Business Analysis of McKesson

McKesson Corporation provides pharmaceuticals and medical supplies in the United States and internationally. The company operates in two segments, McKesson Distribution Solutions and McKesson Technology Solutions. The McKesson Distribution Solutions segment distributes branded and generic pharmaceutical medications, and other healthcare-related products; and provides practice management, technology, clinical support, and business solutions to community-based oncology and other specialty practices. This segment also provides specialty pharmaceutical solutions for pharmaceutical manufacturers; and medical-surgical supply distribution, logistics, and other services to healthcare providers. In addition, this segment operates retail pharmacy chains in Europe and Canada, as well as supports independent pharmacy networks in North America and Europe; and supplies integrated pharmacy management systems, automated dispensing systems, and related services to retail, outpatient, central fill, specialty, and mail order pharmacies. This segment serves retail national accounts, including national and regional chains, food/medication combinations, mail order pharmacies, and mass merchandisers; and institutional healthcare providers, such as hospitals, health systems, integrated delivery networks, and long-term care providers, as well as offers its services to pharmaceutical manufacturers. The McKesson Technology Solutions segment provides clinical, financial, and supply chain management solutions to healthcare organizations. McKesson Corporation was founded in 1833 and is headquartered in San Francisco, California.

BUSINESS ANALYSIS OF MCKESSON

The Healthcare Services Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how McKesson compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by McKesson to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.

1. Revenue Growth: McKesson reported a revenue growth of 6.6% year-on-year during 2016. Medication Stores, PBM and Distributors Industry grew at 10.3% in the same period
2. COGS share of Revenues: As a percentage of revenue, McKesson spent 94.0% of its total revenues on COGS. Medication Stores, PBM and Distributors industry average (COGS share of revenue) in the same period was 88.6%
3. R&D; share of Revenues: As a percentage of revenue, McKesson spent 0.2% of its total revenues on R&D.; Medication Stores, PBM and Distributors industry average R&D; spending in the same period was 0.0%
4. SG&A; share of Revenues: As a percentage of revenue, McKesson spent 3.8% of its total revenues on Sales, Marketing, and General Administration (SG&A;). Medication Stores, PBM and Distributors industry average SG&A; spending in the same period was 7.8%
5. Inventory share of Revenues: As a percentage of revenue, McKesson spent 8.0% of its total revenues on Inventories. Medication Stores, PBM and Distributors industry average Inventory spending in the same period was 7.5%
6. Accounts Payable share of Revenues: As a percentage of revenue, McKesson invested 15.0% of its total revenues on Accounts Payable (A/P) Medication Stores, PBM and Distributors industry average Accounts Payable investment in the same period was 12.5%
7. Accounts Receivable share of Revenues: As a percentage of revenue, McKesson invested 9.4% of its total revenues on Accounts Receivable (A/R). Medication Stores, PBM and Distributors industry average Accounts Receivable investment in the same period was 7.1%
8. PP&E; share of Revenues: As a percentage of revenue, McKesson invested 1.2% of its total revenues on Property, Plants, and Equipments (PP&E;). Medication Stores, PBM and Distributors industry average PPE investment in the same period was 3.8%
9. Intangibles share of Revenues: As a percentage of revenue, McKesson invested 6.7% of its total revenues on Intangibles. Medication Stores, PBM and Distributors industry average Intangibles investment in the same period was 17.2%
10. Net Margins: McKesson Net Margins in the year 2016 were 1.2%. Medication Stores, PBM and Distributors industry average Net Margins in the same period were 2.1%

SECTOR AND INDUSTRY ASSOCIATION OF MCKESSON

For the purpose of performance benchmarking of a company with a sector or industry average, R&P; Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries. For high-level analysis purposes, related/similar sectors are grouped into sector groups.

McKesson is associated with Healthcare Sector Group, Healthcare Services Sector, and Medication Stores, PBM and Distributors Industry.

Healthcare Services sector is comprised of the following industries: Medication Stores, PBM and Distributors; Healthcare Payers; Healthcare Providers; Medical Software; Healthcare Research Services. The definitions for each of the industries is as follows:

• Medication Stores, PBM and Distributors industry includes nationwide medication store chains, pharmacy benefit management (PBM) companies, and medication distributors. Medication stores also offer walk-in clinics and related pharmacy services. Distributors distribute branded and generic pharmaceutical and other healthcare products to hospitals, pharmacies and other healthcare providers. PBMs are primarily responsible for developing and maintaining the formulary, contracting with pharmacies, negotiating discounts and rebates with pharmacy manufacturers, and processing and paying prescription pharmacy claims.
• Healthcare Payers industry includes healthcare insurance companies that finance or reimburse the cost of health services. These companies also offer collaborative care, population health management, healthcare technology, Pharmacy Benefit Management, analytics, consulting and administrative services.
• Healthcare Providers industry consist primarily of hospitals but recent changes in the health services industry have contributed to both increasing numbers of other types of facility providers. Companies in this industry include traditional healthcare providers and emerging healthcare facility providers like ambulatory surgery centers, behavioral healthcare facilities, dialysis clinics, home health care companies and others.
• Medical Software industry includes companies that offer any software item or system used within a healthcare context. These companies offer standalone software used for diagnostic, therapeutic purposes, clinical financial and operational purposes.
• Healthcare Research Services industry includes companies that offer biopharmaceutical development services, commercial outsourcing services; commercial pharmaceutical sales and service organizations, consulting, health information analytics and technology consulting.

INDUSTRY RANKING OF MCKESSON

With $190.9 billion revenues, McKesson ranked number 1 of all the companies in the US Medication Stores, PBM and Distributors industry. There were a total of 14 public companies in the US Medication Stores, PBM and Distributors industry that had revenues greater than $50 million during 2016.

The top-10 companies in the US Medication Stores, PBM and Distributors industry by revenues during 2016 were:

1. McKesson ($190.9 billion)
2. CVS Health ($177.5 billion)
3. AmerisourceBergen ($146.8 billion)
4. Cardinal Health ($121.5 billion)
5. Walgreens Boots Alliance ($117.4 billion)
6. Express Scripts Holding ($100.3 billion)
7. Rite Aid ($30.7 billion)
8. Henry Schein ($11.6 billion)
9. Owens & Minor ($9.7 billion)
10. Patterson Companies ($5.4 billion)

BUSINESS MODEL ANALYSIS (BMA) FRAMEWORK

We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.

INDUSTRY PEERS AND COMPETITORS OF MCKESSON

CVS Health (CVS) Business Analysis – Analyze Historical Performance, Strategic Priorities,…

CVS Health Corp with $178 billion revenues in the year 2016 was the number 2 Medication Stores, PBM and Distributors company. Read this report to know the top competitors of CVS Health and identify growth and cost optimization opportunities of CVS Health

AmerisourceBergen (ABC) Business Analysis – Analyze Historical Performance, Strategic Priorities, And…

AmerisourceBergen Corp with $147 billion revenues in the year 2016 was the number 3 Medication Stores, PBM and Distributors company. Read this report to know the top competitors of AmerisourceBergen and identify growth and cost optimization opportunities of AmerisourceBergen

Cardinal Health (CAH) Business Analysis – Analyze Historical Performance, Strategic Priorities,…

Cardinal Health Inc with $122 billion revenues in the year 2016 was the number 4 Medication Stores, PBM and Distributors company. Read this report to know the top competitors of Cardinal Health and identify growth and cost optimization opportunities of Cardinal Health

Walgreens Boots Alliance (WBA) Business Analysis – Analyze Historical Performance, Strategic…

Walgreens Boots Alliance, Inc. with $117 billion revenues in the year 2016 was the number 5 Medication Stores, PBM and Distributors company. Read this report to know the top competitors of Walgreens Boots Alliance and identify growth and cost optimization opportunities of Walgreens Boots Alliance

Express Scripts Holding (ESRX) Business Analysis – Analyze Historical Performance, Strategic…

Express Scripts Holding Co. with $100 billion revenues in the year 2016 was the number 6 Medication Stores, PBM and Distributors company. Read this report to know the top competitors of Express Scripts Holding and identify growth and cost optimization opportunities of Express Scripts Holding

Rite Aid (RAD) Business Analysis – Analyze Historical Performance, Strategic Priorities,…

Rite Aid Corp with $31 billion revenues in the year 2016 was the number 7 Medication Stores, PBM and Distributors company. Read this report to know the top competitors of Rite Aid and identify growth and cost optimization opportunities of Rite Aid

REVENUES ANALYSIS

McKesson (MCK) Revenues And Revenue Growth From 2012 To 2016

This report provides the last five years revenues and revenue growth of McKesson Corp (MCK) from 2012 to 2016. McKesson generated a total of $190.9 billion revenues during 2016. McKesson reported a revenue growth of 6.6% year-over-year during 2016. The revenues and the revenue growth correspond to the fiscal year ending in March.

McKesson (MCK) Revenues And Revenue Growth From 2002 To 2016

This report provides the last fifteen years revenues and revenue growth of McKesson Corp (MCK) from 2002 to 2016. McKesson generated a total of $190.9 billion revenues during 2016. McKesson reported a revenue growth of 6.6% year-over-year during 2016. The revenues and the revenue growth correspond to the fiscal year ending in March.

McKesson (MCK) Revenue Growth Comparison With Industry Growth From 2012 To…

This report provides a comparison of McKesson Corp (MCK) revenue growth with Medication Stores, PBM and Distributors industry growth during the last five years from 2012 to 2016. McKesson reported a revenue growth of 6.6% year-over-year during 2016. The Medication Stores, PBM and Distributors industry growth was 10.3% year-over-year during 2016. McKesson growth was slower than the industry during 2016.

PROFIT ANALYSIS

McKesson (MCK) Net Profit And Net Margin From 2012 To 2016

This report provides the last five years net profit and net margin of McKesson Corp (MCK) from 2012 to 2016. McKesson reported a total net income of $2.3 billion during 2016. McKesson generated a total of $190.9 billion revenues during 2016. McKesson net profit margin was 1.2% during 2016. The net profit and the net profit margin correspond to the fiscal year ending in March.

McKesson (MCK) Net Profit And Net Margin From 2002 To 2016

This report provides the last fifteen years net profit and net margin of McKesson Corp (MCK) from 2002 to 2016. McKesson reported a total net income of $2.3 billion during 2016. McKesson generated a total of $190.9 billion revenues during 2016. McKesson net profit margin was 1.2% during 2016. The net profit and the net profit margin correspond to the fiscal year ending in March.

McKesson (MCK) Net Profit Margin Comparison With Industry From 2012 To…

This report provides a comparison of McKesson Corp (MCK) net profit margin with Medication Stores, PBM and Distributors industry net profit margin during the last five years from 2012 to 2016. McKesson reported a net profit margin of 1.2% during 2016. The Medication Stores, PBM and Distributors industry net profit margin was 2.1% during 2016. McKesson was less profitable than the industry during 2016.

COST & EXPENSES ANALYSIS

McKesson (MCK) Cost of Sales (COGS) Analysis From 2012 To 2016

This report provides the last five years cost of sales (COGS) analysis of McKesson Corp (MCK) from 2012 to 2016. McKesson spent a total of $179.5 billion on COGS during 2016. McKesson generated a total of $190.9 billion revenues during 2016. As a percentage of revenues, McKesson spent 94% of its total revenues on COGS during 2016. The cost of sales (COGS) numbers are for the fiscal year ending in March.

McKesson (MCK) Research & Development (R&D) Spending Analysis From 2012 To…

This report provides the last five years research and development (R&D;) expenses of McKesson Corp (MCK) from 2012 to 2016. McKesson spent a total of $392 million on research and development (R&D;) activities during 2016. McKesson generated a total of $190.9 billion revenues during 2016. As a percentage of revenues, McKesson spent 0.2% of its total revenues on R&D; activities during 2016. The R&D; spending numbers are for the fiscal year ending in March.

McKesson (MCK) Sales, Marketing, General & Administrative (SG&A) Spending Analysis From…

This report provides the last five years sales, marketing, general & administrative (SG&A;) expenses of McKesson Corp (MCK) from 2012 to 2016. McKesson spent a total of $7.3 billion on sales, marketing, general, and administrative (SG&A;) activities during 2016. McKesson generated a total of $190.9 billion revenues during 2016. As a percentage of revenues, McKesson spent 3.8% of its total revenues on SG&A; activities during 2016. The SG&A; spending numbers are for the fiscal year ending in March.

WORKING CAPITAL ANALYSIS

McKesson (MCK) Inventory Spending Analysis From 2012 To 2016

This report provides the last five years inventory spending analysis of McKesson Corp (MCK) from 2012 to 2016. McKesson invested a total of $15.3 billion on inventories during 2016. McKesson generated a total of $190.9 billion revenues during 2016. As a percentage of revenues, McKesson invested 8% of its total revenues on inventories during 2016. The inventory numbers are for the fiscal year ending in March.

McKesson (MCK) Accounts Receivable (A/R) Analysis From 2012 To 2016

This report provides the last five years Accounts Receivable (A/R) analysis of McKesson Corp (MCK) from 2012 to 2016. McKesson invested a total of $18 billion on accounts receivable during 2016. McKesson generated a total of $190.9 billion revenues during 2016. As a percentage of revenues, McKesson invested 9.4% of its total revenues on accounts receivable during 2016. The accounts receivable numbers are for the fiscal year ending in March.

McKesson (MCK) Accounts Payable (A/P) Analysis From 2012 To 2016

This report provides the last five years Accounts Payable (A/P) analysis of McKesson Corp (MCK) from 2012 to 2016. McKesson invested a total of $28.6 billion on accounts payable during 2016. McKesson generated a total of $190.9 billion revenues during 2016. As a percentage of revenues, McKesson invested 15% of its total revenues on accounts payable activities during 2016. The accounts payable numbers are for the fiscal year ending in March.

ASSET MANAGEMENT ANALYSIS

McKesson (MCK) Property, Plant & Equipment (PP&E) Investment Analysis From 2012…

This report provides the last five years property, plant & equipment (PP&E;) investment analysis of McKesson Corp (MCK) from 2012 to 2016. McKesson invested a total of $2.3 billion on property, plant & equipment (PP&E;) activities during 2016. McKesson generated a total of $190.9 billion revenues during 2016. As a percentage of revenues, McKesson invested 1.2% of its total revenues on PP&E; activities during 2016. The PP&E; investment numbers are for the fiscal year ending in March.

McKesson (MCK) Intangible Assets Analysis From 2012 To 2016

This report provides the last five years Intangible assets analysis of McKesson Corp (MCK) from 2012 to 2016. McKesson invested a total of $12.8 billion on Intangible assets during 2016. McKesson generated a total of $190.9 billion revenues during 2016. As a percentage of revenues, McKesson invested 6.7% of its total revenues on intangible assets during 2016. The Intangible asset numbers are for the fiscal year ending in March.