McKesson Earnings: Strong Year-End Shows Momentum and Resilience of Core Business; Tariffs Minimal

Narrow-moat McKesson reported solid fourth quarter-earnings to end the year just as strongly as it started. Total revenue of $90.8 billion was up 18.9% year over year as favorable utilization trend, healthy prescription demand, and new customers all provided nice tailwinds during the three months. GLP-1 drugs (diabetes and weight-loss) contributed $10.9 billion during the quarter and now make up more than 13% of the firm’s distribution sales. This contribution was up $3.5 billion against last year, or nearly 50%, and made up about one quarter of distribution segment growth. We think this growth could slow in the first half of fiscal 2026 as it is lapping a period when key manufacturers had resolved their capacity and supply issues. But we still expect GLP-1s to be an important driver of growth for the US distribution industry both in the near and midterm. After incorporating strong 2026 guidance and adjusting upward our midcycle revenue growth assumptions, we raise our fair value estimate to $610 per share from $550.