Big Three Distributors Lean on Specialty for Profit Growth

McKesson, Cencora and Cardinal Health each reported higher earnings this week across their most recent quarter, with all three pointing to specialty pharmaceutical distribution as a key growth driver.

The Big Three are expanding into specialty care through deals for practice networks, community care sites and biopharma services. The shift is unfolding as branded drug pricing and lower-margin GLP-1 volume weigh on the traditional wholesale business.

What Did Each Distributor Report?

McKesson’s fiscal second-quarter revenue rose 8% to $111.0 billion.¹ The company attributed the growth to higher prescription volumes and specialty product distribution in its North American Pharmaceutical and Oncology & Multispecialty segments, partially offset by lower contributions from branded pharmaceuticals.

“We further strengthened our portfolio through transactions that will expand our capabilities and deepen our presence in key growth areas, while maintaining our commitment to financial discipline,” said Brian Tyler, McKesson’s chair and CEO, in a quarterly announcement.¹

Cencora reported fiscal fourth-quarter revenue of $88.4 billion. For fiscal year 2026, revenue rose 5.0% to $337.4 billion. In an announcement, Robert P. Mauch, Cencora’s president and CEO, described the year as “a pivotal year,” as the wholesaler expanded its MSO platform through the acquisition of OneOncology and sharpened its portfolio focus.²

Cardinal Health’s fiscal first-quarter revenue rose 5% to $67.5 billion. The company partially credited brand and specialty pharmaceutical sales growth from existing customers in its Pharmaceutical and Specialty Solutions segment. The wholesaler also reported gains across Nuclear and Precision Health Solutions, at-Home Solutions and OptiFreight Logistics.³

Why Is Specialty Carrying Profit Growth?

In each company’s main pharmaceutical distribution segment, profit grew approximately three to four times faster than revenue.

• McKesson: North American Pharmaceutical revenue rose 6% to $91.4 billion, while adjusted segment operating profit rose 22% to $1.0 billion. The company attributed the profit gain to specialty product distribution to health systems and strategic accounts. Its Oncology & Multispecialty segment revenue grew 24% to $15.0 billion, and adjusted operating profit rose 8% to $427 million on provider solutions and specialty distribution.¹
• Cencora: U.S. Healthcare Solutions revenue rose 5.4% to $78.3 billion, driven in part by specialty sales to health systems and physician practices and by higher GLP-1 volumes. Segment operating income rose 22.0% to $997.6 million.²
• Cardinal Health: Pharmaceutical and Specialty Solutions revenue rose 6% to $62.6 billion on brand and specialty sales growth from existing customers. Segment profit rose 17% to $783 million. The company also cited positive generics program performance.³

The specialty market is doing the heavy lifting on profit at all three companies. Beyond McKesson’s specialty distribution gains, Cardinal Health credited brand and specialty products, along with its generics program, and Cencora pointed to its February 2026 acquisition of OneOncology, which lifted U.S. margins even as GLP-1 sales, which carry lower margins, grew.^2,3

Cencora expects operating income in its new specialty and provider segment to grow 18% to 21% in fiscal 2027, compared with 2% to 4% for traditional distribution. Its long-term targets follow the same pattern: mid-teens growth for specialty and mid-single digits for distribution.²

What Are the Distributors Buying?

The companies are backing that shift with acquisitions on the provider side of specialty care and in services sold to biopharma companies.

Cencora acquired OneOncology in February 2026, building on a stake it already held, to expand the company’s MSO platform. It has also signed a definitive agreement to acquire American Oncology Network, a physician-led network of more than 350 oncology providers across 21 states, though it did not disclose terms.²

In October, McKesson agreed to pay approximately $1.4 billion for a roughly 49% stake in Option Care Health. The company said the investment supports delivery of complex specialty therapies and expands patient access through community-based care. On Nov. 2, McKesson also closed its acquisition of Precision Medicine Group, a clinical research and biopharma commercialization services provider, calling it a milestone for its oncology, multispecialty and biopharma services strategy. It did not disclose the price. Separately, McKesson reported that PRISM Vision Group added Spectrum Vision Partners, bringing more than 150 providers into a network that now tops 350.¹

Cardinal Health’s results include costs tied to physician practice acquisitions, and it expects to close its purchase of AdaptHealth’s Diabetes Health business in fiscal third-quarter 2027.³

What Does the Specialty Pivot Signal Commercially?

The Big Three increasingly sit on both sides of the specialty channel. All three distribute specialty drugs, and all three are building provider businesses alongside that distribution.

That widens what a distributor relationship can cover. Cencora distributes specialty drugs to physician practices and, through its MSO platform, provides management services to oncology practices. It added Retina Consultants of America in January 2025.² McKesson’s pending Option Care Health stake would give it a minority position in community-based delivery of complex specialty therapies, and its oncology business grew on both provider solutions and specialty distribution.¹ Cardinal Health has been acquiring physician practices as well.³

The distributors are also selling more services to biopharma companies. McKesson said demand for access solutions drove profit growth in its prescription technology business, and Precision Medicine Group adds clinical research and commercialization services.¹ Cardinal Health’s INSIGHT-IBD study with Eli Lilly will examine treatment patterns and outcomes for patients with inflammatory bowel disease in routine clinical practice.³

Where Are the Pressure Points?

Brand pricing appeared in all three announcements:

• McKesson: cited lower contributions from branded pharmaceuticals as a revenue offset.¹
• Cencora: pointed to declining manufacturer prices on certain brand products and lower sales to its large mail-order customer.²
• Cardinal Health: listed uncertainty over branded pharmaceutical pricing, including from proposed or final regulatory changes, among its forward-looking risks. Its list also includes tariffs, the conflict with Iran and generic market deflation.³

References

1. McKesson reports fiscal 2027 second quarter results and raises full year adjusted EPS guidance. McKesson. News release. November 4, 2026. Accessed November 5, 2026. https://www.mckesson.com/about-us/newsroom/press-releases/2026/mckesson-reports-fiscal-2027-second-quarter-results-and-raises-full-year-adjusted-eps-guidance/
2. Cencora reports fiscal 2026 fourth quarter and fiscal year end results. Cencora. News release. November 4, 2026. Accessed November 5, 2026. https://s203.q4cdn.com/785768684/files/doc_news/Cencora-Reports-Fiscal-2026-Fourth-Quarter-and-Fiscal-Year-End-Results-2026.pdf
3. Cardinal Health reports first quarter fiscal year 2027 results and raises outlook. Cardinal Health. News release. November 5, 2026. Accessed November 5, 2026. https://cs201.q4cdn.com/566741227/files/content_files/Q1-FY27-Earnings-Press-Release-FINAL.pdf