Cencora Inc Q2 2026 Earnings Call - EPS Guidance Raised Amid Revenue Slowdown and OneOncology Integration

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.3: Hello everyone, thank you for joining us. Welcome to Cencora Inc. Q2 2026 earnings call. After today’s prepared remarks, we’ll host a question and answer session. If you’d like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity. Please go ahead.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.: Good morning. Good afternoon. Thank you all for joining us for this conference call to discuss Cencora’s fiscal 2026 second quarter results. I am Bennett Murphy, Senior Vice President, Investor Relations, and Enterprise Productivity. Joining me today are Bob Mauch, President CEO, and Jim Cleary, Executive Vice President and CFO. On today’s call, we’ll be discussing non-GAAP financial measures. Reconciliations of these measures to GAAP are provided in today’s press release, which is available on our website, investor.cencora.com. We have also posted a slide presentation to accompany today’s press release on our investor website. During this conference call, we will discuss forward-looking statements about our business and financial expectations on an adjusted non-GAAP basis, including but not limited to EPS, operating income, and income taxes. Forward-looking statements are based on management’s current expectations and are subject to uncertainty and change.

For a discussion of key risks and assumptions, we refer to today’s press release and our SEC filings, including our most recent 10-K. Cencora assumes no obligation to update forward-looking statements, and this call cannot be rebroadcast without the express permission of the company. You will have the opportunity to ask questions after today’s remarks by management. We ask that you limit your questions to one per participant in order for us to get to as many as possible within the hour. For that, I’ll turn the call over to Bob.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.4: Thank you, Bennett. Hi, everyone, and thank you for joining Cencora’s fiscal 2026 second quarter earnings call. In our fiscal second quarter, we saw operating income growth in both our U.S. and International Healthcare Solutions segments and delivered adjusted diluted EPS growth of 7.5%. These results reflect the resilience of our business, and we remain confident in our full year fiscal 2026 guidance. Building upon that confidence, today we announced the resumption of opportunistic share repurchases. Today, I’ll focus on how our growth priorities and performance drivers support continued long-term growth, specifically building upon the critical role we play within the pharmaceutical supply chain through digital transformation, strengthening our position in specialty pharmaceuticals across channels, and optimizing our portfolio to focus on our pharmaceutical centric strategy. I’ll start with building upon the critical role we play within the pharmaceutical supply chain through digital transformation.

We serve as the backbone of the pharmaceutical supply chain, ensuring the safe and secure delivery of medications from the manufacturers who develop them to the sites of care supporting patients. Every day, our teams move millions of medications through the supply chain to thousands of healthcare sites, creating significant efficiency for our manufacturer and provider partners. Through advanced technology and a network of highly automated fulfillment centers, we help simplify ordering and inventory processes, providing centralized access to products ranging from over-the-counter treatments to highly complex specialty pharmaceuticals. Our services streamline the industry’s logistics and working capital needs, provide data and insights, and drive reliable patient access, ultimately lowering costs. Given our critical role, we continuously invest to strengthen our physical and digital infrastructure, driving enhanced customer visibility, accelerated issue resolution, and improvements deepening the value we provide. We are seeing positive impact from these efforts.

Recently launching AI-supported tools, improving consistency and quality across our customer support operations, benefiting both our customers and team members. We’re excited to continue deeply embedding these capabilities across our enterprise. We are strengthening our position in specialty pharmaceuticals across channels. I’ve spoken extensively about the investments we’ve made in management services organizations that provide physician practices with the tools needed to thrive. MSOs are just one example of how we’re supporting the growth of specialty pharmaceuticals across Cencora. In our global specialty logistics business, the efforts we’ve taken to improve performance have yielded results, and we’re pleased to report our second consecutive quarter of operating income growth. We’re winning new contracts in areas like cell and gene therapies and laboratory logistics, as well as executing productivity initiatives to drive sustained success.

As manufacturers increasingly develop products targeting smaller patient populations, our global reach and ability to support complex specialty products positions us uniquely as a trusted partner. Health systems represent another area where specialty pharmaceuticals have seen continued growth, and our teams have worked to build comprehensive solutions designed to provide end-to-end support to these customers. Through our Accelerate Pharmacy Solutions portfolio, we offer services aimed at streamlining the complexity of health systems operations from specialty strategy enablement to freight management optimization. This offering has been well received in the market, with health systems increasingly seeking to deepen and form new partnerships with us due to our differentiated consultative approach. The breadth of our specialty solutions and market leading customer portfolio allow us to capitalize on the growing specialty pharmaceutical market. Finally, we’re optimizing our portfolio to provide focus.

During the quarter, we took key steps in our ongoing work to focus our portfolio, including the agreement to merge MWI Animal Health with Covetrus and the sale of our U.S. hub consulting services, positioning these businesses for success with strategically aligned partners. Optimizing our portfolio supports focus on our investments in MSOs and ongoing integration efforts. While it’s still early days, we are encouraged by our initial progress in building shared capabilities across OneOncology and RCA that will drive growth across our MSO platform. We’ve established joint teams to share best practices in key areas like research and clinical trials, back office services, and physician recruitment and retention, so we can leverage what is working well across the platform. Before turning to my closing remarks, I’ll now pass the call to Jim for a discussion of our financial results and updated fiscal 2026 guidance. Jim?

Jim Cleary, Executive Vice President and Chief Financial Officer, Cencora Inc.: Thanks, Bob. Good morning and good afternoon, everyone. Cencora delivered solid performance in our second quarter, demonstrating the resilience of our business and our team members’ execution to serve our customers and partners. In the quarter, we delivered adjusted diluted EPS of $4.75, reflecting growth of 7.5%, which puts us on track to achieve our increased EPS guidance of $17.65-$17.90. During my remarks today, I’ll provide an overview of our consolidated results before turning to our segment-level results and updated guidance. As a reminder, unless otherwise stated, my remarks will focus on our adjusted non-GAAP financial results. For further discussion of our GAAP results, please refer to our earnings press release and presentation. Turning now to consolidated revenue.

Consolidated revenue was $78.4 billion, up 4%, driven by growth in both reportable segments and in other, which I will describe in more detail when discussing segment level results. Moving to gross profit, consolidated gross profit was $3.4 billion, up 16%, primarily due to growth in the U.S. Healthcare Solutions segment. Consolidated gross profit margin was 4.31%, an increase of 45 basis points, largely driven by the February 2026 acquisition of OneOncology. Consolidated operating expenses were $2.1 billion, up 22.5%, which included the impact of the February 2026 acquisition of OneOncology. Excluding both MSOs, operating expenses grew 5% on a constant currency basis.

In the second half of the year, we expect our core expense growth will moderate, particularly in the fourth quarter, with an easier comparison for the U.S. Healthcare Solutions segment, excluding OneOncology. Turning now to operating income, consolidated operating income was $1.3 billion, an increase of 6% compared to the prior year quarter, driven by solid growth in both our U.S. and International Healthcare Solutions segments, more than offsetting the slight decline in other. Moving now to our interest expense and effective tax rate for the second quarter. Net interest expense was $140 million, an increase of $36 million versus the prior year quarter, primarily due to debt raised in February to finance the OneOncology acquisition. We expect third quarter net interest expense to be roughly the same as our second quarter interest expense.

Our effective income tax rate was 18.9% compared to 20.8% in the prior year quarter, as we benefited from discrete tax items in the current year quarter. Finally, diluted share count was 195.4 million shares, a 0.1% increase compared to the prior year second quarter. Regarding our cash balance and adjusted free cash flow, we ended March with $2.2 billion of cash, reflecting $1.1 billion of free cash flow generated in the March quarter. Our full year adjusted free cash flow guidance of approximately $3 billion remains unchanged as we expect to continue to generate cash in the back half of the fiscal year. This completes the review of our consolidated results. I’ll turn to our segment results for the second quarter.

U.S. Healthcare Solutions revenue was $68.8 billion, up 3%. In the quarter, we saw continued volume growth, including specialty sales to health systems and physician practices, and in sales of GLP-1s, which increased $1.9 billion year-over-year. Despite these trends, our revenue growth was tempered by three main factors, two of which were fully contemplated. The two factors that were fully contemplated were, first, manufactured list price reductions, which represented a $2 billion revenue headwind in the quarter, and second, the previously disclosed fiscal 2025 loss of an oncology customer and a grocery customer. The third factor, which was not fully contemplated, was the speed of brand conversions for our large mail order pharmacy customer.

These sales are low margin, which concentrates their impact to our revenue line. The increase in brand conversions is a meaningful contributor to our reduced revenue growth expectations for the fiscal year, but results in higher margins for Cencora overall. Moving now to operating income. U.S. Healthcare Solutions segment operating income increased 6% to $998 million. In the quarter, we saw good trends across much of our business. However, there were a few items that impacted our growth. First, we have not yet lapped the loss of an oncology customer that began to hit our numbers in July 2025 due to its acquisition. This headwind was larger than the contribution we recognized from our February 2026 acquisition of OneOncology. Second, many physician offices had lower volumes due to missed patient appointments as a result of inclement weather across the U.S.

Given our leading presence in this channel, we saw some lighter volumes in late January and early February. We were encouraged to see a rebound in patient appointments and specialty product volumes in March. Overall, we estimate that weather represented a $10 million headwind to U.S. segment operating income growth in the quarter. Finally, as we noted on our earnings call last May, we had a $15 million contribution from COVID-19 vaccines in the fiscal 2025 second quarter. This quarter, COVID vaccines represented a $10 million operating income headwind for the segment. Taking a step back, if we exclude the OneOncology acquisition and the 2025 loss of the oncology customer, the U.S. Healthcare Solutions segment growth would have been approximately 7% in line with our long-term guidance in spite of the transitory weather and COVID items.

Turning now to our International Healthcare Solutions segment. International Healthcare Solutions revenue was $7.6 billion, up 13% on an as-reported basis and up 7% on a constant currency basis, primarily driven by growth in our European distribution business. In the quarter, International Healthcare Solutions operating income was $176 million, up approximately 14% on an as-reported basis and up 13% on a constant currency basis. In the quarter, our European distribution business benefited from the shift in timing of manufacturer price adjustments in a developing market country, as I called out last quarter, and the continued rebound of our global specialty logistics business, where we saw a 2nd consecutive quarter of operating income growth. We are very pleased with this rebound of our global specialty logistics business. Moving to other.

Revenue in other was $2.1 billion, up 5%, largely due to growth at ProPharma and MWI Animal Health, partially offset by an expected revenue decline in our legacy U.S. hub consulting services, which was divested on April 30th. Operating income was $92 million, down 1% due to a decline in operating income in our U.S. hub consulting service business resulting from the fiscal 2025 loss of a manufacturer program, partially offset by operating income growth at MWI Animal Health. That completes the review of our segment-level results. I will now discuss our updated fiscal 2026 guidance expectations. As a reminder, we do not provide forward-looking guidance for certain metrics on a GAAP basis, so the following information is provided on an adjusted non-GAAP basis, except with respect to revenue. I will start with adjusted diluted earnings per share.

We are pleased to raise our full-year guidance range to $17.65-$17.90, up from $17.45-$17.75. The updated guidance reflects our strong full-year fiscal 2026 operating income growth expectations for the U.S. and International Healthcare Solutions segments and our updated expectations in other. I will now turn to updates to our revenue guidance. On a consolidated basis, we now expect revenue growth to be in the range of 4%-6%, down from the previous expectations of 7%-9%. This is driven by our lower expectations for revenue growth in the U.S. Healthcare Solutions segment, where we now expect revenue growth of 4%-6%. As a reminder, our guidance for fiscal 2026 has always contemplated the impact of manufacturer WAC price reductions.

Our updated guidance reflects the faster-than-expected branded conversions at our large mail order customer and slower anticipated GLP-1 growth than we had been expecting. In the International Healthcare Solutions segment, we now expect revenue growth to be in the range of 8%-10% on an as-reported basis to reflect changes in foreign exchange rates. Our International Healthcare Solutions segment constant currency revenue growth expectations remain unchanged at 6%-8% growth. Our revenue growth expectations for other remain unchanged. Moving to operating income, we expect consolidated operating income growth to be in the range of 12%-14%, up from our previous guidance of 11.5%-13.5%.

This is driven by our updated full-year expectations for other to show operating income growth in the high single-digit percent range due to MWI now being accounted for as an asset held for sale and, as a result, depreciation expense is suspended. Our full year operating income expectations of 14%-16% growth for the U.S. Healthcare Solutions segment remain unchanged. As you think about our second half cadence, we continue to expect to see our strongest growth of the fiscal year in the fourth quarter after we lap the loss of the oncology customer that occurred on July 1, 2025, and as OneOncology accretion ramps. Our expectations for International Healthcare Solutions segment operating income growth remains unchanged at growth of 5%-8%. Moving now to interest expense.

We expect interest expense to be approximately $485 million compared to our previous range of $480 million-$500 million, reflecting progress on debt pay down and incrementally better than expected rates on our senior notes that we priced in February. As you look at your models, in the third quarter, we anticipate net interest expense will be at a similar level as this quarter before modestly stepping down in the fourth quarter given working capital dynamics. Finally, turning to share count, we expect our full year diluted shares outstanding to be under 195.5 million shares as we resume opportunistic share repurchases. As we indicated in our press release, we expect to repurchase $1 billion worth of shares by calendar year end. That concludes our updated full year guidance assumptions.

As it relates to quarterly cadence, I would point out that we expect third quarter adjusted diluted EPS growth to be in the high single digits, partly as a result of our net interest expense remaining at that $140 million level in the quarter. To close, I am proud of our teams who work diligently to support our customers and partners, guided by our purpose and pharmaceutical centric strategy. As we continue to prioritize a balanced approach to capital deployment, we are pleased to be resuming opportunistic share repurchases that will support value creation. Despite noise today, given some transitory items causing our results to be below expectations, we remain on track to deliver strong guidance for fiscal 2026. I’ll now turn the call back to Bob for some closing remarks before moving to Q&A. Bob?

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.4: Thank you. As Jim said, today’s results are impacted by transitory items and our full year guidance remains strong, reflecting the strength of our business and execution to drive sustainable long-term growth. The critical role we play in the pharmaceutical supply chain and the investments we are making allow us to capitalize on growth opportunities. As we look to the balance of the fiscal year and beyond, our focused strategy, guided by our purpose, growth priorities, and performance drivers, positions us to continue creating value for all our stakeholders. Before opening the call for Q&A, I want to take a moment to acknowledge that today is Jim’s final earnings call before his retirement as CFO in June and from the company in December. On behalf of all of us at Cencora, I thank Jim for his many years of service.

His leadership and expertise have shaped our company and performance, and Jim has been a terrific partner to me. I wish him all the best.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.3: We will now begin the question and answer session. Please limit yourself to 1 question. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you’re muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Lisa Gill at J.P. Morgan. Your line is open. Please go ahead.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.1: Thanks very much. Good morning. Jim, I wish you the best in your retirement. I just really wanted to understand and Jim, I appreciate, you know, you kind of laying out that the core underlying growth was about 7%. When we look at stripping out WAC, IRA changes, the U.S. business, everything you talked about, how do we think about the impact to operating profit from those changes, as well as the shift in the mail channel that you talked about? Generally, that’s gonna be lower margin. When we put this all together, how do we think about, does this have an impact on your long-term growth rates on either revenue or operating profit as we see these changes, especially on WAC and IRA moving forward?

Jim Cleary, Executive Vice President and Chief Financial Officer, Cencora Inc.: Sure. Thank you very much for the question, Lisa. What I’ll do is I’ll go through our revenue and our operating income and the key drivers in Q2. As you know, our revenue growth was 4% during the quarter, and in the U.S. healthcare segment it was 3%. I’ll go through some of the growth drivers and the growth headwinds. First of all, with regard to growth drivers, we saw continued volume growth, including specialty sales to health systems and physician practices. We also saw $1.9 billion of growth from GLP-1s. We’re still seeing growth in GLP-1s of course, but at a slower pace than we expected, which is contributing to our lower revenue guidance. Then we saw some growth headwinds on the revenue front.

For instance, we saw $2 billion from IRA WAC reductions, that had a 3% impact to U.S. revenue growth during the quarter. As previously disclosed, there’s a loss of an oncology customer and a grocery customer that impacted growth in the quarter. There were also faster than anticipated brand conversions at a large mail order customer that meaningfully contributes to the reduced revenue growth. In international we saw 13% revenue growth, primarily due to Alliance Healthcare, but also saw growth in global specialty logistics. In other, we saw 5% growth driven by MWI and ProPharma. You asked kind of what is driving the operating income growth during the quarter, let me go through those factors. Operating income up 6% in the quarter, and in U.S., operating income up 6%.

We continue to have the headwind related to the loss of an oncology customer due to its acquisition. This headwind during the quarter was larger than the contribution we recognized from the February acquisition of OneOncology. If we exclude the impact of the oncology customer loss and our February 2026 acquisition of OneOncology, our growth would have been approximately 7% in line with our long-term guidance. We were able to achieve this in spite of two headwinds. The two headwinds were: we saw a $10 million operating income headwind related to weather and specialty practices due to some patient visit cancellations and delays, we did see the business rebound in March and saw good trends in April as well. We also had a $10 million operating income headwind related to COVID-19 vaccines.

As a reminder, we had $15 million of COVID-19 contributions in the second quarter of FY 2025. You know, I’ll say to address your question, as we talk about the things that impacted operating income in the quarter, you know, we haven’t called out the faster than anticipated brand conversions, which are lower margin, and we haven’t called out the IRA WAC reductions when we’re talking about the quarter. In International, we had good growth of operating income in the quarter, 14%, driven by growth at our European distribution business. Also we benefited from a shift in the timing of manufacturer price adjustments in a developing market country, which was mentioned on our February call. We also saw the second consecutive quarter of growth of our global specialty logistics business.

We were very pleased to see this business continue to rebound. That’s really kind of a driver of our revenue growth during the quarter and our operating income growth. You asked about our long-term guidance, and we continue to have confidence in our long-term guidance, which is of course, 7%-10% organic operating income growth, another 3%-4% from capital deployment, and 10%-14% EPS growth. Thanks a lot for the question, Lisa.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.4: Lisa, I’ll just, I’ll follow on to Jim’s excellent answer and just, you know, summarize by in reinforcing the last point that Jim just made, which is, you know, while there are times where there’ll be revenue pressure, they are generally, these are lower margin activities. In the case of WAC decreases, as you know, we’ve been able to recoup the value of those changes. We guide on operating income for the long term, and it’s for that very reason, because there can be some variability in revenue, especially as we cycle through some of the policy initiatives and other things that we’ll see in the U.S. market, but our confidence in maintaining our operating income growth is high.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.3: Your next question comes from the line of Michael Cherny at Leerink Partners. Your line is open. Go ahead.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.2: Hi. Good morning. Thanks for taking the question. Yes, I’ll echo Lisa’s comments, Jim. Congratulations and good luck in retirement. Lisa kind of hit on some of the longer term dynamics. I wanna dive in, if I can, on the second half of the year. As I understand or as I think through the moving pieces, obviously you have some comp dynamics, you have some deals, but as we think about the acceleration of growth, can you kind of risk weight where you have the most confidence versus the most potential variability in terms of the U.S. AOI build, in particular, into the back half of the year, both because of comps dynamics but also because of what you’re seeing in the market relative to customer behavior and other key factors? Thank you.

Jim Cleary, Executive Vice President and Chief Financial Officer, Cencora Inc.: Yeah. Thank you very much for that question. Michael, what I’ll do is I’ll start by describing our guidance update and some of the key drivers, then I’ll finish up with what really gives us confidence in our growth acceleration in the balance of the fiscal year. First of all, with regard to our guidance update and drivers, as you know, we are increasing our EPS guidance to a range of $17.65-$17.90, up from the previous range of $17.45-$17.75. This reflects our strong fiscal 2026 guidance and growth in both the U.S. Healthcare Solutions and International Healthcare Solutions segments. It also reflects the increase in expectations for other as a result of MWI being classified as an asset held for sale.

Excluding this asset held for sale benefit, our full year fiscal 2026 EPS guidance would have remained largely unchanged, with the incrementally lower interest expense and share count moving EPS up modestly. Our revenue growth guidance for the fiscal year is now 4%-6%, down from the previous range. In the U.S. Healthcare Solutions segment, growth is also 4%-6% for revenue, down from the previous range. This is driven by a reduction in growth expectations for GLP-1s. That’s one of a few things that’s driving it. Given the size of this product class

A 5% delta in growth year-over-year represents approximately $2 billion in annual revenue. It’s also driven by the faster than expected brand conversions at our large mail-order pharmacy customer and updated expectations for mix, including slower growth and lower margin categories. In International, we’re now guiding to growth of 8%-10%, up from the previous range of 7%-9%. This reflects updates to foreign exchange rates, and constant currency guidance remains unchanged. Now talking about operating income growth, we’ve increased our operating income growth guidance of 12%-14%, up from the previous range of growth of 11.5%-13.5%. U.S. Healthcare and International Healthcare Solutions guidance remains unchanged for operating income. Our guidance now calls for high single-digit growth up from flat. This reflects MWI now being classified as an asset held for sale as previously discussed.

What’s giving us confidence in our growth acceleration for the balance of the year? I’d really like to address that. We do have high confidence in our full year fiscal 2026 guidance that contemplates operating income growth of 12%-14% and strong growth across both reportable segments and other. There are a few factors that support the growth ramp in the balance of the year. In U.S. Healthcare, there’s the lapping of the loss of the oncology customer due to its acquisition in July 2025. We also see, as we talked about in the past, OneOncology accretion ramping over the fiscal year. We also see an easier expense comparison for our U.S. Healthcare Solutions segment in the fourth quarter.

Also, in the International Healthcare Solutions segment, our global specialty logistics business is seeing continued growth, and it also has easier comps in the balance of the year. Another, of course, we have the benefit of MWI asset held for sale accounting treatment. Those are some of the key things that give us confidence in growth acceleration in the balance of the year and give us confidence in our guidance for the fiscal year. Thank you for the question.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.3: Your next question comes from the line of Glen Santangelo at Barclays.

Glen Santangelo, Analyst, Barclays: Yeah, good morning. Thanks for taking my question. You know, I also have a longer term operating profit growth question. You know, it seems to me that investors, they’re obviously aware of the increasing generics and biosimilar pipeline that is emerging here over the next couple years. While I think the traditional generics opportunity is well understood, I think the specialty to biosimilar conversion is much less understood. You know, we saw it perhaps have an impact on revs this quarter with your mail order customer. More importantly, you know, we’re hearing concerns from investors that the lower price biosimilars could potentially have a negative impact on some of the profit pools in your specialty.

What I was hoping you’d do is just spend 1 minute and talk about these biosimilar conversions and maybe the longer term impact you think they’ll have on your long-term operating profit growth in your distribution business. Thanks so much.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.4: Thanks, Glen. I’ll take that. terrific question, and it’s, I think it’s probably best to start by taking a step back just with a little, a little context and separating the biosimilar market in the Part D mail market and then the biosimilar market in the Part B space. I think if we go down the Part D path for a second, I think that’s where people would rightly assume that as a product moves from brand to biosimilar, that it’s very likely to move away from the wholesaler, which is exactly what happened in oral generics. That’s part of the model that we have with our customers, you know, currently. That’s not a surprise.

You know, on the kinda revenue and profit side of it, again, just to reiterate that’s a, that’s a revenue hit, but it’s not a meaningful profit hit. To the extent that the mail order pharmacies and PBMs have, you know, selection choice over the biosimilar and that could go around the wholesaler, I think that’s gonna be true in many cases, but that’s part of the model today. That’s not incremental pressure. Next to that, it’s important to talk about how the Part B space is not that.

The Part B space, which is where we have a important presence, both with our GPO distribution and with MSOs, and that as a product converts from the brand to the biosimilar, in that space, it actually is incrementally beneficial to the practice and to Cencora. I think those are good things for us to watch over time. They’re all things that we have contemplated in our planning. But again, there’s not unknown pressure out there as biosimilars grow in the Part D space, and there is actually benefit as biosimilars grow in the Part B space. Thank you for the question.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.3: Your next question comes from the line of Elizabeth Anderson at Evercore ISI.

Elizabeth Anderson, Analyst, Evercore ISI: Hi, guys. Good morning. Jim, congrats on your retirement. My question is about OneOncology. I heard your call-outs about some of the transitory issues.

Sorry, OneOncology. I heard some of your transitory issues about weather and stuff in the first quarter. My question is sort of how are you thinking about that business and its performance on a run rate business basis? You know, can you talk to us a little bit more about sort of the Synergy acquisition? How is the rest of it tracking versus your expectations minus, you know, obviously that transitory issues?

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.4: Yeah, thanks. Thanks, Elizabeth, for the question. We couldn’t be happier with, you know, being able to acquire One Oncology in February. We have now, you know, full ownership of that business and what’s exciting is having the opportunity for RCA and One Oncology to now collaborate. As I said in my prepared remarks, we’re really starting to see the benefits of that collaboration. As we signaled over several quarters as we were kind of awaiting this full acquisition at some point, was that there are best practices that exist within both of those MSO platforms that are transferable to the other.

There are strengths within one that are different than the strengths in the other, and now we’re able to all get in a room together, and those teams are formed, and they’re working on, making sure that we can deliver, you know, the value to the practices, which is value to the patients, ultimately. It’s going really well. As you mentioned, you know, I think this is, you know, a new phenomenon for Cencora where, you know, a significant storm could have some pressure on office visits. It’s as Jim said, you know, the volume comes back, which we’ve seen already. You know, we’re very happy with the acquisition. We’re very happy with the integration progress to date.

I would say most importantly, we’re really happy that OneOncology and RCA are now able to work more closely together, along with the expertise that we have within Cencora to make sure that we’re driving long-term value.

Jim Cleary, Executive Vice President and Chief Financial Officer, Cencora Inc.: Bob, I’ll just add one thing if I may, and that’s that, OneOncology and RCA have both been significant contributors to our specialty growth for several years. It’s of course wonderful to have the MSO presence now, which we’re very pleased with both platforms. I also wanted to call out that they’ve been significant contributors to our, you know, very important specialty growth for many years.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.4: Thanks, Jim.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.3: Your next question comes from the line of Eric Percher at Nephron Research. Your line is open. Please go ahead.

Eric Percher, Analyst, Nephron Research: Thank you. A question relative to some of the pressures that you faced from price reductions. I’d like to better understand when you sit across from a manufacturer and you have a discussion, whether it has been AMP or where we are this year with the price reductions, also as we think about GLP-1 reductions coming 1/1/2027, what is the basis for the discussion of value? Is it simply pick back and ship? Is it receivables or capital put to work? How confident are you that you continue to be able to maintain absolute margin on lower prices?

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.4: Yeah. Hey, Eric. Thank you for the question. It’s an important question, and I’ll begin with the end of your question, which is we’re very confident that we can, you know, maintain that dollar profit through these discussions. It’s really because of the scope and scale and quality of the services that we provide to the manufacturers and the providers. You listed a few of them, and you know them well. You know, our ability to one provide the quality and efficiency that we do as an industry, frankly, with the massive investments that we have in the distribution networks. That’s the technology for ordering. It’s the highly automated distribution that’s there.

It’s the secure handling of those products, you know, across the board that is very efficient, very low cost, and very high value and frankly would be impossible to replicate outside of the system that exists here in particular in the United States. We often are able to talk about, you know, a study that the Healthcare Distribution Alliance updates every few years, it’s probably worth mentioning that those services contribute about $80 billion a year to the healthcare system. In other words, without those services, the cost would be that much higher within the system. Eric, it’s not an automatic, right?

We do have to go in there, we have to have a real conversation with a partner that has to see the value in what we do. We are confident that manufacturers will continue to see the value in what we do for all of the reasons that I just described. Of course, that’s the base case and we’re always, you know, working to innovate to create new services and new solutions and new data and analytics opportunities that provide value. Again, it’s a commercial relationship. It’s something that we have to demonstrate our value all the time, but because of the investments that we’ve made over decades, we feel confident that that will continue.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.3: Your next question.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.4: Thank you for the question.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.3: comes from the line of Charles Rhyee at TD Cowen. Your line is open. Please go ahead.

Charles Rhyee, Analyst, TD Cowen: Yeah, thanks for taking the questions, and, Jim, good luck to your retirement and, best wishes. I guess maybe first to follow up a little bit on Glen’s question, you know, Bob, I appreciate that Part B is the real focus because when we think about specialty, but we, you know, and that in the Part D side, it’s pretty much more of a revenue hit. Is it fair to think that we’re still making some margin on these revenues, and certainly, when we think about, you know, your mail, large mail order customer, shifting and then moving that volume to their own sort of distribution business?

When we think about sort of, you know, that impact and that faster conversion, was that, you know, how do we understand that kind of speed of conversion that might have been sort of outside your expectations? When we think about the pipeline of future drugs, is that something that you are contemplating when you’re in this, in your long-term guide of what products you think will continue to be through your channel versus what might go through some of your customers’ own internal channels? Secondly, I just real quickly, Jim, you talked about sort of the loss of the big OneOncology contract last year as well as the grocery store chain. Were there any other kind of movements?

You know, I know there were some other M&A activity going on in the space over the last year or so, and some of that was oncology. Just curious if the one that you called out is the only one that’s been sort of a headwind for you. Thanks.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.4: Hey, Charles. I’ll take the biosimilar part of your question first. There’s two or three things happening. You know, one that we called out is the speed of conversion from the brand to the biosimilar was something that we hadn’t necessarily planned for. You know, that’s not something we’ll always know. As you know, traditionally, the speed from brand to generic within the PBM mail space hadn’t always been quick. There have been products that transition took longer. Something that we weren’t really aware that would happen that quickly. That’s one. Two, yes, we would have a small part of the margin if that biosimilar stayed with the wholesaler. I think it’s important to say that that would not be the norm.

That’s not what would normally happen. Again, if you go back over the models between the wholesalers and the PBMs and mail pharmacies over time, is when a product went from brand to generic, that was then insourced. The wholesaler wasn’t then generally gonna be providing that generic, whether that was an oral solid generic or a biosimilar. What we’re seeing is what would be expected within the model. You know, what we’d call that here was that the pace of conversion was faster than we had anticipated.

Jim Cleary, Executive Vice President and Chief Financial Officer, Cencora Inc.: Great. Bob, I’ll take the last part of that question. First of all, with regard to the brand conversion to the biosimilar at the large mail order customer, as you know, brand sales to this customer are low margin, and so the impact of the shift is impactful to the revenue line, but not a meaningful driver at all of operating income. Then with regard to the last part of your question, of course, we have called out the loss of the oncology customer in July of last year and then the grocery customer, and there’s really nothing else of size that would be meaningful for us to call out.

With regard to the oncology customer, of course, we’ve indicated that that does have an impact on operating income, and of course, we’ve disclosed that in the past. The grocery customer is, you know, it’s not something that we’ve called out as having an impact on operating income.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.4: Yeah, Charles, I would just add, you know, from time to time there are, you know, smaller customers who would be acquired or who would move that wouldn’t be material enough for us to call out, and that’s exactly what Jim’s saying. You know, any of those, you know, smaller activities have been contemplated in our guidance, but not anything to call out.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.3: Your next question comes from the line of Allen Lutz at Bank of America. Your line is open. Please go ahead.

Allen Lutz, Analyst, Bank of America: Good morning. Thanks for taking the question. First, Jim, congrats on your retirement. A clarification question here. On the 7% U.S. Healthcare Solutions EBIT growth, excluding OneOncology and the loss of an oncology customer, Jim, you also mentioned there’s a 1% headwind from COVID-19 and another 1% headwind from weather. Is it fair to assume that the starting point, excluding those, would be 9%? More broadly on the GLP-1 growth, you said that grew $1.9 billion in the quarter. How much slower are GLP-1s growing relative to your expectations? I know they’re not a big driver of profitability, as that mix shift changes from injectable to oral, are you seeing or expecting any change in profitability there? Thank you.

Jim Cleary, Executive Vice President and Chief Financial Officer, Cencora Inc.: Yeah, sure. Let me first say, the answer is a yes to the first part of your question. You know, we saw that $10 million operating income headwind related to weather in specialty practices due to some patient visit cancellations and delays. As I said, we have seen a rebound from that in March and April. You’re absolutely right, our operating income growth would have been higher if it were not for that headwind. The same thing as it relates to headwind from COVID-19 vaccines. That’s again a $10 million headwind. As a reminder, we had $15 million of COVID-19 vaccine contributions in the second quarter of fiscal 2025, we were $10 million down from there.

If you add back for both of those things, our operating income would have been $20 million higher during the quarter, and of course, our growth rate would have been higher. Thank you very much for asking the question.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.3: Your next question comes from the line of Daniel Grosslight at Citi. Please go ahead.

Daniel Grosslight, Analyst, Citigroup: Hi, guys. Thanks for taking the question. I’d like to focus on the international business, and really the solid quarter that you put up with World Courier. You mentioned some nice new contract wins, and it looks like the overall just macro environment for biotech is a, is a bit better. As we look to the remainder of the fiscal year, I’m curious how sustainable that growth is, and I get that comps get easier in the second half of the year. On a sequential basis throughout the year, do you think you’ll continue to see World Courier growth? Thanks.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.4: Hi, thanks for the question. We’re really pleased with the progress that World Courier is making, it’s a combination of I think the market is not getting significantly better, but it’s not getting worse, I think that’s a positive for us. We’ve also been working hard at the business. We’ve been working hard at making sure that we’re commercially right-sized, that’s sales process and pricing and making sure that we’re as efficient as we can possibly be in the business.

As we said, we’re really happy to see multiple quarters now of operating income growth and also volume growth within the business, which is an important thing that we track. Yeah, we’re excited, and I’ll pass it to Jim for the second part of your question.

Jim Cleary, Executive Vice President and Chief Financial Officer, Cencora Inc.: Sure. I’ll just say that we have good confidence in our guidance for the fiscal year in our international business. You know, we’ve been very pleased as Bob talked about with World Courier, and we’ve been very pleased with our distribution business and our 3PL business in the international market also. Thank you. It is nice to see growth in that business and our optimism for future growth.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.3: Your next question comes from the line of Kevin Caliendo at UBS. Your line is open. Please go ahead.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.0: Thanks. Thanks for taking my question. Jim, it’s been a pleasure knowing you over all this time, even back to the MWI days, so good luck with everything going forward. I wanna focus a little bit on you made a comment, ex all the one-timers and the weather and everything else, your EBIT growth would have fallen within your LRP. It would’ve been roughly 7%. That’s still a poor sort of ex all one-timers. A pretty material slowdown in core growth from what we’ve seen over the last several years. I’m just wanting to know sort of what exactly changed this quarter that you saw. Two, yeah, these changes in pricing and changes in GLP-1s and everything else, we would’ve expected to see a decline in gross margin, but that actually wasn’t the issue.

It was more that the G&A leverage was worse than what we had anticipated. Is there anything in that that occurred? Anything that changed there? I’d just love to get some additional color on that aspect as well as the core growth. Thanks.

Jim Cleary, Executive Vice President and Chief Financial Officer, Cencora Inc.: Let me address both those things. First of all, to the first part of your question, you know, we were pleased to see the core operating income growth aligned with our long-term guidance despite the weather-related softness and despite the lower demand for COVID-19 vaccines. We were within that long-term guide rate before those headwinds. If you add back those headwinds, it would, you know, move us up within the long-term guidance range. With regard to your question about gross margin and operating expenses, we had a high operating expense growth in the quarter, and it’s important to look at our business excluding MSOs. The shape of the MSO income statement is very different than the shape of the core distribution income statement.

If you back out the MSO business, our operating expense growth rate in the quarter on a constant currency basis was about 5%. It is important to think about the business that way also, and I did mention that in my prepared remarks. I’ll also say that the MSOs really bring up our gross margin, and they bring up our operating margin also. You saw a nice increase in operating margin during the quarter, and the biggest reason for that was the MSO business. I think it’s important as you’re looking at our operating leverage gross margin to operating expenses to think about the business without the MSOs. Thank you for the question.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.3: Your next question comes from the line of Erin Wright at Morgan Stanley. Your line is open. Please go ahead.

Erin Wright, Analyst, Morgan Stanley: Great. Thanks. Jim, I wanna echo, it’s been great working with you. Yes, also going back to the MWI days, but appreciate all the support and insights over the years. On capital deployment, you mentioned you’ll be back in the market potentially buying back shares. You know, do you still see the longer term opportunities across the MSO assets that are out there? I know you did the more recent EyeSouth deal, but how do you think about that in the context of also the timing and magnitude of share repurchases? Thanks.

Jim Cleary, Executive Vice President and Chief Financial Officer, Cencora Inc.: We’ll continue to have balanced capital deployment, which will, as it always had, include investments in the business and CapEx, which always have very good returns for us. It’ll include strategic M&A, it’ll include opportunistic share repurchases, and it’ll include growing our dividend and having a reasonable growing dividend over time, which we’ve been growing within our long-term guidance range for EPS growth. We really are getting back into opportunistic share repurchases. We had paused for a while because of the acquisitions, but we’ve been very successful in paying down some of the term loans. We paid down $500 million so far this fiscal year, and our plan is to pay down $1.3 billion of term loans during the fiscal year.

We’ve had good success there, and we anticipate that we’ll hit our guidance of $3 billion in free cash flow. That gives us the opportunity to do these important opportunistic share repurchases, and we’re planning on doing $1 billion between now and the end of the calendar year. With regard to the MSO business, we’re very pleased to have announced the EyeSouth acquisition, and we see very good bolt-on opportunities for our MSO businesses over time and feel that our strong platforms will be very attractive to physicians. Thank you very much for the question.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.3: Your next question comes from the line of George Hill at Deutsche Bank. Please go ahead.

George Hill, Analyst, Deutsche Bank: Good morning, Bob and Jim, thanks for taking the question. Jim, I will echo everybody’s well wishes. You’ve been great to work with. Mine’s pretty simple, Jim. Just if we think about pro forma for the acquisition of EyeSouth, is there any chance you would give us what portion of the AOI in the U.S. segment now comes from physician administered, or I’ll call them Part B businesses, versus the Part D businesses? Just because if we look back at the last year, I mean, I know we’ve talked about the loss of the grocery customer. We know there’s been some smaller losses. We talked about what’s going on with the big mail customer. There’s been lots of acquisitions. Just trying to get a good sense of the apportionment of the business from an earnings perspective at this point. Thank you.

Jim Cleary, Executive Vice President and Chief Financial Officer, Cencora Inc.: I think what the question asked is, kind of the earnings from Part B versus the earnings from Part D. You know, that’s not the way that we present the financials now, but it’s something that we’re always evaluating, you know, what is the best way to talk about our business and present our business over time so that we can give the best visibility. Thank you very much for the question.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.: Yeah, George, I just to be clear, the current FY 2026 guidance does not include any contribution from EyeSouth, as we stated in the press release announcing that deal. we’ve, you know, we’ve given some of the pieces to disclose what the relative size of the different MSOs would be. Obviously, we’ve lapped the RCA, 1-year annualization, and we’re beginning on the OneOncology side, which will continue to ramp in the balance of the year.

Jim Cleary, Executive Vice President and Chief Financial Officer, Cencora Inc.: Thank you, Bennett.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.3: We’ve reached the end of the Q&A session. I will now turn the call back to Bob Mauch for closing remarks.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.4: Thank you, everyone, for your thoughtful questions and continued interest in Cencora. As we’ve emphasized today, we have conviction on our fiscal 2026 guidance, reflecting the strength and resilience of our pharmaceutical-centric strategy. Powered by a purpose, we’re executing on our growth priorities and performance drivers, positioning our business to deliver sustainable long-term value creation. Thanks, everyone.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Enterprise Productivity, Cencora Inc.3: This concludes today’s call. Thank you for attending. You may now disconnect.