Cencora(US:COR)2025-12-02 19:02Financial Data and Key Metrics Changes - The company reported a strong fiscal year 2025, with EPS and adjusted operating income both up 16% [4] - The stock price has compounded at 25% over the past several years, with a 55% increase recently [4] - Long-term operating income guidance has been raised to 6%-9% growth, with U.S. healthcare operating income growth expected at 9%-11% for 2026 [4][5] Business Line Data and Key Metrics Changes - The U.S. operating income growth is projected at 9%-11%, with a potential 10%-12% growth when excluding a 1% headwind from a competitor acquisition [5][6] - The specialty business continues to drive outsized growth, particularly in pharmaceutical utilization trends and sales of specialty products [7][8] Market Data and Key Metrics Changes - The international healthcare solutions segment saw weaker performance, with 85% of operating income coming from the U.S. and only 15% from international [50] - The 3PL market is identified as the fastest-growing part of the international distribution business, with improvements noted in the global specialty logistics business [51][53] Company Strategy and Development Direction - The company is focusing on expanding its MSO business, particularly in oncology and retina, to provide higher value services to physician practices [15] - A commitment to remain pharmaceutical-centric in all strategic moves, leveraging innovation in the pharmaceutical market and demographic trends for long-term growth [9][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term growth driven by pharmaceutical innovation and demographics, despite expecting normalization in growth rates post-fiscal 2026 [9][10] - The company is optimistic about the international business for fiscal year 2026, with a turnaround in the global specialty logistics business noted [51][53] Other Important Information - The company plans to invest approximately $900 million in capital expenditures for infrastructure and technology in the current year [62] - A balanced capital deployment strategy includes strategic acquisitions, opportunistic share repurchases, and a commitment to increasing dividends [63][64] Q&A Session Summary Question: What are the key growth drivers for the MSO business? - The MSO business is evolving through organic growth and acquisitions, with a focus on providing management services to physician practices [15][17] Question: How does the company view potential headwinds from drug pricing? - The company has historically advocated for community providers and believes that pharmaceuticals are the most efficient form of care, which should mitigate potential pricing headwinds [24][25] Question: What is the impact of biosimilars on the business? - Biosimilars are expected to benefit the company from a distribution and GPO standpoint, as they offer higher margins compared to brand-name drugs [27][28] Question: How is the relationship with Walgreens affected by its privatization? - The relationship remains strong, with contracts in place until 2029, and the company continues to work on improving operational efficiencies [42][43] Question: What actions are being taken regarding the PharmaLex business? - The company is focusing on the more attractive parts of PharmaLex, particularly in pharmacovigilance, market access, and regulatory affairs, while evaluating strategic alternatives for less competitive segments [56][57]