Cencora misses Q2 estimates, cuts revenue growth outlook but raises EPS guidance

 

Cencora misses Q2 estimates, cuts revenue growth outlook but raises EPS guidance and launches $1B buyback

• Q2 adjusted EPS grew 7.5% to $4.75 on 4% revenue growth to $78.4B.
• Gross margin expanded 45 bps to 4.31%, driven by higher-margin OneOncology MSO acquisition.
• Full-year adjusted EPS guidance raised to $17.65–$17.90 despite reduced revenue growth outlook.
• Consolidated revenue growth guidance cut to 4–6% from 7–9%, mainly due to U.S. softness.
• U.S. revenue pressured by $2B wholesale acquisition cost cuts and faster biosimilar conversions.
• GLP-1 revenue grew $1.9B year over year but is now tracking below prior growth expectations.
• Operating income growth guidance increased to 12–14%, aided by MSOs and MWI reclassification.
• International segment delivering double-digit revenue and operating income growth as logistics rebound continues.
• Company plans to repurchase $1B of stock by calendar year-end under announced buyback program.
• Free cash flow is about $3B, according to management commentary.
• Management reiterates long-term 7–10% organic AOI growth target, viewing revenue headwinds as transitory and margin-neutral.
• Main concern is accelerating revenue headwinds from pricing reforms and biosimilar conversions potentially pressuring future growth.
• Mixed quarter with strong margin and EPS performance offset by reduced revenue growth outlook.

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