Cencora (COR) Wells Fargo 2024 Healthcare Conference summary

Fiscal 2024 and 2025 guidance and performance drivers

• Adjusted EPS guidance for fiscal 2024 raised to $13.60–$13.70 per share, driven by strong U.S. business performance and favorable net interest expense.

• U.S. segment operating income grew 16% in the first half of fiscal 2024; excluding COVID vaccines, growth was 8%.

• Fiscal 2025 adjusted operating income and EPS growth expected at the bottom end of long-term guidance (5%-8% and 8%-12%, respectively), mainly due to lower COVID vaccine and therapy contributions.

• COVID vaccine and therapy contributions are expected to decline significantly in 2025, with product mix changes and reduced exclusivity impacting fees.

• Potential customer loss in oncology, due to M&A, may have a late fiscal 2025 impact, but investments like OneOncology are seen as future growth platforms.

Core business trends and market dynamics

• Strong utilization and specialty product sales to physician practices and health systems continue to drive growth.

• Generic deflation has moderated, and branded price increases are expected to align with forecasts.

• Recent quarter saw U.S. revenue growth accelerate to 10% year-over-year (ex-GLPs), led by oncology and ophthalmology.

• Generic deflation remains a manageable headwind, with industry stability attributed to manufacturer portfolio management and increased FDA inspections.

• GLP-1 drugs are a major top-line driver but remain minimally profitable; improved economics may come as supply and competition evolve.

International business outlook

• International operations contribute 20% of operating income and have higher margins than U.S. business.

• Recent softness in international results due to elevated IT costs, lower global specialty logistics volumes, and PharmaLex integration; normalization expected in fiscal 2025.

• Core international distribution grows slower than U.S., but higher-margin services are expected to drive long-term growth within the 5%-8% range.