Mckesson Corp (NYSE: MCK)

Sector: Healthcare Industry: Medical Distribution CIK: 0000927653
Market Cap 117.90 Bn
P/B -90.83
P/E 27.17
P/S 0.30
ROIC (Qtr) 55.68
Div Yield % 0.32
Rev 1y % (Qtr) 11.40
Total Debt (Qtr) 8.62 Bn
Debt/Equity (Qtr) -6.64
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About

McKesson Corporation, commonly known as MCK, is a diversified healthcare services leader with a rich history spanning over 180 years. The company operates in various healthcare sectors, providing an extensive range of services and solutions to its clients. McKesson's operations are divided into four primary segments: U.S. Pharmaceutical, Prescription Technology Solutions, Medical-Surgical Solutions, and International. The U.S. Pharmaceutical segment, which contributes approximately 60% of the company's total revenue, is responsible for distributing...

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Investment thesis

Bull case

  • Strong operating cash flow of 10.48B provides robust 1.22x coverage of total debt 8.62B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 2.96B provide 2.09x coverage of short-term debt 1.42B, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 68.69B provides 7.96x coverage of total debt 8.62B, indicating robust asset backing and low credit risk.
  • Operating cash flow of 10.48B provides exceptional 49.91x coverage of minority interest expenses 210M, showing strong core operations.
  • Operating cash flow of 10.48B provides exceptional 45.38x coverage of interest expenses 231M, showing strong debt service capability.

Bear case

  • Operating cash flow of 10.48B barely covers its investment activities of (4.08B), with a coverage ratio of -2.57, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 2.96B against inventory of 27.07B, the 0.11 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 10.48B provides thin coverage of dividend payments of (371M) with a -28.25 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 2.96B provide limited coverage of acquisition spending of (3.20B), which is -0.92x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Free cash flow of 9.64B represents just -5.87x of debt issuance (1.64B), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Segments Breakdown of Revenue (2025)

Segments Breakdown of Revenue (2025)

Peer comparison

Companies in the Medical Distribution
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MCK Mckesson Corp 117.90 Bn 27.17 0.30 8.62 Bn
2 CAH Cardinal Health Inc 80.96 Bn 103.48 0.82 9.03 Bn
3 COR Cencora, Inc. 79.51 Bn 93.02 0.52 7.92 Bn
4 HSIC Henry Schein Inc 9.46 Bn 24.20 0.73 3.44 Bn
5 AHG Akso Health Group 0.37 Bn -2.71 24.79 0.00 Bn
6 EDAP Edap Tms Sa 0.17 Bn -7.47 2.30 0.01 Bn
7 QIPT Quipt Home Medical Corp. 0.17 Bn -15.61 0.63 0.11 Bn
8 EMPG Empro Group Inc. 0.12 Bn 157.82 21.62 -

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.47 1.06
EV to Cash from Ops. EV/CFO 11.80 13.08
EV to Debt EV to Debt 14.34 282.28
EV to EBIT EV/EBIT 22.04 6.31
EV to EBITDA EV/EBITDA 18.78 12.22
EV to Free Cash Flow [EV/FCF] EV/FCF 12.83 15.66
EV to Market Cap EV to Market Cap 1.05 1.21
EV to Revenue EV/Rev 0.31 1.87
Price to Book Value [P/B] P/B -90.83 11.46
Price to Earnings [P/E] P/E 27.17 34.37
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 11.70 2.22
Dividend Payout Ratio % Div Payout % (Qtr) 8.80 5.88
Dividend per Basic Share Div per Share (Qtr) 3.06 0.67
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 3.91 2.23
Interest Coverage Int. cover (Qtr) 24.29 60.87
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 1.41 -12,260.13
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 161.63 27.05
Dividend Growth (1y) % Div 1y % (Qtr) 15.04 2.21
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 48.55 -177.28
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 34.07 368.76
EBIT Growth (1y) % EBIT 1y % (Qtr) 35.72 -206.06
EBT Growth (1y) % EBT 1y % (Qtr) 40.31 -173.08
EPS Growth (1y) % EPS 1y % (Qtr) 58.72 -21.54
FCF Growth (1y) % FCF 1y % (Qtr) 490.21 -218.00
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 6.60 15.84
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 4.73 1.93
Cash Payout Ratio Cash Payout (Qtr) 0.03 0.06
Cash Ratio Cash Ratio (Qtr) 0.04 0.22
Current Ratio Curr Ratio (Qtr) 0.88 1.54
Debt to Equity Ratio Debt/Equity (Qtr) -6.64 -0.33
Interest Cover Ratio Int Coverage (Qtr) 24.29 60.87
Times Interest Earned Times Interest Earned (Qtr) 24.29 60.87
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 1.60 -94.80
EBIT Margin % EBIT Margin % (Qtr) 1.41 -102.39
EBT Margin % EBT Margin % (Qtr) 1.35 -105.05
Gross Margin % Gross Margin % (Qtr) 3.60 23.37
Net Profit Margin % Net Margin % (Qtr) 1.10 -86.72