Cencora is set to invest $1bn by 2030 for expanding its US pharmaceutical distribution network, adding resilience and capacity to support customer needs across the country. This includes opening a second national distribution centre in Harrison, Ohio and expanding facilities in California and Alabama. The centre will span 530,000ft² and become operational by spring 2027. It aims to boost both throughput and storage capacity, incorporating advanced automation technologies, including autonomous mobile rob ...

Core Insights - Cencora, Inc. reported strong fourth-quarter fiscal 2025 results, with adjusted EPS of $3.84, exceeding estimates by 2.7% and showing a 15% year-over-year improvement [2][9] - The company achieved total revenues of $83.73 billion for the quarter, a 5.9% increase year-over-year, and also surpassed consensus estimates [4][9] - For the full fiscal year 2025, adjusted EPS was $16.00, reflecting a 16.3% increase from the previous year, while total revenues reached $321.33 billion, up 9.3% year-over-year [3][4] Revenue Details - Total revenues for the fourth quarter were $83.73 billion, up 5.9% year-over-year, beating the Zacks Consensus Estimate by 0.7% [4][9] - For fiscal 2025, total revenues were reported at $321.33 billion, marking a 9.3% increase year-over-year [4] Segmental Analysis - U.S. Healthcare Solutions segment revenues reached $75.8 billion, up 5.7% year-over-year, driven by increased sales of GLP-1 drugs and specialty products [5] - International Healthcare Solutions segment revenues amounted to $7.9 billion, reflecting a 7.6% year-over-year increase, with a 5.7% rise at constant currency [6] Margin Analysis - Adjusted gross profit was $2.9 billion, an 18.4% increase year-over-year, with an adjusted gross margin of 3.55%, up 36 basis points [8] - Adjusted operating income was $1.1 billion, up 20.6% year-over-year, with an adjusted operating margin of 3.47%, expanding 37 basis points from the previous year [8] Financial Update - The company ended the fiscal fourth quarter with cash and cash equivalents of $4.36 billion, significantly up from $2.23 billion in the previous quarter [10] - Cumulative net cash used in operating activities was $4.98 billion, compared to $618.1 million a year ago [10] Dividend Update - Cencora's board declared a quarterly dividend of 60 cents per share, payable on December 1, 2025, to shareholders of record by November 14, 2025 [11] FY26 Guidance Issued - The company provided guidance for fiscal 2026, estimating adjusted EPS in the range of $17.45-$17.75, with total revenues projected to grow by 5-7% [12][13] - U.S. Healthcare Solutions segment sales are expected to grow by 5-7%, while International Healthcare Solutions revenues are projected to rise by 6-8% [12][13] Overall Performance - Cencora's performance in the fourth quarter was strong, with earnings and revenues exceeding estimates, and the EPS guidance for fiscal 2026 was also above expectations [14] - The company has seen a 53.3% increase in shares year-to-date, outperforming the industry growth of 2.8% [14]

Financial Data and Key Metrics Changes - Cencora achieved adjusted operating income and adjusted diluted EPS growth of 16% in fiscal 2025 [3][4] - Adjusted diluted EPS for Q4 was $3.84, a 15% increase, with consolidated revenue of $83.7 billion, up 6% [13][19] - Consolidated gross profit was $2.9 billion, up 18%, with a gross profit margin of 3.47%, an increase of 37 basis points [13][14] - Consolidated operating income was $1.0 billion, up 20% compared to the prior year quarter [14][20] - Fiscal 2025 consolidated revenue was $321.3 billion, up 9% [19] Business Line Data and Key Metrics Changes - U.S. healthcare solutions segment revenue was $75.8 billion, up approximately 6% year-over-year, with operating income increasing by 25% to $872 million [15][16] - International healthcare solutions segment revenue was $7.9 billion, an increase of 8% on an as-reported basis, but operating income decreased by 2% [16][17] - GLP-1 products contributed $876 million, or 10% year-over-year growth, to the U.S. healthcare solutions segment [15][16] Market Data and Key Metrics Changes - The international healthcare solutions segment saw a rebound in global specialty logistics business, with shipment volumes returning to growth [17][74] - The U.S. healthcare solutions segment is expected to grow at a rate of 5%-7% in fiscal 2026 [23] Company Strategy and Development Direction - Cencora's strategy focuses on three growth priorities: leading with market leaders, enhancing patient access to pharmaceuticals, and strengthening its position in specialty [4][28] - The company is raising long-term guidance for adjusted operating income growth to 6%-9% and adjusted EPS growth to 9%-13% [4][28] - Significant investments totaling $1 billion through 2030 are planned to enhance distribution network and specialty distribution capacity [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued market growth and the strength of the business [3][4] - The company is focused on driving growth through disciplined investments and enhancing customer experience [5][6] - Management acknowledged challenges in the global consulting services businesses but remains optimistic about core business growth [17][18] Other Important Information - Cencora generated $3 billion of adjusted free cash flow and ended the year with a cash balance of $4.4 billion [20] - The company announced a 9% increase in its quarterly dividend, marking the 21st consecutive annual dividend increase [21] Q&A Session Summary Question: Strategic view on business and potential divestitures - Management emphasized a focused strategic execution and disciplined capital allocation to align with growth areas [32][35] Question: Next steps for the MSO platform - Management highlighted the potential for leveraging clinical trial expertise and back-office activities across MSO platforms [40][42] Question: Durability of U.S. healthcare segment growth - Management noted exceptional results in the U.S. segment and confidence in long-term guidance despite recent headwinds [46][49] Question: Profitability and strategic alternatives for businesses in the "other" segment - Management confirmed that all businesses in the "other" segment are profitable, with some exploring strategic alternatives for long-term success [78][81] Question: Margin expansion sustainability - Management indicated that the higher margin specialty segment is expected to continue outpacing revenue growth, contributing positively to margins [85][87] Question: Changes in macro assumptions and guidance - Management clarified that the guidance increase is driven by improved positioning and asset mix rather than changes in macro assumptions [90]

Financial Data and Key Metrics Changes - In fiscal 2025, the company achieved adjusted operating income and adjusted diluted EPS growth of 16% [3][4] - Adjusted diluted EPS for Q4 was $3.84, a 15% increase, with consolidated revenue of $83.7 billion, up 6% [13][19] - Consolidated gross profit was $2.9 billion, up 18%, with a gross profit margin of 3.47%, an increase of 37 basis points [13][14] - Consolidated operating income was $1.0 billion, up 20% compared to the prior year quarter [14][20] - Consolidated revenue for the full year was $321.3 billion, up 9% [19] Business Line Data and Key Metrics Changes - U.S. healthcare solutions segment revenue was $75.8 billion, up approximately 6%, with operating income increasing by 25% to $872 million [15][16] - International healthcare solutions segment revenue was $7.9 billion, an increase of 8% on an as-reported basis, with operating income decreasing by 2% [16][17] - Sales of GLP-1 products increased by $876 million, or 10% year-over-year, contributing 50 basis points to segment revenue growth [15][16] Market Data and Key Metrics Changes - The international healthcare solutions segment saw a rebound in global specialty logistics business, with shipment volumes returning to growth [17][73] - The company expects international healthcare solutions revenue growth in the range of 6%-8% for fiscal 2026 [24][73] Company Strategy and Development Direction - The company is raising long-term guidance for adjusted operating income growth to 6-9% and adjusted EPS growth to 9-13% [4][28] - Strategic priorities include leading with market leaders, enhancing patient access to pharmaceuticals, and strengthening the position in specialty [4][29] - The company is focusing on growth-oriented investments and improving customer experience through advanced data analytics and technologies [5][6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued market growth and the strength of the business [3][4] - The company is committed to advancing its leadership in the healthcare industry through significant investments [5][6] - Management highlighted the importance of enhancing productivity and efficiency in serving the pharmaceutical supply chain [6][10] Other Important Information - The company announced a $1 billion investment through 2030 to expand its distribution network [9][10] - The company generated $3 billion of adjusted free cash flow and ended the year with a cash balance of $4.4 billion [20][21] - The company approved a 9% increase to its quarterly dividend, marking the 21st consecutive annual dividend increase [21] Q&A Session Summary Question: Strategic view on the business and potential divestitures - Management emphasized a focused strategic execution and the importance of allocating resources to align with growth areas [32][35] Question: Next steps in the evolution of the MSO platform - Management discussed leveraging clinical trial expertise and back-office activities across MSO platforms to enhance care delivery [40][42] Question: Durability of growth in U.S. healthcare solutions segment - Management noted exceptional results in the U.S. segment and projected continued strong performance despite headwinds [46][49] Question: Growth rates between specialty and generics - Management indicated that specialty growth is expected to be accretive to overall operating income growth, while generic growth is moderating [66][68] Question: Confidence in international business growth - Management expressed confidence in returning to growth in the international segment, driven by strong demand for specialty logistics [72][73] Question: Potential impact of divestitures on profitability - Management acknowledged that while some businesses in the "other" segment are profitable, divestitures could lead to a more focused and higher growth portfolio [78][80]

Financial Data and Key Metrics Changes - Cencora achieved adjusted operating income and adjusted diluted EPS growth of 16% in fiscal 2025 [3][11] - Adjusted diluted EPS for Q4 was $3.84, a 15% increase, with consolidated revenue of $83.7 billion, up 6% [12][19] - Consolidated gross profit was $2.9 billion, up 18%, with a gross profit margin of 3.47%, an increase of 37 basis points [12][13] - Consolidated operating income was $1.0 billion, up 20% compared to the prior year quarter [13][19] - Consolidated revenue for fiscal 2025 was $321.3 billion, up 9% [19] Business Line Data and Key Metrics Changes - U.S. healthcare solutions segment revenue was $75.8 billion, up approximately 6% year-over-year, with operating income increasing by 25% to $872 million [15][16] - International healthcare solutions segment revenue was $7.9 billion, an increase of 8% on an as-reported basis, but operating income decreased by 2% [16][17] - GLP-1 products contributed $876 million, or 10% year-over-year growth, to the U.S. healthcare solutions segment [15][16] Market Data and Key Metrics Changes - The international healthcare solutions segment saw a rebound in global specialty logistics business, with shipment volumes returning to growth [17][56] - The U.S. healthcare solutions segment continues to benefit from strong utilization trends, particularly in specialty [15][52] Company Strategy and Development Direction - Cencora's strategy focuses on three growth priorities: leading with market leaders, enhancing patient access to pharmaceuticals, and strengthening its position in specialty [4][29] - The company is raising long-term guidance for adjusted operating income growth to 6-9% and adjusted EPS growth to 9-13% [4][28] - Significant investments totaling $1 billion through 2030 are planned to enhance distribution network and specialty distribution capacity [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued market growth and the strength of the business, emphasizing the importance of strategic investments [3][4] - The company is focused on enhancing productivity and efficiency in serving the pharmaceutical supply chain [5][10] - Management acknowledged the impact of losing an oncology customer but remains optimistic about future growth [26][40] Other Important Information - The company announced a 9% increase in its quarterly dividend, marking the 21st consecutive annual dividend increase [20] - A strategic review led to the identification of businesses that do not align closely with future strategy, including MWI Animal Health and certain components of Pharmalex [7][21] Q&A Session Summary Question: Strategic view on business and potential divestitures - Management emphasized a focused strategic execution and the importance of investing in areas aligned with their strategy [31][32] Question: Next steps for the MSO platform - Management discussed leveraging capabilities across MSO platforms and the potential for shared resources to enhance care delivery [36][37] Question: U.S. healthcare segment performance and growth durability - Management highlighted strong performance in the U.S. segment, with adjusted operating income growth of 25%, and expressed confidence in sustaining growth despite headwinds [39][40] Question: International business growth outlook - Management indicated confidence in returning to growth in the international segment, driven by strong demand for specialty logistics and a tailored portfolio [55][56] Question: Profitability and strategic alternatives for businesses in the "other" segment - Management confirmed that all businesses in the "other" segment are currently profitable and discussed the potential for strategic alternatives to enhance long-term success [59][60]

Core Insights - Cencora reported quarterly earnings of $3.84 per share, exceeding the Zacks Consensus Estimate of $3.79 per share, and showing an increase from $3.34 per share a year ago, resulting in an earnings surprise of +1.32% [1] - The company achieved revenues of $83.73 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.69% and reflecting a year-over-year increase from $79.05 billion [2] - Cencora's stock has increased by approximately 53.3% since the beginning of the year, significantly outperforming the S&P 500's gain of 15.1% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $4.05, with projected revenues of $87.22 billion, and for the current fiscal year, the EPS estimate is $17.37 on revenues of $342.35 billion [7] - The estimate revisions trend for Cencora was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Medical Services industry, to which Cencora belongs, is currently ranked in the bottom 41% of over 250 Zacks industries, suggesting that the industry's outlook may impact stock performance [8] - Another company in the same industry, Ardent Health, is expected to report quarterly earnings of $0.42 per share, reflecting a year-over-year change of +121.1%, with revenues anticipated to be $1.55 billion, up 7.1% from the previous year [9][10]

Financial Performance - Fiscal Year 2025 - Cencora's revenue increased by 93% year-over-year to $3213 billion[22] - Adjusted diluted earnings per share grew by 163% year-over-year to $1600[21] - Adjusted operating income increased by 158% year-over-year[20] - U S Healthcare Solutions segment operating income increased by 218% year-over-year[20] - International Healthcare Solutions segment operating income declined by 91% year-over-year[20] Q4 Fiscal Year 2025 Performance - Revenue grew by 59% year-over-year[12] - Consolidated adjusted operating income increased by 202% year-over-year[12] - U S Healthcare Solutions segment operating income increased by 251% year-over-year[12] - International Healthcare Solutions segment operating income declined by 20% year-over-year[12] Fiscal Year 2026 Guidance - Revenue is projected to grow by 5% to 7%[25] - Adjusted operating income is expected to grow by 8% to 10%[10] - Adjusted diluted earnings per share are projected to be between $1745 and $1775[25]

Core Insights - Cencora plans to invest over $1 billion through 2030 to expand its U.S. distribution network, forecasting adjusted profit for next year above Wall Street expectations [1][3] Investment Plans - The company will build a second national distribution center in Harrison, Ohio, and expand sites in California and Alabama [1][2] - The Ohio hub will be 530,000 square feet and is expected to be operational by spring 2027, featuring advanced automation [2] - A new 430,000-square-foot distribution center in Fontana, California, will nearly double the size of the current site and is targeted to open by fall 2026 [3] Financial Performance - Cencora expects adjusted profit per share for 2026 to be between $17.45 and $17.75, slightly above analysts' expectations of $17.5 [3] - The company's U.S. Healthcare Solutions unit reported a 5.7% increase in sales to $75.79 billion for the quarter ended September 30, driven by strong prescription volumes of GLP-1 class drugs and specialty medicines [4] - Cencora reported fourth-quarter profit of $3.84 per share, exceeding analysts' estimates of $3.79 per share, with total sales of $83.73 billion, above the expected $83.46 billion [5]

Group 1 - The company will open two new distribution centers to meet the increasing demand for GLP-1s and other refrigerated medications [1] - A third distribution center will be expanded to further accommodate the surge in demand [1]

Financial Performance - Fourth quarter revenue was $83.7 billion, a 5.9% year-over-year increase, while fiscal year 2025 revenue reached $321.3 billion, up 9.3% year-over-year[1] - Fourth quarter GAAP diluted EPS was $(1.75), a decrease from $0.02 in the prior year, while adjusted diluted EPS increased 15.0% to $3.84[1][4] - Gross profit for the fourth quarter was $3.0 billion, an 18.5% increase year-over-year, with gross profit margin rising to 3.53%[4] - Fiscal year 2025 adjusted diluted EPS was $16.00, a 16.3% increase from the previous year[13] - Total revenue for Fiscal Year 2025 was $321.3 billion, representing a 9.3% increase from $293.96 billion in Fiscal Year 2024[32] - Gross profit for Fiscal Year 2025 was $11.48 billion, a 15.8% increase from $9.91 billion in Fiscal Year 2024[32] - Operating income for Fiscal Year 2025 was $2.63 billion, reflecting a 20.8% increase from $2.18 billion in Fiscal Year 2024[32] - Net income attributable to Cencora, Inc. for Fiscal Year 2025 was $1.55 billion, a 3.0% increase from $1.51 billion in Fiscal Year 2024[32] - Basic earnings per share for Fiscal Year 2025 increased to $8.02 from $7.60 in Fiscal Year 2024, representing a 5.5% growth[32] - Adjusted non-GAAP earnings per share for the fiscal year ended September 30, 2025, was $16.00, up from the previous year[43] - Cencora, Inc. reported total revenue of $321.33 billion for the fiscal year ended September 30, 2025, representing a 9.3% increase from $293.96 billion in 2024[52] - Operating income for Cencora, Inc. increased by 20.8% to $2.63 billion in 2025, compared to $2.18 billion in 2024[52] - U.S. Healthcare Solutions revenue grew by 9.7% to $290.98 billion in 2025, while International Healthcare Solutions revenue increased by 6.1% to $30.37 billion[52] Expenses and Impairments - Operating expenses in the fourth quarter were $2.9 billion, a 24.1% increase year-over-year, primarily due to a $723.9 million goodwill impairment charge[4] - The company reported a $723.9 million impairment of assets, including goodwill, impacting overall profitability[37] - The company incurred a $113.5 million impairment of an equity investment and a $35.5 million loss on the divestiture of non-core businesses during the fiscal year[34] - The company reported net cash used in investing activities of $4,977.3 million in 2025, significantly higher than $618.1 million in 2024, indicating increased investment activity[57] Guidance and Future Projections - The company raised its long-term guidance expectations, reflecting confidence in its growth strategy and market position[2] - Fiscal Year 2026 revenue guidance is projected to grow by 5% to 7%, with actual revenue for Fiscal 2025 at $321.3 billion[18] - Adjusted operating income for Fiscal Year 2026 is expected to increase by 8% to 10%, compared to $4.2 billion in Fiscal 2025[18] - Adjusted diluted earnings per share for Fiscal Year 2026 is forecasted to be between $17.45 and $17.75, up from $16.00 in Fiscal 2025[18] - The U.S. Healthcare Solutions Segment is anticipated to grow by 5% to 7%, with actual revenue of $285.0 billion in Fiscal 2025[18] - The International Healthcare Solutions Segment is expected to grow by 6% to 8%, with actual revenue of $28.3 billion in Fiscal 2025[18] Investments and Capital Expenditures - The company announced a $1 billion investment plan through 2030 to enhance its U.S. distribution network and increase capacity[14] - The company reported capital expenditures of $668.0 million for the fiscal year 2025, compared to $487.2 million in 2024, reflecting a 37.1% increase[57] Shareholder Returns - The quarterly dividend was increased by 9% to $0.60 per share, payable on December 1, 2025[15] Cash Flow and Debt - Net cash provided by operating activities increased to $3,875.1 million in 2025 from $3,484.7 million in 2024, reflecting a rise of 11.2%[57] - The company experienced a net debt borrowing of $3,195.7 million in 2025, contrasting with a repayment of $385.5 million in 2024[57] - Cash, cash equivalents, and restricted cash at the end of fiscal year 2025 totaled $4,394.5 million, up from $3,297.9 million in 2024, marking an increase of 33.4%[57] - Adjusted free cash flow for the fiscal year 2025 was $2,970.8 million, calculated as net cash provided by operating activities minus capital expenditures[62] Segment Performance - U.S. Healthcare Solutions revenue was $75.8 billion in the fourth quarter, a 5.7% increase, while International Healthcare Solutions revenue was $7.9 billion, up 7.6%[8][10] - Operating income for U.S. Healthcare Solutions segment increased by 21.8% to $3.57 billion in 2025[52]