Cencora(COR) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Cencora reported a revenue growth of 13% in Q1 2025, reaching $81.5 billion, primarily driven by strong performance in the U.S. healthcare solutions segment [22][8] - Adjusted diluted EPS increased by 14$3.73, prompting the company to raise its full-year adjusted diluted EPS guidance to a range of $15.25 to$15.55 [21][32] - Consolidated gross profit was $2.5 billion, up 6$74 billion, up 14%, with GLP-1 product sales increasing by 53% year-over-year [26][27] - International healthcare solutions segment revenue was $7.5 billion, up approximately 6$182 million, down 3% on an as-reported basis, but up 3% on a constant currency basis [28] Company Strategy and Development Direction - Cencora is focused on advancing its leadership in specialty healthcare, enhancing efficiency through technology, and maintaining a customer-centric approach [10][15] - The acquisition of Retina Consultants of America (RCA) is part of the strategy to expand leadership in specialty healthcare and support community providers [12][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to capitalize on positive industry trends and innovation, with a focus on driving value for stakeholders [19][39] - The company anticipates a challenging second quarter due to COVID-19 vaccine headwinds and expects to see improved performance in the international segment later in fiscal 2025 [38][62] Other Important Information - The company used $2.7 billion in cash during the quarter, resulting in negative adjusted free cash flow of$2.8 billion, but expects full-year adjusted free cash flow to be in the range of $2 billion to$3 billion [25][30] - Cencora's capital allocation strategy prioritizes deleveraging following the RCA acquisition [25] Q&A Session Summary Question: Strategic positioning in specialty business - Management emphasized a pharmaceutical-centered strategy and the importance of a strong customer portfolio to drive growth in specialty healthcare [44][46] Question: Revenue guidance and potential deceleration - Management noted that the revenue growth guidance reflects assumptions about GLP-1 growth and the impact of Humira's conversion to biosimilars [52][54] Question: World Courier business performance - Management acknowledged a challenging quarter for the World Courier business due to subdued clinical trial activity but expects improvement later in fiscal 2025 [61][62] Question: Update on Walgreens contract discussions - Management confirmed ongoing engagement with Walgreens to create value and that guidance includes assumptions regarding the contract [71][73] Question: MSO business challenges and physician enablement - Management highlighted the importance of physician leadership and value creation in the MSO model [77][79] Question: Competitive environment in ophthalmology MSO space - Management expressed confidence in RCA's leadership position and the ability to attract physicians and practices [83][84] Question: Guidance revision for U.S. business on an organic basis - Management indicated that the U.S. segment's performance is above initial guidance, driven by strong utilization trends [88] Question: COVID headwind impact - Management confirmed that the COVID-related headwind was as expected, with no significant contribution from exclusive COVID therapies in the current year [120]