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MCK, McKesson Corporation

McKesson is a wholesale distributor that sits between drug makers and the places that dispense medicine. It buys branded and generic pharmaceuticals, plus medical-surgical supplies and laboratory equipment, in bulk and delivers them to retail, hospital, and alternate-site pharmacies and to non-acute care settings in the United States. It earns a thin spread on enormous volume, and sells the customers it supplies a layer of software, purchasing programs, and consulting on top of the goods.

Our receivables primarily consist of short-term trade accounts receivable from customers that result from the sale of goods and services.

Customer financing primarily relates to guarantees provided to our customers, or their creditors, regarding the repurchase of inventories.

Latest annual: FY2026 10-K

MCK · McKesson Corporation

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2026

$403.4B

+12.4% YoY · 11% 5-yr CAGR

Vital signs · TTM, with 5-yr average

Revenue $403.4B 5-yr avg $322.4B

Gross margin 4% 5-yr avg 4%

Operating margin 1.5% 5-yr avg 1.3%

Owner-earnings margin 1% 5-yr avg 2%

Free cash flow margin 1% 5-yr avg 1%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

What moves the needle: This is a high-volume, razor-thin-margin middleman, so the test is whether scale buys a durable cost edge: does the densest delivery network and the cheapest generic sourcing drop the cost to serve each pharmacy below what a smaller rival can reach, and does that edge actually stick? Weigh it against who holds the leverage, because the filing notes that a handful of large customers and group purchasing organizations account for most of the sales, and a buyer that big can press on the spread the distributor keeps. Watch, too, that the business runs on supplier money and other people's float rather than its own capital, which flatters returns but leaves little cushion if volume or terms turn, and that it carries net debt. The bad case is a sliver of profit caught between powerful suppliers and powerful buyers; the figures for the spread, the concentration, and the leverage are in the record below.

Drafted from the company's filings and reviewed by hand; every number is shown in full in the sections below.

The record

Ten years of arithmetic, read across the cycle.

The record, 2017–2026

realized figures from each filing · older years to the left

2017’17	2018’18	2019’19	2020’20	2021’21	2022’22	2023’23	2024’24	2025’25	2026’26	TTMTTMMar 2026
											Income statement
$198.5B	$208.4B	$214.3B	$231.1B	$238.2B	$264.0B	$276.7B	$309.0B	$359.1B	$403.4B	$403.4B	RevenueRevenue
6%	5%	5%	5%	5%	5%	4%	4%	4%	4%	4%	Gross marginGross mgn
4%	4%	4%	4%	4%	4%	3%	3%	2%	2%	2%	SG&A / revenueSG&A/rev
0%	0%	0%	0%	—	—	—	—	—	—	0%	R&D / revenueR&D/rev
$7.1B	$762M	$886M	$2.5B	($5.0B)	$2.0B	$4.4B	$3.9B	$4.4B	$6.2B	$6.2B	Operating incomeOp. inc.
3.6%	0.4%	0.4%	1.1%	−2.1%	0.8%	1.6%	1.3%	1.2%	1.5%	1.5%	Operating marginOp. mgn
$5.1B	$67M	$34M	$900M	($4.5B)	$1.1B	$3.6B	$3.0B	$3.3B	$4.8B	$4.8B	Net incomeNet inc.
24%	—	—	2%	—	36%	20%	17%	21%	19%	19%	Effective tax rateTax rate
											Cash flow & returns
$4.7B	$4.3B	$4.0B	$4.4B	$4.5B	$4.4B	$5.2B	$4.3B	$6.1B	$6.2B	$6.2B	Operating cash flowOp. cash
$910M	$951M	$317M	$335M	$344M	$312M	$272M	$279M	$272M	$287M	$287M	DepreciationDeprec.
($1.4B)	$3.3B	$3.7B	$3.1B	$8.7B	$3.0B	$1.3B	$1.0B	$2.5B	$1.1B	$1.0B	Working capital & otherWC & other
$404M	$405M	$426M	$362M	$451M	$388M	$390M	$431M	$537M	$436M	$436M	CapexCapex
0.2%	0.2%	0.2%	0.2%	0.2%	0.1%	0.1%	0.1%	0.1%	0.1%	0.1%	Capex / revenueCapex/rev
$4.3B	$3.9B	$3.7B	$4.0B	$4.2B	$4.0B	$4.9B	$4.0B	$5.8B	$5.9B	$5.9B	Owner earningsOwner earn.
2.2%	1.9%	1.7%	1.7%	1.8%	1.5%	1.8%	1.3%	1.6%	1.5%	1.5%	Owner earnings marginOE mgn
$4.3B	$3.9B	$3.6B	$4.0B	$4.1B	$4.0B	$4.8B	$3.9B	$5.5B	$5.7B	$5.7B	Free cash flowFCF
2.2%	1.9%	1.7%	1.7%	1.7%	1.5%	1.7%	1.3%	1.5%	1.4%	1.4%	Free cash flow marginFCF mgn
$4.2B	$2.9B	$905M	$133M	$35M	$6M	$867M	$272M	$24M	$3.4B	$3.4B	AcquisitionsAcquis.
$253M	$262M	$292M	$294M	$276M	$277M	$292M	$314M	$345M	$381M	$381M	Dividends paidDiv. paid
$2.3B	$1.7B	$1.6B	$1.9B	$742M	$3.5B	$3.6B	$3.0B	$3.1B	$4.8B	—	BuybacksBuybacks
46%	1%	0%	18%	—	—	—	—	—	—	—	Return on equityROE
43%	−2%	−3%	12%	—	—	—	—	—	—	—	Retained to equityRetained/eq
											Balance sheet
$2.8B	$2.7B	$3.0B	$4.0B	$6.3B	$3.5B	$4.7B	$4.6B	$5.7B	$4.0B	$4.0B	Cash & investmentsCash+inv
$18.2B	$17.7B	$18.2B	$19.9B	$19.2B	$18.6B	$19.4B	$21.6B	$25.6B	$28.0B	$28.0B	ReceivablesReceiv.
$15.3B	$16.3B	$16.7B	$16.7B	$19.2B	$18.7B	$19.7B	$21.1B	$23.0B	$24.2B	$24.2B	InventoryInvent.
$31.0B	$32.2B	$33.9B	$37.2B	$39.0B	$38.1B	$42.5B	$47.1B	$55.3B	$60.0B	$60.0B	Accounts payablePayables
$2.5B	$1.8B	$1.1B	($511M)	($548M)	($801M)	($3.4B)	($4.3B)	($6.7B)	($7.8B)	($7.8B)	Operating working capitalOper. WC
$36.9B	$37.1B	$38.5B	$42.2B	$45.4B	$46.2B	$44.3B	$48.0B	$55.4B	$57.2B	$57.2B	Current assetsCur. assets
$35.6B	$36.7B	$37.6B	$42.6B	$44.1B	$48.5B	$48.0B	$52.4B	$61.6B	$67.0B	$67.0B	Current liabilitiesCur. liab.
1.0×	1.0×	1.0×	1.0×	1.0×	1.0×	0.9×	0.9×	0.9×	0.9×	0.9×	Current ratioCurr. ratio
$10.6B	$10.9B	$9.4B	$9.4B	$9.5B	$9.5B	$9.9B	$10.1B	$10.0B	$11.3B	$11.3B	GoodwillGoodwill
$61.0B	$60.4B	$59.7B	$61.2B	$65.0B	$63.3B	$62.3B	$67.4B	$75.1B	$82.3B	$82.3B	Total assetsAssets
$8.4B	$7.9B	$7.6B	$7.4B	$7.1B	$5.9B	$5.6B	$5.6B	$5.7B	$6.5B	$8.3B	Total debtDebt
$5.6B	$5.2B	$4.6B	$3.4B	$870M	$2.4B	$922M	$1.0B	$9M	$2.6B	$4.3B	Net debt / (cash)Net debt
23.1×	2.7×	3.4×	10.0×	-23.2×	11.4×	17.7×	15.5×	16.7×	25.1×	25.1×	Interest coverageInt. cov.
$11.1B	$9.8B	$8.1B	$5.1B	($21M)	($2.3B)	($1.9B)	($2.0B)	($2.1B)	($2.2B)	($2.2B)	Shareholders’ equityEquity
0.1%	0.0%	—	—	—	—	—	—	—	—	0.0%	Stock comp / revenueSBC/rev
$290M	$1.7B	$1.8B	$2M	$69M	—	—	—	—	—	—	Goodwill written downGW imp.
											Per share
223M	209M	197M	182M	161M	154M	142M	134M	128M	124M	124M	Shares out (diluted)Shares
$890.28	$996.92	$1086.26	$1272.31	$1483.36	$1712.95	$1945.93	$2303.89	$2802.90	$3250.85	$3250.85	Revenue / shareRev/sh
$22.74	$0.32	$0.17	$4.96	$-28.26	$7.23	$25.04	$22.39	$25.72	$38.37	$38.37	EPS (diluted)EPS
$19.46	$18.85	$18.85	$22.09	$26.14	$26.26	$34.37	$30.09	$45.38	$47.28	$47.28	Owner earnings / shareOE/sh
$19.46	$18.85	$18.30	$22.09	$25.47	$26.26	$33.54	$28.96	$43.31	$46.08	$46.08	Free cash flow / shareFCF/sh
$1.13	$1.25	$1.48	$1.62	$1.72	$1.80	$2.05	$2.34	$2.69	$3.07	$3.07	Dividends / shareDiv/sh
$1.81	$1.94	$2.16	$1.99	$2.81	$2.52	$2.74	$3.21	$4.19	$3.51	$3.51	Cap. spending / shareCapex/sh
$49.75	$46.91	$41.02	$28.04	$-0.13	$-14.74	$-13.06	$-14.70	$-16.19	$-17.50	$-17.50	Book value / shareBVPS

Per-share growththe realized rate an owner's share compounded

	9-yr	5-yr
Revenue / share	+15.5%/yr	+17.0%/yr
Owner earnings / share	+10.4%/yr	+12.6%/yr
EPS	+6.0%/yr	—
Dividends / share	+11.7%/yr	+12.3%/yr
Capital spending / share	+7.6%/yr	+4.6%/yr

The record, charted

FY2017–2026

Each measure over its full record; the current point and the worst year marked.

Share count

124Mpeak FY2017

Gross margin

4%low FY2026

Net debt ÷ owner earnings

0.4×peak FY2018

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

$5.9Bowner earningsvs.$4.8Bnet incomelow FY2019

Where the cash went

ReinvestBuybacksDividendsAcquisitionsRetainedBeyond op. cash

Each year's outlays against its operating cash: the mix, and how it drifts. The hatched cap is spending beyond that year's operating cash — financed from the balance sheet or borrowing, not operations.

FY2017FY2026

Owner-earnings bridge

FY2022–FY2026cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2026 the business earned $5.9B of owner earnings, the operating cash left after the $287M it takes just to hold its position. It put $149M more into growth; free cash flow, after that spending, was $5.7B.

Reported net income$4.8B

Owner earnings$5.9B · 1% of revenue

	FY2026	FY2025	FY2024	FY2023	FY2022
Reported net income	$4.8B	$3.3B	$3.0B	$3.6B	$1.1B
Depreciation & amortizationnon-cash charge added back	+$287M	+$272M	+$279M	+$272M	+$312M
Working capital & othertiming of cash in and out, other non-cash items	+$1.1B	+$2.5B	+$1.0B	+$1.3B	+$3.0B
Cash from operations	$6.2B	$6.1B	$4.3B	$5.2B	$4.4B
Maintenance capital expenditurethe spending needed just to hold position and volume	−$287M	−$272M	−$279M	−$272M	−$388M
Owner earnings	$5.9B	$5.8B	$4.0B	$4.9B	$4.0B
Growth capital expenditurediscretionary; spent to get bigger, not to stand still	−$149M	−$265M	−$152M	−$118M	—
Free cash flow	$5.7B	$5.5B	$3.9B	$4.8B	$4.0B
Owner-earnings marginowner earnings ÷ revenue	1%	2%	1%	2%	2%

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the maintenance capital it must spend to hold its position (here about $287M, roughly its depreciation, the rate its assets wear out). The other $149M of its capital spending is growth it chose, not upkeep it owed; charged only with the maintenance it must do, the business earns well more than the year's free cash flow shows.

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2026 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? 25.1×

Comfortable

Operating income $6.2B ÷ interest expense $247M

What this means
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
How heavy is the debt, net of cash? $3.1B · 0.5× operating profit

Modest net debt

Cash $4.0B − debt $7.0B

What this means
Netting $4.0B of cash and short-term investments against $7.0B of debt leaves $3.1B owed, about 0.5× a year's operating profit (1.1× on the gross debt, before the cash). Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? -8d

Negative, funded by others

DSO 25 + DIO 23 − DPO 56 days

What this means
Days cash is tied up between paying suppliers and collecting from customers. A negative cycle is a quiet moat: suppliers and customers fund the operation (Buffett's “float”), the company grows on other people's money.

Is it a good business?

Return on invested capital —

Not enough data

Industry peers: median 8%

What this means
The filing data didn't include the inputs for this check.
Owner-earnings margin 2%

Thin through the cycle

10-yr median margin, range 1%–2%; latest $5.9B = operating cash $6.2B − maintenance capex $287M

Industry peers: median 1%

What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 1% of revenue this year, a 2% median across 10 years. Treating stock comp as the real expense it is (less $69M of SBC) leaves $5.8B.
Are earnings backed by cash? 1.29×

Cash-backed

Cash from ops $6.2B ÷ net income $4.8B

What this means
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

Where do the earnings go? 87%

Returns about half

Dividends + buybacks $5.1B ÷ Owner Earnings $5.9B

What this means
Of $5.9B Owner Earnings, $5.1B (87%) went back to shareholders, $381M dividends, $4.8B buybacks. Net of $69M stock comp, the real buyback was about $4.7B. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
Investing or harvesting? 1.52×

Expanding

Capex $436M ÷ depreciation $287M

What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 3 of 6 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Pass

Revenue ≥ $2B · $403.4B

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity Miss

Current ratio ≥ 2× · 0.85×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Conservative debt Miss

Debt ≤ working capital · $7.0B vs ($9.8B) WC

What this means
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
Earnings stability Near

A profit every year (10-yr record) · 1 loss year

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Pass

Uninterrupted dividends · paid every year (10)

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth Pass

Earnings +33% over the record · +114%

What this means
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $30.67/share (latest year $39.62), the averaged base the calculator's gate runs on, and book value is $-18.07/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2017–2026

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 9 of 10

What this means
Lost money in 1 year(s), look at what happened there before trusting the average.
Return on capital ≥ 15% 4 of 7 yrs

What this means
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
Operating margin 1% → 1% (3-yr avg ends)

In the filing’s words The margin has held, but the filing names price competition — the pressure is present even where the margin has absorbed it so far.

What this means
Through the cycle the operating margin held roughly steady — about 1% early, 1% lately, median 1%.
Reinvestment, incremental ROIC returns capital

What this means
The capital base barely grew: this business returns cash through dividends and buybacks rather than reinvesting. Judge it on the cash returned, not on compounding.
Owner earnings growth +4%/yr

What this means
Owner earnings grew about 4% a year over the record.
Worst year 2021 · −2.1% op. margin

What this means
Operations went underwater in 2021, understand why before trusting the good years.
Share count −6.3%/yr

What this means
The share count is shrinking, buybacks are quietly growing your slice of the business.
Dividend record rising

What this means
Paid and raised the dividend across the record, the continuity Graham prized.

Does AI threaten the moat?

Moderate contestability

AI is likely to reshape costs and some products here without clearly contesting or sparing the core moat; how the company itself frames it is the tell.

In its own filing A competitive risk, new this year

Its FY2026 10-K names artificial intelligence as a competitive threat, in language that was not in the prior year's filing.

“New technologies, such as AI, may not result in the benefits we anticipate, may not enable us to keep pace with our competitors and the rapidly evolving technological landscape, and may require us to expend significant resources, including to maintain our capabilities.”

The question is whether a moat the record shows as durable outlasts a technology that lowers the cost of part of what the firm sells. The durability is read in the record above, the filing's own framing of AI beside it; the industry label decides nothing on its own.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of fiscal year-end, Mar 31, 2026

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$57.2B

Cash & short-term investments$4.0B
Receivables$28.0B
Inventory$24.2B
Other current assets$1.0B

Current liabilities$67.0B

Debt due within a year$1.8B
Accounts payable$60.0B
Other current liabilities$5.3B

Current ratio0.85×all current assets ÷ what's due · Graham looked for 2×

Quick ratio0.49×stricter: inventory excluded

Cash ratio0.06×strictest: cash alone against what's due

Working capital($9.8B)the cushion left after near-term bills

Its current ratio is below 1, which usually reads as strain; here it is likely structural strength. This business collects from customers before it pays suppliers (a negative cash-conversion cycle), so the balance sheet is funded by that float, the way Costco's and Amazon's are. The low ratio can be the edge, not the risk; the cash-conversion cycle and the debt due above say which.

Debt due this year vs. cash$1.8B due · $4.0B cash covered by cash on hand, no refinancing forced · both figures from the Mar 31, 2026 balance sheet

Revenue, latest quarter vs. a year ago+11.4%the freshest read on whether the business is still growing

Current ratio, recent quarters0.9× → 0.9×

Deeper floors

Tangible book value($17.6B)equity stripped of goodwill & intangibles

Debt incl. operating leases$10.4B$2.1B of it operating leases; with finance leases, “total fixed claims” below reaches $9.3B (annual-report basis)

Deferred revenue$63Mcustomer cash collected before delivery; operating float

From the company's latest filing.

Debt maturity

the debt note, SEC EDGAR →

Not how much it owes, but when it falls due, and against what. The ladder the company files, beside cash on hand and a year's owner earnings.

'27$1.3B

'28$390M

'29$1.0B

'30$723M

'31$676M

later$2.4B

Bars scaled to the largest single year; “later” is everything due after 2031, shown apart since it dwarfs the years.

Due in the next 12 months$1.3Bthe first rung: what must be repaid or rolled over within the year

Within two years$1.7Bthe near wall, the part most exposed to today’s credit conditions

Biggest single year$1.3Bin 2027the lumpiest maturity, where a refinancing, if needed, is largest

Total scheduled principal$6.5Bevery year plus what lies beyond, as the footnote totals it

Against what the business has and earns

Cash & short-term investments, Mar 31, 2026$4.0B

One year of owner earnings (FY2026)$5.9B

Together, against $1.3B due next year7.8×

Cash on hand as of Mar 31, 2026 plus a year’s owner earnings comes to $9.8B against the $1.3B due in the twelve months after the Mar 31, 2026 schedule: 7.8 times it.

Maturity schedule extracted from the company’s Mar 31, 2026 annual report and reconciled to the total the table states.

Lease obligations

the lease note, SEC EDGAR →

Debt by another name. What the business owes on the property, aircraft, stores and equipment it rents rather than owns is a fixed claim due on a schedule; added back to the debt, it is the true leverage. That ladder, operating and finance leases together, and what it adds to the debt on the page above.

Operating leasesFinance leases

'27$405M

'28$394M

'29$354M

'30$316M

'31$268M

later$948M

Lease payments by year, scaled to the largest; “later” is everything beyond year five, shown apart. These are the contractual cash payments, before the interest the filing imputes back out to the balance-sheet liability.

Due in the next 12 months$405Ma fixed cash payment, owed whether or not the business has a good year

Total lease payments$2.7Bevery year plus the tail, undiscounted: the full cash the leases will take

On the balance sheet$2.3Bthe present value of those payments, the recognised lease liability

True leverage: debt plus leases

On-balance-sheet debt$7.0B

Lease obligations (present value)$2.3B

Total fixed claims on the business$9.3B

Counting the leases the way Buffett does, the fixed claims on this business come to $9.3B, of which the leases are 24%. The lease wall above and the debt schedule together are the calendar of what must be paid, and when.

Lease ladder read from the ASC 842 tags in the company’s Mar 31, 2026 annual report and reconciled: the yearly buckets sum to the undiscounted total, which less the imputed interest equals the balance-sheet liability; a ladder that doesn’t tie out is withheld.

How the cash was used, 2017–2026

Over the record, the business generated $48.2B of operating cash; how management split it reads as a cash returner, paying most of what it earns straight back to owners.

Reinvested$4.2B · 9%
Dividends$3.0B · 6%
Buybacks$26.4B · 55%
Retained (debt / cash)$14.6B · 30%

Returned to owners$29.4B
66% of the owner earnings the business produced over the span, $3.0B as dividends and $26.4B as buybacks.
Average price paid for buybacks$142.19
Across the years where the filing reports a share count, 53M shares were bought for $7.6B, about $142.19 each. Year to year the price paid ranged from $121.41 (2019) to $162.76 (2018); its heaviest year, 2017, paid $149.10 ($2.3B).
Net change in share count−44.3%
The diluted count fell from 223M to 124M, so the buybacks outran the stock issued to staff.
Dividend record$3.07/sh
Paid in 10 of the years on record, the per-share dividend growing about 12% a year. It was never cut over the span.

Buybacks are gross of stock issued to staff; the share-count line above is the net of that, the figure that decides whether owners gained. The average price paid blends a year of purchases (and any accelerated repurchase), so it is close, not exact. The record of where the cash went and on what terms.

Acquisitions & goodwill

from the balance sheet & the 10-year cash-flow record

Goodwill grows only when a company acquires and falls only when it concedes it overpaid. The size of that bet, the cash put into buying rather than building, and how much has already been written off.

Goodwill & intangibles$15.4B19% of all assets; the premium carried on the balance sheet for businesses acquired

Against book equity—goodwill is this share of book equity; the rest is the company’s own retained and paid-in capital

Cash spent acquiring$12.8Bover 10 years buying other businesses, against $4.2B of capital spent building

$3.9B written down across 5 years (2017, 2018, 2019, 2020, 2021): goodwill the company has already conceded it overpaid for, charged against earnings. That is roughly 31% of the cash it put into acquisitions over the span. A write-down costs no cash (the cash went out when the deal was signed), but it is management marking its own past judgment to market.

Goodwill, acquired intangibles and equity from the latest balance sheet; acquisition spend and write-downs summed across the 10-year record, from the company's own filings.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.

Fiscal year	Chief executive	Pay, as filed	“Actually paid”	Owner earnings
2022	Brian S. Tyler	$18.2M	$65.3M	$4.0B
2023	Brian S. Tyler	$20.2M	$38.8M	$4.9B
2024	Brian S. Tyler	$19.0M	$51.7M	$4.0B
2025	Brian S. Tyler	$20.2M	$39.2M	$5.8B
2026	Brian S. Tyler	$24.2M	$48.9M	$5.9B

Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Owner earnings are the whole business's, from the record above, for the same fiscal years.

Insider ownership<1%
The stake all directors and executive officers hold together, per the 2026 proxy: skin in the game, the first thing Munger reads.
CEO pay ratio357:1
What the chief earns for every dollar the median employee makes, per the 2026 proxy. A high ratio alone settles nothing; some businesses are genuinely top-heavy in scarce skill. A runaway figure is where Buffett starts asking whether the board is doing its job.
Stock-based compensation$69M
The slice of the business handed to employees in shares this year, 0% of revenue, equal to 1% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.

Inverting the record

Invert: instead of why McKesson Corporation is a good business, the question is what would make owning it a mistake, and whether those marks are in the record. Disconfirming tests across 2017–2026.

2 of the 6 tests turned up something to look into; the other 4 came back clean.

Look hereIs it less profitable than it was?1.5% vs 1.9%
The owner-earnings margin averaged 1.9% early in the record and 1.5% across the last three years, and the latest year has not recovered. Ask the filing whether that is a structural drift or a cyclical trough — price, mix, cost, or a competitor — and whether it is permanent.
Look hereAre "one-time" charges a yearly habit?6 of 10 years
Management took an impairment or write-down in 6 of the last 10 years, $4.0B in all. Taken across the majority of the record, the "one-time" label is wearing thin — ask whether these are past deals coming due rather than genuinely isolated events. Read it beside the goodwill the company still carries.

And these came back clean

Did the share count rise anyway?
Did debt outgrow the business?
Did reported profit become cash?
Did receivables and inventory outpace sales?

Each test is read from the filings and is noisy alone; a flag can mark a cyclical trough or a year of heavy investment as easily as a problem. The filing says which.

What an owner would ask, FY2026

read the 10-K →

How much of the revenue rides on one buyer?
≈$294.5B · 73% of revenue on the largest customers (TTM)
“Sales to our ten largest customers, including group purchasing organizations ("GPOs"), accounted for approximately 73% of total consolidated revenues in fiscal 2026 and comprised approximately 43% of total trade accounts receivable at March 31, 2026.”verify →

The questions the record and the charts do not answer on their own; each carries the figure and the place to look.

Peers, Drug & Medical Distributors

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
MCKMcKesson Corporation	$403.4B	5%	1.2%	—	2%
CORCencora Inc.	$321.3B	3%	0.8%	38%	1%
CAHCardinal Health Inc.	$222.6B	4%	0.5%	14%	1%
SYYSysco Corporation	$81.4B	19%	3.8%	16%	3%
PFGCPerformance Food	$63.3B	12%	1.3%	6%	1%
USFDUS Foods	$39.4B	17%	2.7%	8%	2%
WKCWorld Kinect	$36.9B	3%	0.5%	6%	0%
CHSCOCHS Inc.	$35.5B	3%	1.2%	4%	2%
Group median	—	5%	1.2%	—	2%

The price

What a price has to assume.

What the price implies

reverse-DCF

Type today's close and see the owner-earnings growth you'd have to believe to justify it, beside what McKesson Corporation has delivered.

Today’s price $

Through the cycle, McKesson Corporation earns about $7.0B on its 1.7% median owner-earnings margin. This year’s 1.5% margin runs below that; the reported figure may understate a lean year. Normalize, below, values the price on that through-cycle figure rather than the latest year.

Base Normalize · through-cycle ($7.0B) Net of stock comp (−$69M) Steady-state · maintenance capex ($5.9B)

—

The assumptions Required return 9% Years of high growth 10 Terminal growth 2.5%

9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.

Enter a price above to run it.

Implied by the price—

Owner-earnings growth · ’22→’26+7%/yr

Owner-earnings growth · ’17→’26+3%/yr

Owner-earnings yield—

P/E (3-yr earnings ’24–’26)—

P/B—

Graham’s price gate—

Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.

Against a high-grade bond: Graham’s yardstick bond yield%

Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.

Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.

Free cash flow $5.7B on 120M shares outstanding, per the 10-K cover, as of 2026-04-30; net debt $4.3B. The if-converted diluted count is 124M, 3% above the shares outstanding: the dilution overhang (convertibles, options) a buyer inherits. The base is the latest year by default; Normalize values it on the through-cycle median owner-earnings margin (to avoid paying on a peak year). Net of stock comp treats option pay as the expense it is. Capex ($436M) runs well above depreciation ($287M), so this is a build-out; Steady-state swaps total capex for maintenance (≈ depreciation), lifting the base to about $5.9B, the cash it would throw off if it stopped expanding. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.

Weigh MCK against another business →

Cite: Owner Scorecard, "McKesson Corporation (MCK), the owner's record," https://ownerscorecard.com/c/MCK, data as of 2026-07-09.

Manual order: ← MCHPP its page in the Manual MCO →

Industry order: ← HSIC the Drug & Medical Distributors chapter NUS →