Cencora, Inc. Q1 FY2026 earnings call

Management Statement and Operational Highlights

• Completed the acquisition of the majority of the remaining equity interest in OneOncology and welcomed the OneOncology team. 2026 first quarter saw adjusted operating income growth of 12% and adjusted diluted EPS growth of 9%, with guidance for fiscal 2026 adjusted operating income growth revised to 11.5% - 13.5%.
• US healthcare solutions business continued strong performance, executing pharmaceutical-centric strategy, advancing commercial solutions, and leveraging technology and analytics to enhance customer experience and operational excellence.
• Three growth priorities: strengthening specialty leadership, leading with market leaders, and enhancing patient access to pharmaceuticals. MSO expansion advances these priorities, e.g., RCA joining Cencora a year ago has performed well, and OneOncology physicians are active in advancing cancer care and patient access to complex treatments at conferences.

Segment Performance

• US healthcare solutions segment: Revenue was $76.2 billion, up 5%. Operating income increased 21% to $831 million, driven primarily by the RCA acquisition and continued specialty growth in health systems and physician practices.
• International healthcare solutions segment: Revenue was $7.6 billion, up approximately 10% on an as-reported basis and 6% on a constant currency basis. Operating income was $142 million, down 14% on an as-reported basis and down 17% on a constant currency basis, driven by lower operating income in the European distribution business due to timing of manufacturer price adjustments, partially offset by growth in the global specialty logistics business.
• Other: Revenue was $2.1 billion, up 6%. Operating income was $91 million, down 6% due to a decline in the US hub consulting services business, partially offset by growth at MWI Animal Health.

Guidance

• Adjusted diluted EPS guidance reaffirmed in the range of $17.45 to $17.75.
• Consolidated revenue growth expected to be in the range of 7% - 9%, up from previous 5% - 7%.
• Consolidated operating income growth expected to be in the range of 11.5% - 13.5%, up from previous 8% - 10%, with US healthcare solutions segment expected to grow operating income by 14% - 16% due to OneOncology acquisition and strong execution.
• Interest expense expected to be in the range of $480 million - $500 million, up from previous $315 million - $335 million due to additional borrowings for OneOncology acquisition.
• OneOncology acquisition expected to bring non-income contributions, including approximately $30 million of income on other income and loss line for fiscal 2026 and a noncontrolling loss add back related to UUG.

Risks

• International business: Weakness in European distribution business due to timing of manufacturer price adjustments in a developing market country.
• US business: Headwind from loss of an oncology customer acquired by a competitor.
• Debt: Increased debt for OneOncology acquisition leading to higher interest expense.

Q: Glen Santangelo asked about operating income growth for the balance of the year and if there would be continued deceleration due to harder comps.

A: James Cleary responded that excluding RCA and OneOncology, the US was still within the long-term guidance range of 7% - 10% due to utilization trends, strength in specialty sales, and broad-based performance.

Q: Elizabeth Anderson inquired about shorter-term opportunities in the MSO platform AOI accelerators.

A: Robert Mauch said the MSO strategy is a natural extension, with opportunities to leverage clinical trial excellence, revenue cycle management, and future products/technologies across the platform.

Q: Lisa Gill asked about opportunities with strategic partnerships with health systems and cadence of earnings.

A: Robert Mauch talked about focus on specialty growth with health systems, and James Cleary mentioned headwind from lost oncology customer and interest expense in second quarter being about double first quarter due to OneOncology financing.

Q: Michael Cherny asked about market construct and supplier side terms.

A: James Cleary said the global sourcing team was well prepared, maintaining economics and gross profit dollars due to value provided in the supply chain.

Q: Erin Wright asked about international segment timing dynamic and confidence in ramp.

A: James Cleary explained timing difference in manufacturer price adjustments in a developing market country and positive volume growth in global specialty logistics business.

Q: Steven Baxter asked about revised US EBIT guidance and contribution from OneOncology.

A: James Cleary said the increase was driven by OneOncology acquisition and continued US healthcare solutions performance, with OneOncology benefits below the operating income line including $30 million in other income and loss line.

Q: Eric Percher asked about OneOnco acquisition contribution flow and segment level.

A: James Cleary said the increase in guidance was largely driven by OneOncology, with the contribution ramping over the year.

Q: Allen Lutz asked about core business EBIT guidance excluding RCA and OneOncology.

A: James Cleary said it was due to solid utilization trends, strength in specialty sales to health systems and physician practices, and broad-based performance.

Q: Charles Rhyee asked about below the line items related to OneOncology and share repurchase.

A: James Cleary said there were below the line benefits from OneOncology's UUG subsidiaries, ownership stake increased to 92%, and share repurchases paused to focus on deleveraging.

Q: George Hill asked about revenue guidance change in US business and OneOncology EBITDA proxy.

A: James Cleary said OneOncology has limited impact on revenue guidance, and no meaningful difference between EBITDA and operating income for OneOncology except depreciation and amortization.

Q: Steven Valiquette asked about drug pricing trends in Europe.

A: Robert Mauch said no real changes in pricing from MFN, and global 3PL platform in Europe is performing well.

Q: Kevin Caliendo asked about asset divestitures and MWI's positioning.

A: Robert Mauch talked about strategic focus on growth-oriented investments, and James Cleary said MWI performs well, with potential dilution from divestitures but long-term growth benefit.

Q: Daniel Grosslight asked about RCA's performance and OneOncology below the line items.

A: James Cleary said RCA performed better than initial expectations, and there were below the line benefits from OneOncology's UUG subsidiaries related to accounting nuanced items.