McKesson Corp

McKesson, the oldest company in our portfolio, exemplifies a business that meets timeless societal needs. Its core service of delivering pharmaceuticals will never be obsolete, and while the means of delivery may evolve, the fundamental requirement remains. McKesson operates in a stable, consolidated industry with a fragmented customer base, which provides scale advantages that protect it from new competitors. The significant investment required to replicate its infrastructure creates a strong barrier to entry. Additionally, McKesson's mission-critical service to the American medical system, despite earning low net margins, gives it substantial bargaining power. Few businesses possess the qualities that McKesson does, making it a robust investment.

We had the opportunity to invest in shares of McKesson Corporation (MCK) during a bout of general market apathy towards defensive businesses. McKesson is one of the 'Big Three' drug distributors in the U.S., controlling over 90% of all drug distribution. The opportunity for McKesson is a rapidly changing backdrop in the generic pharmaceutical market, with strong reasons to believe that stabilization is coming. Nearly $100 billion worth of branded drugs are expected to go off patent in 2028, acting as a tailwind for generic price stability and margin opportunities. Additionally, the shift in capacity within the generic drug manufacturing industry should lead to further improvements in price stability.

We had the opportunity to invest in shares of McKesson Corporation (MCK) during a bout of general market apathy towards defensive businesses. McKesson is one of the 'Big Three' drug distributors in the U.S., controlling over 90% of all drug distribution. The opportunity for McKesson is a rapidly changing backdrop in the generic pharmaceutical market, with strong reasons to believe that stabilization is coming. Nearly $100 billion worth of branded drugs are expected to go off patent in 2028, acting as a tailwind for generic price stability and margin opportunities for distributors. This suggests a sustainable growth trajectory for McKesson in the coming years.

McKesson, the drug distributor, reported its full year results which were perfectly in-line with our expectations. Management provided strong guidance for its next year’s earnings, and reiterated its 13%-16% long term growth expectations. After feeding the numbers through our model, our valuation increased by 18%, and with the share price trading below it, we bought a little more such that it accounts for 6.8% of the Fund.

McKesson, the drug distributor, reported its full year results which were perfectly in-line with our expectations. Management provided strong guidance for its next year’s earnings, and reiterated its 13%-16% long term growth expectations. After feeding the numbers through our model, our valuation increased by 18%, and with the share price trading below it, we bought a little more such that it accounts for 6.8% of the Fund.

McKesson has shown impressive performance, with a 5.6% increase in share price this quarter. Management raised and tightened its full year guidance, completed the divestment of its European business, and announced plans to separate its Medical Surgical business. They reiterated a long-term growth outlook in the mid teens, which supports our positive view on the company. The share price rose 15.7% on the day of these announcements, reflecting strong market confidence in McKesson's future prospects.

McKesson, a leading global wholesaler of pharmaceuticals and provider of healthcare IT solutions, exceeded market expectations with its quarterly profit figures and raised its full-year forecast. The company has shown strong performance, with a 19.7% increase in stock price, indicating robust growth potential. This positive trajectory supports our decision to add to our position, as we believe McKesson's market position and operational capabilities provide a significant competitive advantage.

Healthcare services company McKesson benefitted from its core US pharmaceutical distribution businesses in specialty and high growth areas like GLP-1 medication. It also demonstrated strategic portfolio management through the acquisition of PRISM Vision Holdings, and the divestiture of its Canadian retail businesses (Rexall and Well.ca) while continuing to focus on efficiency and cost control.

McKesson, the drug distributor, was up 18.2% and released a decent set of results, including management narrowing and upgrading its guidance. They acquired a controlling interest in PRISM Vision, expanding their business into Ophthalmology alongside Oncology. Management reiterated long-term EPS growth expectations of 12-14%. Although the business looks fully priced, trading at a 25% premium to our valuation, this valuation is based on conservative earnings compared to management's current guidance. Given our history of increasing our valuation over the six years we've held this business, we will maintain our investment.

McKesson outperformed due to strong U.S. pharmaceutical and specialty distribution trends. The company is well-positioned to benefit from these trends, which are expected to continue supporting its performance. The manager believes that McKesson's role in the distribution of pharmaceuticals is critical, and its operational strength will allow it to capitalize on the growing demand in the health care sector.