QS Research · Michael Burry's Scion Capital analyst template · 2006
MCKESSON CORP (MCK)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case +0% · downside -11% · upside +8%
Base is TTM to Sep 30 2026: $7.47B EBITDA (N15) at the 16.8x EV/EBITDA (N29) gives $125.50B EV; less $2.67B net debt (N25) gives $122.83B equity, or about $1,064 per share on 115.46M shares (N5), essentially today's $1,060.84 (N1). Guidance is strong, with FY2027 adjusted EPS raised to $45.60-$46.40 for 17%-19% growth (S5), and buybacks are real, but the stock already trades at 26.1x TTM P/E (N32) and a 5.8% FCF yield (N33), so the market is not missing a cheap distributor. Downside at 15.0x TTM EBITDA is $947 (-10.7%) and upside at 18.1x is $1,148 (+8.2%), leaving risk/reward balanced rather than a long. I would watch, not own, until price or earnings gives a +30% base case with downside no worse than -25%.
Key numbers
- Share price: $1,060.84
- Market cap: $122.48B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $418.79B
- EV / EBITDA (TTM): 16.8x
- P/E (TTM): 26.1x
The 15 boxes
- ✓ 1. Long-form business notes
McKesson is a healthcare distribution and services company: the FY2026 10-K reports four segments and FY2026 revenue of $403.43B, gross profit of $14.55B, operating income of $6.21B and operating cash flow of $6.16B. Between the FY2021 and FY2026 10-Ks, the reportable structure changed from U.S. Pharmaceutical, International, Medical-Surgical Solutions and RxTS to North American Pharmaceutical, Oncology & Multispecialty, Prescription Technology Solutions and Medical-Surgical Solutions, with Canada folded into North American Pharmaceutical and Norway sold in fiscal 2026. The latest 10-K also shows a smaller U.S. distribution footprint and Health Mart network than FY2021, while Medical-Surgical is being separated and Apollo is taking an approximately 13% minority stake for approximately $1.25B.
- ✓ 2. Competitive advantage
McKesson's only stated advantage is scale and breadth of portfolio; it sells into a price-competitive distribution market against two named giants, Cencora and Cardinal Health, plus manufacturers going direct and customers who could in-source. The six-year record shows revenue growing $165.20B while gross profit grew only $2.40B, so volume, not pricing power, drives the model. What the numbers do show is a capital-light cash machine: operating cash flow of $6.16B against $436M capex in FY2026 funded $4.75B of buybacks and cut diluted shares to 124.10M from 160.60M in FY2021. Verdict: a narrow, scale-and-network advantage, not a margin-fortified franchise; negative total equity means book returns cannot be used as the test.
- ✓ 3. 10-Q takeaways
The three months ended September 30, 2026 showed 8% revenue growth to $110,957 million, 12% gross profit growth and a 3.57% gross margin, up 14 bp, with GAAP diluted EPS of $10.44 and adjusted EPS of $11.68, up 18%. The quarter generated $3.1 billion of operating cash flow and $2.9 billion of free cash flow; the six-month period included $3.4 billion of buybacks and the company raised FY2027 adjusted EPS guidance to $45.60-$46.40. Segment sales grew in all four reportable segments, but Medical-Surgical GAAP operating profit fell 25% on separation charges. The 10-Q excerpt gives no inventory or comparable-sales data.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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