McKesson Corporation (MCK) has divested a minority stake in its medical-surgical solutions division to Apollo Funds in a $1.25 billion transaction, setting the stage for an upcoming spinoff via initial public offering. This strategic move enables McKesson to extract value while concentrating on higher-growth oncology and biopharma services, establishing operational independence for both organizations.
Key Takeaways
- Apollo Funds acquires minority stake for $1.25 billion
- Medical-surgical unit generated $11.4 billion revenue in fiscal 2025
- IPO planned for second half of 2027
Strategic Portfolio Optimization
This transaction exemplifies McKesson’s focused capital allocation approach, directing resources toward higher-margin prospects in oncology and biopharma solutions1. While the medical-surgical solutions division accounts for just 3.2% of McKesson’s aggregate revenue, it has faced growth challenges since 2020 amid post-pandemic normalization and supply chain disruptions2.
McKesson CEO Brian Tyler stated the separation will “unlock significant value for both McKesson and Medical-Surgical Solutions, enabling each to pursue growth and operational excellence in their respective markets”3. The organization has demonstrated expertise in successful divestitures, including the 2020 Change Healthcare transaction, which generated substantial shareholder returns.
Financial Performance and Market Context
The medical-surgical division recorded $11.4 billion in revenue during fiscal year 2025, marking a modest 1% uptick from the previous year1. Operating profit margins have maintained attractiveness despite volume pressures, especially within physician office environments and seasonal illness patterns4.
McKesson’s comprehensive portfolio demonstrated robust performance, achieving total revenues of $359.1 billion in fiscal 2025, reflecting 16.2% year-over-year growth2. The U.S. Pharmaceutical segment, comprising 91.3% of sales, fueled much of this expansion through enhanced specialty drug distribution, particularly in oncology treatments.
IPO Timeline and Market Preparation
The corporation is planning an IPO for the medical-surgical business during the second half of calendar year 2027, contingent on market conditions and regulatory clearances4. Critical transition service agreements were finalized on January 1, representing a significant milestone toward operational autonomy.
McKesson leadership highlighted their proven expertise with complex separations, including recent successful exits from European markets through the Norwegian operations sale to NorgesGruppen4. The company anticipates the separated entity will benefit from focused management attention and customized growth strategies across alternate care markets.
Investment in Growth Areas
Alongside the medical-surgical divestiture, McKesson has bolstered its oncology platform through a $2.49 billion acquisition of a 70% stake in CORE Ventures, supporting over 250 physicians across nearly 100 locations in Florida3. This investment reflects the company’s strategy to channel resources into high-growth specialty sectors.
The organization projects fiscal 2026 adjusted earnings per share of $36.75 to $37.55, indicating 11% to 14% growth year-over-year2. Management confirmed long-term adjusted EPS growth targets of 12% to 14% while revising U.S. Pharmaceutical segment operating profit growth expectations to 6% to 8%.
Not investment advice. For informational purposes only.
References
1Joe Cornell (May 15, 2025). “McKesson To Spin-Off Its Medical-Surgical Solutions Business”. Forbes. Retrieved April 20, 2026.
2Reuters (May 8, 2025). “McKesson to spin off surgical supplies unit, forecasts strong annual profit”. Reuters. Retrieved April 20, 2026.
3HME News Staff (June 3, 2025). “McKesson to spin off Medical-Surgical Solutions segment, focus on high-growth oncology and biopharma markets”. HME News. Retrieved April 20, 2026.
4Liz Beaulieu (February 13, 2026). “McKesson on track for IPO of Medical-Surgical business”. HME News. Retrieved April 20, 2026.