during the first half of fiscal 2026.

Net Income Attributable to McKesson Corporation

Net income attributable to McKesson Corporation was $1.1 billion and $241 million for the three months ended September 30, 2025 and 2024, respectively, and $1.9 billion and $1.2 billion for the six months ended September 30, 2025 and 2024, respectively. Diluted earnings per common share attributable to McKesson Corporation was $8.92 and $1.87 for the three months ended September 30, 2025 and 2024, respectively, and $15.16 and $8.89 for the six months ended September 30, 2025 and 2024, respectively. Our diluted earnings per share includes the cumulative effects of share repurchases during each period.

Weighted-Average Diluted Common Shares Outstanding

Diluted earnings per common share was calculated based on a weighted-average number of shares outstanding of 124.4 million and 129.3 million for the three months ended September 30, 2025 and 2024, respectively, and 124.9 million and 130.0 million for the six months ended September 30, 2025 and 2024, respectively. Weighted-average diluted shares outstanding for the three and six months ended September 30, 2025 decreased from the same prior year periods primarily due to the cumulative effect of share repurchases, as discussed in the “Share Repurchases Plans” section of this Financial Review.