MCKESSON CORP

Overview of Consolidated Results:

Revenues

Revenues increased for the three and six months ended September 30, 2026 compared to the same prior year periods, primarily due to market growth in our North American Pharmaceutical segment, including higher volumes from institutional healthcare providers and retail national account customers. Market growth includes growing drug utilization, for example the GLP-1 class of medications, and newly launched products, partially offset by branded pharmaceutical price decreases and branded to generic drug conversion. Revenues for the three and six months ended September 30, 2026 was also favorably impacted by growth in our Oncology & Multispecialty segment primarily due to higher specialty pharmaceutical sales.

Revenues are also impacted by changes in wholesale acquisition cost, including from inflation or deflation, which depend on manufacturer actions, competitive factors, and other developments. Refer to the “Trends and Uncertainties” section above for additional information regarding impacts on revenues.

Gross Profit

Gross profit increased for the three months ended September 30, 2026 compared to the same prior year period primarily due to growth in our North American Pharmaceutical segment, including higher volumes from institutional healthcare providers and retail national account customers, and growth in our Oncology & Multispecialty segment, driven by growth of specialty pharmaceuticals and the addition of providers in practice management.

Gross profit increased for the six months ended September 30, 2026 compared to the same prior year period primarily due to growth in our North American Pharmaceutical segment, including higher volumes from retail national account customers and institutional healthcare providers, and growth in our Oncology & Multispecialty segment, driven by growth of specialty pharmaceuticals and the addition of providers in practice management.

We recognized gains of $50 million for the three months ended September 30, 2026, and $56 million and $8 million for the six months ended September 30, 2026 and 2025, 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.

Total Operating Expenses

A summary of the components of our total operating expenses for the three and six months ended September 30, 2026 and 2025 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, 2026, total operating expenses increased and total operating expenses as a percentage of revenues increased and was flat, respectively, 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, 2026 increased due to increased operating expenses to support higher volumes and includes net charges of $46 million and $114 million, respectively, related to our planned separation of the Medical-Surgical Solutions business;

•SDG&A for the six months ended September 30, 2025 includes a provision for bad debts of $189 million related to the bankruptcy of our customer Rite Aid Corporation (including certain of its subsidiaries, “Rite Aid”);

•Claims and litigation charges, net primarily consists of a credit of $36 million for the six months ended September 30, 2026 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 $85 million and $63 million for the three months ended September 30, 2026 and 2025, respectively, and $221 million and $110 million for the six months ended September 30, 2026 and 2025, 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 2027 and fiscal 2026 did not indicate any impairment of goodwill, and no goodwill impairment charges were recorded during the three and six months ended September 30, 2026 and 2025. 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 2026 Annual Report.

Restructuring Initiatives

We recorded restructuring, impairment, and related charges of $85 million and $63 million for the three months ended September 30, 2026 and 2025, respectively, and $221 million and $110 million for the six months ended September 30, 2026 and 2025, respectively. These charges were included in “Restructuring, impairment, and related charges, net” in the Condensed Consolidated Statements of Operations.

During the first quarter of fiscal 2027, we approved multi-year initiatives within Corporate to further optimize our operating model and align certain enterprise support functions with our long-term strategic priorities. These initiatives include organizational changes, process enhancements, and the implementation of automation solutions designed to improve efficiency and productivity. We anticipate total charges of approximately $230 million to $310 million, consisting primarily of severance and employee-related costs and exit-related costs. We recorded immaterial charges associated with these initiatives during the three and six months ended September 30, 2026. These programs are expected to be substantially complete by the end of fiscal 2028.

During the fourth quarter of fiscal 2026, we approved an initiative within our Prescription Technology Solutions segment to increase operational efficiencies and cost optimization efforts, with the intent of aligning with our long-term strategy. This initiative includes headcount reductions, the exit or downsizing of certain facilities, and other costs. We anticipate total charges between $200 million and $250 million, consisting primarily of employee severance and other employee-related costs, and facility, exit and other-related costs, including long-lived asset impairments. We recorded charges of $18 million and $79 million for the three and six months ended September 30, 2026, respectively, associated with this initiative. These charges primarily include asset impairments as well as severance and other employee-related costs. This program is anticipated to be substantially complete by the end of fiscal 2029.

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. We recorded charges of $49 million and $52 million for the three months ended September 30, 2026 and 2025, respectively, and charges of $94 million and $90 million for the six months ended September 30, 2026 and 2025, respectively, related to these initiatives, which primarily includes facility, exit and other related costs as well as severance and other employee-related costs. These programs are anticipated to be substantially complete in fiscal 2028.

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 was flat for the three and six months ended September 30, 2026 compared to the same prior year periods.

Interest Expense

Interest expense increased for the three and six months ended September 30, 2026 compared to the same prior year periods due to interest from increased average balances of the Company’s loan portfolio in fiscal 2027, primarily driven by the MMS Credit Agreement. 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, 2026 and 2025, we recorded income tax expense of $266 million and $232 million, respectively. For the six months ended September 30, 2026 and 2025, we recorded income tax expense of $542 million and $452 million, respectively. Our income tax rates were 17.0% and 16.6% for the three months ended September 30, 2026 and 2025, respectively, and 18.9% and 18.5% for the six months ended September 30, 2026 and 2025, 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.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests for the three and six months ended September 30, 2026 and 2025 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, primarily related to our acquisitions of Core Ventures and PRISM Vision and sale of an approximately 13% noncontrolling interest in our Medical-Surgical Solutions business. On a quarterly basis, we determine the redemption value of the redeemable noncontrolling interests, which resulted in an adjustment to redemption value for the redeemable noncontrolling interests for the three and six months ended September 30, 2026 recorded within “Net income attributable to noncontrolling interests”.

Refer to 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 noncontrolling interests and noncontrolling interests during the first half of fiscal 2027.

The increase in net income attributable to noncontrolling interests was primarily driven by higher volumes in our ClarusONE joint venture and contributions from Core Ventures. Net income attributable to noncontrolling interests was also impacted by a charge of $28 million for Core Ventures and a credit of $11 million for Medical-Surgical Solutions for the three months ended September 30, 2026 and charges of $282 million for Medical-Surgical Solutions and $109 million for Core Ventures for the six months ended September 30, 2026 to remeasure the respective redeemable noncontrolling interests to redemption value.

Net Income Attributable to McKesson Corporation

Net income attributable to McKesson Corporation was $1.2 billion and $1.1 billion for the three months ended September 30, 2026 and 2025, respectively, and $1.8 billion and $1.9 billion for the six months ended September 30, 2026 and 2025, respectively. Diluted earnings per common share attributable to McKesson Corporation was $10.44 and $8.92 for the three months ended September 30, 2026 and 2025, respectively, and $15.53 and $15.16 for the six months ended September 30, 2026 and 2025, 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 116.7 million and 124.4 million for the three months ended September 30, 2026 and 2025, respectively, and 117.9 million and 124.9 million for the six months ended September 30, 2026 and 2025, respectively. Weighted-average diluted shares outstanding for the six months ended September 30, 2026 decreased from the same prior year period primarily due to the cumulative effect of share repurchases, as discussed in the “Share Repurchases” section of this Financial Review.