Cencora (COR) Barclays 28th Annual Global Healthcare Conference summary

Recent financial performance and guidance

• Achieved 21% growth in the U.S. segment and strong overall first quarter results, with operating income guidance raised to 11.5%-13.5% enterprise-wide and 14%-16% for the U.S. segment after closing the OneOncology acquisition.

• Operating profit growth of 21% was broad-based, even after accounting for the loss of an oncology customer and the incremental benefit from the RCA acquisition.

• RCA tailwind and Florida Cancer headwind net to a 1% headwind for full-year operating income; Q2 expected to be the lowest growth quarter due to annualization effects.

• Guidance was raised twice in the past six months, now projecting 7%-10% organic operating income growth and 3%-4% from capital deployment, totaling a 10%-14% long-term guide.

• No significant contract expirations disclosed in the next 12 months; focus remains on core priorities and stability.

Market trends and business outlook

• Pharmaceutical demand remains inelastic across economic cycles, with no observed volatility in growth rates despite macroeconomic news.

• Generic pricing shows continued moderation of deflation and price stability, with manufacturers prioritizing portfolios and increased inspections.

• A robust pipeline of generics and biosimilars is expected to provide ongoing tailwinds through 2030, supporting both innovation and cost reduction.

• IRA pricing changes are being managed through contract terms allowing renegotiation, with success in maintaining gross profit dollars.

Strategic initiatives and investments

• Significant investments in specialty through RCA and OneOncology, with MSO strategy seen as a natural evolution and key growth driver.

• Synergies expected between RCA and OneOncology in clinical trials, back office, and data analytics; focus on pharmaceutical-centric specialties like retina and oncology.

• Future acquisitions likely to be bolt-on investments in specialty, with no expectation of large deals after establishing two leading platforms.

• Divestiture of non-core assets like MWI and consulting businesses to focus on core strengths; strategic alternatives being pursued for remaining non-core assets.

• Capital deployment prioritizes de-leveraging post-acquisition, with a return to balanced investments, opportunistic share repurchases, and a growing dividend over time.