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Cencora, Inc. (COR)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY2025 delivered solid topline and margin expansion: revenue $80.66B (+8.7% YoY) and adjusted EPS $4.00 (+19.8% YoY), with strength in U.S. Healthcare Solutions and contribution from the January 2025 RCA acquisition .
  • Beat vs S&P Global consensus: adjusted EPS $4.00 vs $3.84*, revenue $80.66B vs $80.12B*, and EBITDA $1.24B vs $1.15B*; beat driven by specialty volumes, GLP‑1 category growth, and RCA contribution .
  • FY2025 guidance raised/narrowed: adjusted EPS to $15.85–$16.00 (from $15.70–$15.95), consolidated operating income growth to 15–16% (from 13.5–15.5%), U.S. segment OI growth to 20–21% (from 17.5–19.5%); International OI guided to ~‑6% (worse), with expected sequential improvement into Q4 .
  • Key stock catalysts: continued strength in U.S. specialty and narrowed/raised EPS guidance, plus indications of sequential improvement in global specialty logistics; dividend maintained at $0.55 (payable Sep 3, 2025) .

Note: Values marked with * are retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • U.S. Healthcare Solutions strength: revenue $72.88B (+8.5% YoY) and segment operating income $0.90B (+29.1% YoY), aided by specialty volumes and RCA integration .
  • Margin expansion: adjusted gross margin 3.55% (+36 bps YoY) and adjusted operating margin 1.31% (+13 bps YoY), driven primarily by U.S. mix and RCA .
  • Raised FY2025 EPS guidance: “Adjusted diluted EPS to be in the range of $15.85 to $16.00” (up from $15.70–$15.95), reflecting U.S. outperformance .
  • Management tone confident: “Cencora delivered strong financial results… driven by our pharmaceutical-centric strategy and focus on our growth priorities” — CEO Robert Mauch ; CFO emphasized “adjusted diluted EPS growth of 20%” and strength in specialty .

What Went Wrong

  • International Healthcare Solutions operating income declined 12.9% YoY to $156.2M (constant currency down 16.2%), pressured by global specialty logistics and consulting businesses .
  • Net interest expense rose to $81.8M (+$50.5M YoY) due to debt raised for RCA and higher revolver usage; a headwind to earnings .
  • Guidance lowered for International OI: now ~‑6% for FY2025 (as reported) vs prior decline of 1–4% (constant currency ~‑5% vs prior down 3% to flat), reflecting slower-than-expected rebound in trial activity and consulting demand .
  • Revenue growth moderation vs prior: CFO cited decelerating GLP‑1 growth (+19% YoY in Q3) and loss of a high‑revenue low‑margin grocery customer impacting top‑line guidance .

Financial Results

Consolidated P&L vs Prior Quarters (GAAP and Adjusted)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$81.49 $75.45 $80.66
GAAP Diluted EPS ($)$2.50 $3.68 $3.52
Adjusted Diluted EPS ($)$3.73 $4.42 $4.00
Gross Profit Margin % (GAAP)3.14% 4.06% 3.60%
Adjusted Gross Margin %3.11% 3.86% 3.55%
Operating Margin % (GAAP)0.87% 1.37% 1.08%
Adjusted Operating Margin %1.16% 1.58% 1.31%

Segment Breakdown

Segment MetricQ1 2025Q2 2025Q3 2025
U.S. Healthcare Solutions Revenue ($B)$74.03 $68.28 $72.88
International Healthcare Solutions Revenue ($B)$7.46 $7.17 $7.79
U.S. Healthcare Solutions Operating Income ($B)$0.77 $1.03 $0.90
International Healthcare Solutions Operating Income ($B)$0.18 $0.16 $0.16
Total Segment Operating Income ($B)$0.95 $1.19 $1.06

KPIs and Operating Items

KPIQ1 2025Q2 2025Q3 2025
Net Interest Expense ($USD Millions)$27.93 $103.99 $81.79
Adjusted Effective Tax Rate (%)20.0% 20.8% 20.7%
Diluted Weighted Avg Shares (Millions)195.19 195.09 195.23

Q3 2025 Actuals vs S&P Global Consensus

MetricConsensusActual
EPS (Adjusted) ($)3.84*4.00
Revenue ($USD Billions)80.12*80.66
EBITDA ($USD Billions)1.15*1.24*

Note: Values marked with * are retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted Diluted EPSFY2025$15.70–$15.95 $15.85–$16.00 Raised
Consolidated Revenue GrowthFY20258–10% ~9% Narrowed to midpoint
U.S. Healthcare Solutions Revenue GrowthFY20259–11% 9–10% Narrowed/Lowered upper bound
International Healthcare Solutions Revenue Growth (as reported)FY20253–4% 6–7% Raised
International Revenue Growth (constant currency)FY20256–8% 7–8% Raised lower bound
Adjusted Consolidated Operating Income GrowthFY202513.5–15.5% 15–16% Raised
U.S. Healthcare Solutions Operating Income GrowthFY202517.5–19.5% 20–21% Raised
International Healthcare Solutions Operating IncomeFY2025‑1% to ‑4% ~‑6% Lowered
International OI (constant currency)FY2025down 3% to flat ~‑5% Lowered
Adjusted Effective Tax RateFY2025~21% 20.5–21% Lowered
Quarterly DividendQ3 FY2025$0.55 declared (Q2 payable Jun 2, 2025) $0.55 payable Sep 3, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1/Q2)Current Period (Q3)Trend
Specialty leadership and RCAContinued focus on specialty growth; RCA closed Jan 2, 2025 ; U.S. operating income +22.8% in Q2 CEO: RCA enhances clinical trial access and specialty innovation; distribution support for new retina therapies Strengthening; RCA accretive to margins
GLP‑1 categoryQ1/Q2: GLP‑1 sales contributed to U.S. revenue growth CFO: GLP‑1 sales +$1.4B (+19% YoY); growth decelerating; minimally profitable Still positive top-line; moderating growth; limited margin impact
International segmentQ1/Q2: revenue modest, OI down due to logistics/consulting Softness persists; sequential improvement; expect OI growth exiting FY25 Stabilizing; improving sequentially
Digital transformation & productivityEmphasis on operational excellence/productivity in Q1/Q2 CEO reiterates digital transformation and productivity as core drivers Ongoing strategic priority
DSCSA preparednessNot highlighted in Q1/Q2CEO: long-term investment supports DSCSA compliance Positive supply chain readiness
Tariffs/macroNot called out beforeManagement monitoring; no material financial impact; focus on patient access and avoiding shortages Watchful; no impact to date
Policy/taxPrior-year opioid accruals noted in Q1 comps CFO: new tax bill incrementally beneficial to ETR Slightly positive

Management Commentary

  • Strategy and execution: “Cencora delivered strong financial results in the third fiscal quarter, driven by our pharmaceutical-centric strategy and focus on our growth priorities.” — Robert P. Mauch, CEO .
  • Specialty and RCA impact: CFO highlighted “consolidated gross profit margin… primarily driven by the gross profit contribution from our acquisition of Retina Consultants of America” .
  • U.S. momentum and guidance: “We are raising and narrowing our fiscal 2025 EPS guidance… reflecting continued strong performance of our U.S. Healthcare Solutions segment” — James Cleary, CFO .
  • International path forward: “Global specialty logistics… grew sequentially… expect… operating income return to growth exiting the fiscal year” — CFO .

Q&A Highlights

  • U.S. revenue vs OI: Revenue growth moderating due to biosimilars (Part D impact), GLP‑1 deceleration (+19% YoY), and loss of a high‑revenue low‑margin grocery customer; OI outpaces top‑line on stronger specialty mix .
  • International softness: Subdued clinical trial activity pressured logistics and consulting; sequential growth observed with expectation of Q4 OI return to growth .
  • FY2026 planning levers: RCA full-year inclusion, oncology customer loss impact, utilization trends, capital deployment/shares; confidence in long‑term targets (5–8% organic OI; 8–12% EPS with capital deployment) .
  • Tariffs: No material impact; focus on patient access and avoiding shortages; brands vs generics supply chains monitored .
  • GLP‑1 profitability: Minimally profitable currently; margins could improve with normalized fee-for-service in future, but not assumed in FY2026 plan .

Estimates Context

  • Q3 FY2025 vs consensus: EPS $4.00 vs $3.84* (beat), revenue $80.66B vs $80.12B* (beat), EBITDA $1.24B vs $1.15B* (beat). Beats driven by U.S. specialty distribution and RCA contribution, with sequential improvements emerging internationally .
  • Street likely to adjust upward for FY2025 EPS given raised range (to $15.85–$16.00) and stronger U.S. OI growth; international expectations may be tempered near-term given lowered OI outlook .

Note: Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

  • U.S. specialty continues to be the engine: broad‑based strength in physician practices and health systems, biosimilar dynamics supportive to margins; expect continued outperformance versus top‑line .
  • RCA is accretive and strategically important: supports margin expansion and specialty leadership in retina; integration momentum and customer feedback positive .
  • International headwinds are easing: sequential improvement in logistics with expectation of OI growth exiting FY25; watch Q4 trajectory closely .
  • Balance sheet and cash: net interest expense elevated on deal financing; monitor leverage and cash generation versus unchanged full‑year adjusted FCF guide commentary from CFO .
  • FY2025 setup improved: narrowed/raised EPS and OI guidance should support estimates and sentiment; dividend maintained .
  • Near‑term trading: stock likely responsive to beats and guidance raise; monitor any macro/policy headlines (tariffs, outpatient rule) — management sees no material impact to date .
  • Medium‑term thesis: durable U.S. specialty growth, potential normalization and improved pricing in GLP‑1 category over time, and operational leverage from digital/productivity initiatives underpin long‑term EPS growth .