Cencora Stock Down Despite Q1 Earnings Beat, Gross Margin Improves

Core Insights - Cencora, Inc. (COR) reported fiscal first-quarter 2026 adjusted earnings per share (EPS) of $4.08, beating the Zacks Consensus Estimate of $4.07 by 0.2% and showing a year-over-year improvement of 9.4% [1] - Total revenues reached $85.93 billion, reflecting a 5.5% year-over-year increase, aligning closely with the Zacks Consensus Estimate [2] Revenue Details - U.S. Healthcare Solutions segment revenues amounted to $76.2 billion, up 5% year-over-year, driven by increased unit volume and sales of GLP-1 drugs and specialty products [3] - International Healthcare Solutions segment revenues were $7.6 billion, up 7.6% year-over-year, with a reported increase of 9.6% and a constant currency increase of 6.2% [5] Segmental Analysis - U.S. Healthcare Solutions segment operating income totaled $831.3 million, up 21% year-over-year, supported by higher gross profit from increased product sales and the acquisition of RCA [4] - International Healthcare Solutions segment operating income was $142.2 million, down 13.9% on a reported basis and 17% at constant currency, attributed to lower operating income in global specialty logistics and consulting services [5] Margin Analysis - Adjusted gross profit was $3 billion, up 18.1% year-over-year, with an adjusted gross margin of 3.48%, an increase of 37 basis points [6] - Adjusted operating income reached $1.1 billion, up 11.9% year-over-year, with an adjusted operating margin of 1.24%, expanding by 8 basis points [6] Financial Update - Cencora ended the fiscal first quarter with cash and cash equivalents of $1.75 billion, down from $4.36 billion in the previous quarter [7] - Net cash used in operating activities was $2.31 billion, compared to $2.72 billion a year ago [7] Dividend Update - The board of directors declared a quarterly dividend of 60 cents per share, payable on March 2, 2026, to shareholders of record on February 13, 2026 [10] FY26 Guidance Updated - Adjusted EPS for fiscal 2026 is estimated to be in the range of $17.45-$17.75, with total revenues projected to rise by 7%-9%, an increase from the previous guidance of 5%-7% [11] - Adjusted operating income is expected to improve by 11.5%-13.5%, with U.S. Healthcare Solutions segment operating income anticipated to grow by 14-16% [12] Overall Performance - Cencora's fiscal first quarter showed mixed results, with earnings exceeding estimates while revenues were in line, and the revenue guidance for fiscal 2026 was above estimates [13] - The company experienced a 5.3% decline in shares during pre-market trading, despite a 23.2% increase in shares over the last six months compared to the industry growth of 18% [13]