McKesson recently released the annual report for its 2021 fiscal year, which ended on March 31.
The report provides fresh insights about the company’s business with CVS Health, its largest customer. As you will see, CVS purchased $50 billion in pharmaceuticals from McKesson—more than triple the figure from 10 years ago.
The report also reveals that CVS Health paid McKesson in about 24 days, providing the wholesaler with an often-overlooked cash flow benefit. In fact, McKesson’s overall business had a negative cash conversion cycle. That’s essential for a low margin distribution business.
Below, I delve into the financials behind these two elements of the McKesson-CVS relationship. You’ll understand why CVS is McKesson’s worst best friend.
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