What Cencora (COR) Said on Its Q4 Earnings Call

Key Points

• Fourth-quarter performance strengthened: Revenue rose 6% to $88.4 billion and adjusted diluted EPS increased 21% to $4.66, with specialty drug sales and OneOncology contributing to growth.
• Fiscal 2027 guidance calls for adjusted EPS of $19.40–$19.75, up 8% to 10%, and revenue growth of 3% to 5%. Cencora expects about $3.5 billion in adjusted free cash flow and raised its quarterly dividend 10%.
• Cencora is reorganizing to spotlight specialty operations, combining specialty distribution and provider services into a dedicated segment. It expects that segment’s operating income to grow 18% to 21% in fiscal 2027, partly reflecting additional months of OneOncology ownership.

Cencora NYSE: COR reported higher fiscal fourth-quarter revenue and adjusted earnings as specialty drug sales and its acquisition of OneOncology contributed to growth. The company also introduced a new reporting structure that separates its specialty operations from its broader pharmaceutical distribution business.

For fiscal 2027, Cencora forecast adjusted diluted earnings of $19.40 to $19.75 per share, an increase of 8% to 10%. The outlook includes an expected $0.35 per-share impact from the assumed midyear merger of its MWI Animal Health business with Covetrus.

President and CEO Bob Mauch said the company was entering the new fiscal year with greater operational and strategic focus after investing in specialty capabilities and pursuing divestitures of businesses outside its pharmaceutical-centered strategy.

Fourth-Quarter and Full-Year Results

Fiscal fourth-quarter revenue rose 6% to $88.4 billion, while adjusted operating income increased 22% to $1.2 billion. Adjusted diluted earnings per share climbed 21% to $4.66.

Adjusted gross margin expanded 57 basis points to 4.04%, largely because of the OneOncology acquisition completed in February, Executive Vice President and CFO Eva Boratto said. Adjusted operating expenses also rose 23%, largely reflecting the acquisition. Excluding OneOncology and Retina Consultants of America, expense growth was less than 3%.

Under the company’s prior reporting structure, fourth-quarter U.S. Healthcare Solutions revenue rose 5% to $78.3 billion. Boratto said specialty sales to health systems and physician practices and growth in GLP-1 drugs supported the increase. GLP-1 sales rose $2.8 billion year over year, while manufacturer list-price reductions created an offsetting $2.8 billion revenue headwind.

For the full fiscal year, revenue increased 5% to $337 billion, and adjusted operating income rose 14% to $4.8 billion. Adjusted diluted earnings per share increased 12% to $17.97. Cencora generated $3.8 billion in adjusted free cash flow, exceeding its guidance.

New Segments Highlight Specialty Business

Cencora’s new Specialty Pharmaceutical and Provider Services segment combines specialty distribution, practice management, clinical-trial logistics, commercialization and other services. Its Pharmaceutical Distribution and Services segment includes its broader distribution operations serving pharmacies, health systems and other customers.

Mauch said the specialty assets had previously been spread across different parts of the company under different leaders. Bringing them together under one leader is intended to improve execution and customer service while giving shareholders more visibility, he said.

The company expects specialty distribution revenue across the two segments to reach approximately $100 billion in fiscal 2027. Management also said its management services organizations, or MSOs, represented about 10% of enterprise operating income in fiscal 2026.

Cencora completed its OneOncology acquisition in February and has agreed to acquire a majority interest in American Oncology Network. It also announced an acquisition of EyeSouth’s retina business. Mauch said the company remains focused on oncology and retina for its MSO investments and does not currently see other therapeutic areas as fitting that pharmaceutical-centered approach.

Asked about a competitor’s transaction in the infusion market, Mauch said Cencora supports infusion providers as customers but does not need to own that capability.

Fiscal 2027 Outlook and Portfolio Changes

Cencora expects fiscal 2027 revenue growth of 3% to 5% and adjusted operating income growth of 4% to 6%. Excluding businesses in its “Other” category, the company expects adjusted operating income growth of 8.5% to 11%.

Boratto said the outlook assumes the MWI merger with Covetrus closes around the middle of the fiscal year. Cencora also reached an agreement to sell its equity stake in Profarma, with closing expected in the fiscal first quarter. The guidance excludes the pending EyeSouth retina and American Oncology Network acquisitions until they close.

For the new Pharmaceutical Distribution and Services segment, Cencora expects revenue growth of 4% to 6% and operating income growth of 2% to 4%. Boratto said the operating income outlook includes the continuing impact of a customer volume shift and an approximately $20 million currency headwind in European distribution.

For Specialty Pharmaceutical and Provider Services, the company forecasts revenue growth of 9% to 14% and operating income growth of 18% to 21%. Boratto said the latter figure benefits from the additional months of OneOncology ownership compared with fiscal 2026; excluding that effect, underlying growth would be in line with the segment’s mid-teens long-term target.

Cencora expects approximately $3.5 billion in adjusted free cash flow and $1 billion in capital spending in fiscal 2027. It also anticipates $1.25 billion in share repurchases and announced a 10% increase in its quarterly dividend.

About Cencora (NYSE:COR)

Cencora, formerly known as AmerisourceBergen, is a global pharmaceutical sourcing and distribution company. It provides branded, generic and specialty pharmaceuticals, over-the-counter products and related health care supplies to pharmacies, hospitals, health systems, physician practices and other health care providers.

The company also offers services to pharmaceutical and biotechnology manufacturers, including logistics, commercialization support, market access, consulting, clinical trial support and patient assistance programs.

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