Cencora Highlights Specialty Growth, MSO Expansion and Walgreens Ties at Conference

Key Points

• Specialty pharmaceuticals and MSOs are central to Cencora’s growth strategy, with particular emphasis on retina and oncology practices. Management expects the MSO business to remain profitable, expand through physician and tuck-in additions, and become a larger part of the company’s mix.
• Cencora will support clinical trials through World Courier and its physician networks but does not plan to acquire a contract research organization. The company sees its logistics and practice-management capabilities as complementary to CROs and pharmaceutical manufacturers.
• Capital-allocation priorities remain focused on core investment, smaller acquisitions, opportunistic share repurchases, dividend growth aligned with earnings, and maintaining a strong balance sheet. Management also reaffirmed its ongoing Walgreens relationship, citing a U.S. contract through 2029 and a Boots agreement through 2031.

Cencora NYSE: COR executives highlighted the company’s specialty pharmaceutical positioning, medical specialty organization strategy and capital-allocation priorities during an investor conference discussion, while reaffirming the durability of its relationship with Walgreens.

Chief Executive Officer Bob Mauch said Cencora’s growth is being supported by pharmaceutical innovation, demographic trends and the company’s long-standing investments in specialty distribution and related services. He described pharmaceuticals as a cost-effective healthcare intervention and said the company is positioned to help manufacturers bring complex products to market while supporting providers and patients.

“What is the driver of that growth is really the positioning that we have within the specialty pharmaceutical market,” Mauch said. “You have this amazing innovation that’s happening in pharma.”

Mauch said the company has spent more than two decades investing, competing and building capabilities in specialty care. Those capabilities include specialty distribution, group purchasing organization services and medical specialty organizations, or MSOs. He said Cencora aims to provide support in the background so providers can focus on patient care.

New CFO Sees Broad Services Platform

Chief Financial Officer Eva Boratto, who joined Cencora near the end of June, said her decision to return to healthcare followed a career spanning pharmaceutical manufacturer Merck, Medco and CVS Health. She said her prior experience with Medco gave her familiarity with Cencora because Medco had been among the company’s largest customers at the time.

Boratto said Cencora’s strategy and role in the pharmaceutical market were key attractions. She also said the evolving regulatory environment required learning, but did not deter her from taking the position.

“The strategy that Bob has put together is so clear,” Boratto said. “The importance of the role that we will play in the pharmaceutical space just excites me every day.”

She said the finance organization has substantial depth of talent and noted the support she received during the transition from former CFO Jim Cleary. Boratto also said she had underestimated, in a positive sense, the breadth of Cencora’s services beyond logistics and distribution.

Those services support hospital accounts, corporate partners and pharmacy partners, she said, with the goal of enabling those customers to grow.

MSOs Expected to Become More Important

Mauch said Cencora expects its MSO business to remain a profitable and growing part of the company and to contribute to an improving business mix over time. The company’s MSO strategy is focused on pharmaceutical-centric specialties, particularly retina and oncology, he said.

He emphasized that Cencora does not participate in clinical decision-making and that physicians retain clinical autonomy. Instead, the company views MSOs as an extension of its efforts to support physician practices and patient access.

The company expects to continue adding physicians and smaller practices to its existing MSO platforms, Mauch said. He cited activity at Retina Consultants of America, or RCA, and OneOncology, while noting these smaller additions are less likely to generate headlines than larger acquisitions.

Boratto said management is evaluating how its disclosures should evolve as specialty and MSO operations become a larger and faster-growing part of the business. She said greater transparency could help investors better assess the company’s growth opportunities and capital deployment.

“As we head into 2027, it is something that is really top of mind for us,” Boratto said of disclosure considerations.

Clinical Research Support Without Owning a CRO

Mauch said Cencora sees clinical trial support as complementary to its specialty-focused strategy, particularly through its World Courier business and physician networks. World Courier provides global clinical logistics for trials involving complex therapies, including cell therapies and gene therapies, he said.

Cencora also sees clinical research support within its MSO platforms as useful for patient care, patient access and physician recruitment, according to Mauch. However, he said the company does not see a need to acquire and operate a contract research organization, or CRO.

“We like the way we are playing in this space,” Mauch said. “I don’t think that if we owned a CRO, that we would be a better site management organization or that we would be a better global logistics provider.”

Instead, the company intends to support CROs and pharmaceutical manufacturers in executing trials and enrolling patients, he said.

Capital Deployment and Walgreens Relationship

On capital allocation, Boratto said Cencora’s priorities remain unchanged. They include investing in the business, pursuing tuck-in acquisitions that enhance its existing portfolio, opportunistic share repurchases, dividend growth in line with earnings growth and maintaining a strong balance sheet.

• Continue investing in core operations and MSO platforms.
• Focus M&A on smaller tuck-in opportunities rather than pursuing new major adjacencies.
• Use share repurchases opportunistically.
• Grow the dividend consistently with earnings growth.

Mauch said the company has deployed significant capital to its MSO strategy in recent years and remains focused on adding to those businesses rather than prioritizing a separate adjacency.

Addressing recent attention surrounding Walgreens distribution activity, Mauch declined to discuss specific details but said such changes can occur in large customer relationships. He said Cencora continues to value its customer portfolio, including Walgreens, and pointed to the history and integration of the companies’ relationship.

Cencora has a U.S. contract with Walgreens through 2029 and an agreement with Boots in the United Kingdom through 2031, Mauch said. “We expect to continue to support them throughout that time,” he said.

About Cencora (NYSE:COR)

Cencora, Inc NYSE: COR is a global healthcare company that provides pharmaceutical sourcing, distribution and related services. The company connects biopharmaceutical manufacturers with pharmacies, hospitals, health systems, physician practices and other healthcare providers, helping move prescription medicines and healthcare products through the supply chain.

Cencora's operations include pharmaceutical distribution, specialty pharmaceutical services, manufacturer support and patient-centered solutions.

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