MCKESSON CORP

FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES

We expect our available cash generated from operations and our short-term investment portfolio, together with our existing sources of liquidity from our credit facilities, commercial paper program, and other borrowings will be sufficient to fund our short-term and long-term capital expenditures, working capital, and other cash requirements. We remain adequately capitalized, including access to liquidity from our $4.0 billion revolving credit facility and $1.0 billion 364-day credit facility. At December 31, 2025, we were in compliance with all debt covenants, and believe we have the ability to continue to meet our debt covenants in the future.

The following table summarizes the net change in cash, cash equivalents, and restricted cash for the periods shown:

Operating Activities

Operating activities provided cash of $2.7 billion and used cash of $1.7 billion during the nine months ended December 31, 2025 and 2024, respectively. Cash flows from operations can be significantly impacted by factors such as the timing of receipts from customers, inventory receipts, and payments to vendors. Additionally, working capital is primarily a function of sales and purchase volumes, inventory requirements, and vendor payment terms.

For the nine months ended December 31, 2025, net cash provided by operating activities increased by $4.4 billion compared to the same prior year period. This increase was primarily due to the following:

•the Company’s net income increased by $1.1 billion and was impacted by lower net non-cash items of $708 million, compared to the same prior year period driven by factors discussed in more detail in the“Overview of Consolidated Results” section of this Financial Review;

•an increase in cash of $2.2 billion related to accounts payable as a result of customary vendor payment scheduling and timing related to the day of the week on which the period ends, partially offset by a decrease in cash of $1.0 billion due to higher inventory requirements during the period compared to the prior year;

•an increase in net cash of $1.9 billion related to accounts receivable is primarily due to favorable timing of collections in the current period and timing related to the day of the week on which the period ends; and

•an increase in cash from other assets and liabilities primarily related to lower contract liability payments.

Investing Activities

Investing activities used cash of $3.9 billion and $509 million during the nine months ended December 31, 2025 and 2024, respectively. Investing activities for the nine months ended December 31, 2025 includes $3.4 billion of net cash payments for acquisitions, including $2.5 billion and $875 million for the acquisitions of the interests in Core Ventures and PRISM Vision, respectively, as discussed in further detail in Financial Note 2, “Business Acquisitions and Divestitures,” to the accompanying condensed consolidated financial statements in this Quarterly Report. Investing activities for the nine months ended December 31, 2025 and 2024 includes $560 million and $581 million, respectively, in capital expenditures for property, plant, and equipment and capitalized software. Investing activities for the nine months ended December 31, 2025 were also impacted by the receipt of proceeds of $137 million related to the sale of businesses and investments, as discussed in Financial Note 10, “Fair Value Measurements,” to the accompanying condensed consolidated financial statements included in this Quarterly Report.

Investing activities for the nine months ended December 31, 2024 were also impacted by the receipt of proceeds of $92 million related to the sale of equity securities, as discussed in Financial Note 10, “Fair Value Measurements,” to the accompanying condensed consolidated financial statements included in this Quarterly Report.

Financing Activities

Financing activities used cash of $1.8 billion and of $1.1 billion during the nine months ended December 31, 2025 and 2024, respectively, which includes $2.1 billion and $2.8 billion of cash paid for share repurchases, respectively, as well as $280 million and $254 million of cash paid for dividends, respectively. Financing activities also includes cash receipts of $2.3 billion and $11.4 billion, and cash payments of $2.3 billion and $9.0 billion for the nine months ended December 31, 2025 and 2024, respectively, related to short-term borrowings of commercial paper.

On May 30, 2025, we completed a public debt offering of 4.65% Notes due May 30, 2030 in a principal amount of $650 million, 4.95% Notes due May 30, 2032 in a principal amount of $650 million, and 5.25% Notes due May 30, 2035 in a principal amount of $700 million, for total proceeds received, net of discounts and debt offering expenses, of $2.0 billion. The net proceeds from these notes were utilized to fund the purchase of our interest in Core Ventures.

On November 14, 2025, our €600 million outstanding principal amount of 1.50% Notes matured and on December 3, 2025, our $500 million outstanding principal amount of 0.90% Notes matured, and were repaid using cash on hand. Refer to Financial Note 8, “Debt and Financing Activities,” to the accompanying condensed consolidated financial statements in this Quarterly Report for additional information.

On September 10, 2024, we completed a public offering of 4.25% Notes due September 15, 2029 in a principal amount of $500 million. Proceeds received from this note issuance, net of discounts and offering expenses, were approximately $496 million. We utilized the net proceeds from this note issuance along with cash on hand to redeem our $500 million outstanding principal amount of 5.25% Notes due February 15, 2026 prior to maturity at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest through the settlement date.

Cash used for other financing activities generally includes the cash value of shares surrendered for tax withholding and payments to noncontrolling interests.