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1. Company Snapshot

1.a. Company Description

Cencora, Inc.sources and distributes pharmaceutical products.Its U.S. Healthcare Solutions segment distributes pharmaceuticals, over-the-counter healthcare products, home healthcare supplies and equipment, and related services to acute care hospitals and health systems, independent and chain retail pharmacies, mail order pharmacies, medical clinics, long-term care and alternate site pharmacies, and other customers.


The company also provides pharmacy management, staffing, and other consulting services; supply management software to retail and institutional healthcare providers; packaging solutions to various institutional and retail healthcare providers; clinical trial support, product post-approval, and commercialization support services; data analytics, outcomes research, and additional services for biotechnology and pharmaceutical manufacturers; and pharmaceuticals, vaccines, parasiticides, diagnostics, micro feed ingredients, and other products to the companion animal and production animal markets.In addition, this segment distributes plasma and other blood products, injectable pharmaceuticals, vaccines, and other specialty products; and provides other services primarily to physicians who specialize in various disease states, primarily oncology, as well as to other healthcare providers, including hospitals and dialysis clinics.The company's International Healthcare Solutions segment offers international pharmaceutical wholesale and related service, and global commercialization services; and distributes pharmaceuticals, other healthcare products, and related services to pharmacies, doctors, health centers and hospitals primarily in Europe.


This segment also provides specialty transportation and logistics services for the biopharmaceutical industry.The company was formerly known as AmerisourceBergen Corporation and changed its name to Cencora, Inc.in August 2023.


Cencora, Inc.was incorporated in 2001 and is headquartered in Conshohocken, Pennsylvania.

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1.b. Last Insights on COR

Cencora's recent performance was negatively impacted by several factors. Multiple institutional investors, including Coho Partners Ltd., Black Creek Investment Management Inc., Stanley Laman Group Ltd., and Valley National Advisers Inc., reduced their stakes in the company. The sales by these investors may have contributed to downward pressure. However, the company's recent Q1 earnings report showed a beat in EPS, revenue matching estimates, and improved gross margins. Additionally, Cencora raised its fiscal 2026 growth guidance. Analysts have a "Moderate Buy" rating on the stock, with eight issuing a buy recommendation.

1.c. Company Highlights

2. Cencora's Strong Q1 Performance Driven by OneOncology Acquisition

Cencora, Inc. reported a robust fiscal 2026 first quarter, with adjusted diluted EPS of $4.08, beating analyst estimates of $4.05. The company's consolidated revenue reached $85.9 billion, representing a 5.5% increase, driven by growth in both reportable segments. The US healthcare solutions segment revenue was $76.2 billion, up 5%, with operating income surging 21% to $831 million. The international healthcare solutions segment revenue grew approximately 10% on an as-reported basis and 6% on a constant currency basis to $7.6 billion.

Publication Date: Feb -05

📋 Highlights
  • Adjusted Operating Income Growth:: Rose 12% to $831 million in Q1, driven by strong US healthcare solutions performance and the OneOncology acquisition.
  • Revenue Expansion:: Consolidated revenue hit $85.9 billion (+5.5%), with US healthcare solutions contributing $76.2 billion (+5%) and international solutions up 10% ($7.6 billion).
  • Guidance Upgrade:: Fiscal 2026 revenue growth now projected at 7–9%, with operating income growth raised to 11.5–13.5% and adjusted EPS guidance of $17.45–$17.75.
  • OneOncology Impact:: Acquisition contributed $35 million in net after-tax earnings Q1, with full-year operating margin expected to rise from 9% to 16% due to integration benefits.
  • Interest Expense Rise:: Projected to increase to $480–$500 million in FY2026, doubling Q1’s interest expense of $240 million due to OneOncology financing costs.

Segment Performance

The US segment's operating income growth was 21% in Q1, driven by the OneOncology acquisition and continued strong performance in the US healthcare solutions segment. Excluding RCA and OneOncology, the US segment's performance is within the long-term guidance range of 7-10%. The company expects utilization trends, strength in specialty sales, and broad-based performance to drive growth.

Guidance and Outlook

Cencora raised its fiscal 2026 guidance, expecting consolidated revenue growth to be in the range of 7% to 9%, and consolidated operating income growth to be in the range of 11.5% to 13.5%. The company expects adjusted diluted EPS to be in the range of $17.45 to $17.75. The acquisition of OneOncology is expected to be neutral, net of financing costs, to adjusted diluted EPS in its first twelve months.

Valuation and Metrics

With a P/E Ratio of 39.43 and an EV/EBITDA of 18.39, the market appears to be pricing in significant growth expectations. The company's ROIC of 13.83% and ROE of 101.43% indicate strong profitability. The Net Debt / EBITDA ratio of 1.62 suggests a manageable debt burden. Analysts estimate next year's revenue growth at 6.7%, which may be challenging to achieve given the current valuation multiples.

Acquisition Impact

The OneOncology acquisition is expected to drive growth, with benefits flowing into the segment level throughout the year. The company owns 92% of OneOncology, with the remaining 8% owned by practices and management. The $30 million below-the-line item related to OneOncology is an ongoing non-controlling interest piece.

Capital Deployment

Cencora has paused share repurchases, focusing on deleveraging, but long-term capital deployment priorities remain the same, including investing in the business, strategic acquisitions, share repurchases, and a growing dividend. The company's dividend yield is 0.68%, which is relatively modest compared to other industry players.

3. NewsRoom

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Artisan Partners Limited Partnership Sells 94,061 Shares of Cencora, Inc. $COR

Feb -27

Source: defenseworld.net

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Lansforsakringar Fondforvaltning AB publ Purchases 3,073 Shares of Cencora, Inc. $COR

Feb -23

Source: defenseworld.net

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Bleakley Financial Group LLC Cuts Stock Position in Cencora, Inc. $COR

Feb -23

Source: defenseworld.net

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COR's MWI Animal Health to Merge With Covetrus in $3.5 Billion Deal

Feb -19

Source: zacks.com

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Public Sector Pension Investment Board Grows Stock Holdings in Cencora, Inc. $COR

Feb -19

Source: defenseworld.net

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Cencora's animal health unit to merge with Covetrus in $3.5 billion deal

Feb -18

Source: reuters.com

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Covetrus and MWI Animal Health to Merge

Feb -18

Source: businesswire.com

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Is the Options Market Predicting a Spike in Cencora Stock?

Feb -17

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.38%)

6. Segments

Human Health

Expected Growth: 8.5%

Cencora, Inc.'s Human Health segment growth of 8.5% is driven by increased demand for pharmaceuticals, expanding patient access, and rising adoption of innovative treatments. Additionally, the company's robust distribution network and growing presence in emerging markets contribute to its strong growth momentum.

Alliance Healthcare

Expected Growth: 7.0%

Alliance Healthcare from Cencora, Inc.'s 7.0% growth is driven by increased demand for pharmaceutical distribution services, expanded customer base, and strategic acquisitions. The company's strong logistics capabilities and ability to adapt to changing market conditions have also contributed to its growth. Additionally, the segment's growth is fueled by the rising need for healthcare products and services.

Other Healthcare Solutions

Expected Growth: 9.5%

The 9.5% growth in Other Healthcare Solutions from Cencora, Inc. is driven by increasing demand for specialty pharmaceuticals, expanding patient access programs, and strategic partnerships. Additionally, the segment benefits from Cencora's expertise in healthcare logistics and distribution, enabling efficient and reliable delivery of critical therapies to patients.

Animal Health

Expected Growth: 8.0%

The 8.0% growth in Animal Health from Cencora, Inc. is driven by increasing demand for animal care products, expanding veterinary services, and rising pet ownership. Additionally, the segment benefits from a strong portfolio of veterinary pharmaceuticals and vaccines, as well as growing sales of animal health diagnostics and nutritional products.

Intersegment Eliminations

Expected Growth: 0.0%

Intersegment eliminations from Cencora, Inc. show 0.0% growth, indicating no change in inter-segment transactions or pricing. This stability suggests that the company's business segments are not experiencing significant shifts in operations or market dynamics that would impact intersegment interactions.

7. Detailed Products

Pharmaceutical Distribution

Cencora, Inc. (formerly AmerisourceBergen) provides pharmaceutical distribution services to healthcare providers, pharmacies, and pharmaceutical manufacturers. They offer a comprehensive portfolio of pharmaceuticals, including brand-name, generic, and specialty medications.

Medical Supply Distribution

Cencora, Inc. distributes medical supplies, including surgical supplies, medical equipment, and patient care products, to various healthcare settings such as hospitals, clinics, and physician practices.

Pharmaceutical Manufacturer Services

Cencora, Inc. offers a range of services to pharmaceutical manufacturers, including supply chain management, logistics, and market access solutions. They help manufacturers navigate complex regulatory environments and optimize their product distribution.

Specialty Pharmacy Services

Cencora, Inc. operates a specialty pharmacy business that focuses on providing medications and support services for patients with complex conditions, such as cancer, HIV/AIDS, and rare diseases.

Data and Analytics Services

Cencora, Inc. offers data and analytics services to help healthcare providers, pharmaceutical manufacturers, and other stakeholders make informed decisions. They provide insights on market trends, patient outcomes, and treatment patterns.

8. Cencora's Porter Forces

Forces Ranking

Threat Of Substitutes

Cencora, Inc., formerly known as AmerisourceBergen, operates in the pharmaceutical distribution industry. The threat of substitutes in this industry is medium. While there are alternative distribution channels and some pharmacies or healthcare providers might consider direct purchasing, the extensive network, reliability, and regulatory compliance of companies like Cencora make substitution challenging. However, the growing trend of online pharmacies and direct-to-consumer sales of pharmaceuticals could potentially increase the threat level over time.

Bargaining Power Of Customers

The bargaining power of customers in the pharmaceutical distribution industry, where Cencora operates, is relatively low. This is because the customers (pharmacies, hospitals, and healthcare providers) rely heavily on the extensive distribution networks and the critical role that distributors play in ensuring the availability of medications. While large pharmacy chains might have some negotiating power, the essential nature of the services provided by Cencora limits the overall bargaining power of customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers in the pharmaceutical distribution industry is medium. Cencora deals with a variety of pharmaceutical manufacturers. While some of these suppliers, especially those with highly sought-after medications, might have more bargaining power, the industry's dynamics and the regulatory environment tend to balance the power. Cencora's size and market position also give it significant negotiating power with suppliers.

Threat Of New Entrants

The threat of new entrants in the pharmaceutical distribution industry is low. This industry is highly regulated, and new entrants face significant barriers to entry, including the need for substantial capital investment in logistics and distribution networks, as well as the establishment of relationships with pharmaceutical manufacturers and healthcare providers. Additionally, companies like Cencora have long-standing relationships with suppliers and customers, making it difficult for new entrants to compete effectively.

Intensity Of Rivalry

The intensity of rivalry in the pharmaceutical distribution industry, where Cencora operates, is high. The industry is dominated by a few large players, including Cencora (formerly AmerisourceBergen), Cardinal Health, and McKesson. These companies compete aggressively on price, service, and the ability to adapt to changing market conditions, such as the opioid crisis and the COVID-19 pandemic. The high level of competition among these major players results in a high intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 87.17%
Debt Cost 7.48%
Equity Weight 12.83%
Equity Cost 7.40%
WACC 7.47%
Leverage 679.33%

11. Quality Control: Cencora passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
J&J

A-Score: 6.9/10

Value: 3.1

Growth: 4.0

Quality: 8.8

Yield: 6.0

Momentum: 9.5

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
AbbVie

A-Score: 6.7/10

Value: 3.1

Growth: 4.7

Quality: 7.2

Yield: 7.0

Momentum: 9.5

Volatility: 9.0

1-Year Total Return ->

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Stock-Card
Cardinal Health

A-Score: 6.6/10

Value: 6.8

Growth: 6.6

Quality: 4.5

Yield: 4.0

Momentum: 10.0

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
McKesson

A-Score: 6.1/10

Value: 5.4

Growth: 8.3

Quality: 4.5

Yield: 0.0

Momentum: 9.5

Volatility: 8.7

1-Year Total Return ->

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Stock-Card
Cencor

A-Score: 5.9/10

Value: 3.4

Growth: 6.7

Quality: 4.3

Yield: 2.0

Momentum: 9.5

Volatility: 9.7

1-Year Total Return ->

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Stock-Card
Regeneron Pharmaceuticals

A-Score: 4.9/10

Value: 4.0

Growth: 6.4

Quality: 8.8

Yield: 0.0

Momentum: 4.0

Volatility: 6.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

371.44$

Current Price

371.44$

Potential

-0.00%

Expected Cash-Flows