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CI

Cencora, Inc. (COR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 FY2025: Adjusted diluted EPS of $4.42 (+16% YoY) on revenue of $75.45B (+10% YoY); GAAP EPS $3.68 . EPS beat S&P Global consensus by ~$0.32*, while revenue was modestly below by ~$0.35B*.
  • U.S. Healthcare Solutions led results (revenue $68.28B, +11% YoY; operating income $1.03B, +23% YoY), driven by specialty utilization, GLP-1 volume (GLP-1 sales +$2.2B YoY, +36% YoY; −10% QoQ) and biosimilar uptake .
  • Guidance raised: FY2025 adjusted EPS to $15.70–$15.95 (from $15.25–$15.55); consolidated OI growth to 13.5–15.5% (from 11.5–13.5%); U.S. OI growth to 17.5–19.5% (from 14.5–16.5%); International OI now down 1–4% (prior flat) and International revenue growth trimmed to 3–4% (from 4–5%) .
  • Key stock catalysts: guidance raise (and clarity on RCA accounting increasing EPS), resilient U.S. specialty trends, and International logistics recovery timing; Board declared $0.55 dividend payable June 2, 2025 .

What Went Well and What Went Wrong

What Went Well

  • Strong U.S. segment performance: U.S. Healthcare Solutions OI rose 22.8% YoY to $1.03B; consolidated adjusted OI +15.3% YoY to $1.19B . CEO: “We are strengthening our global leadership in specialty medications… deepening our offering across geographies and customer channels.”
  • GLP-1 and specialty tailwinds: GLP-1 sales +$2.2B YoY (+36%), robust specialty utilization across health systems and physician practices; biosimilars contributed favorably to mix .
  • Guidance raise and EPS uplift from RCA accounting: CFO highlighted ~$0.14 of EPS guide increase due to recognizing the 15% RCA minority as a contingent liability (no non-controlling interest reduction), with remainder from core U.S. distribution strength .

What Went Wrong

  • International softness: International Healthcare Solutions OI down 17.3% YoY to $159.3M; guidance cut to −1% to −4% for FY OI (as-reported), reflecting subdued clinical trial logistics demand and consulting projects .
  • Higher net interest expense: $104.0M (+62% YoY) due to December notes issuance and January term loan for RCA plus seasonal revolver borrowings .
  • LIFO expense and Turkey FX remeasurement headwinds: Q2 included LIFO expense of $39.5M and Turkey FX impacts ($14.5M), partially offset by antitrust settlement gains ($198.6M) .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Billions)$79.05 $81.49 $75.45
GAAP Diluted EPS ($)$0.02 $2.50 $3.68
Adjusted Diluted EPS ($)$3.34 $3.73 $4.42
GAAP Gross Profit Margin %3.15% 3.14% 4.06%
Adjusted Gross Profit Margin %3.10% 3.11% 3.86%
GAAP Operating Margin %0.16% 0.87% 1.37%
Adjusted Operating Margin %1.08% 1.16% 1.58%
Net Interest Expense ($USD Millions)$21.0 $27.9 $104.0
Adjusted Effective Tax Rate %20.3% 20.0% 20.8%

Segment breakdown

Segment MetricQ4 2024Q1 2025Q2 2025
U.S. Healthcare Solutions Revenue ($USD Billions)$71.67 $74.03 $68.28
U.S. Healthcare Solutions Operating Income ($USD Millions)$697.4 $767.3 $1,033.2
International Healthcare Solutions Revenue ($USD Billions)$7.38 $7.46 $7.17
International Healthcare Solutions Operating Income ($USD Millions)$153.7 $182.1 $159.3

KPIs and notable items

KPIQ4 2024Q1 2025Q2 2025
GLP-1 sales change——+$2.2B YoY; +36% YoY; −10% QoQ
Gains from antitrust litigation settlements ($USD Millions)$62.3 $22.9 $198.6
LIFO (expense)/credit ($USD Millions)$(12.3) $7.3 $(39.5)
Turkey highly inflationary impact ($USD Millions)$(10.2) $(7.2) $(14.5)
Diluted weighted avg. shares (Millions)198.08 195.19 195.09
Dividend per share ($)$0.55 (declared Nov 2024) $0.55 (paid Mar 3, 2025) $0.55 (payable Jun 2, 2025)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted diluted EPSFY2025$15.25–$15.55 $15.70–$15.95 Raised
Consolidated operating income growthFY202511.5%–13.5% 13.5%–15.5% Raised
U.S. Healthcare Solutions OI growthFY202514.5%–16.5% 17.5%–19.5% Raised
International Healthcare Solutions OI (as reported)FY2025~Flat −1% to −4% Lowered
International Healthcare Solutions OI (constant currency)FY2025~+5% −3% to Flat Lowered
International Healthcare Solutions revenue growth (as reported)FY20254%–5% 3%–4% Lowered
International Healthcare Solutions revenue growth (constant currency)FY20257%–9% 6%–8% Lowered
Consolidated revenue growthFY20258%–10% 8%–10% Maintained (likely bottom of range per mgmt)
Diluted weighted avg. shares (Millions)FY2025Under 196 195.0–195.5 Lowered

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Specialty leadership and MSO expansionAnnounced RCA acquisition; highlighted community oncology strength Broad-based specialty strength across health systems and practices; integrating RCA; MSO strategy reinforced Strengthening
GLP-1 dynamicsMargin pressure from GLP-1 mix; revenue tailwind +$2.2B YoY GLP-1 sales; sequential −10%; minimally profitable but positive for revenue Normalizing comparisons; margin-neutral/mix-positive
Biosimilars uptakeNoted benefits in U.S. specialty Continued uptake benefiting mix and OI Improving
International logistics/consultingEuropean distribution steady; logistics mixed Clinical trial activity subdued; slower rebound; guidance cut Softer
Tariffs/macroMonitoring macro headwinds No material tariff impact expected; focus on access and reimbursement Neutral
Health systems focusBuilding capabilities; distribution strength Greater emphasis on health systems solutions and services Expanding
Capital deployment/deleveragingOpportunistic buybacks; MSO investments No further buybacks near term; deleveraging post-RCA; potential to consolidate OneOncology over time Balanced (deleveraging)

Management Commentary

  • Strategy and positioning: “Rooted in our pharmaceutical-centric strategy... Cencora is building on our position as a leading end-to-end health care solutions provider.”
  • Specialty momentum: “We are strengthening our global leadership in specialty medications by deepening our offering across customer channels.”
  • U.S. segment drivers: “We saw particularly strong performance in specialty… and benefited from the continued uptake of biosimilars.”
  • RCA accounting impact: “Approximately $0.14 of the increase in EPS guidance is a result of the RCA accounting determination… the incremental 15% of operating income falls right to pretax income.”

Q&A Highlights

  • Tariffs: Management does not expect material business impact; manufacturers are importer of record; focus remains patient access and adequate reimbursement .
  • RCA and EPS mechanics: EPS uplift (~$0.14) due to contingent liability accounting for RCA minority interest; operating income unchanged; core U.S. strength drove the majority of the guide raise .
  • International outlook: Clinical trial logistics demand remains subdued; consulting demand hasn’t materially ramped; guidance cut reflects slower recovery paths .
  • Health systems: Elevated emphasis reflects broad-based specialty positioning; ongoing investment in solutions tailored to health systems .
  • COVID headwind: Q2 COVID vaccine headwind half of prior expectation ($15M vs ~$30M), aiding OI and EPS trajectory .

Estimates Context

MetricQ4 2024 ConsensusQ4 2024 ActualQ1 2025 ConsensusQ1 2025 ActualQ2 2025 ConsensusQ2 2025 Actual
Revenue ($USD Billions)$77.72*$79.05 $78.22*$81.49 $75.80*$75.45
Primary EPS ($)$3.23*$3.34 $3.52*$3.73 $4.10*$4.42
# of Estimates (Revenue / EPS)13 / 15*—11 / 13*—12 / 12*—
  • Q2 FY2025 outcome: Adjusted EPS beat by ~$0.32*, revenue missed by ~$0.35B*. Q1 and Q4 both exceeded revenue and EPS consensus*.
  • Values retrieved from S&P Global.*

Key Takeaways for Investors

  • U.S. specialty remains the engine: Strong utilization, biosimilar uptake, and GLP-1 volumes continue to drive outperformance and margin mix improvement .
  • Guidance credibility improved: EPS and OI raised with transparency on RCA accounting; expect revenue growth toward low-end of range but higher margins from mix .
  • International is the swing factor: Recovery in global specialty logistics and consulting is slower than expected; watch for signs of clinical trial activity re-acceleration .
  • Cash and capital allocation: Expect deleveraging post-RCA; buybacks paused near term; MSO platform expansion (e.g., potential OneOncology consolidation) remains a medium-term strategic lever .
  • Non-GAAP items matter: Antitrust settlement gains and LIFO/FX effects are sizable; adjusted margins provide clearer view of core run-rate .
  • Short-term trading setup: Beat-and-raise quarter with International headwind explicitly incorporated; stock likely sensitive to specialty utilization/biosimilar updates and any visibility on logistics rebound.
  • Medium-term thesis: Durable EPS growth from U.S. specialty and MSO expansion, with potential upside if International services recover and GLP-1 dynamics normalize toward margin-friendly mix .