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

Recent financial performance and guidance

• Achieved 21% operating profit growth in the U.S. segment for the fiscal first quarter, with broad-based strength even after accounting for acquisition timing and customer losses.

• Increased enterprise operating income guidance to 11.5%-13.5% and U.S. segment guidance to 14%-16% for the year following the OneOncology acquisition.

• Raised long-term guidance twice in the past six months, now projecting 10%-14% annual operating income growth, including 7%-10% organic and 3%-4% from capital deployment.

• Q2 expected to be the lowest growth quarter due to annualization of RCA and timing of OneOncology acquisition, with normalization anticipated in Q4.

• No significant contract expirations disclosed in the next 12 months.

Business trends and market outlook

• Underlying pharmaceutical demand remains inelastic despite macroeconomic fluctuations, with no observed volatility in growth rates.

• Generic pricing trends show continued moderation of deflation and price stability, supported by manufacturer portfolio prioritization and increased inspections.

• A robust pipeline of generics, complex generics, and biosimilars is expected to provide ongoing tailwinds through 2030.

• Exposure to specialty pharmaceuticals, particularly in retina and oncology, is seen as a strategic advantage.

• IRA-related pricing changes are being managed through contract renegotiations, with success in maintaining gross profit dollars.

Strategic initiatives and investments

• MSO strategy is a core growth driver, with successful integration and performance from RCA and the recent OneOncology acquisition.

• Synergies between RCA and OneOncology are expected in clinical trials, back office, and data analytics.

• Future M&A activity will focus on bolt-on investments in specialty, with no expectation of large-scale deals in the near term.

• Divestiture of non-core assets like MWI and ongoing evaluation of strategic alternatives for smaller consulting businesses to enhance focus.

• Capital deployment is currently prioritized toward de-leveraging post-acquisition, with a return to balanced deployment and opportunistic share repurchases anticipated after leverage targets are met.