Earnings

McKesson Will Put $1.4 Billion Into Option Care Health And Let CD&R Run It

McKesson also closed its roughly $2.25 billion Precision Medicine Group purchase and raised its fiscal 2027 profit outlook.

Matteo Parrino Jonathan Ponciano

Matteo Parrino, Jonathan Ponciano

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McKesson Will Put $1.4 Billion Into Option Care Health And Let CD&R Run It

McKesson, the drug distributor, signed a deal to invest about $1.4 billion for a 49% minority stake in Option Care Health, Chief Financial Officer Kenny Cheung said on the company's earnings call Wednesday. Chair and CEO Brian Tyler said that CD&R, the buyout partner that will own the majority, will run the home and alternate-site infusion provider day to day.

A minority seat, not the driver's seat

Tyler said McKesson is the "minority non-operating partner," so there will be "years where this is really under the stewardship of CDNR," as the call transcript renders the firm's name. He described the stake as "incubating future growth platforms highly adjacent to our core strategy."

The deal has not closed. Option Care stockholders and regulators still have to approve it, Tyler said, and "there are no interfaces ongoing today" between the two companies. Cheung said closing is expected in the first half of calendar 2027.

The stake will be booked under the equity method, which counts McKesson's share of Option Care's results as other income in the corporate segment rather than in any operating segment, Cheung said. The current outlook includes no contribution from Option Care.

Tyler said the logic is a shift toward specialty therapies delivered in lower-cost community settings, at or near home. McKesson says it has supported the U.S. Oncology Network and more than 3,400 providers for over 25 years.

Precision Medicine Group closes, outlook rises

McKesson distributes branded, generic and specialty drugs and other healthcare products to pharmacies, hospitals and physicians in the U.S. and Canada. It closed the cash purchase of Precision Medicine Group, for roughly $2.25 billion, earlier this week, executives said.

Cheung expects the business to add 10 to 20 cents of adjusted earnings per share in fiscal 2027, with contributions weighted toward the fourth quarter, and about $1.60 to $1.80 by the end of year three. It will report in the oncology and multispecialty segment. Tyler said it adds clinical research capacity to the joint venture formed in 2022 with Sarah Cannon Research Institute.

Management lifted fiscal 2027 adjusted earnings guidance to $45.60 to $46.40 a share, from $44.20 to $45. Second-quarter revenue rose 8% to $111 billion, and adjusted earnings per share rose 18% to $11.68.

Buybacks and the share count

McKesson expects to repurchase about $5 billion of stock in fiscal 2027. It bought about $3.4 billion in the first half at an average of roughly $818 a share. Its market value was $116.5 billion after Wednesday's session.

The Option Care deal now waits on a vote by that company's stockholders and on regulatory approvals, with closing targeted for the first half of calendar 2027.

Sources

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