Earnings call transcript: Cencora Inc. beats Q3 2025 expectations, stock dips

Cencora Inc. reported its third-quarter earnings for 2025, surpassing Wall Street expectations with an earnings per share (EPS) of $4 against a forecast of $3.84. The company’s revenue also exceeded predictions, reaching $80.7 billion compared to the anticipated $80.31 billion. Despite these positive results, Cencora’s stock fell by 4.05% in pre-market trading, closing at $283, as investors reacted to broader market conditions and potential future challenges. According to InvestingPro data, the company maintains a strong financial health score of 3.08 (rated as "GREAT"), with 15+ additional insights available to subscribers. The stock has demonstrated low volatility with a beta of 0.58 over the past five years.

Key Takeaways

• Cencora’s Q3 2025 EPS of $4 exceeded expectations by $0.16.
• Revenue reached $80.7 billion, up 9% year-over-year.
• Stock price decreased by 4.05% in pre-market trading.
• The company raised its fiscal 2025 EPS guidance.
• Continued focus on specialty healthcare and digital transformation.

Company Performance

Cencora Inc. demonstrated robust performance in the third quarter of 2025, with a 9% year-over-year increase in revenue. The company’s focus on specialty healthcare, particularly in retina and oncology, and its strategic acquisition of Retina Consultants of America, contributed to this growth. Cencora’s strong positioning in pharmaceutical distribution and specialty markets continues to drive its success.

Financial Highlights

• Revenue: $80.7 billion, up 9% year-over-year.
• Earnings per share: $4, up from previous forecasts of $3.84.
• Gross profit: $2.9 billion, a 21% increase year-over-year.
• Adjusted operating income: $1.1 billion, up 21%.

Earnings vs. Forecast

Cencora’s actual EPS of $4 surpassed the forecast of $3.84, marking a 4.17% surprise. The revenue of $80.7 billion also exceeded the expected $80.31 billion, with a surprise margin of 0.49%. This performance aligns with the company’s historical trend of surpassing market expectations, though the magnitude of the beat is consistent with previous quarters.

Market Reaction

Despite exceeding earnings and revenue forecasts, Cencora’s stock fell by 4.05% to $283 in pre-market trading. This decline contrasts with the company’s 52-week high of $309.35 and reflects broader market volatility and investor concerns over future challenges. The trading volume was moderate, indicating a cautious market sentiment. InvestingPro analysis shows the stock trading near its Fair Value, with a year-to-date return of 30.66%. Notably, the company has maintained dividend payments for 25 consecutive years, with a current dividend yield of 0.75%. For detailed valuation metrics and comprehensive analysis, investors can access the Pro Research Report, available for 1,400+ top US stocks.

Outlook & Guidance

Cencora raised its fiscal 2025 EPS guidance to a range of $15.85 to $16.00, indicating 15-16% growth. The company expects U.S. Healthcare Solutions segment revenue to grow by 9-10% and international segment revenue by 6-7%. Cencora remains confident in its long-term organic operating income growth of 5-8%. InvestingPro data reveals the company’s strong revenue CAGR of 10% over the past five years, though it faces challenges with a relatively low gross profit margin of 3.29%. Three analysts have recently revised their earnings estimates upward for the upcoming period, suggesting growing confidence in the company’s outlook.

Executive Commentary

"Our pharmaceutical-centric strategy and positioning in key markets has allowed us to capitalize on favorable industry trends," said Jim Cleary, CFO. CEO Bob Mach added, "We are focused on four drivers: digital transformation, talent and culture, productivity, and prioritizing growth-oriented investments." Mach emphasized that "innovation is driving specialty pharmaceutical market growth."

Risks and Challenges

• Potential impacts of tariffs on the pharmaceutical supply chain.
• Regulatory developments around drug pricing.
• Subdued clinical trial activity in international markets.
• Macroeconomic pressures affecting global operations.
• Maintaining profitability in GLP-1 product lines.

Q&A

During the earnings call, analysts inquired about the performance of the RCA acquisition, to which executives responded positively, highlighting its strong cultural fit. Questions also focused on potential tariff impacts and drug pricing policies, with management indicating close monitoring of these issues. The profitability of GLP-1 products was also discussed, with expectations of minimal impact on overall profitability.

Full transcript - Cencora Inc (COR) Q3 2025:

Lucy, Call Coordinator: Hello, everyone, and thank you for joining the Senkora Fiscal twenty twenty five Third Quarter Results Call. My name is Lucy, and I’ll be coordinating your call today. It is now my pleasure to hand over to your host, Bennett Murphy, Senior Vice President of Investor Relations and Treasury to begin. Please go ahead.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Treasury, Senkora: Thank you. Good morning, good afternoon and thank you all for joining us for this conference call to discuss Syncora’s fiscal twenty twenty five third quarter results. I am Bennett Murphy, Senior Vice President, Head of Investor Relations and Treasury. Joining me today are Bob Mach, President and CEO and Jim Cleary, Executive Vice President and CFO. On today’s call, we’ll be discussing non GAAP financial measures.

Reconciliations of these measures to GAAP are provided in today’s press release, which is available on our website at investor.senkora.com. We have also posted a slide presentation to accompany today’s press release on our investor website. During this conference call, we will discuss forward looking statements about our business and financial expectations on an adjusted non GAAP basis, including, but not limited to, EPS, operating income and income taxes. Forward looking statements are based on our management’s current expectations and are subject to uncertainty and change. For a discussion of key risks and assumptions, we refer you to today’s press release and our SEC filings, including our most recent 10 Q.

Tancora assumes no obligation to update any forward looking statements, and this call cannot be rebroadcast without the express permission of the company. You have the opportunity to ask questions after today’s remarks by management. We ask that you limit your questions to one per participant in order for us to get to as many participants as possible within the hour. With that, I’ll turn the call over to Bob.

Bob Mach, President and CEO, Senkora: Thank you, Bennett. Hi, everyone, and thank you for joining Senscor’s fiscal twenty twenty five third quarter earnings call. To start, I’d like to thank the over 51,000 Senscor team members for the industry leading expertise and purpose driven approach they bring to work each day. Their talent and commitment fuel our growth as we continue to strengthen our position as an end to end health care solutions provider. Through the strength of our strategy, services and unwavering standards, Senkora’s business model is driven by pharmaceutical distribution and complemented by higher margin, high growth value added services and solutions for our biopharma and provider customers.

In our third quarter, Syncora delivered strong performance with adjusted operating income growth of 21% and adjusted diluted EPS growth of 20%. In recognition of our outperformance during the quarter and year to date, both in The U. S. Segment and on a consolidated basis, we are pleased to once again raise our fiscal twenty twenty five guidance. Today, I will highlight three growth priorities.

First, enhancing patient care and adherence. Through decades of investment in physical and digital infrastructure, our core pharmaceutical distribution services ensure access to lifesaving medications. Second, strengthening our specialty leadership. As we focus on future growth, we are differentiating the services and solutions we offer to pharmaceutical manufacturers to support specialty product innovation. And third, leading with market leaders.

By prioritizing active learning and active leading, we identify opportunities to create value in collaboration with our leading customer portfolio. I’ll begin with how Suncora enhances patient access to pharmaceuticals through our critical role as a leader in pharmaceutical distribution. Our global reach, coupled with our local expertise, ensures patients have access to the medications they need when and where they need them in an efficient, reliable, and secure manner. We’ve invested in our distribution capabilities for decades, enhancing our efficiency, security, and ability to handle increasingly complex medications, allowing us to meet the needs of innovation and the increased use of pharmaceuticals. We are responsible for delivering millions of pharmaceutical orders overnight or the same day to hundreds of thousands of health care providers we serve, ensuring pharmacists, physicians, veterinarians, and other health care providers have access to the medications they require to treat patients.

Specifically, we believe our investments over the past decade have made Senkora a market leader in ensuring the supply chain is supported and equipped to comply with the enhanced tracking and visibility requirements of the Drug Supply Chain Security Act, DSCSA, which goes into effect later this year in The United States. The significant investments made over the past several years in support of the DSCSA is yet another clear proof point of the vital role Sankura and our industry play to ensure patients’ efficient, safe, and reliable access to medication. Next, Sankora is strengthening our leadership in specialty by enhancing capabilities through RCA. RCA’s physician centric approach in retina is enhancing clinical trial access, supporting specialty product innovation and improved outcomes for patients. Recently, physician and business leaders across the RCA organization came together at our offices outside Philadelphia for their business and medical leadership board.

The time our team spent together demonstrated collective value as we focused on practice management, value creation, and the future of patient care. In addition, retina specialists across RCA had a significant presence at the annual American Society of Retina Specialists meeting, which was oriented around highlighting the rapid innovation in retina treatments. RCA physicians drove discussions and clinical research where they demonstrated clinical excellence, strong clinical trial patient enrollments, and novel therapeutic approaches, including the delivery of an investigational gene therapy. We are proud to support these groundbreaking clinicians. Additionally, Senkora’s longstanding leadership and specialty distribution, including deep relationships in the retina market, equips us with specific expertise to support manufacturers’ product launches.

As a result, we look forward to serving as a specialty distributor for several recently approved retina therapies that are beginning to enter both The US and international markets. Through these partnerships, we are facilitating streamlined market entry, secure storage, and distribution. Innovation is driving specialty pharmaceutical market growth, and Sankora is deepening our leadership in specialty by remaining at the forefront through our portfolio of services and solutions end to end from manufacturers to specialty providers. And finally, our focus on active learning and active leading is bolstering relationships with our industry leading portfolio of customers, furthering our leadership with market leaders. Our teams are prioritizing focused engagement with our partners to deeply understand their business, challenges and growth opportunity.

The intentional time we spend with our customers is helping inform how we invest and expand our business to best create value. Throughout the quarter, we drove meaningful interactions with our customers and partners across the supply chain. As an example, we hosted our annual Good Neighbor Pharmacy ThoughtSpot Conference, giving our independent pharmacy customers the opportunity to learn about the latest trends shaping the industry and connect with peers. Our enterprise leadership team recently had the opportunity to visit a Good Neighbor Pharmacy member that is a great representation of a pharmacy that has positioned itself as a differentiated care provider. Community pharmacies are vital, accessible health care destinations, providing care tailored to the community they serve.

I’m continually inspired by the creativity and tenacity these community pharmacists exhibit, and I’m proud of Syncora’s partnership with these market leaders. In closing, and before I hand it over to Jim, as I near the end of my first year as CEO, I’ll remind you we are focused on four drivers that will strengthen our execution, digital transformation, talent and culture, productivity, and prioritizing growth oriented investments. We’re focused on Senkora’s digital transformation using data and advanced analytics to accelerate operational excellence and enhance both the customer and team member experience. We’re committed to developing our team members, ensuring Centcora is a place where best in class talent come to grow their careers and furthering our purpose driven culture. We’ve elevated our concentration on productivity, equipping us to identify ongoing capability and process improvements.

And finally, our commitment to leading now and in the future means we prioritize investments in strategic growth oriented areas. As evidenced by our continued investment in technology and capabilities for our customers, our acquisition of RCA, and our investment with a pathway to full ownership in One Oncology. This also means that we continually evaluate the areas which are less strategically aligned where we should deemphasize investment. To close, I wanna again thank the Senkora team members. It’s due to their expertise, efficient execution of our strategy, and dedication to our purpose that Jim and

Jim Cleary, Executive Vice President and CFO, Senkora: I are able to once again report such strong results. With that, I will turn the call over to Jim for an in-depth review of our third quarter results and our updated fiscal twenty twenty five guidance. Jim? Thanks, Bob. Good morning and good afternoon, everyone.

As a reminder, before I turn to my prepared remarks, my remarks today will focus on our adjusted non GAAP financial results. For a detailed discussion of our GAAP results, please refer to our earnings press release and presentation. Senkura delivered strong financial performance in our fiscal third quarter, and we are pleased to be raising our full year fiscal twenty twenty five guidance as we move into the fourth quarter. Our pharmaceutical centric strategy and positioning in key markets has allowed us to capitalize on favorable industry trends, and our growth oriented investments to advance our leadership in specialty are driving significant value as evidenced by our adjusted diluted EPS growth of 20%. Before reviewing our updated guidance, I’ll first turn to a review of our consolidated and segment level third quarter results beginning with revenue.

Our consolidated revenue was $80,700,000,000 up 9% driven by revenue growth in both reporting segments. In The U. S. Healthcare Solutions segment, which makes up a significant majority of our revenue and operating income, we continued to benefit from strong utilization trends and volume growth, including continued growth in GLP-one products. Excluding sales of GLP-1s, our consolidated revenue growth would have been 8%.

Turning now to gross profit. Consolidated gross profit was $2,900,000,000 up 21%, primarily due to the U. S. Healthcare Solutions segment. Consolidated gross profit margin was 3.55%, an increase of 36 basis points, primarily driven by the gross profit contribution from our acquisition of Retina Consultants of America.

Moving now to operating expenses. In the quarter, consolidated operating expenses were $1,800,000,000 up 21%, driven primarily by the RCA acquisition and to support our revenue growth. Consolidated operating income was $1,100,000,000 an increase of 21% compared to the prior year quarter due to continued strong performance in our U. S. Healthcare Solutions segment, which I will discuss in more detail in the segment level results.

Moving now to our net interest expense and effective tax rate for the third quarter. Net interest expense was $82,000,000 an increase of $50,000,000 versus the prior year quarter, primarily due to the $3,300,000,000 in debt raised to finance a portion of the RCA acquisition. Turning now to income taxes. Our effective income tax rate was 20.7% compared to 21% in the prior year quarter. Finally, our diluted share count was 195,200,000 shares, a 2% decrease compared to the prior year quarter driven by approximately $1,000,000,000 in opportunistic share repurchases over the past year.

Regarding our cash balance and adjusted free cash flow, we ended June with $2,200,000,000 of cash and year to date adjusted free cash flow of approximately $100,000,000 Our full year adjusted free cash flow guidance of $2,000,000,000 to $3,000,000,000 remains unchanged. This completes the review of our consolidated results. Now I’ll turn to our segment results for the third quarter. U. S.

Healthcare Solutions segment revenue was $72,900,000,000 up 9% as the strong pharmaceutical utilization trends continued including growth in GLP-1s. Across the segment, we saw broad based revenue growth in all customer classes. As it relates to GLP-one products, in the quarter GLP-one sales increased 1,400,000,000 or 19% year over year. Turning now to operating income. U.

S. Healthcare Solutions segment operating income increased an outstanding 29% to $9.00 $2,000,000 driven by growth across our distribution businesses and the contribution from RCA. In the quarter, specialty remained a key growth driver in both health systems and specialty physician practices, where we benefited from strong volumes and saw good biosimilar conversion trends. I’ll now turn to our International Healthcare Solutions segment. In the quarter, International Healthcare Solutions revenue was $7,800,000,000 up approximately 11 on an as reported basis and up 9% on a constant currency basis, primarily driven by revenue growth in our European distribution business.

International Healthcare Solutions operating income was $156,000,000 down 13% on an as reported basis and down 16% on a constant currency basis. The decline was driven by continued softness for our higher margin global specialty logistics as well as a decline at our consulting business. While our global specialty logistics business did have a decline year over year, it grew sequentially from the March as our teams have taken steps to optimize the business and drive value for our customers. We expect to see the same type of sequential improvement in operating income from the June to the September for this business. In the third quarter, we also saw solid performance in our 3PL business as our differentiated footprint is resonating with manufacturers.

That completes the review of our third quarter results. I’ll now discuss our updated fiscal twenty twenty five guidance expectations. As a reminder, we do not provide forward looking guidance for certain metrics on a GAAP basis, so the following information is provided on an adjusted non GAAP basis except with respect to revenue and share count. I will also provide certain guidance metrics on a constant currency basis. I will start with adjusted diluted EPS guidance and then provide detail on the income statement items contributing to the increase.

We are raising and narrowing our fiscal twenty twenty five EPS guidance and now expect EPS to be in the range of $15.85 to $16 up from the previous range of $15.7 to $15.95 and representing growth of 15% to 16%. The updated guidance reflects the continued strong performance of our U. S. Healthcare Solutions segment and reflects a lower expected contribution from our International Healthcare Solutions segment. Moving to revenue, we are narrowing our consolidated revenue guidance to be growth of approximately 9%.

At the segment level, we are updating both our U. S. And International Healthcare Solutions segment revenue growth outlooks. In The U. S, we now expect segment revenue growth to be in the range of 9% to 10% narrowed from our previous range of 9% to 11%.

And given the trends we have seen and foreshadowed last quarter, we will likely finish in the lower part of that revenue range for The U. S. For the International segment, we now expect our segment revenue growth to be in the range of 6% to 7% on an as reported basis, up from our previous range of 3% to 4% to reflect the weakening of the U. S. Dollar relative to several key currencies and sales mix for our European distribution business.

On a constant currency basis, we now expect International Healthcare Solutions segment revenue growth to be in the range of 7% to 8%, up from the previous range of 6% to 8%. Moving to operating income, we are raising and narrowing our expected consolidated operating income growth guidance to be in the range of 15% to 16%, up from our previous range of 13.5% to 15.5% growth. In The U. S. Healthcare Solutions segment, we now expect operating income growth to be in the range of 20% to 21%, up from our prior range of 17.5 to 19.5%.

The updated guidance reflects our strong performance and execution and expectation for continued strong pharmaceutical utilization trends in our fourth quarter despite the previously disclosed loss of an oncology customer due to its acquisition. Turning now to the International Healthcare Solutions segment. On an as reported basis, we now expect operating income to be down approximately 6% compared to our prior expectations for operating income to be down 4% to down 1%. The updated guidance range reflects the pressure we have seen in our higher margin global specialty logistics and consulting businesses. On a constant currency basis, we now expect segment operating income to be down approximately 5%.

As we move into the fourth quarter, we have an easier comparison. And with continued sequential improvement from our global specialty logistics business, we expect to see the International Healthcare Solutions segment operating income return to growth exiting the fiscal year. That concludes our full year guidance update. As we near the end of our fiscal year, I remain inspired by our team members’ dedication to being a differentiated and solution oriented partner for our customers, which continues to result in strong financial results. Senkora continues to drive impressive performance powered by our U.

S. Healthcare Solutions segment as we are positioned to capitalize on positive industry trends, and our investments in high growth specialty are generating value. Grounded in our pharmaceutical centric strategy, Senkora is delivering sustainable growth, investing in our strengths and is well positioned to continue driving long term value for all our stakeholders. Now I will turn the call over to the operator to open the line for questions. Operator?

Lucy, Call Coordinator: Thank The first question comes from Lisa Gill of JPMorgan. Your line is now open. Please go ahead.

Lisa Gill, Analyst, JPMorgan: Good morning and thanks very much, Bob and Jim. Congrats on a very strong quarter. First, can we just start with The U. S. Healthcare segment, where we saw strong gross profit, strong operating profit, but a slight trim in the revenue, Jim, that you talked about from a guidance perspective.

Can you talk about what some of the key drivers are there on on each side? And then secondly, I just want a clarification on the international business. I’m assuming that, you know, some of the things that you talked about from an environmental perspective are around the SMID or mid sized biotech pharma environment, and you talked about that getting better, as we exit the year. Can you maybe just talk a little bit about what you’re seeing there as well?

Jim Cleary, Executive Vice President and CFO, Senkora: Sure. Lisa, thanks so much for the questions. Very much appreciate it. First question had to do with, our particularly strong performance in, The US business, but revenue growth moderating a bit there. But I’ll say, first of all, we were really pleased to be able to increase our adjusted operating income guidance in The U.

S. Business to a range of 20 to 21% because of the excellent performance there. Now if we look at revenue versus operating income, we did see revenue growth moderating a bit in The US segment. And I’ll really call out a few things. One is biosimilars, both Part D and Part B, which, of course, impact top line growth, particularly Part d.

Another thing is, moderated GLP one growth. You know, GLP ones are still growing, but the growth we saw is 19% in the most recent quarter. So while the growth is still strong, it’s decelerating versus prior year. And then a third thing on the top line is a grocery customer that we no longer have. There was a very kind of high revenue customer but a very low margin customer.

So those are some of the things that were impacting revenue growth guidance in The U. S. Segment. If we look at operating income results in the most recent quarter and our guidance, it really shows just excellent performance and excellent growth. And I’ll just kind of call out things that we’ve been talking about for quite some time.

Broad based strong performance in The US segment, specialty sales to physician practices and health systems. So some of our higher margin businesses are performing quite well. And then also part b biosimilar growth, that’s moderating sales growth a bit. It’s, you know, kind of very positive from an operating income standpoint. And so those are some of the things that are just causing our operating income growth, in The US, which is excellent to be, you know, faster than our top line growth.

And then you were asking about international and just some of the things that we’ve been seeing there. And as other players in the market have been calling out, the clinical trial activity this year has been subdued, which has been pressuring some of our businesses in the international segment, particularly our global specialty logistics business and the earlier stage pharma consulting projects that impacts our consulting business. And so the rebound’s been slower than expected in the segment and been impacting our global specialty logistics business and our consulting business. And one thing I did say in my prepared remarks is that the global specialty logistics business, while it’s declining year over year, it did grow sequentially in the June versus the March, and we also expect sequential growth in the September versus the June. And so as we look ahead in the segment, we are encouraged by better clinical trial start statistics that we’ve been seeing the last couple months that other people have been calling out also, and we see that as a positive leading indicator for potential future demand.

And so we do expect, of course, to see business performance improve. And as we move into the fourth quarter, we do have an easier comparison. And with the continued sequential improvement from our Global Specialty Logistics business, we expect to see the International Healthcare Solutions segment operating income to return to growth in the fourth quarter. So thank you very much for those questions, Lisa.

Lucy, Call Coordinator: The next question comes from Elizabeth Anderson of Evercore ISI. Your line is now open. Please go ahead.

Elizabeth Anderson, Analyst, Evercore ISI: Hi, guys. Good morning. Congrats on a nice quarter and thanks for the question. You obviously referenced RCA and sort of how it’s been going since your you closed on the purchase there. Can you talk about some of how that’s tracking versus your expectations and what some of the early customer feedback is?

And then on a related note, obviously, there have been lots of there’s been lots of political commentary around MSN, and that seems to be a changing landscape. Can you talk about sort of the exposure of businesses like RCA and sort of the general the medical specialty to that and how we should think about the potential impact there? Thank you.

Bob Mach, President and CEO, Senkora: Hi, Elizabeth. Thanks very much for the question. I’ll start with the question around RCA. And, you know, we couldn’t be more pleased with, you know, where we are, you know, so far with the acquisition. I mentioned in the prepared remarks, we had the, both the clinical and the management leaders from RCA at our offices in the last last few weeks.

And, you know, aside from the work that we got done, which which was meaningful in terms of, you know, how how we’ll work together, how integration will progress, how we’ll identify new opportunities for growth and and value creation. But, you know, I think, importantly, it’s just the the cultural fit is really, really strong, and and there’s an appreciation from from the physicians and the practice, leaders about the the value that Zancora can bring to them in terms of their continued growth. What that means is is more care for for patients, which is which is absolutely terrific. You know, when when you think about customer reaction, it’s, you know, it’s nothing remarkable there. Right?

So, I mean, the the market is adapting to an era where us and our peers are investing in MSOs. As I’ve said previously, it’s it’s important to note that the MSO investments or ownership are analogous to the work that we’ve done over over decades to support community providers, whether they be a community pharmacist or or veterinarians or or physicians with the wraparound services that we have. And the and the MSOs are just the the next evolution of that. So the market understands that, and, the customer market understands that. So, you know, I’d say all is well there.

I’ll take, MFN quickly and and just, you know, overall policy, Elizabeth. Obviously, there’s a lot of news, you know, a lot of things happening, you know, right now, from, you know, IRA implementation to the, you know, the letter sent to the to the CEOs. And I would say we continue to believe it’s just too early to to call, you know, where all this goes. I think it’s it’s clear at this point, what we all know, which is these things take these things take a long time, and and we’re doing what you would expect that we are. We’re stay we’re staying very engaged in, as things are happening.

We’re spending time, in Washington DC. We’re we’re able to really communicate the need to make sure that access to community providers is maintained. So when you get beyond the headlines of of drug prices, you know, in many cases that flows to reimbursement to physicians, in particular, in the part in the part b space. So we’re spending time making sure that legislators and regulators understand that that most cost effective side of care is maintained. And somehow that is not an unintended consequence of focus on drug prices.

So too early to call. We’re very focused there, and thank you very much for the questions.

Lucy, Call Coordinator: The next question comes from Michael Cherny of Leerink Partners. Your line is now open. Please go ahead.

Michael Cherny, Analyst, Leerink Partners: Good morning and thanks for taking the question. I know typically as we get to the end of year, you’re working on your four year planning. As you sit here today, given the moving pieces we’ve had, into the end of the year between, RCA annualizing between the international sequential upticks, how should we think about the moving pieces into next year framed against your long term 5% to 8% segment growth, 812% earnings growth? Seems like the street is sitting around 10% EPS growth for next year. I know you still have some attribution from RCA, but how should we think about, what could provide a source of upside versus downside, especially given, areas of strength like the recent specialty trends?

Thank you.

Jim Cleary, Executive Vice President and CFO, Senkora: Michael, thank you very much for that question. And, of course, as you know, we’ll provide comprehensive fiscal twenty twenty six guidance at the end of our fiscal year after we’ve completed our year end planning process. And of course, we’re really actively involved with our teams in that planning process now. And I will say that, Senkora, we’ve consistently delivered strong financial performance driven by our leading market positions and the continued execution by our team members. And I’d also say that our pharmaceutical centric foundation and competitive positioning enables us to capitalize on these market trends and to continue to deliver strong results.

I’ll say that we have confidence and we feel confident about our long term guidance that contemplates organic operating income growth of 5% to 8% and EPS growth of 8% to 12% including capital deployment. We will benefit from RCA as we lap the close of the acquisition that occurred in our fiscal second quarter. So we had three quarters of RCA in fiscal year ’twenty five. We’ll have four quarters of RCA in fiscal year ’twenty six. As we also look at moving pieces, we’ll have three quarters of impact due to the loss of the previously disclosed oncology customer due to M and A activity that was acquired by a peer.

And so, we have one quarter impact from that in fiscal year ’twenty five, the September, and we’ll have four quarters impact from that in fiscal year ’twenty six. Now other key items that’ll move us within the range, include changes in utilization trends. And of course, we’ve seen very strong utilization trends. And those include things like growth in specialty products, sales to physician practices and health systems. Other things that will impact our guidance, of course, include timing of capital deployment, for instance, timing of share repurchases.

And as you said, another thing that will impact guidance is we’ll assume better international growth given the soft fiscal year ’twenty five. So those are some of the moving pieces. But as I said before, we have confidence in our long term guidance of 5% to eight percent organic operating income growth and EPS growth of 8% to 12%. Thank you for the question.

Lucy, Call Coordinator: The next question comes from Steven Baxter of Wells Fargo. Your line is now open. Please go ahead.

Steven Baxter, Analyst, Wells Fargo: Hi, thank you. Just a numbers question here. Was hoping that you could better, help us understand the acceleration in US health care earnings growth. I believe it was 23% last quarter or more like 29% this quarter. I’m guessing part of it is that the year over year contribution from RCA is greater in the third quarter, but it doesn’t feel like the acceleration goes beyond just that.

I was hoping to to see if there’s any other adjustments or or kind of drivers in the acceleration you can maybe speak to. Thank you.

Jim Cleary, Executive Vice President and CFO, Senkora: Yeah. Yeah. Thanks. Appreciate the question. And, you know, I will say just it was a it was a really, strong quarter.

And, of course, you know, RCA had an impact on the growth rate and that we didn’t have it at this time last year. But I will say that if we look at, you know, kinda beating expectations and those sorts of things, it was really more driven by just the strength of the core business and strength of what we saw in specialty market. And as we talked about many times, utilization trends and sales of specialty products to physician practices and health systems. So our core business just performed very strong in The US segment. Really good expectation excuse me.

Really good execution by our team members and just very strong, very strong broad based performance. You know, one probably other thing if we look at, you know, kind of relative comps is, you know, less of a COVID headwind compared to other points points in time. But, overall, the, you know, the 29% adjusted operating income growth in The U. S. Segment during the quarter just reflects some outstanding execution by our team.

Thank you.

Lucy, Call Coordinator: The next question comes from Eric Percher of Nephron Research. Your line is now open. Please go ahead.

Eric Percher, Analyst, Nephron Research: Thank you. Bob, I appreciate your commentary. That was a little early for you to go deep on MSN, but I’m wondering if the tariff topic is a little bit different. And you’ve had three months to process the full spectrum of potential policies. Any thoughts on potential impact across brand versus generic?

Any change to your approach to inventory or sourcing? And do you think we may be heading into a naturally more inflationary environment?

Jim Cleary, Executive Vice President and CFO, Senkora: You know, I’ll I’ll start, Eric. Thanks a lot for the question. And, of course, we continue to monitor, the evolutions around tariffs in the pharm pharmaceutical market. As you can imagine, we have teams in place analyzing the impacts of the tariffs, on our business and on the supply chain. Importantly, as it relates to our business, we’ve not called out any material impacts as a result of tariffs.

And as you know, we’re pharmaceutical centric, and manufacturers are the importer of record for pharmaceuticals. And so, you know, the main focus is ensuring patients have access to lifesaving medications, and we’re supporting our upstream and downstream partners as they navigate any uncertainty. And we’ll continue, to advocate on behalf of our customers to ensure they receive, adequate reimbursement for the services that they provide. And, of course, you know, we’re evaluate know, evaluating things and kind of many announcements that come out as to whether or not they, you know, impact, you know, branded pharmaceuticals versus generic pharmaceuticals. But from a financial standpoint, we haven’t called out any material impacts on our business as a result of tariffs.

With that, I’ll turn it over to Bob.

Bob Mach, President and CEO, Senkora: Yeah. Thanks, Jim. Eric, thanks for the question. You know, I think, you know, headline, you know, is, you know, we’re we’re not changing our our sourcing practices based on this. We have we have confidence in in in the supply chain, and we’ll continue to work work through that.

I I do think, you know, the watch out is, you know, there is a difference between the supply chains for brands and and generics. And, I think what we are being care what we’re carefully monitoring is is the risk of of shortages and and then therefore, a disruption to to patient access. So that’s, again, an unintended consequence that would, would not be positive. So, you know, we’re thinking about that. We’re analyzing it.

As Jim said, we’re also, you know, educating in Washington about that. Again, it’s it’s one of the roles that we play in Washington is is to make sure that that ideas that are put forward are thought all the way through. We’re we are, you know, one of the very few player health care players that really have end to end visibility of the supply chain. We can play an education role. And as you think about that, it’s the patient access impact of shortages that we’re doing everything that we can to mitigate.

Lucy, Call Coordinator: The next question comes from Charles Rhyee of TD Cowen. Your line is now open. Please go ahead.

Charles Rhyee, Analyst, TD Cowen: Thanks for taking the question. I wanted to just go back to international and just trying to get a sense when you’re looking obviously understanding that the comps get a little easier and it sounds like sequentially some of the business like Special Logistics was improving. What is the lead time generally for projects that come in for you? Is that like a year ahead of time? Like how far ahead are projects booked for the various business there, particularly maybe in consulting as well?

Or is it kind of a short cycle type of business? Or is it tends to be longer? And just trying to get a sense on what kind of visibility forward you have in terms of demand.

Bob Mach, President and CEO, Senkora: Yeah. Thanks, Charles. We have, you know, as as you’d expect, you know, visibility in terms of of bookings, and then, you know, our ability, to pull through, and then the the sales cycle is in in your question as well. And I I would just say it’s variable. I mean, the size of the project, the market, the type of work that it is.

So there there’s not a simple answer to that, certainly, but, you know, you can be assured that we have we do have good visibility in terms of, you know, where we’re tracking in terms of future growth. Our teams are very focused on execution on the sales side, and we’re also making sure that we’re optimizing the services that we have. So as the market begins to turn more positively, that we’re gonna be even better positioned to take advantage of that. Thanks for the question.

Lucy, Call Coordinator: The next question comes from Kevin Caliendo of UBS. Your line is now open. Please go ahead.

Jim Cleary, Executive Vice President and CFO, Senkora: Thanks for taking my question. Good morning. I wanted to expand a little bit on the headwinds and tailwinds for 2026. Jim, I appreciate the details that you gave us, but the reality is your your growth in The US segment, especially, has been so much above your LRP. And you’re talking about incremental things around RCA one quarter and the three quarters loss of FCS, and and I understand that.

But I guess, is there anything fundamental that you can see that would bring your growth rate down closer to your LRP where it’s been, you know, exceeding it now for almost two years? Fantastic performance. I’m just wondering, is there anything in biosimilars? Is there is GLP one slowdown something that could bring you back to within that range as you sort of described within within the range earlier? Yeah.

Thank you very much for the question, and thank you for your commentary on our results that we’ve been having also. That’s very much appreciated. Let me just kinda answer one very specific thing that you said, and then I’ll get into a broader answer. Kind of, you know, slowdown in growth in GLP ones really wouldn’t have a, you know, major impact on our, guidance because as we’ve said for a long time, GLP ones add a lot to top line growth, and they are profitable for us, but they’re minimally profitable for us. And as we said during the second quarter earnings call, we’ll say the same thing here, that as we look at things like the remainder of the year and next year, we, you know, certainly expect to see, good growth, but we aren’t assuming, you know, the same level of outperformance that we’ve had in, the the recent

And so, you know, we we do have a lot of confidence in our long term guidance. We have confidence in the momentum that we have and what that is, you know, kind of translating in in terms of, achieving the long term guidance. But, know, we probably wouldn’t assume the same level of rapid growth that we’ve had in the recent past, especially as we begin to comp against periods of exceptional growth that we’ve had. But having said that, I’ll say we are very confident in our long term guidance ranges, and we’ll continue to evaluate them annually. Thank you for the question.

Lucy, Call Coordinator: The next question comes from George Hill of Deutsche Bank. Your line is now open. Please go ahead.

Eric Percher, Analyst, Nephron Research: Good morning, and thanks for taking the question. Bob and Jim, I’m wondering if you could comment a little bit on the competitive environment in specialty distribution, especially in the Part B space. One of your large customers last week talked about trying to rapidly expand their business in this space. So maybe talk about how you think about market segmentation and where you guys kind of want to be strong and where you might have less of a competitive advantage. Thank you.

Bob Mach, President and CEO, Senkora: Yeah. Thanks. Thanks, George. You know, we are, you know, focused in our areas of strength, which align very well with with our strategy. So I wouldn’t call out anything necessarily changing about the market.

You know, we are we are a leader in the market, you know, in particular in retina and and oncology, and we’re very focused on making sure that we execute well there for the for the near term and the long term. And and also, you know, we’re continuing to evaluate what what future opportunities that there are. But as we sit here now, I I wouldn’t call out anything changing. We’re we’re happy with with our positioning. We’re we’re very happy with the investments that we’ve made both in RCA and in one oncology as well as in our internal capabilities, by the way.

Don’t wanna I don’t wanna leave that out. Right? When you talk about, you know, kind of the future of specialty distribution and, you know, how things are evolving, you know, I I do wanna probably remake the point that I made in a slightly different context in in my prepared remarks, but we’re we’re continually investing in our in our capabilities across our network, both digital capabilities as well as as physical infrastructure. So we feel good about being able to to continue to to grow, meet the needs of our customers, both manufacturer customers as well as provider customers. Thanks for the question, George.

Lucy, Call Coordinator: The next question comes from Erin Wright of Morgan Stanley. Your line is now open. Please go ahead. Thanks for taking my question. Bob, another thing from your prepared remarks.

You mentioned that you’re continually evaluating, I guess, areas that are less strategically aligned and where you should deemphasize investments. I guess, maybe I’m reading too much into the comment, but how are you thinking about commitments to the international business, the different components of that business, also in Animal Health as well and your commitment to that business. But how are these all fitting now with the core? Is there this clear synergy that, you know, you originally thought and and and where there may be kind of, I guess, less so as these businesses have evolved?

Bob Mach, President and CEO, Senkora: Yeah. Thanks very much for the question, Erin. Yeah. What I’m I’m really saying here is and there’s not, you know, reading reading between the lines. What I’m what I’m trying to clearly say is that we’re we’re applying, you know, rigorous discipline to our entire portfolio of of services and making sure that they are the right strategic fit.

And then as we go through that, that will help us identify how to best deploy our resources, whether that’s CapEx or OpEx or talent, that we make sure that we are investing in a differentiated way in the areas that are gonna grow for us and are aligned with our strategy and that we’re deprioritizing investment in areas that we see as less aligned. Thanks for the question, Aaron.

Lucy, Call Coordinator: The next question comes from Steven Valiquette of Mizuho Securities. Your line is now open. Please go ahead.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Treasury, Senkora0: Yes, thanks. Good morning. So just based on our channel checks, it seems that brand drug manufacturers put in a bigger wave of AWP list price increases at mid-twenty 5%, really relative to any other midyear period in almost a decade, it seems. So I’m just wondering if you were seeing this as well, even though I know you’ve commented that brand inflation has less beneficial impact to your P and L today versus history. But just curious if you’re really seeing the activity.

Jim Cleary, Executive Vice President and CFO, Senkora: Yeah. Thank you very much for the question. What I’ll say is that what we saw in terms of branded price appreciation was about in line with our expectations, may have been a little bit ahead of our expectations, certainly not something big enough for us to call out. But, you know, so I’d just say it was, generally in line with our expectations or a little bit ahead. And as we’ve, you know, talked about in the past, it, you know, it, has, you know, less of an impact on our overall p and l than it did at one point in time.

And as we’ve, you know, rebalanced, contracts and making sure that we make, a fair profit across the board on brand specialty and generic products. Thanks. Appreciate the question.

Lucy, Call Coordinator: The next question comes from Daniel Grosslight of Citi. Your line is now open. Please go ahead. Daniel, your line is now open. Please go ahead.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Treasury, Senkora1: Hi, sorry about that. Was on mute. Congrats on the strong quarter. Thanks for taking the question. Really just a couple of policy questions for you guys.

The proposed hospital outpatient perspective rule seeks to end the pricing advantage that hospital owned off campus outpatient facilities have in drug administration. I’m curious how that may impact the competitive environment and growth for your MSO assets. And separately, I’m also curious if there are any tax benefits you’re realizing from the, OBDBA, and if that’s having any meaningful benefit to your free cash flow in the near term.

Jim Cleary, Executive Vice President and CFO, Senkora: Yeah. I’ll start with the, second part of that question, that, the new tax bill moving forward will have some incremental benefits for us. So as we look at our, you know, effective tax rate moving forward as a global company, there’s, you know, always a lot of things that, impact our consolidated effective tax rate. But the new tax bill is incrementally beneficial for us as it is for many companies. Thank you for that question.

Lucy, Call Coordinator: The final question is from Brian Tranquillet of Jefferies. Your line is now open. Please go ahead.

Bennett Murphy, Senior Vice President, Head of Investor Relations and Treasury, Senkora2: Hey, good morning. It’s Jack Slabin on for Brian. Thanks for taking my question. Just wanted to double click on the comment around GLP-1s and appreciate the commentary that a slowdown there shouldn’t be particularly impactful when you think about consolidated earnings or U. S.

Healthcare earnings. But maybe more broadly as you cast forward, just thinking about what are the moving pieces that need to happen as we see more competition in that category for earnings to expand there or for margins to expand there? Is it something that’s just not really possible? Or do you think over time as we get more and more competition and in that, that that’s something that you can achieve? Thanks.

Jim Cleary, Executive Vice President and CFO, Senkora: Yes. Thank you very much for the question. And as we’ve consistently said for quite some time, GLP ones have really been a driver of top line growth, and they are profitable for us, but they are, minimally profitable for us. You know, at some point in time, as there are more competitors on the market, maybe it will move to a more normalized fee for service, and they will become more profitable for us at some point in time. But it’s certainly not it’s we’re doing, for instance, our fiscal year twenty six planning.

It’s not something that we’re anticipating in our, fiscal year twenty six plan. We’re expecting them to remain profitable but be minimally profitable for us and, kind of that type of time horizon. Thank you very much for the question.

Lucy, Call Coordinator: We currently have no further questions, so I’ll hand back to Bob for closing remarks.

Bob Mach, President and CEO, Senkora: Thanks, everyone, for your time and interest in Senkora. We’re continuing to deliver strong results powered by our strength in specialty, our leading customer portfolio and our ability to enhance patient care. I want to again thank our incredible team members at Senkora who every day are executing at a very high level, bringing their passion and expertise to our customers, both upstream to manufacturers and downstream to providers, and delivering our purpose every day. Thank you, everyone.

Lucy, Call Coordinator: This concludes today’s call. Thank you for joining. You may now disconnect your lines.

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