Core Insights - Cencora is a global pharmaceutical services healthcare company that ships over 1 billion medications annually through its MSO investments [2] - The company reported a 9% year-over-year revenue increase and a 16% increase in both adjusted operating income and adjusted diluted EPS, while generating $3 billion in free cash flow [2] Strategic Focus - Cencora emphasizes its purpose-driven approach, aiming to create healthier futures, which is a key indicator of its operational outcomes [3] - The company is strategically focused on four drivers, including digital transformation, optimizing business processes, and leveraging advanced analytics and AI to enhance business operations [3]

Cencora (NYSE:COR) FY Conference Summary Company Overview - Cencora is a global pharmaceutical services healthcare company that ships over a billion medications annually and employs 51,000 team members [2][3] - The company reported a 9% year-over-year revenue increase and a 16% increase in both adjusted operating income and adjusted diluted EPS, generating $3 billion in free cash flow [2] Core Strategic Drivers - **Digital Transformation**: Focus on optimizing business processes through advanced analytics and AI [3] - **Talent Development**: Commitment to career growth for employees [3] - **Productivity Improvement**: Continuous focus on enhancing operational efficiency [4] - **Growth-Oriented Investments**: Prioritization of investments that align with future strategies [4] Recent Developments - Cencora completed the acquisition of Retina Consultants of America and plans to accelerate the acquisition of OneOncology, which is expected to enhance the company's MSO platform [5][8] - The company announced a $1 billion investment in supply chain infrastructure through 2030, focusing on expanding capacity and cold chain logistics [6] Financial Guidance - Long-term operating income growth guidance was raised from 5%-8% to 6%-9%, and EPS guidance was increased from 8%-12% to 9%-13% [14][15] - Following the OneOncology acquisition announcement, long-term guidance was further raised to 7%-10% for operating income and 10%-14% for EPS [15] Market Position and Growth - Cencora is well-positioned in the specialty pharmaceuticals market, which is experiencing significant innovation and growth [7] - The MSO platform is expected to drive additional growth, enhancing relationships with providers and pharmaceutical manufacturers [7][23] Challenges and Opportunities - The company is monitoring potential impacts from changes in pharmaceutical pricing policies, particularly regarding WAC decreases and their effect on physician reimbursement [25][26] - Cencora has a strong strategic global sourcing department that has successfully managed gross margin dollars despite pricing pressures [27] International Segment - The international segment, which accounts for about 20% of operating income, is expected to see 5%-8% growth, with improvements anticipated in global specialty logistics and a more focused portfolio [59][60] Share Repurchase and Capital Deployment - Share repurchases have been paused due to the OneOncology acquisition, with plans to resume after prioritizing debt repayment [66] Conclusion - Cencora is focused on enhancing its pharmaceutical-centric strategy, investing in growth-oriented opportunities, and maintaining strong financial performance while navigating market challenges [10][66]

J.P. Morgan Healthcare Conference Bob Mauch, President and Chief Executive Officer JANUARY 12, 2026 Cautionary note regarding forward-looking statements Certain of the statements contained in this presentation are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Securities Exchange Act"). Words such as "aim," "anticipate," "believe," "can," "continue," "could," "estimate," "expec ...

Core Insights - Medical supplies stocks are typically not seen as high-return investments due to thin margins and regulatory pressures, making outperformance unlikely in a challenging macro environment [1] - However, companies like Cardinal Health, McKesson, and Cencora have achieved significant stock returns over the past year, outperforming the broader market with gains of 66.4%, 39.5%, and 42.2% respectively [2] Company Performance Cardinal Health - Cardinal Health has shown a turnaround with double-digit operating earnings growth across all segments in Q1 of fiscal 2026, indicating broad improvement [4][8] - Revenues increased by 22% year over year to $64 billion, driven by strong pharmaceutical demand and GLP-1 volumes, with the Pharmaceutical and Specialty Solutions segment profit rising by 26% [5] - The company is expanding its specialty business, including the acquisition of Solaris Health, aimed at enhancing provider relationships [6][8] - Cardinal Health generated $1.3 billion in adjusted free cash flow and returned $500 million to shareholders through dividends and buybacks [9] McKesson - McKesson reported 10% revenue growth to $103 billion and 39% adjusted EPS growth in Q2 of fiscal 2026, showcasing its operational excellence [11] - The Oncology and Multispecialty segment saw revenues jump by 32% and operating profit surge by 71%, driven by strong specialty volumes and acquisitions [12] - The company generated $2.2 billion in free cash flow and returned $907 million to shareholders, primarily through share repurchases [13] Cencora - Cencora's performance reflects the strength of specialty-focused distribution, with 6% revenue growth and 15% adjusted EPS growth in Q4 of fiscal 2025 [16] - Operating income rose by 20% year over year, supported by strong specialty demand and the acquisition of Retina Consultants of America [17] - The company plans to invest approximately $1 billion through 2030 to enhance distribution capacity and cold-chain infrastructure [18]

Core Insights - Cencora, Inc. (COR) is positioned for growth due to a strong U.S. Healthcare Solutions business and new product launches, although competition remains a concern [1][8] - The company's shares have increased by 13.4% over the past six months, outperforming the industry gain of 12.1% and the S&P 500 Index increase of 13.6% [1] Company Overview - Cencora is one of the largest pharmaceutical service companies globally, focusing on drug distribution and related services to lower healthcare costs and enhance patient outcomes, with a market capitalization of $67.15 billion [2] Financial Performance - The bottom line for Cencora is expected to improve by 11.9% over the next five years, with earnings surpassing estimates in the last four quarters, averaging a surprise of 5.51% [3] Positive Growth Drivers - Cencora benefits from sustained pharmaceutical utilization trends, particularly in specialty drugs for oncology and retina, supported by favorable demographics and ongoing pharmaceutical innovations [4] - As a leading distributor aligned with top manufacturers, Cencora is well-positioned for long-term organic operating income growth of 6-9% [5] - The expansion into management services organizations (MSOs) enhances growth and strategic positioning, allowing for higher-value services and reinforcing Cencora's pharmaceutical-centric strategy [6] Market Dynamics - The rising adoption of biosimilars in the Part B market is a significant profitability driver, generating higher margins than branded products, which supports operating income expansion [10] - Strong physician adoption in oncology and retina reinforces the benefits of biosimilars, positioning Cencora to capitalize on ongoing innovation and product transitions [11] Challenges - The international segment is experiencing declines due to reduced clinical trial activity and a slower recovery in biotech services, with operating income down 2% in the fourth quarter of fiscal 2025 [12] - Although GLP-1 sales remain strong, growth has moderated to 19%, and the loss of a low-margin grocery-channel customer is impacting revenue growth, leading to a revised U.S. revenue outlook [13] Estimate Trends - There has been a positive estimate revision trend for fiscal 2026, with the Zacks Consensus Estimate for earnings increasing from $17.59 to $17.62 per share, and first-quarter fiscal 2026 revenues expected to improve by 5.4% year-over-year [14]

Core Viewpoint - Cencora, Inc. plans to release its First Quarter Fiscal 2026 results on February 4, 2026, before the market opens [1] Group 1 - The conference call to discuss the results will take place at 8:30 a.m. ET on the same day [1] - Key executives participating in the conference call include Robert P. Mauch, President & CEO, and James F. Cleary, Executive Vice President [1]

Company Overview - Cencora Inc (NYSE:COR) is a significant player in the medical sector, focusing on specialty drugs and healthcare solutions [1][5] - The company's market capitalization is approximately $64.37 billion, indicating its substantial presence in the industry [4][5] Stock Performance - On January 5, 2026, Bank of America Securities adjusted its rating for Cencora to Neutral, with the stock priced at $332.12, reflecting a decrease of 1.99% or $6.75 for the day [1][5] - The stock has experienced a 52-week high of $377.54 and a low of $227.95, showcasing significant volatility [2] Market Trends - Wall Street analysts maintain a bullish outlook for Cencora, driven by the adoption of artificial intelligence and increased demand for specialty drugs [2][5] - The medical sector is transitioning from a defensive position to a growth engine, with artificial intelligence enhancing efficiency and precision in diagnostics and drug discovery [3] Trading Activity - Cencora's daily trading volume is 227,149 shares, with a trading range of $329.10 to $337.31, reflecting the dynamic nature of the market [4]

Market Performance - Major U.S. indexes ended the Christmas-shortened week higher, with the S&P 500 and Dow reaching new record highs, gaining 0.75% and 0.72% respectively, while the Nasdaq Composite increased by 0.70% [1] - The U.S. GDP growth rate for Q3 2025 was 4.3%, exceeding expectations and marking the fastest growth since Q3 2023 [2] - Despite a decline in consumer confidence, investor optimism is driven by strong corporate earnings outlook and AI enthusiasm [2] Stock Performance - Castle Biosciences, Inc. (CSTL) shares increased by 77.9% since being upgraded to a Zacks Rank 1 (Strong Buy) on October 20, significantly outperforming the S&P 500's 3.8% increase [3][6] - F.N.B. Corporation (FNB) shares rose by 13.4% after its upgrade to Zacks Rank 2 (Buy) on October 21, compared to the S&P 500's 2.8% increase [4] - Hamilton Insurance Group, Ltd. (HG) and Kinross Gold Corporation (KGC) saw gains of 19.8% and 7.7% respectively since their upgrade to Outperform on October 17 [7] Portfolio Performance - A hypothetical portfolio of Zacks Rank 1 stocks returned +14.3% in 2025, slightly underperforming the S&P 500's +14.9% [11] - The Zacks Model Portfolio has outperformed the S&P 500 index by over 12 percentage points since 1988, with an annualized average return of +23.9% compared to +11.5% for the S&P 500 [13] - The Zacks Earnings Certain Admiral Portfolio (ECAP) returned -1.30% in Q3 2025, underperforming the S&P 500's +8.1% gain [15] Dividend Portfolio Performance - Johnson & Johnson (JNJ) returned 14.3% over the past 12 weeks, while 3M Company (MMM) increased by 5.2% during the same period [18] - The Zacks Earnings Certain Dividend Portfolio (ECDP) returned -0.01% in Q3 2025, compared to the S&P 500's +8.1% gain [19]

Industry Overview - The Medical sector is undergoing a significant transformation as it approaches 2026, shifting from a defensive haven to a growth engine driven by innovation and demographic demand [1] - Key trends include the integration of artificial intelligence into clinical workflows, enhancing efficiency and precision in diagnostics and drug discovery [2] - The industry faces cost inflation and regulatory changes, pushing providers towards value-based care and operational innovation, while aging populations and chronic diseases sustain long-term demand [3] Stock Recommendations - Analysts are bullish on three medical stocks: Cencora, Inc. (COR), Addus HomeCare Corporation (ADUS), and Select Medical Holdings Corporation (SEM), due to their operational strength and long-term growth potential [4][5] - All three stocks have a Zacks Rank 2 (Buy), a VGM Score of A, and a market capitalization exceeding $1 billion, with over 70% of brokers rating them as a strong buy or buy [6] Cencora, Inc. (COR) - Cencora is benefiting from higher unit volume and improved sales of GLP-1 drugs and specialty products, with strong performance in Canada and strategic investments in European distribution [10] - The Zacks Consensus Estimate for COR's fiscal 2026 earnings is $17.62 per share, indicating a 10.1% year-over-year increase, with six upward estimate revisions in the past 60 days [12] Addus HomeCare Corporation (ADUS) - Addus provides personal care services to elderly and chronically ill individuals, with stable hiring trends and growing market size due to the cost benefits of home-based healthcare [13] - The Zacks Consensus Estimate for ADUS's 2025 earnings is $6.19 per share, signaling a 17.7% year-over-year growth, followed by a 10.7% increase in 2026 to $6.85 [15] Select Medical Holdings Corporation (SEM) - Select Medical operates critical illness recovery facilities and rehabilitation clinics, with strategic expansions and rising patient admissions driving performance [16] - The Zacks Consensus Estimate for SEM's 2025 earnings is $1.23 per share, indicating a 30.9% year-over-year jump, followed by a 9.9% increase in 2026 to $1.36 [18]

Summary of Healthcare Services Conference Call Industry Overview - The conference call focused on the **Healthcare Services** industry, particularly the **Managed Care** sector and its outlook for 2026, highlighting potential margin improvements and policy clarity as positive factors for growth [4][10][11]. Key Points and Arguments Managed Care - **Earnings Recovery**: Most Managed Care Organizations (MCOs) are expected to reach trough earnings in 2026, with potential upward revisions thereafter. Medicare Advantage (MA) is anticipated to drive margin upside, while skepticism remains around Medicaid and ACA Exchanges until MCOs demonstrate margin improvements [5][12]. - **Enrollment Trends**: MCOs are targeting enrollment declines to improve margins, with companies like CVS, ELV, and UNH focusing on this strategy. Conversely, HUM is positioned for membership growth [12][52]. - **Regulatory Environment**: The 2026 midterms are expected to create gridlock, reducing the likelihood of major policy changes outside of CMS rulemaking, which could stabilize the operating environment for MCOs [5][12]. Pharmaceutical Distributors - **Strong Fundamentals**: The current strength in results for pharmaceutical distributors is attributed to stable generic pricing, MSO growth, and a robust specialty pipeline. Companies like McKesson (MCK) and Cencora (COR) are favored due to their strong specialty businesses [9][16]. - **M&A Activity**: Distributors led M&A activity in 2025, with expectations for continued integration and organic investment in MSO capabilities in 2026 [25]. Labs and Healthcare Facilities - **Demand Trends**: Labs are expected to see steady demand trends with a healthy backdrop in diagnostics. Regulatory uncertainties may impact pricing and mix development, but overall operating conditions are stable [9][12]. - **Facility Performance**: Healthcare facilities are positioned to benefit from favorable utilization trends, although policy uncertainty remains a concern for future earnings growth [12][16]. Additional Insights - **Investment Picks**: Top investment picks include UnitedHealth (UNH) and CVS Health (CVS) for their cleaner stories, while Cigna (CI) is seen as attractive but with more complexities [5][14][17]. - **Margin Pressures**: Medicaid remains a challenge, with companies like ELV and UNH guiding for margin pressure in 2026. Investment income is also expected to be a headwind for managed care [5][12]. - **Market Dynamics**: The ACA Exchanges are viewed as a swing factor for MCOs, with a wide range of outcomes expected due to potential shifts in market morbidity [12][43]. Conclusion The healthcare services industry is navigating a complex landscape with potential for margin recovery and growth driven by Medicare Advantage, while facing challenges in Medicaid and ACA Exchanges. The focus on regulatory clarity and strategic M&A activity will be crucial for companies as they prepare for 2026 and beyond.