Why McKesson Stock Soared More Than 5% Higher Today
Key Points
The arrangement is now in force through June 2032.
McKesson also reaffirmed its guidance for the current fiscal year.
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McKesson (NYSE:MCK) investors received a strong dose of good news on the second-to-last trading day of the week. The storied pharmaceutical and healthcare products distributor announced the extension of its partnership with a major pharmacy chain operator. This development pushed McKesson stock to an over 5% gain on Thursday.
Long-standing partnership
McKesson's counterparty is none other than the ubiquitous CVS Health (NYSE:CVS). The two companies have signed an agreement in principle for the former to distribute medicines to mail-order, specialty, and retail pharmacies, as well as distribution centers, through June 2032.
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In the press release trumpeting the new arrangement, McKesson quoted CEO Brian Tyler as saying that "We are pleased to extend our long-standing, strategic relationship with CVS Health and continue supporting their important role in serving patients and communities across the country."
McKesson didn't hesitate to mention that the extension builds on a 25-year history between it and CVS.
Guidance maintained
With one important item ticked off its to-do list, McKesson was confident enough to reiterate its guidance for the current fiscal year (2027). It' still believes its net income not under generally accepted accounting principles (non-GAAP, or adjusted) will hit $44.20 to $45 per share. The company also reaffirmed its long-term forecast of 13% to 16% growth in adjusted, per-share earnings.
McKesson is a go-to distributor in its field, a longtime operator that many partners trust to get medicines and other supplies where they need to go. That's a solid advantage in an environment where the U.S. population is aging proportionally, thereby requiring more medical care and products. The company's stock is a fine play on this dynamic.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends CVS Health and McKesson. The Motley Fool has a disclosure policy.
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