Revenue: Cencora reported consolidated revenue of $68.4 billion in Q2, marking an 8% growth. U.S. Healthcare Solutions segment revenue saw an 8% increase to $61.3 billion, while International Healthcare Solutions segment revenue rose 5% reported (10% on a constant currency basis) to $7.1 billion.
Profits: Consolidated gross profit was $2.5 billion, with a growth of 7%. Operating income rose 11% to $1.0 billion. U.S. Healthcare Solutions segment operating income increased by 11% to $841 million, and International Healthcare Solutions segment operating income went up by 10% reported (22% on a constant currency basis) to $193 million.
Margins: The consolidated gross profit margin slightly decreased by 1 basis point to 3.70%.
Future Guidance
EPS: Revised guidance for fiscal 2024 EPS to a range of $13.30 to $13.50, from an initial range of $13.25 to $13.50, indicating an 11% to 13% growth.
Revenue: Guidance for consolidated revenue growth remains unchanged at 10% to 12%. For the International Healthcare Solutions segment, as-reported revenue growth is now expected to be between 4% and 7% (narrowed from 4% to 8%), with constant currency growth anticipated to be between 7% and 10%.
Operating Income: Expectations for consolidated adjusted operating income growth have been increased to a range of 9% to 11% from the prior 8% to 10%. In the U.S. Healthcare Solutions segment, operating income growth is now forecasted to be between 10% and 12%.
Trends, Market Conditions, Sentiment
GLP-1 Sales: Growth trends continued in the sales of GLP-1 products, although the growth rate moderated due to supply constraints.
COVID-19 Impact: The demand for commercial COVID-19 vaccines declined, and contributions from exclusive COVID treatment distribution were not significant.
Customer Support: Cencora supported its customers during the Change Healthcare outage by providing flexible payment terms, reflecting the company’s ability to offer timely solutions amidst challenges.
International Performance: Strong performance was noted in Brazil and Canada, with growth also driven by positive manufacturer price adjustments in developing market countries.
Sustainability Efforts: Recognition by Newsweek on its inaugural list of America’s Greenest Companies highlights Cencora’s commitment to environmental responsibility.
Investment in Technology: The enhancement of applications to integrate clinical, pharmacy, and financial information showcases Cencora’s investment in technology for better services and solutions.
Notable Quotes
Leadership Transition: “Bob’s experience leading our commercial operations and building talented customer-focused teams will benefit our company and all its stakeholders in the years to come.” – James Cleary on Bob Mauch’s appointment as CEO.
Customer Support: “The support we provided to our customers created a cash flow headwind in the second quarter of approximately $600 million, which we fully expect will reverse in our third fiscal quarter.” – James Cleary on supporting customers during the Change Healthcare outage.
Market Position: “Our role at the center of health care is core to our strategy and our positioning allows us to serve as a trusted partner while capturing opportunities presented by innovation.” – Steven Collis on the company’s strategic position.
