McKesson will sell a minority stake in its medical-surgical solutions business to investment firm Apollo Funds for $1.25 billion, as the drug distributor plans to spin off the unit through an initial public offering.
Apollo will acquire about 13% of the business through a convertible preferred equity investment, valuing it at roughly $13 billion, while McKesson will retain control and majority ownership of the unit, the companies said on Monday.
One of the largest healthcare distributors in the U.S., McKesson is streamlining its operations to focus on its core pharmaceutical distribution business after years of investor pressure.
The investment by Apollo is a “crucial milestone” that helps reduce uncertainty around the medical‑surgical unit’s standalone valuation, Leerink Partners analyst Michael Cherny said.
The drug distributor, which first unveiled plans to spin off the unit in May 2025, has exited several overseas markets and divested other non‑core assets over the past few years.
“While the implied valuation may appear slightly dilutive, we view the transaction positively from a strategic perspective,” said Evercore analyst Elizabeth Anderson.
The medical‑surgical solutions, or MMS, unit supplies medical products, equipment and supply chain services to doctors’ offices, surgery centers and other care providers outside hospitals, operating separately from McKesson’s drug distribution business.
“Apollo’s experience in supporting complex carve-out and public market transactions will be additive as we position MMS for success,” said McKesson CEO Brian Tyler, while Apollo said the business was well-positioned for growth.
The drug distributor, however, said it will continue to consolidate the unit’s results and did not provide a timeline for the planned stock-market listing.
Source: Reuters.com