Cencora Raises Outlook as OneOncology Expands Margins
Fiscal third-quarter revenue rose 5.1% to $84.8 billion as specialty-drug volumes increased.
The pharmaceutical distributor Cencora (COR) posted a 17.0% increase in adjusted operating income as OneOncology helped lift profitability despite acquisition-related costs.
The quarter marked a widening gap between sales and profit growth. GAAP gross profit climbed 24.1% to $3.61 billion, expanding gross margin 66 basis points to 4.26%, primarily because of OneOncology and a larger LIFO credit. A growing mix of lower-margin GLP-1 drugs tempered the increase.
Revenue rose 5.1% from a year earlier to $84.8 billion. GAAP diluted earnings increased 11.9% to $3.94 a share from $3.52, while adjusted earnings rose 12.0% to $4.48 a share. GAAP operating income increased 29.1% to $1.12 billion, lifting operating margin 24 basis points to 1.32%.
U.S. Healthcare Solutions revenue increased 4.9% to $74.86 billion, driven mainly by higher specialty and GLP-1 unit volumes. Lower prices on certain branded drugs, the loss of an oncology customer and reduced sales to a large mail-order customer offset part of that growth. Segment operating income rose 15.9% to $966.2 million as OneOncology and higher pharmaceutical sales boosted gross profit.
International Healthcare Solutions revenue grew 5.9% to $7.68 billion and operating income increased 20.8% to $165.9 million, led by European distribution and global specialty logistics. The company's other businesses recorded 6.9% revenue growth and a 24.8% increase in operating income as gains at Profarma and MWI Animal Health outweighed lower consulting-services sales following an April divestiture.
Operating expenses rose 21.9% to $2.49 billion, largely reflecting costs added through the February OneOncology acquisition. A $102.0 million reduction in opioid liability following the dismissal of litigation partly offset that increase, contributing to a net litigation and opioid-related credit of $88.6 million. Interest expense climbed 72.0% to $140.7 million after Cencora used senior notes and variable-rate term loans to help finance the acquisition.
Cencora raised its fiscal 2026 adjusted earnings forecast by five cents at both ends. The company now expects $17.75 to $17.95 a share, compared with its previous range of $17.70 to $17.90.
The company repurchased $1 billion of shares during the quarter, completing the amount it had previously expected to buy through the end of calendar 2026. Diluted shares declined 0.7% to 193.9 million.