Healthcare distributor and services company McKesson (NYSE: MCK) fell short of the market’s revenue expectations in Q1 CY2026, but sales rose 6% year on year to $96.3 billion. Its non-GAAP profit of $11.69 per share was 1.1% above analysts’ consensus estimates.

Is now the time to buy McKesson? Find out by accessing our full research report, it’s free.

Company Overview

With roots dating back to 1833, making it one of America's oldest continuously operating businesses, McKesson (NYSE: MCK) is a healthcare services company that distributes pharmaceuticals, medical supplies, and provides technology solutions to pharmacies, hospitals, and healthcare providers.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, McKesson’s 11.1% annualized revenue growth over the last five years was decent. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers.

Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. McKesson’s annualized revenue growth of 14.3% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

We can dig further into the company’s revenue dynamics by analyzing its most important segment, U.S. Pharmaceutical . Over the last two years, McKesson’s U.S. Pharmaceutical revenue averaged 10.5% year-on-year growth. This segment has lagged the company’s overall sales.

This quarter, McKesson’s revenue grew by 6% year on year to $96.3 billion, missing Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 10% over the next 12 months, a deceleration versus the last two years. We still think its growth trajectory is attractive given its scale and indicates the market is forecasting success for its products and services.

ONE MORE THING: The $21 AI Application Stock Wall Street Forgot. While Wall Street obsesses over who’s building AI, one company is already using it to print money. And nobody’s paying attention.

AI chip stocks trade at ridiculous valuations. This company processes a trillion consumer signals monthly using AI and trades at a third of the price. The gap won’t last. The institutions will figure it out. You need to see this first. Read the FREE Report Before They Notice.

Adjusted Operating Margin

Adjusted operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies because it excludes non-recurring expenses, interest on debt, and taxes.

McKesson’s adjusted operating margin has more or less stayed the same over the last 12 months , averaging 1.6% over the last five years. This profitability was lousy for a healthcare business and caused by its suboptimal cost structure.

Looking at the trend in its profitability, McKesson’s adjusted operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, McKesson generated an adjusted operating margin profit margin of 2.2%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

McKesson’s EPS grew at 17.9% compounded annual growth rate over the last five years, higher than its 11.1% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its adjusted operating margin didn’t improve.

Diving into the nuances of McKesson’s earnings can give us a better understanding of its performance. A five-year view shows that McKesson has repurchased its stock, shrinking its share count by 23.6%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

In Q1, McKesson reported adjusted EPS of $11.69, up from $10.12 in the same quarter last year. This print beat analysts’ estimates by 1.1%. Over the next 12 months, Wall Street expects McKesson’s full-year EPS of $39.15 to grow 12.8%.

Key Takeaways from McKesson’s Q1 Results

Revenue missed, but EPS managed to beat by a bit. Looking ahead, EPS guidance was roughly in line with expectations. Overall, this was a mixed quarter. The stock remained flat at $749.52 immediately following the results.

McKesson may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).