been very very solid execution has been fantastic and we are on the high end of the guidance range we provided you at the time of the acquisition so been very successful both in the cultural integration the operational execution and the financial performance i would note that we began laughing that transaction starting this quarter next question please and next will be brian tankulet with jeffries hey good afternoon and congrats in the quarter um maybe just as i think about the comments you made on glp's expecting that to continue to grow throughout the year just curious what you're seeing there in terms of market dynamics especially as it relates to employer coverage and how you're thinking about that going forward and also balancing that with the consumer side of things the direct consumer aspect of glp's thanks well we continue to be pleased with the growth that we're seeing in GLP-1s. There is a vibrant cash market for GLP-1s. It's one of the only product categories out there that I think we could say that's true for. But we've seen very strong growth in the covered segment as well, as evidenced by the performance of Cover My Meds and the revenue that's showing up in APD. There has been some debate about coverage, but it really hasn't moved super significantly, and you can obviously track the overall growth and performance of this category and see that the growth remains healthy and robust.

Next question, please. And next will be Lisa Gill with JPMorgan.

Hi. Thanks very much. Brian, you mentioned that, you know, you continue to monitor what's happening from a policy perspective, and I just really wanted to understand two things. One, we've heard about some incremental changes around 340B, and I'm curious if there's any impact to your North American business through that. And then secondly, anything else that you're watching? I know you and I have in the past have talked about GLOBE and the fact that, you know, that pricing goes around the physician practice and doesn't really have an impact. But is there anything else that we should be thinking about from a business perspective?

Sure. Let me start with 340B, and I should frame the discussion and remind everybody that this is probably pretty preliminary because the current proposal remains under a comment and review period. We think it's going to be important to let that process play out before we draw any conclusions about the final structure or timing or anything. And Lisa, you will well know we've seen many 340B proposals come and go over the last half a decade or more. 340B is a complicated ecosystem and I think any reform we see there will create both opportunity and challenges for various stakeholder groups. Some participants will benefit from the operational clarity and transparency. Others could face impacts to their economics, cash flows, etc. We serve many of those stakeholders—hospitals, health systems, contract pharmacies, community providers, biopharma manufacturers—so we really think about this from a very holistic or multiple perspective. Our focus will be to help our customers navigate this change like we do for all policy that we've had to deal with over my 30-year career, and we'll think about all the constituents we serve as we approach that. And I think regardless of the ultimate direction the reform takes, we think that our scale, our technology expertise, our compliance expertise, and our strong relationships will allow us to continue to create value. So it'd be premature to speculate on the financial impact, but I feel very confident in the capabilities of McKesson in partnership with our customers that we can navigate that. Your second question, I think, related more towards, you know, what other things are we watching? There's obviously been a lot of discussion about IRA Part D, and I would just remind everyone that that is not going to go into effect until January of 2028, and again, there's a lot of unknowns. We don't know what the MFP will be. We don't know if there will be supporting reimbursement changes around that. We don't know if biosimilars will come into the market and therefore obviate the eligibility for that program. What we do know is that fundamentally the community provider setting is the low-cost setting with the highest and easiest access to care. We believe the government and our legislators understand that, and we would put forth evidence for that the program you referenced, GLOBE, where as they attempted to push prices lower in this demonstration project, the mechanism to achieve that is a rebate directly from the manufacturer to CMS, therefore with no impact on the provider practice itself. We think that that is a good solution. That's a working solution that supports the goal of lowering drug prices, but it also protects the community-based provider and therefore creates an incentive for care to happen in the community where it's low cost, i.e. good for the government and easy for the patient to access.

I think one thing just to add, you know, when we talk about, think about IRA, there's a lot of discussions around WAC pricing. And, you know, let me share with you how I think about that topic. And just a reminder, right, on WAC pricing, you know, WAC movements impact top line because our revenue is recognized on the drug selling price, right? However, GP and operating profit are, of course, less sensitive on these price changes. And just so you know, more than 95% of our brand of drugs are fee-for-service as we earn a fair value for what we deliver. I think one proof point that I like to kind of talk about is, you know, this past quarter, as I mentioned in my prepared remarks, we did see wax pricing decreases. And despite this dynamic, we were able to achieve GP growth, margin expansion, and strong operating leverage as well. So this is another proof point that, as a company, we know how to manage through these Next question, please.

And next will be Erin Wright with Morgan Stanley. Okay, thanks. So, within the North America distribution business, I think you spoke to some of the accelerated investments that you called out, and you so much touched on the confidence you have in the guide, but I guess more specifically, is there anything to call out or we should be aware of from a quarterly cadence perspective as we kind of map out the balance of the year within that segment?

Yeah, so in terms of quarterly cadence, let me go through the enterprise, and I'll give you a bit more detail. So first, from a North American standpoint, seasonality can play a factor here. So if you look at prior years, Q4 will be the biggest quarter for us from a dollar standpoint. If you look at RxTS from a quarterly standpoint, I remind you, Q4 is our annual verification season. The quarterly cadence can vary due to internal investment patterns, product launch timing, general product lifestyle, and which may shift to other services and termination. On that surge, you know, right now we've closed the minority interest investment from Apollo, so just make sure you model the quarterly NCI correctly in terms of that front. Again, for Norway, the investiture that was completed in January 2026. So in terms of the phasing of it, this quarter Q2 was roughly $25 million from a year-on-year standpoint. And then last but not least, on U.S. oncology and multispecialty, from a quarterly cadence standpoint, this quarter, meaning Q2, we have a $51 million gain that we're lapping last year, driven by the self-equity investment within the USAN business.

Next question, please. And next will be Eric Percher with Nefron Research. Thank you.

I want to return to Onco and Multi, and I appreciated the commentary on organic growth. There's been a lot of discussion of what the growth rate is today, and I'd be interested in your 15% or your view of the long term. What do you view as the market's growth versus your growth given the assets and specialties that you're in? And then, Brian, I might come back to you on how can you extend that growth via additions of additional providers or other services?

Look, we're very pleased with the growth that we had seen in oncology and multi-specialty and even adjusting for the last quarter of FCS impact. We grew 24% in the segment. That's a combination of the organic growth resident in the market, same-store visits or patient traffic that was up sequentially over our last quarter. We continue to add to our practices by recruiting physicians and expanding geographically. All of those things, Eric, support the growth algorithm. We don't think there'll be opportunities for kind of the scale of adding additional FCSs, but we do continue to think that geographical expansion and recruitment to build the practices locally will be an important part of the growth algorithm. And then as we continue to introduce technologies, AI or otherwise, into the support of these positions. It should allow us to expand our capacity to see patients, and that's a growth driver we haven't really talked about a lot in the past. So, very, very pleased with the performance, feel very good about the positioning of our business, the quality of the service we deliver, and the impact we have on patients' lives.

Yeah, the outlook reflects, you know, the outlook and guide reflects the overall strength of the business and the value of our highly differentiated platform. The 15% growth I mentioned earlier, that is all organic, no M&A in there, and we do expect that to continue on the forward to hit the long-term targets. Growth will come from, as I mentioned, a couple areas, right? Yes, there'll be some M&A along the way, some tokens along the way, and then you'll also have driving more throughput through existing provider network and also winning new business as well. As you probably know, on the USAN side, for example, we have 3,400 providers, But then we also have a bigger basket of $14,000 in total, which would support the GPO and distribution side as well. So we expect broad-based growth across the board.

Next question, please. And next will be Kevin Caliendo with UBS.

Hey, guys. Thanks for taking my question. Kenny, welcome aboard. Love the energy on these calls. Question about the free cash flow. So I know the guidance hasn't changed, but I just want to, I'm kind of asking Kenny this It's basically down, not just year over year, but for over the last couple of years. And I know with your business, it's always lumpy in this way, but now this is sort of like a two-year trend. Earnings are growing a lot faster than free cash flow. And I'm just wondering if there's anything in there that we should think about or when we might think about the free cash flow starting to accelerate a little bit, because just optically it looks a little off or it looks a little odd that it's not growing along with the income.

Yeah, I understand the question. I follow you completely. So first quarter, we had a, you know, usually first quarter free cash flow is negative because of working capital and inventory timing. With that said though, this year was much improved. Last year we were roughly down a billion dollars in free cash flow. This quarter it was roughly $370 million. So much improvement there. A lot of it's structural, which is very, very encouraging. It's still early in the year for us, and as you pointed out, there's a lot of moving pieces on day of the close, the week of the close, et cetera. So right now we're sticking with the current guide, which was provided on the last quarterly call. With that said, from my vantage point, we are seeing, you know, using technology, AI, et cetera, really structural improvements within our working capital management. And I do believe some of that should flow with you for the rest of the year. So as we progress through these projects and, you know, more to come on this one is my answer, more to come on this one. Right now, I feel very good about our forecast. And, you know, we do have opportunities along the way to beef that off throughout the year.

Last question, please. That question will come from Michael Cherney with Learink Partners.

Good afternoon. Thanks for taking the question. Yes, welcome, Kenny, as well. I apologize to come back on it, but in doing some rough math, even if you go to the high end of your North American pharma guidance for the rest of the year, you're at about 6.8%. Now, this is very squarely in line with the LRP, but as you think about the moving pieces for that segment in the back half of the year, are there anything on the comp dynamics to think about, and how are you thinking about the pathway forward, both for utilization as well as additional potential launches within that market? It would be greatly appreciated.

Yeah, well, again, I'm very pleased with the first quarter and the strength coming out of the gate. We think the utilization environment continues to be steady. I would say, Michael, that we probably had some favorability in the generics portion of the business that came earlier in the year than we would have expected it to. that obviously will come at the expense of later quarters if we've benefited early. But other than that, I don't think there's anything structurally that, Kenny, you might want to comment.

So as I mentioned earlier, there was some new product launch timing. As I mentioned earlier, these were both the new branded and branded to generics, and that did prop up a little bit on the AOP growth in Q1. as I think about the rest of the year in terms of the NAP guidance, right? So the updated outlook reflects strong performance and solid underlying fundamentals, including a continuation of stable globalization trends and specialty growth. It also incorporates accelerated investments in the business the second half of the year as well, focused on growth and also AI. So we do have that based into our current forecast. And the return on investment is accretive to our enterprise and the return timing will most likely be the beginning of 2028. At McKesson, we're always thinking about ways to deliver the spot moment, but at the same time, built for tomorrow as well. And these are the right things to do as a company.

It's always been part of our algorithm.

That's exactly it.

Okay. Well, thank you again, everyone, for joining us today. We always appreciate your questions, and thank you to Cynthia for facilitating the call. McKesson's first quarter results were strong. and they're a testament to the strength of our business and the fundamentals of the markets we participate in and the differentiated solutions that we bring to those markets. I do want to thank all McKesson employees for their dedication, their unweighting commitment to our partners, to our customers, and to their patients. As we look ahead, we're confident in our ability to consistently execute, extend the business momentum, and deliver long-term shareholder value. Thanks again, everyone. I hope you have a terrific evening.

Thank you for joining today's conference call. You may now disconnect and have a great day.