Q3 2024 Cencora Inc Earnings Call

Good morning and good afternoon ladies and gentlemen. Welcome to the Cencora Q3 earnings call. My name is Jaquita. I will be your moderator for today's call. All lines will be muted on the presentation portion of the call with the opportunity for questions and answers at the end.

Operator: Earnings Call. My name is Jaquita.

Jocquita: Matthew III, Ernie's call. My name is Jocquita.

Jaquita: I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with the opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to your host, Bennett Murphy, Senior Vice President, Head of Investor Relations and Treasury. Bennett, please go ahead. Thank you.

Jocquita: I will be your moderator for today's call. All lines will be muted on a presentation portion of the call, with the opportunity for questions and answers at the end. If you would like to ask a question, please fast start one on your telephone keypad.

If you would like to ask a question, please press star 1 on your telephone keypad. I would now like to pass the conference over to your host, Bennett Murphy, Senior Vice President, Head of Investor Relations and Treasury. Bennett, please go ahead.

Bennett Murphy: I would not like to pass the conference over to your host, Bennett Murphy, Senior Vice President of Investor Relations and Treasury. Bennett, please go ahead. Thank you.

Bennett S. Murphy: Good morning, good afternoon, and thank you all for joining us for this conference call to discuss CENCORA's fiscal 2024 third quarter results. I am Bennett Murphy, Senior Vice President, Head of Investor Relations and Treasury. Joining me today are Steve Collis, Chairman, President, and CEO; Jim Cleary, Executive Vice President and CFO; and Bob Mauch, Executive Vice President and COO. On today's call, we will be discussing non-GAAP financial measures. Reconciliations of these measures to GAAP are provided in today's press release, which is available on our website at investor.cencora.com.

Bennett Murphy: Good morning, good afternoon, and thank you all for joining us for this conference call to discuss Cencora's fiscal 2024 third-quarter results. I am Bennett Murphy, Senior Vice President, Head of Investor Relations and Treasury. Joining me today are Steve Collis, Chairman, President, CEO; Jim Cleary, Executive Vice President, CFO; and Bob Mauch, Executive Vice President, COO.

Bennett S. Murphy: Thank you. Good morning. Good afternoon. And thank you all for joining us for this conference call to discuss

Bennett S. Murphy: We've also posted a slide presentation to accompany today's press release on our investor website. During this conference call, we will make forward-looking statements about our business and financial expectations on an adjusted, non-GAAP basis, including but not limited to EPS, operating income, and income tax. Overlooking statements are based on management's current expectations and are subject to uncertainty and change. For a discussion of key risks and assumptions, we refer you to today's press release and our SEC filings, including our most recent 10-Q. Cencora assumes no obligation to update any forward-looking statements, and this call cannot be rebroadcast without the express permission of the company.

Bennett S. Murphy: Cencora's fiscal 2024 third quarter results. I am Bennett Murphy, Senior Vice President, Head of Investor Relations and Treasury. Joining me today are Steve Collis, Chairman, President, CEO ,

Bennett S. Murphy: Jim Cleary, Executive Vice President and CFO , and Bob Mauch.

Bennett Murphy: On today's call, we will be discussing non-GAAP financial measures. Recommendations of these measures to GAAP are provided in today's press release, which is available on our website at investor.cancora.com. We've also posted a slide presentation to accompany today's press release on our investor website.

Robert P. Mauch: Executive Vice President and COO.

Robert P. Mauch: On today's call, we will be discussing non-GAAP financial measures. Reconciliations of these measures to GAAP are provided in today's press release, which is available on our website at investor.cencora.com. We've also posted a slide presentation to accompany today's press release on our investor website.

Bennett Murphy: During this conference call, we will make four living statements about our business and financial expectations on adjusted non-GAAP basis, including but not limited to EPS, operating income, and income taxes. Four living statements are based on management's current expectations and are subject to uncertainty and change.

Bennett S. Murphy: During this conference call, we will make forward-looking statements about our business and financial expectations on an adjusted, non-GAAP basis, including but not limited to EPS, operating income, and income taxes.

Bennett S. Murphy: Overlooking statements are based on management's current expectations and are subject to uncertainty and change. For a discussion of key risks and assumptions, we refer you to today's press release and our SEC filings, including our most recent 10-Q.

Bennett Murphy: For discussion of key risks and assumptions, we refer you to today's press release and our SEC filing, including our most recent thank you. Cencora seems no obligation to update any four living statements, and this call cannot be broadcast without express permission of the company.

Bennett S. Murphy: Cencora assumes no obligation to update any forward-looking statements and this call cannot be rebroadcast without the express permission of the company.

Bennett Murphy: You'll have an opportunity to ask questions after today's remarks by management. We ask the linear questions to one per participant in order for us to get to as many participants as possible in the hour.

Bennett S. Murphy: You'll have an opportunity to ask questions after today's remarks by management. We ask that you limit your questions to one per participant in order for us to get to as many participants as possible within the hour. With that, I will turn the call over to Steve.

Steve Collis: With that, I will turn the call over to Steve. Thank you, Bennett. Good morning and good afternoon to everyone on the call.

Steve Collis: Thank you, Bennett. Good morning and good afternoon to everyone on the call. As I prepared for this, my 53rd and last earnings call as Cencora CEO, I look back at my prepared remarks from my first ever earnings call as CEO. On that call 13 years ago, I highlighted that it was the first time the company had eclipsed the $20 billion revenue mark for a quarter, and the company reported 66 cents in diluted earnings per share.

Bennett S. Murphy: Thank you, Bennett. Good morning and good afternoon to everyone on the call.

Steve Collis: As I prepared for this, my 53rd and last earnings call as Cencora CEO, I look back at my prepared remarks from my first ever earnings call as CEO. On that call 13 years ago, I highlighted that it was the first time the company had eclipsed the $20 billion revenue mark for a quarter, and the company reported $0.66 in diluted earnings per share. Fast forward to today and Cencora is proudly reporting courtly revenue of over $74 billion and adjusted diluted EPS of $3.34. Representing your over your growth of 11% and 14% respectively. Further, we are pleased to be raising our four-year outlook as Cencora continues to execute well against our pharmaceutical center.

Speaker Change: As I prepared for this, my 53rd and last earnings call as Cencora CEO , I look back at my prepared remarks from my first ever earnings call as CEO .

Bennett S. Murphy: On that call 13 years ago, I highlighted that it was the first time the company had eclipsed the $20 billion revenue mark for a quarter, and the company reported 66 cents in diluted earnings per share.

Steve Collis: Fast forward to today, and Cencora is proudly reporting quarterly revenue of over $74 billion and adjusted diluted EPS of $3.34, representing year over year growth of 11% and 14%, respectively. Further, we are pleased to be raising our four-year outlook as Cencora continues to execute well against our pharmaceutical-centric strategy. The healthcare landscape continues to rapidly evolve, and our strategic position as a global leader in healthcare, coupled with the agility and expertise of our teams, places us at the forefront of innovation.

Bennett S. Murphy: Fast forward to today and Cencora is proudly reporting quarterly revenue of over $74 billion and adjusted diluted EPS of $3.34.

Bennett S. Murphy: representing year-over-year growth of 11% and 14% respectively.

Bennett S. Murphy: Further, we are pleased to be raising our four-year outlook as Cencora continues to execute well against our pharmaceutical-centric strategy.

Steve Collis: The health care landscape continues to rapidly evolve, and our strategic position as a global leader in health care, coupled with the agility and expertise of our teams, places us at the forefront of innovation. We continue to leverage our commercial strengths to capsize on the opportunities presented by positive pharmaceutical trends and innovation to drive increased value for our customers, partners, and shareholders. Cencora's differentiated footprint and robust suite of services makes us a partner of choice, providing integrated solutions to support pharmaceutical commercialization and access. Our teams collaborate cross-functioning, creating a seamless process to efficiently bring new products to market.

Bennett S. Murphy: The healthcare landscape continues to rapidly evolve, and our strategic position as a global leader in healthcare, coupled with the agility and expertise of our teams, places us at the forefront of innovation.

Steve Collis: We continue to leverage our commercial strengths to capitalize on the opportunities presented by positive pharmaceutical trends and innovation to drive increased value for our customers, partners, and shareholders. Cencora's differentiated footprint and robust suite of services make us a partner of choice, providing integrated solutions to support pharmaceutical commercialization and access. Our teams collaborate cross functionally, creating a seamless process to efficiently bring new products to market. We remain differentiated in the market by our comprehensive approach, which leverages expertise developed from our position at the Center of Healthcare and our deep collaboration.

Bennett S. Murphy: We continue to leverage our commercial strengths to capsulize on the opportunities presented by positive pharmaceutical trends and innovation to drive increased value for our customers, partners, and shareholders.

Syncora: Cencora's differentiated footprint and robust suite of services makes us a partner of choice, providing integrated solutions to support pharmaceutical commercialization and access.

Syncora: Our teams collaborate cross-functionally.

Steve Collis: We remain differentiated in the market by a comprehensive approach, which leverages expertise developed from our position at the center of healthcare and our deep collaboration. As an example, Cencora is serving as an integrated launch partner to a bio-former company launching their products outside the US. Cencora is supporting both market access and efficient distribution to ensure providers and ultimately the patients have reliable access to the navel therapy. Partnerships like this exemplify how our holistic pharmaceutical solutions are providing value to our former partners and serve as a testament to how our diverse capabilities allow us to capture opportunity to drive innovation and access throughout the industry.

Syncora: Creating a seamless process to efficiently bring new products to market.

Syncora: We remain differentiated in the market by our comprehensive approach, which leverages expertise developed from our position at the Center of Healthcare and our deep collaboration.

Steve Collis: As an example, Cencora is serving as an integrated launch partner to a biopharmaceutical company launching their products outside the US. Cencora is supporting both market access and efficient distribution to ensure providers and, ultimately, patients have reliable access to the Novell therapy. Partnerships like this exemplify how our holistic pharmaceutical solutions are providing value to our pharma partners and serve as a testament to how our diverse capabilities allow us to capture opportunities to drive innovation and access throughout the industry. Many of these innovations are increasingly complex, which creates challenges to access and opportunities for Cencora to differentiate itself as a party.

Sincora: As an example, Cencora is serving as an integrated launch partner to a biopharma company launching their products outside the U.S.

Sincora: Cencora is supporting both market access and efficient distribution to ensure providers and ultimately the patients have reliable access to the Novell therapy.

Steve Collis: Many of these innovations are increasingly complex, which creates challenges to access and opportunities for Cencora to differentiate ourselves as a partner.

Speaker Change: Many of these innovations are increasingly complex, which creates challenges to access and opportunities for Cencora to differentiate ourselves as a partner.

Steve Collis: This quarter, we continued our Think Live trade show series by hosting a two-day cell and gene therapy conference. We leaders across the bio-former city core and healthcare industry came together to share a range of perspectives on the developments and challenges throughout the developing market. By hosting events like this, we foster collaborative relationships and effective strategies that enable the launch of groundbreaking therapies and reduce barriers to patient access.

Steve Collis: This quarter, we continued our Think Live trade show series by hosting a two-day cell and gene therapy conference. Leaders across the biopharmaceutical and healthcare industry came together to share a range of perspectives on the developments and challenges throughout the developing market. By hosting events like this, we foster collaborative relationships and effective strategies that enable the launch of groundbreaking therapies and reduce barriers to patient access. On the provider side, just last week, we also hosted our annual ThoughtSpot pharmacy trade show and conference, in collaboration with our good neighbor pharmacy network of independent customers.

Speaker Change: This quarter, we continued our Think Live trade show series by hosting a two-day cell and gene therapy conference.

Sincora: We're leaders across the biopharmaceutical and healthcare industry came together to share a range of perspectives on the developments and challenges throughout the developing market.

Sincora: By hosting events like this, we foster collaborative relationships and effective strategies that enable the launch of groundbreaking therapies and reduce barriers to patient access.

Steve Collis: On the provider side, just last week, we also hosted our annual Thought Spot Pharmacy Trade Show and Conference in collaboration with our Good Neighbor Pharmacy Network of independent customers. Our Thought Spot Conference provides thousands of community pharmacists with the opportunity to connect with peers, attend educational sessions on the latest development and technologies, and celebrate the positive impact community pharmacies have as trusted healthcare providers. We truly believe that by bringing our customers together, we help advance the healthcare landscape and promote a deeper collaboration across our teams. Independent pharmacies play a vital role in promoting access to healthcare in their local communities, and we are proud that Good Neighbor Pharmacy ranked number one in customer satisfaction among chain drugstore pharmacies in J.D. Power's U.S. Pharmacy Study for the eighth consecutive year in a row.

Sincora: On the provider side, just last week, we also hosted our annual ThoughtSpot Pharmacy Trade Show and Conference.

Sincora: in collaboration with our good neighbor pharmacy network of independent customers.

Steve Collis: Our ThoughtSpot conference provides thousands of community pharmacists with the opportunity to connect with peers, attend educational sessions on the latest developments and technologies, and celebrate the positive impact community pharmacies have as trusted healthcare providers. We truly believe that by bringing our customers together, we help advance the healthcare landscape and promote a deeper collaboration across our team. Independent pharmacies play a vital role in promoting access to healthcare in their local communities, and we are proud that Goodneighbor Pharmacy ranked number one in customer satisfaction among chain drugstore pharmacies in J.D. Powers U.S. Pharmacy Study for the eighth consecutive year in a row.

Sincora: Our ThoughtSpot conference provides thousands of community pharmacists with the opportunity to connect with peers, attend educational sessions on the latest development and technologies, and celebrate the positive impact community pharmacies have as trusted health care providers.

Goodneighbor Pharmacy: Independent pharmacies play a vital role in promoting access to health care in their local communities, and we are proud that Good Neighbor Pharmacy ranks number one in customer satisfaction among chain drugstore pharmacies.

Sincora: in J.D. Power's U.S. Pharmacy Study for the eighth consecutive year in a row.

Steve Collis: The Good Neighbor Pharmacy Network is clearly made up of leaders providing differentiated services for patients across the country.

Steve Collis: The Good Neighbor Pharmacy Network is clearly made up of leaders providing differentiated services for patients across the country. Forging deep strategic partnerships with market-leading customers is a strategic imperative and a key differentiator for Cencora. Through these relationships, we better understand the challenges our customers are facing, which allows us to strengthen our services and solutions, driving mutual value and growing better together. As we work to enhance our customer experience, one area of particular focus has been on how we leverage innovative technology and analytics to enhance our efficiency and effectiveness.

Speaker Change: The Good Neighbor Pharmacy Network is clearly made up of leaders providing differentiated services for patients across the country.

Steve Collis: Forging deep strategic partnerships with market leading customers is a strategic imperative and key differentiator for St. Korak. Through these relationships, we better understand the challenges our customers are facing, which allows us to strengthen our services and solutions, driving mutual value and growing better together. As we work to enhance our customer experience, one area of particular focus has been evolving how we leverage innovative technology and analytics to enhance our efficiency and effectiveness. This is important for continuing to improve our day-to-day operations and also finding new and creative ways to analyze and grow their business with actionable data, Cencora and Harness.

Speaker Change: Forging deep strategic partnerships with market leading customers is a strategic imperative and key differentiator for Cencora.

Speaker Change: Through these relationships, we better understand the challenges our customers are facing, which allows us to strengthen our services and solutions, driving mutual value and growing better together.

Speaker Change: As we work to enhance our customer experience, one area of particular focus has been evolving how we leverage innovative technology and analytics to enhance our efficiency and effectiveness.

Steve Collis: This is important for continuing to improve our day-to-day operations and also finding new and creative ways to analyze and grow their business with actionable data Cencora can harness. These strategic relationships with customers also allow us to capture areas of opportunity in rapidly advancing sectors of the market. I am particularly proud of our specialty distribution and services office.

Speaker Change: This is important for continuing to improve our day-to-day operations and also finding new and creative ways to analyze and grow their business with actionable data Cencora can harness.

Steve Collis: These strategic relationships with customers also allows to capture areas of opportunity in rapidly and bad things sectors of the market.

Speaker Change: These strategic relationships with customers also allow us to capture areas of opportunity in rapidly advancing sectors of the market.

Steve Collis: I am particularly proud of our specially distribution and services offering. For close to three decades, we have been a leader and innovator in this space. Importantly, we continue to make forward-thinking investments that position us to capitalize on addressing the complexities these products pose in handling and distribution and connect us with downstream providers where we are positioned to equip practices with offerings that advance the strength of their business. As specially continues to grow across all therapeutic areas, we are able to expand and develop the partnerships we have with customers, furthering our leading market position. Our leadership in specially remains a key tenant of our long-term growth and strategy.

Speaker Change: I am particularly proud of our specialty distribution and services offering.

Steve Collis: For close to three decades, we have been a leader and innovator in this space. Importantly, we continue to make forward-thinking investments that position us to capitalize on addressing the complexities these products pose in handling and distribution and connect us with downstream providers, where we are positioned to equip practices with offerings that advance the strength of their business. As specialty continues to grow across all therapeutic areas, we are able to expand and develop the partnerships we have with customers, furthering our leading market position.

Speaker Change: For close to three decades, we have been a leader and innovator in this space. Importantly, we continue to make forward-thinking investments that position us to capitalize on addressing the complexities these products pose in handling and distribution.

Speaker Change: and connect us with downstream providers where we are positioned to equip practices with offerings that advance the strength of their business.

Speaker Change: As specialty continues to grow across all therapeutic areas, we are able to expand and develop the partnerships we have with customers.

Steve Collis: Our leadership in specialty remains a key tenant of our long-term growth and strategy. We make forward-thinking investments in our infrastructure and emerging technology to position Cencora as the best partner to address our customers' current and future needs. The value we create throughout the supply chain and for our shareholders is driven by our global team members and their commitment to our purpose. Our team members execute at the impressive level they do because of our purpose-driven culture, which promotes differing perspectives and points of view. In June, we celebrated our team members that identify as a part of the LGBTQ+ community by hosting a global pride celebration and events throughout the month.

Speaker Change: Furthering our leading market position.

Speaker Change: Our leadership in specialty remains a key tenant of our long-term growth and strategy.

Steve Collis: We make forward-thinking investments in our infrastructure and emerging technologies to position Cencora as a best partner to address our customers' current and future needs. The value we create throughout the supply chain and for our shareholders is driven by our global team members and their commitment to our purpose. Our team members execute at the impressive level they do because of our purpose-driven culture, which promotes differing perspectives and points of view.

Speaker Change: We make forward-thinking investments in our infrastructure and emerging technologies to position Cencora as the best partner to address our customers' current and future needs.

Speaker Change: The value we create throughout the supply chain and for our shareholders is driven by our global team members and their commitment to our purpose.

Speaker Change: Our team members execute at the impressive level they do because of our purpose-driven culture, which promotes differing perspectives and points of view.

Steve Collis: In June, we celebrated our team members that identify as a part of the LGBTQ class community by hosting a global proud celebration and events throughout the month. In recognition of our commitment to fostering an inclusive and supportive workplace for all our team members, we are also proud to have been recognized as a best place to work for disability inclusion by Disability, I.N., for a second consecutive year. Our leaders are dedicated to fostering a working community and culture that celebrates and embraces our team members as the authentic self, which includes providing a safe and inclusive working environment for all, as our talents, engagement, and commitment to our purpose drives our business resiliency and long-term strategic growth.

Speaker Change: In June , we celebrated our team members that identify as a part of the LGBTQ plus community by hosting a global pride celebration and events throughout the month.

Robert P. Mauch: In recognition of our commitment to fostering an inclusive and supportive workplace for all our team members, we are also proud to have been recognized as a Best Place to Work for Disability Inclusion by Disability IN for a second consecutive year. Our leaders are dedicated to fostering a workplace community and culture that celebrates and embraces our team as the authentic self, which includes providing a safe and inclusive working environment for all as our talents, engagement, and commitment to our purpose drive our business resiliency and long-term strategic growth.

Speaker Change: In recognition of our commitment to fostering an inclusive and supportive workplace for all our team members.

Speaker Change: We are also proud to have been recognized as a Best Place to Work for Disability Inclusion by Disability IN for a second consecutive year.

Speaker Change: Our leaders are dedicated to fostering a working community and culture that celebrates and embraces our team members as the authentic self.

Steve Collis: Cencora continues to efficiently adapt to industry changes, operate and draw on our business energies, and execute across the geographies we serve. with results in our continued growth and resiliency. Our team members' diligence and passion for our purpose is inspiring and is fundamental to our success.

Robert P. Mauch: Cencora continues to efficiently adapt to industry change, operate and draw on our business synergies, and execute across the geographies we serve, which results in our continued growth and resilience. Our team members' diligence and passion for our purpose is inspiring and is fundamental to our success. With that, I will now hand the call over to Bob, our incoming CEO, effective October 1. Thank you, Steve.

Speaker Change: Cencora continues to efficiently adapt to industry changes, operate and draw on our business synergies, and execute across the geographies we serve.

Speaker Change: which results in our continued growth and resiliency.

Speaker Change: Our team members' diligence and passion for our purpose is inspiring and is fundamental to our success.

Bob Mauch: With that, I will now hand the call over to Bob, our incoming CEO, effective October 1. Bob. Thank you, Steve. As I continue to prepare to transition to CEO in October, I'm focused on speaking to and learning from our team members and our customers. In my conversations with customers, I reinforce the value of Cencora strategy, leadership and expertise, and how we are investing and innovating to be the partner that they need now and into the future. We are working closely with leaders in healthcare across every channel, prioritizing customer-centric solutions, maintaining a learning mindset and embracing our enterprise-powered capabilities. We differentiate ourselves as partners, grow together and anticipate advancements throughout healthcare.

Speaker Change: With that, I will now hand the call over to Bob, our incoming CEO , effective October 1. Bob?

Robert P. Mauch: As I continue to prepare to transition to CEO in October, I'm focused on speaking to and learning from our team members and our customers. In my conversations with customers, I reinforce the value of Cencora's strategy, leadership, and expertise and how we are investing and innovating to be the partner that they need now and into the future, and working closely with leaders in healthcare across every channel, prioritizing customer-centric solutions. Maintaining a learning mindset and embracing our enterprise power capabilities

Robert P. Mauch: Thank you, Steve. As I continue to prepare to transition to CEO in October , I'm focused on speaking to and learning from our team members and our customers.

Robert P. Mauch: In my conversations with customers, I reinforced the value of Cencora's strategy, leadership and expertise, and how we are investing and innovating to be the partner that they need now and into the future.

Speaker Change: In working closely with leaders in healthcare across every channel, prioritizing customer-centric solutions

Speaker Change: Maintaining a learning mindset and embracing our enterprise-powered capabilities, we differentiate ourselves as partners.

Robert P. Mauch: We differentiate ourselves as partners, grow together, and anticipate advancements throughout health care. Our team members are motivated by the important work we do, the collective strength of our business, and the collaboration we enjoy across our company.

Bob Mauch: Our team members are motivated by the important work we do, the collective strength of our business, and the collaboration we enjoy across our company. The culture and pride our team members have in their work drive our purpose as we create healthier futures, and our success is a direct reflection of our team's pursuit of operational excellence. We champion the diverse perspectives and backgrounds that our team members bring to the table, which enables us to take a thoughtful and creative approach to addressing industry challenges, enhancing the value we provide to customers, partners, shareholders, and the broader healthcare industry.

Speaker Change: Grow Together, and Anticipate Advancements Throughout Healthcare.

Speaker Change: Our team members are motivated by the important work we do, the collective strength of our business and the collaboration we enjoy across our company.

Robert P. Mauch: The culture and pride our team members have in their work drive our purpose as we create a healthier future and our success as a direct reflection of our team's pursuit of operational excellence. We champion the diverse perspectives and backgrounds that our team members bring to the table, which enables us to take a thoughtful and creative approach to addressing industry challenges. Enhancing the value we provide to customers, partners, shareholders, and the broader health care industry. Looking forward, we will continue to execute against our pharmaceutical-centric strategy. Driving efficiency through the supply chain

Speaker Change: The culture and pride our team members have in their work drive our purpose as we create healthier futures.

Speaker Change: We champion the diverse perspectives and backgrounds that our team members bring to the table, which enables us to take a thoughtful and creative approach to addressing industry challenges, enhancing the value we provide to customers, partners, shareholders, and the broader healthcare industry.

Bob Mauch: Looking forward, we will continue to execute against our pharmaceuticals-centric strategy, driving efficiency through the supply chain, and supporting the growth of innovative products to our higher growth, higher margin services.

Speaker Change: Looking forward, we will continue to execute against our pharmaceutical centric strategy, driving efficiency through the supply chain.

Robert P. Mauch: Supporting the growth of innovative products through our higher growth, higher margin service. In closing, I'm incredibly honored to have the opportunity to succeed Steve as Cencora's next CEO. Cencora's position in healthcare is a direct result of Steve's vision and next-minded approach to growing and advancing the depth and breadth of our services. And I want to take a moment to congratulate Steve on his incredible tenure and the mark he has made on this company as well as our industry.

Bob Mauch: In closing, I'm incredibly honored to have the opportunity to succeed Steve at Cencora's next CEO. Cencora's position in healthcare is a direct result of Steve's vision and next-minded approach in growing and advancing the depth and breadth of our services. And I want to take a moment to congratulate Steve on his incredible tenure and the marquee made on this company as well as our industry. Under Steve's leadership, Cencora has delivered tremendous growth and demonstrated our crucial role to stakeholders. Steve has led the company through major strategic decisions that position Cencora for long-term value creation, including customer partnerships with leading healthcare organizations, expanding our geographic footprint, and the various services and solutions we provide, as well as successfully navigating significant national and global challenges.

Speaker Change: In closing, I'm incredibly honored to have the opportunity to succeed Steve as Cencora's next CEO .

Steve: Cencora's position in healthcare is a direct result of Steve's vision and next-minded approach in growing and advancing the depth and breadth of our services.

Speaker Change: And I want to take a moment to congratulate Steve on his incredible tenure and the mark he made on this company as well as our industry.

Robert P. Mauch: Under Steve's leadership, Cencora has delivered tremendous growth and demonstrated our crucial role to stakeholders. He has led the company through major strategic decisions that positioned Cencora for long-term value creation, including customer partnerships with leading health care organizations. Expanding our geographic footprint and the various services and solutions we provide, as well as successfully navigating significant national and global challenges, all while remaining committed to our purpose and supporting our team members. Thank you, Steve, for your service to Cencora and your unwavering commitment.

Speaker Change: Under Steve's leadership, Cencora has delivered tremendous growth and demonstrated our crucial role to stakeholders.

Speaker Change: Steve has led the company through major strategic decisions that positioned Cencora for long-term value creation.

Speaker Change: including customer partnerships with leading healthcare organizations.

Speaker Change: expanding our geographic footprint and the various services and solutions we provide.

Speaker Change: as well as successfully navigating significant national and global challenges.

Bob Mauch: All while remaining committed to our purpose and supporting our team members. Thank you, Steve, for your service to Cencora and your unwavering commitment. I'm working closely with Steve to ensure a seamless transition, and I look forward to his continued leadership, partnership, and guidance as he transitions to the role of Executive Chair. It's a privilege to work alongside Cencora as inspiring and passionate team members. And I look forward to building on our momentum as we are optimistic and excited about the future of Cencora and intend to keep up the track record of execution and performance.

Speaker Change: All while remaining committed to our purpose and supporting our team members.

Speaker Change: Thank you, Steve, for your service to Cencora and your unwavering commitment.

Robert P. Mauch: I'm working closely with Steve to ensure a seamless transition, and I look forward to his continued leadership, partnership, and guidance as he transitions to the role of Executive Chair. It's a privilege to work alongside Cencora's inspiring and passionate team members.

Speaker Change: I'm working closely with Steve to ensure a seamless transition, and I look forward to his continued leadership, partnership, and guidance as he transitions to the role of Executive Chair.

Speaker Change: It's a privilege to work alongside Cencora's inspiring and passionate team members, and I look forward to building on our momentum as we are optimistic and excited about the future of Cencora and intend to keep up the track record of execution and performance.

Jim Cleary: And I look forward to building on our momentum as we are optimistic and excited about the future of Cencora and intend to keep up the track record of execution and performance. I will now turn the call over to Jim for a review of our fiscal 2024 third quarter financial performance. Thanks, Bob. Good morning and good afternoon, everyone.

Unknown Executive: Lawrence.

Jim Cleary: I will now turn the call over to Jim for a review of our fiscal 2024 third-quarter financial performance. Jim. Thanks, Bob. Good morning and good afternoon, everyone. Before I turn to a review of our consolidated third quarter results, as a reminder, my remarks will focus on our adjusted non-GAAP financial results unless otherwise stated. For a detailed discussion of our gap results, please refer to our earnings press release and presentation. Cencora delivered another strong performance in the third quarter as we continue to benefit from positive utilization trends, our leadership in specialty, and the strong free cash flow generation of our business.

Speaker Change: I will now turn the call over to Jim for a review of our fiscal 2024 third quarter financial performance. Jim.

Jim Cleary: Before I turn to a review of our consolidated third quarter results, as a reminder, my remarks will focus on our adjusted non-GAAP financial results unless otherwise stated. For a detailed discussion of our GAAP results, please refer to our earnings press release and presentation. Cencora delivered another strong performance in the third quarter as we continue to benefit from positive utilization trends, our leadership and specialty, and the strong free cash flow generation of our business.

Jim Cleary: Thanks, Bob. Good morning and good afternoon, everyone.

Jim Cleary: Before I turn to a review of our consolidated third quarter results, as a reminder, my remarks will focus on our adjusted non-GAAP financial results unless otherwise stated. For a detailed discussion of our GAAP results, please refer to our earnings press release and presentation.

Jim Cleary: Cencora delivered another strong performance in the third quarter as we continue to benefit from positive utilization trends, our leadership and specialty, and the strong free cash flow generation of our business.

Jim Cleary: As Steve mentioned, adjusted diluted EPS increased 14% to $3.34 as we benefited from strong results in the U.S. healthcare solution segment, lower net interest expense, and a lower share count due in part to approximately $550 million in opportunistic share repurchases in the quarter as we continue to thoughtfully deploy capital and return value to shareholders. Beginning with our consolidated revenue in the quarter, we had $74.2 billion in revenue, up 11%, with continued growth in our distribution businesses, including increased sales of GLP1 products, increased sales of specialty products to position practices and health systems, and growth in sales to some of our largest customers.

Jim Cleary: As Steve mentioned, Adjusted Diluted EPS increased 14% to $3.34 cents as we benefited from strong results in the US healthcare solutions segment, lower net interest expense, and a lower share count due in part to approximately $550 million in opportunistic share repurchases in the quarter as we continue to thoughtfully deploy capital and return value to shareholders. Beginning with our consolidated revenue in the quarter, we had $74.2 billion in revenue With continued growth in our distribution businesses, including increased sales of GLP-1 products, increased sales of specialty products to physician practices and health systems, and growth in sales to some of our largest customers.

Jim Cleary: As Steve mentioned, Adjusted Diluted EPS increased 14% to $3.34 as we benefited from strong results in the U.S. healthcare solutions segment.

Steve: Lower net interest expense and a lower share count due in part to approximately 550 million dollars in opportunistic share repurchases in the quarter as we continue to thoughtfully deploy capital and return value to shareholders.

Jim Cleary: Our strong revenue growth was offset in part by the January 1 manufacturer price reductions in certain product classes. Sales of GLP-1 products in the quarter increased by $2.1 billion or 38% compared to the prior year and increased 30% sequentially from the March quarter when there was a notable slowdown in growth due to supply constraints, which have clearly now subsided. Excluding GLP-1s, consolidated revenue growth would have been approximately 8%.

Speaker Change: Beginning with our consolidated revenue in the quarter, we had $74.2 billion in revenue up 11%.

Speaker Change: With continued growth in our distribution businesses, including increased sales of GLP-1 products, increased sales of specialty products to physician practices and health systems, and growth in sales to some of our largest customers.

Jim Cleary: Our strong revenue growth was offset in part by the January 1 manufacturer price reductions in certain product classes. Sales of GLP1 products in the quarter increased by $2.1 billion, or 38%, compared to prior year and increased 30% sequentially from the March quarter, when there was a notable slowdown in growth due to supply constraints, which have clearly now subsided. Excluding GLP1's consolidated revenue growth, would have been approximately 8%. Turning now to gross profit, consolidated gross profit was $2.4 billion, up 6% compared to the prior year quarter. Consolidated gross profit margin was 3.19%, a decrease of 14 basis points compared to the prior year quarter as a reasseleration of low margin GLP1 products sales negatively impacts our gross profit margin.

Speaker Change: Our strong revenue growth was offset in part by the January 1 manufacturer price reductions in certain product classes.

Speaker Change: Sales of GLP-1 products in the quarter increased by $2.1 billion or 38% compared to prior year and increased 30% sequentially from the March quarter when there was a notable slowdown in growth due to supply constraints, which have clearly now subsided.

Speaker Change: Excluding GLP-1s, consolidated revenue growth would have been approximately 8%.

Jim Cleary: Turning now to gross profit, consolidated gross profit was $2.4 billion, up 6% compared to the prior year quarter. consolidated gross profit margin was 3.19%, a decrease of 14 basis points compared to the prior year quarter, as a reacceleration of low-margin GLP-1 product sales negatively impacts our gross profit margin.

Speaker Change: Turning now to gross profit. Consolidated gross profit was $2.4 billion, up 6% compared to the prior year quarter.

Speaker Change: Consolidated gross profit margin was 3.19%, a decrease of 14 basis points compared to the prior year quarter, as a reacceleration of low margin GLP-1 product sales negatively impacts our gross profit margin.

Jim Cleary: Moving now to operating expenses. In the quarter, consolidated operating expenses were $1.5 billion, up 6% due to higher distribution, selling, and administrative expenses to support revenue growth and lapping the efficiency actions we called out last year on our May earnings call. Consolidated operating income was $878 million, an increase of 7% compared to the prior year quarter, with strong growth in the U.S. healthcare solutions segment, which I will discuss in more detail when reviewing the segment level results.

Jim Cleary: Moving now to operating expenses in the quarter, consolidated operating expenses were $1.5 billion, up 6% due to higher distribution, selling, and administrative expenses to support revenue growth. And lapping the efficiency actions we called out last year on our May earnings call. Consolidated operating income was $878 million, an increase of 7% compared to the prior year quarter. There was strong growth in the US healthcare solutions segment, which I will discuss in more detail when reviewing the segment level results. Moving now to our net interest expense and effective tax rate for the third quarter, net interest expense was $31 million, a decrease of 46% year over year, as interest income increased as a result of particularly strong cash flow in the quarter.

Speaker Change: Moving now to operating expenses. In the quarter, consolidated operating expenses were $1.5 billion, up 6% due to higher distribution, selling, and administrative expenses to support revenue growth.

Jim Cleary: and lapping the efficiency actions we called out last year on our May earnings call.

Jim Cleary: Consolidated operating income was $878 million, an increase of 7% compared to the prior year quarter, with strong growth in the U.S. healthcare solutions segment, which I will discuss in more detail when reviewing the segment level results.

Jim Cleary: Moving now to our net interest expense and effective tax rate for the third quarter. Net interest expense was $31 million, a decrease of 46% year-over-year as interest income increased as a result of particularly strong cash flow in the quarter, in part due to our successful unwinding of the extended payments program we launched in the March quarter to support our customers during the change healthcare outage. The combination of strong cash flow early in the quarter and higher investment rates compared to the prior year drove a significant decline in net interest expense year over year.

Jim Cleary: Moving now to our net interest expense and effective tax rate for the third quarter.

Jim Cleary: Net interest expense was $31 million, a decrease of 46% year-over-year as interest income increased as a result of particularly strong cash flow in the quarter.

Jim Cleary: In part due to our successful unwinding of the extended payments program, we launched in the March quarter to support our customers during the change Health Care house. Mortgage. The combination of strong cash flow early in the quarter and higher investment rates compared to the prior year drove the significant decline in net interest expense year over year. Turning to income taxes, our effective income tax rate was 21.0% compared to 21.5% in the prior year quarter. Finally, our diluted share count was 200 million shares, a 2% decrease compared to the prior year third quarter, primarily driven by opportunistic share repurchases.

Jim Cleary: In part due to our successful unwinding of the extended payments program we launched in the March quarter to support our customers during the change healthcare outage.

Jim Cleary: The combination of strong cash flow early in the quarter and higher investment rates compared to the prior year drove the significant decline in net interest expense year over year.

Jim Cleary: Turning to income taxes, our effective income tax rate was 21.0% compared to 21.5% in the prior year quarter. Finally, our diluted share count was 200 million shares, a 2% decrease compared to the prior year third quarter, primarily driven by opportunistic share repurchases.

Jim Cleary: Turning to income taxes, our effective income tax rate was 21.0% compared to 21.5% in the prior year quarter.

Jim Cleary: Finally, our diluted share count was 200 million shares, a 2% decrease compared to the prior year third quarter, primarily driven by opportunistic share repurchases.

Jim Cleary: In fiscal 2024, we have repurchased almost $1 billion of our shares, including $700 million directly from Walgreens Boots Alliance. Regarding our cash balance and adjusted free cash flow, we ended the quarter with a cash balance of $3.3 billion and $2.3 billion of adjusted free cash flow. As the $600 million impact from the Change Healthcare outage that I just spoke about reversed early in the third quarter.

Jim Cleary: In fiscal 2024, we have repurchased almost $1 billion of our shares, including $700 million directly from Walgreens Boots Alliance.

Jim Cleary: In fiscal 2024, we have repurchased almost $1 billion of our shares, including $700 million directly from Walgreens Boots Alliance. Regarding our cash balance and adjusted free cash flow, we ended the quarter with a cash balance of $3.3 billion and $2.3 billion of adjusted free cash flow as the $600 million impact from the change healthcare outage that I just spoke about reversed early in the third quarter. This concludes our review of our consolidated results.

Jim Cleary: Regarding our cash balance and adjusted free cash flow.

Jim Cleary: We ended the quarter with a cash balance of $3.3 billion and $2.3 billion of adjusted free cash flow as the $600 million impact from the change healthcare outage that I just spoke about reversed early in the third quarter.

Jim Cleary: This completes the review of our consolidated results.

Jim Cleary: Now I'll turn to our segment results for the third quarter. U.S. Healthcare Solutions segment revenue was $67.2 billion, up 12%, reflecting strong Scripps utilization trends, including increased sales of GLP-1 products and specialty products to physicians and health systems. Excluding sales of GLP-1 products, segment revenue growth would have been approximately 10%.

Jim Cleary: Now I'll turn to our segment results for the third quarter. U.S. Healthcare Solutions Segment Revenue was $67.2 billion, up 12%, reflecting strong script utilization trends, including increased sales of GLP1 products and specialty products to physicians and health systems. Excluding sales of GLP1 products, segment revenue growth would have been approximately 10%. U.S. Healthcare Solutions Segment operating income increased 10% to $698 million as our specialty distribution business saw strong growth in both oncology and ophthalmology, in addition to strong overall prescription volumes and biosimilar conversions.

Jim Cleary: This completes the review of our consolidated results. Now I'll turn to our segment results for the third quarter.

Jim Cleary: U.S. healthcare solutions segment revenue was $67.2 billion, up 12%, reflecting strong Scripps utilization trends, including increased sales of GLP-1 products and specialty products to physicians and health systems.

Jim Cleary: Excluding sales of GLP-1 products, segment revenue growth would have been approximately 10%.

Jim Cleary: U.S. Healthcare Solutions Segment operating income increased 10% to $698 million as our specialty distribution business saw strong growth in both oncology and ophthalmology, in addition to strong overall prescription volumes and biosimilar conversion. I will now turn to our International Healthcare Solutions segment. In the quarter, International Healthcare Solutions revenue was $7.1 billion, flat compared to the prior year, on an as-reported basis, or up 6% on a constant currency basis. International Healthcare Solutions operating income was $179 million, a decrease of 4% on an as-reported basis due to the continuation of higher information technology expenses for our European distribution business and lower operating income at our global specialty logistics business, as there were fewer international shipments and lower weights per shipment, all of which was partially offset by positive results at our Canadian business.

Jim Cleary: U.S. Healthcare Solutions Segment operating income increased 10%

Jim Cleary: to $698 million as our specialty distribution business saw strong growth in both oncology and ophthalmology, in addition to strong overall prescription volumes and biosimilar conversions.

Jim Cleary: I will now turn to our International Healthcare Solutions segment. In the quarter, International Healthcare Solutions revenue was $7.1 billion, flat compared to prior year on an as reported basis, or up 6% on a constant currency basis. International Healthcare Solutions operating income was $179 million, a decrease of 4% on an as reported basis due to continuation of higher information technology expenses for our European distribution business and lower operating income at our global specialty logistics business as there were less international shipments and lower wage per shipment, all of which was partially offset by positive results at our Canadian business.

Jim Cleary: On a constant currency basis, the international health care solutions segment operating income increased 1%. Our global specialty logistics business is starting to see some good early signs on the demand side, and the business continues to invest to further differentiate its global strength and its complex high-touch market. That completes the review of our segment level results. I will now discuss our updated fiscal 2024 guidance expectations. As a reminder, we do not provide forward-looking guidance on a gap basis, so the following metrics are provided on an adjusted, non-gap basis.

Jim Cleary: I will now turn to our International Healthcare Solutions segment. In the quarter, International Healthcare Solutions revenue was $7.1 billion, flat compared to prior year on an as-reported basis, or up 6% on a constant currency basis.

Jim Cleary: International Healthcare Solutions operating income was $179 million.

Jim Cleary: A decrease of 4% on an as-reported basis due to continuation of higher information technology expenses for our European distribution business.

Jim Cleary: and lower operating income at our global specialty logistics business as there were less international shipments and lower weights per shipment, all of which was partially upset by positive results at our Canadian business.

Jim Cleary: On a constant currency basis, International Healthcare Solutions segment operating income increased 1%. Our global specialty logistics business is starting to see some good early signs on the demand side, and the business continues to invest to further differentiate its global strength and its complex high-touch market.

Jim Cleary: On a constant currency basis, international healthcare solutions segment operating income increased 1%.

Jim Cleary: Our global specialty logistics business is starting to see some good early signs on the demand side, and the business continues to invest to further differentiate its global strength and its complex high-touch market.

Jim Cleary: That completes review of our segment level results.

Jim Cleary: I will now discuss our updated fiscal 2024 guidance expectations. As a reminder, we do not provide forward-looking guidance on a GAAP basis, so the following metrics are provided on an adjusted non-GAAP basis. I will also provide certain guidance metrics on a constant currency basis. Joseph. I will start with updated adjusted deluded EPS guidance and then provide greater detail on the income statement items driving our improved earnings expectations. Today we are pleased to raise our fiscal 2024 EPS guidance for the fourth time this fiscal year. We now expect EPS to be in the range of $13.55 to $13.65, representing growth of 13 to 14%.

Jim Cleary: I will also provide certain guidance metrics on a constant currency basis. I will start with updated, adjusted, diluted EPS guidance and then provide greater detail on the income statement items driving our improved earnings expectations. Today, we are pleased to raise our fiscal 2024 EPS guidance for the fourth time this fiscal year.

Jim Cleary: That completes the review of our segment level results. I will now discuss our updated fiscal 2024 guidance expectations.

Jim Cleary: As a reminder, we do not provide forward-looking guidance on a gap basis, so the following metrics are provided on an adjusted, non-gap basis. I will also provide certain guidance metrics on a constant currency basis.

Jim Cleary: We now expect EPS to be in the range of $13.55 to $13.65, representing growth of 13% to 14%, up from our intraperiod provided EPS guidance range of $13.35 to $13.55. Our updated guidance range reflects our expectation for continued growth in the US healthcare solutions segment, tapered expectations in the international healthcare solutions segment, and lower net interest expense expectations for the fiscal year. Beginning with revenue, we now expect both our as reported and constant currency consolidated revenue growth to be approximately 12% from our previous guidance range of 10% to 12% given our increased guidance in the US segment.

Jim Cleary: I will start with updated, adjusted, diluted EPS guidance and then provide greater detail on the income statement items driving our improved earnings expectations.

Jim Cleary: Today, we are pleased to raise our fiscal 2024 EPS guidance for the fourth time this fiscal year.

Jim Cleary: We now expect EPS to be in the range of $13.55 to $13.65, representing growth of 13% to 14%.

Jim Cleary: Up from our intraperiod provided EPS guidance range of $13.35 to $13.55. Our updated guidance range reflects our expectation for continued growth in the U.S. healthcare solution segment, tapered expectations in the international healthcare solution segment, and lower net interest expense expectations for the fiscal year. Beginning with revenue, we now expect both our as-reported and constant currency consolidated revenue growth to be approximately 12% from our previous guidance range of 10% to 12%, given our increased guidance in the U.S. segment. In the U.S. healthcare solution segment, we now expect segment level revenue growth of 12% to 13% from the previous range of 11% to 13%.

Speaker Change: Up for Mark Intra Period Provided EPS Guidance Range of $13.35 to $13.55.

Speaker Change: Beginning with revenue, we now expect both our as-reported and constant currency consolidated revenue growth to be approximately 12% from our previous guidance range of 10% to 12% given our increased guidance in the U.S. segment.

Jim Cleary: In the US healthcare solutions segment, we now expect segment level revenue growth of 12% to 13% from the previous range of 11% to 13%. In the international healthcare solutions segment, we now expect as reported segment level revenue growth of 4% to 6% from the previous range of 4% to 7% and constant currency revenue growth of 7% to 9% from the previous range of 7% to 10%.

Speaker Change: In the U.S. healthcare solutions segment, we now expect segment-level revenue growth of 12% to 13% from the previous range of 11% to 13%.

Jim Cleary: In the international healthcare solution segment, we now expect as reported segment level revenue growth of 4% to 6% from the previous range of 4% to 7%, and constant currency revenue growth of 7% to 9% from the previous range of 7% to 10%. Moving to adjusted operating income, we now expect our as reported consolidated adjusted operating income growth to be in the range of 10% to 11% as we narrow our guidance from the previous range of 9% to 11%, and constant currency growth to be in the range of 11% to 12%, narrowed from the previous guidance range of 10% to 12%.

Speaker Change: We now expect, as reported, segment-level revenue growth of 4% to 6% from the previous range of 4% to 7%.

Speaker Change: and constant currency revenue growth of 7% to 9% from the previous range of 7% to 10%.

Jim Cleary: Moving to adjusted operating income, we now expect our as reported consolidated adjusted operating income growth to be in the range of 10% to 11% as we narrow our guidance from the previous range of 9% to 11% and constant currency growth to be in the range of 11% to 12%, narrowed from the previous guidance range of 10% to 12%. The updated guidance reflects expected continued growth toward the upper end of our previous guidance range in the U.S. healthcare solutions segment and growth toward the lower end of our previous guidance ranges in the international healthcare solutions segment.

Speaker Change: Moving to Adjusted Operating Income.

Speaker Change: We now expect our, as reported, consolidated adjusted operating income growth to be in the range of 10% to 11% as we narrow our guidance from the previous range of 9% to 11%.

Speaker Change: and constant currency growth to be in the range of 11% to 12% narrowed from the previous guidance range of 10% to 12%.

Jim Cleary: Updated guidance reflects expected continued growth toward the upper end of our previous guidance range in the U.S. healthcare solutions segment and growth toward the lower end of our previous guidance ranges in the international healthcare solution segment. In the U.S. healthcare solution segment, we now expect our segment level adjusted operating income growth to be in the range of 11% to 12% from our previous range of 10% to 12%. Due to our continued strong growth expectations for the remainder of the fiscal year. As a reminder, in the fourth quarter, we will lap the prior year contribution of 8% from exclusive COVID therapy distribution and will also begin comparing to prior year quarters that had contributions from commercial COVID vaccines, which we expect to be comparable year over year.

Speaker Change: Updated guidance reflects expected continued growth toward the upper end of our previous guidance range in the U.S. healthcare solutions segment and growth toward the lower end of our previous guidance ranges in the international healthcare solutions segment.

Jim Cleary: In the U.S. healthcare solution segment, we now expect our segment level adjusted operating income growth to be in the range of 11% to 12% from our previous range of 10% to 12% due to our continued strong growth expectations for the remainder of the fiscal year. As a reminder, in the fourth quarter, we will lap the prior year contribution of 8 cents from exclusive COVID therapy distribution and will also begin comparing to prior year quarters that had contributions from commercial COVID vaccines, which we expect to be comparable year over year.

Speaker Change: In the U.S. Healthcare Solutions segment, we now expect our segment-level adjusted operating income growth to be in the range of 11% to 12% from our previous range of 10% to 12% due to our continued strong growth expectations for the remainder of the fiscal year.

Speaker Change: As a reminder, in the fourth quarter, we will lap the prior year contribution of $0.08 from exclusive COVID therapy distribution, and we'll also begin comparing to prior year quarters of the year.

Speaker Change: that had contributions from commercial COVID vaccines, which we expect to be comparable year over year.

Jim Cleary: In the international healthcare solution segment, we now expect our segment level adjusted operating income growth to be in the range of 5 to 7% from our previous range of 5% to 8%. On a constant currency basis, we now expect adjusted operating income growth to be in the range of 10% to 12% from our previous range of 10% to 13%. Percent. We are modestly narrowing our international operating income guidance range, bringing down the top end of the range due to our third quarter results in the segment and some softness in demand at Parmelix. Moving now to net interest expense and share count, we now expect our net interest expense to be in the range of $170 million to $190 million, down from our previous range of $185 million to $215 million, driven by our better, higher than expected free cash flow.

Jim Cleary: In the International Healthcare Solutions segment, we now expect our segment-level adjusted operating income growth to be in the range of 5 to 7% from our previous range of 5% to 8%. On a constant currency basis, we now expect adjusted operating income growth to be in the range of 10% to 12% from our previous range of 10% to 13%. We are modestly narrowing our international operating income guidance range, bringing down the top end of the range due to our third quarter results in the segment and some softness in demand at PharmaList.

Speaker Change: In the International Healthcare Solutions segment, we now expect our segment-level adjusted operating income growth to be in the range of 5 to 7 percent.

Speaker Change: from our previous range of 5% to 8%.

Speaker Change: On a constant currency basis, we now expect adjusted operating income growth to be in the range of 10% to 12% from our previous range of 10% to 13%.

Speaker Change: We are modestly narrowing our international operating income guidance range, bringing down the top end of the range due to our third quarter results in the segment and some softness in demand at Pharmalex.

Jim Cleary: Moving now to net interest expense and share count, we now expect our net interest expense to be in the range of $170 million to $190 million, down from our previous range of $185 million to $215 million, driven by our better than expected free cash flow. For weighted average shares outstanding, we now expect our full-year count to be under 201 million shares as a result of our opportunistic share repurchases in the quarter.

Speaker Change: Moving now to net interest expense and share count, we now expect our net interest expense to be in the range of $170 million to $190 million, down from our previous range of $185 million to $215 million, driven by our better than expected free cash flow.

Jim Cleary: For weighted average shares outstanding, we now expect our full year count to be under 201 million shares as a result of our opportunistic share repurchases in the quarter. As you will recall on May 22nd, we announced that we had completed $550 million in share repurchases in the month, including $400 million repurchase from Walgreens, Foods Alliance, decreasing our weighted average diluted share count. Finally, returning to adjusted free cash flow, we now expect to generate $2.5 billion to $3 billion, up from our previous expectation of approximately $2.5 billion in adjusted free cash flow in the fiscal year, given our strong free cash flow generation in the third quarter.

Speaker Change: For Weighted Average Shares Outstanding, we now expect our full year count to be under 201 million shares as a result of our opportunistic share repurchases in the quarter.

Jim Cleary: As you will recall, on May 22nd, we announced that we had completed $550 million in share repurchases during the month, including $400 million repurchase from Walgreens Boots Alliance, decreasing our weighted average diluted share count. Finally, turning to adjusted free cash flow, we now expect to generate $2.5 billion to $3 billion, up from our previous expectation of approximately $2.5 billion in adjusted free cash flow in the fiscal year, given our strong free cash flow generation in the third quarter.

Speaker Change: As you will recall, on May 22nd, we announced that we had completed $550 million in share repurchases in the month, including $400 million repurchase from Walgreens Boots Alliance, decreasing our weighted average diluted share count.

Speaker Change: Finally, turning to adjusted free cash flow.

Speaker Change: We now expect to generate

Speaker Change: $2.5 billion to $3 billion up from our previous expectation of approximately $2.5 billion.

Speaker Change: and Adjusted Free Cash Flow in the Fiscal Year, given our strong free cash flow generation in the third quarter.

Jim Cleary: That completes the review of our updated guidance for fiscal 2024. As we near the end of the fiscal year, I am proud of the strong results our purpose-driven team members have produced. The dedication and execution by our team members continue to drive our growth and enable us to deliver on our pharmaceutical center strategy. Fencora continues to demonstrate our ability to deliver long-term sustainable growth and create value for our customers, partners, and all our stakeholders.

Jim Cleary: That completes the review of our updated guidance for fiscal 2024. As we near the end of the fiscal year, I am proud of the strong results our purpose-driven team members have produced. The dedication and execution by our team members continue to drive our growth and enable us to deliver on our pharmaceutical centric strategy. Cencora continues to demonstrate its ability to deliver long-term sustainable growth and create value for our customers, partners, and all our stakeholders.

Speaker Change: That completes the review of our updated guidance for fiscal 2024.

Speaker Change: As we near the end of the fiscal year, I am proud of the strong results our purpose-driven team members have produced.

Speaker Change: The dedication and execution by our team members continue to drive our growth and enable us to deliver on our pharmaceutical-centric strategy. Cencora continues to demonstrate our ability to deliver long-term sustainable growth and create value for our customers, partners, and all our stakeholders.

Jim Cleary: Before handing the call back over to Steve, I want to extend my congratulations once again to both him and Bob, as our company is well positioned to continue creating value in the short and long term with the company's thoughtful leadership transition plan. Fencora has benefited from having such a purpose-driven leader and Steve for well over a decade, and his vision for the company has created a strong foundation for value creation for our customers, partners, and shareholders. Under Bob's leadership, we will continue to build on Fencora's momentum and commercial strengths and drive further value for our stakeholders on our path toward our purpose of creating healthier futures.

Jim Cleary: Before handing the call back over to Steve, I want to extend my congratulations once again to both him and Bob as our company is well positioned to continue creating value in the short and long terms with the company's thoughtful leadership transition plan. Cencora has benefited from having such a purpose-driven leader in Steve for well over a decade, and his vision for the company has created a strong foundation for value creation for our customers, partners, and shareholders.

Speaker Change: Before handing the call back over to Steve, I want to extend my congratulations once again to both him and Bob as our company is well positioned to continue creating value in the short and long term with the company's thoughtful leadership transition plan.

Speaker Change: Cencora has benefited from having such a purpose-driven leader in Steve for well over a decade and his vision for the company has created a strong foundation for value creation for our customers, partners, and shareholders.

Jim Cleary: Under Bob's leadership, we will continue to build on Cencora's momentum and commercial strengths and drive further value for our stakeholders on our path toward our purpose of creating a healthier future. Congratulations to you both once again.

Speaker Change: Under Bob's leadership, we will continue to build on Cencora's momentum and commercial strengths and drive further value for our stakeholders on our path toward our purpose of creating healthier futures. Congratulations to you both once again.

Jim Cleary: Congratulations to both once again.

Jim Cleary: Before turning the call back to Steve, I'm going to go through a little bit of historical data, which will take Steve by surprise. And during the 13 years that Steve has been CEO of Fencora, the revenue compound annual growth rate has been 11%. And the adjusted EPS compound annual growth rate has been 14%. And it's a little bit of a coincidence that those were actually the same growth rates we had this most recent quarter: 11% revenue growth and 14% adjusted EPS growth. And then also during the 13 years that Steve has been CEO, the company has had a TSR, a total shareholder return KEGER of between 15 and 16%.

Jim Cleary: Before turning the call back to Steve, I'm going to go through a little bit of historical data, which will surprise Steve. And during the 13 years that Steve has been CEO of Cencora, the revenue compound annual growth rate has been 11%, and the adjusted EPS compound annual growth rate has been 14%. And it's a little bit of a coincidence that those were actually the same growth rates we had this most recent quarter, 11% revenue growth and 14% adjusted EPS growth. And then also during the 13 years that Steve has been CEO.

Speaker Change: Before turning the call back to Steve,

Speaker Change: I'm going to go through a little bit of historical data, which will take Steve by surprise. And during the 13 years that Steve has been CEO of Cencora.

Speaker Change: The Revenue Compound Annual Growth Rate has been 11%.

Speaker Change: and the adjusted EPS compound annual growth rate has been 14%.

Steve: And it's a little bit of a coincidence that those were actually the same growth rates we had this most recent quarter, 11% revenue growth and 14% adjusted EPS growth. And then also during the

Steve: 13 years that Steve has been CEO . The company has had a TSR, total shareholder return CAGR of between 15 and 16%. So Steve, I thought I'd just go through that historical data and now I'll turn it back over to you.

Jim Cleary: The company has had a TSR, total shareholder return CAGR, of between 15 and 16%. So Steve, I thought I'd just go through that historical data. And now I'll turn it back over to you. Thank you, Jim. You did take me by surprise.

Steve Collis: So, Steve, I thought I'd just go through that historical data, and now I'll turn it back over to you. Thank you, Jim. You did take me by surprise. But with this being my final earnings call, I want to take a moment to thank our team members. Our board and our stakeholders for the opportunity to serve as Cencora CEO these last 13 years. In my first call as CEO, are highlighted that we would pursue opportunities to increase our value offering to existing customers. Add to our strengths and core competencies and increase shareholder value. Throughout my tenure, we have delivered on that framework and grown significantly operationally, geographically, and financially as we built upon our scale and expertise as a pharmaceutical distributor and leader in specialty by deepening and broadening our relationships upstream with former and advancing our solutions downstream with our provider customers.

Steve Collis: But with this being my final earnings call, I want to take a moment to thank our team, our board, and our stakeholders for the opportunity to serve as Cencora's CEO these last 13 years. In my first call as CEO, I highlighted that we would pursue opportunities to increase our value offering to existing customers, add to our strengths and core competencies, and increase shareholder value. Throughout my tenure, we have delivered on that framework and grown significantly, operationally, geographically, and financially.

Steve: Thank you, Jim. You did take me by surprise. But with this being my final earnings call, I want to take a moment to thank our team members.

Steve: Our board and our stakeholders for the opportunity to serve as Cencora's CEO these last 13 years.

Speaker Change: In my first call as CEO , I highlighted that we would pursue opportunities to increase our value offering to existing customers.

Steve: Add to our strengths and core competencies and increase shareholder value.

Steve: Throughout my tenure, we have delivered on that framework and grown significantly.

Steve Collis: As we built upon our scale and expertise as a pharmaceutical distributor and leader in specialty by deepening and broadening our relationships upstream with pharma and advancing our solutions downstream with our provider customers, we have advanced our core distribution capabilities to organic and inorganic growth opportunities, in turn expanding our reach and providing more patients with the life-saving medications they need. Our leadership and capabilities in space make Cencora a driving force in supporting access to and intelligence for cutting-edge therapy.

Steve: Operations, Geographically, and Financially.

Steve: As we built upon our scale and expertise as a pharmaceutical distributor and leader in specialty by deepening and broadening our relationships upstream with pharma and advancing our solutions downstream with our provider customers.

Steve Collis: We have advanced our core distribution capabilities through organic and inorganic growth opportunities, in turn expanding our reach and providing more patience with the lifesaving medications they need. Our leadership and capabilities in specialty makes Cencora a driving force in supporting access and intelligence for cutting-edge therapies. Cencora's demonstrated growth over the past decade plus speaks to the strength of our execution against our pharmaceutical centric strategy. Our team's relentless focus has allowed us to continually capitalize on growth across healthcare and to be the partner of choice for both upstream bioformer and downstream providers. Cencora is strategically positioned at the center of healthcare, and as Bob steps into the role as CEO on October 1st, the company will continue to build on our momentum, relationships, and capabilities, guided by his leadership to drive results and create value for all of our stakeholders.

Steve: We have advanced our core distribution capabilities through organic and inorganic growth opportunities.

Steve: In turn, expanding our reach and providing more patients with the life-saving medications they need.

Steve: Our leadership and capabilities in specialty make Cencora a driving force in supporting access and intelligence for cutting-edge therapies.

Steve Collis: Cencora's demonstrated growth over the past decade plus speaks to the strength of our execution against our pharmaceutical-centric strategy. Our team's relentless focus has allowed us to continually capitalize on growth across healthcare and to be the partner of choice for both upstream biopharma and downstream providers. Cencora is strategically positioned at the Center of Health

Steve: Cencora's demonstrated growth over the past decade plus speaks to the strength of our execution against our pharmaceutical-centric strategy.

Steve: Our team's relentless focus has allowed us to continually capitalize on growth across healthcare and to be the partner of choice for both upstream biopharma and downstream providers.

Steve Collis: And as Bob steps into the role as CEO on October 1, the company will continue to build on our momentum, relationships, and capabilities, guided by his leadership to drive results and create value for all of our stakeholders. I have had the pleasure of working alongside Bob for almost 20 years, and I'm excited to see the future as we watch him lead Cencora. Bob's deep understanding of all facets of pharmaceutical distribution, logistics, and commercialization, his experience leading all of our businesses during his tenure, and his integral role in helping to shape our strategy over the years makes him incredibly well equipped to be the company's third ever CEO.

Steve: Cencora is strategically positioned at the center of healthcare.

Steve: And as Bob steps into the role as CEO on October 1st.

Robert P. Mauch: The company will continue to build on our momentum, relationships and capabilities guided by his leadership to drive results and create value for all of our stakeholders.

Steve Collis: I have had the pleasure of working alongside Bob for almost 20 years, and I'm excited to see the future as we watch him lead Cencora. Bob's deep understanding of all facets of pharmaceutical distribution, logistics, and commercialization, experience leading all of our businesses during his tenure, and his integral role in helping to shape our strategy over the years makes him incredibly well equipped. To be the company's third ever CEO, it has been an honor and a pleasure to be a part of the company's evolution, and I look forward to seeing how Cencora advances into the future.

Speaker Change: I have had the pleasure of working alongside Bob for almost 20 years and I'm excited to see the future as we watch him lead Cencora.

Robert P. Mauch: Bob's deep understanding of all facets of pharmaceutical distribution, logistics, and commercialization.

Steve Collis: It has been an honor and a pleasure to be a part of the company's evolution, and I look forward to seeing how Cencora develops into the future. The numbers that I talked about at the opening of the call would not have been possible without the enormous contribution of so many of my colleagues throughout my 30 year career with the company, and I'm sincerely grateful and humbled by their achievement and dedication to being united in our responsibility to create a Healthier Future. With that, we will now move to Q&A. Operator.

Robert P. Mauch: It has been an honor and a pleasure to be a part of the company's evolution, and I look forward to seeing how Cencora advances into the future.

Steve Collis: The numbers that I talked about at the opening of the call would not have been possible without the enormous contribution of so many of my colleagues throughout my 30-year career with the company, and I'm sincerely grateful and humbled by their achievements.

Speaker Change: And I'm sincerely grateful and humbled by their achievements.

Operator: And dedication to being united in our responsibility to create healthier futures. With that, we will now move to Q&A operator.

Operator: Absolutely. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. If, for any reason, you would like to remove that question, please press star 2. Again, to ask a question, press star 1.

Operator: Absolutely, we will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad. If, for any reason, you would like to remove that question, please press star two. Again, to ask a question, press star one.

Robert P. Mauch: Absolutely.

Operator: And if you're using a speakerphone, please remember to pick up your handset before asking your question. We will pause briefly to allow questions to register. The first question comes from the line of Lisa Gill with J.P. Morgan. Your line is now open. Thanks very much.

Speaker Change: If for any reason you would like to remove that question, please press star 2.

Operator: And speaker phone, please remember to take up your hands up before asking your question. We will post briefly to allow questions to register.

Speaker Change: Again, to ask a question, press star 1. And if you're using a speakerphone, please remember to pick up your handset before asking your question. We will pause briefly to allow questions to register.

Lisa Gill: The first question comes from Atlanta, Lisa Gill, with JP Morgan.

Lisa Gill: Your line is now open. Thanks very much.

Lisa Gill: And congratulations, Steve. You know, it's been great working with you for a number of years. And Bob, congratulations to you as well.

Lisa Gill: And congratulations, Steve. You know, it's been great working with you for a number of years, and Bob, congrats to you as well. My question really is around how we think about things from here. You know, obviously a great quarter, great last several years, and also under your tenure as Steve. But as I think about 25, really two questions.

Speaker Change: Thanks very much. And congratulations, Steve. You know, it's been great working with you for a number of years. And Bob, congrats to you as well.

Robert P. Mauch: My question really is around how we think about things from here. You know, obviously, a great quarter, a great last several years, and also under your tenure, Steve. But as I think about 25, I have really two questions.

Robert P. Mauch: One, Bob, any change in the philosophy of how you think about whether it's giving guidance to the street or any of the growth metrics? And then, secondly, for you, Jim, I know usually here in the third quarter, you'll give us some headwinds and tailwinds and things to think about as we think about fiscal 25. Lisa, thank you for the kind words.

Bob Mauch: One, Bob, any change in the philosophy of how you think about whether it's giving guidance to the street or any of the growth metrics. And then secondly, for you, Jim, I know usually here on the third quarter, you'll give us some headwinds and tailwinds and things to think about as we think about fiscal 25.

Bob Mauch: Lisa, thank you for the kind words. You know, when you think about going forward, it's, you know, I'll hit the strategy point first. And that kind of links to your question. I think Steve said this, but it's important to remember that, you know, Steve and I and the executive team have worked for over a long period of time on our strategy. And that's working as evidenced by our performance. And so you shouldn't expect any changes there. And that would include. You know how we think about our going forward guidance and projections, but I'll let you answer that.

Robert P. Mauch: You know, when you think about going forward, it's, you know, I'll hit the strategy point first. And that kind of links to your question. I think Steve said this, but it's important to remember that, you know, Steve and I and the executive team have worked for a long period of time on our strategy, and that's working, as evidenced by our performance. And so you shouldn't expect any changes there.

Speaker Change: Lisa, thank you for the for the kind words.

Speaker Change: You know, when you think about going forward, it's.

Robert P. Mauch: I'll hit the strategy point first, and that kind of links to your question. I think Steve said this, but it's important to remember that Steve and I and the executive team have worked for over a long period of time on our strategy, and that's working as evidenced by our performance. And so you shouldn't expect...

Robert P. Mauch: Any changes there, and that would include, you know, how we think about our going forward guidance and projections, but I'll let Jim answer that.

Jim Cleary: Sure. Great.

Robert P. Mauch: And that would include, you know, how we think about our going forward guidance and projections, but I'll let Jim answer that. Sure, great. Lisa, I'll answer the second part of your question. I'll start by saying that we'll provide comprehensive guidance at the end of our fiscal year after we've completed our year-end planning process. I'll also say that we do feel good about our long-term guidance, which contemplates operating income growth of 5 to 8% and EPS growth of 8 to 12%.

Jim Cleary: Lisa, I'll answer the second part of your question. I'll start by saying that I will provide comprehensive guidance at the end of our fiscal year after we completed our year in planning process. I'll also say that we do feel good about our long-term guidance that contemplates operating income growth of 5 to 8% and EPS growth of 8 to 12%. And you asked about puts and takes. You know, items that would move us within a range include things like growth and specialty products to physicians and health systems and the growth rate, and that important part of our business continued positive utilization trends.

Jim Cleary: Sure, great. Lisa, I'll answer the second part of your question. I'll start by saying that we'll provide comprehensive guidance at the end of our fiscal year after we've completed our year-end planning process. I'll also say that we do feel good about our long-term guidance that contemplates operating income growth of 5% to 8% and EPS growth of 8% to 12%.

Robert P. Mauch: And you asked about puts and takes, items that would move us within a range include things like growth and specialty products to physicians and health systems and the growth rate in that important part of our business, continued positive utilization trends, of course, timing of capital deployment, including any timing of share repurchases. And then also, 1 other thing for fiscal year 25 is the comparison to the 1st season with commercial COVID vaccines.

Speaker Change: And you asked about puts and takes, you know, items that would move us within a range include things like growth and specialty products to physicians and health systems and the growth rate and that important part of our business, continued positive utilization trends.

Jim Cleary: Of course, timing of capital deployment, including any timing of share repurchases. And then also one other thing for fiscal year 25 is comparison to the first season with commercial COVID vaccines. You'll recall in the first quarter of fiscal year 24. We sold a lot of commercial COVID vaccines, and we're preparing for that and for the first quarter of 25. But of course, it's hard to predict the absolute level. You know, I'll finish by just saying that we consistently delivered strong financial performance driven by our leading market positions and the continued execution by our team members.

Speaker Change: Of course, timing of capital deployment, including any timing of share repurchases. And then also one other thing for fiscal year 25 is

Jim Cleary: As you'll recall, in the 1st quarter of fiscal year 24, we sold a lot of commercial COVID vaccines, and we're preparing for that and for the 1st quarter of 25, but of course, it's hard to predict the absolute level. I'll finish by just saying that we've consistently delivered strong financial performance driven by our leading market positions and the continued execution by our team members. Our pharmaceutical-focused foundation and our competitive position enable us to capitalize on market trends and continue to deliver solid results. So, thanks a lot for the question. Thank you. The next question comes from a line of Michael Cherny, O'Leary Partners. Your line is now open. Good morning.

Speaker Change: comparison to the first season with commercial COVID vaccines. As you'll recall, in the first quarter of fiscal year 24, we sold a lot of commercial COVID vaccines, and we're preparing for that and for the first quarter of 25. But of course, it's hard to predict the absolute level.

Speaker Change: You know, I'll finish by just saying that we've consistently delivered strong financial performance driven by our leading market positions and the continued execution by our team members.

Jim Cleary: Our pharmacy pharmaceutical center foundation and our competitive position enables us to capitalize on market trends and continue to deliver solid results. So thanks a lot for the question, Lisa.

Speaker Change: Our pharmaceutical-centric foundation and our competitive position enables us to capitalize on market trends and continue to deliver solid results. So thanks a lot for the question, Lisa.

Jim Cleary: Thank you.

Eric Percher: The next question comes from a lot of micro churning. Will really park partners. Your line is not open.

Michael Aaron Cherny: Thanks for taking the question, and I'll echo Lisa's comments, Steve. It's been a pleasure, and I know you're not going too far, but we'll certainly miss you on these calls and welcome hearing from Bob Moore. Maybe just to kind of follow up a little bit on the second part of Lisa's question, you know, as you think about the market today, you talked last quarter about some of the changes in list prices and how they impacted the quarterly results you saw, at least from a revenue basis in the U.S., a nice sequential uptick. Where do you see relative to where you'd expect?

Eric Percher: Good morning. Thanks for taking the question, and I'll echo Lisa's comments. It's been a pleasure. I know you're not going too far, but we'll certainly miss you on these calls.

Jim Cleary: Welcome hearing from Bob Moore. Maybe just to kind of follow up a little bit on the second part of Lisa's question, you know, as you think about the market today, you talked last quarter about some of the changes in list prices and how it impacted the core of the results. You saw; we saw revenue basis in the US, a nice sequential uptick. Where do you see, relative to where you'd expect me to mention the larger trajectory, but where do you see the health of the markets today as you prepare to give us that full guidance.

Speaker Change: Maybe just to kind of follow up a little bit on the second part of Lisa's question, as you think about the market today,

Speaker Change: You talked last quarter about some of the changes in list prices and how it impacted the quarterly results you saw, at least from a revenue basis in the U.S., a nice sequential uptick.

Michael Aaron Cherny: I mean, Jim, you mentioned the long-term trajectory, but where do you see the health of the markets today as you prepare to give us that full guidance? And in terms of what could be a positive-negative dynamic, obviously, you have a lot of customers, some big, some small, going through strategic changes. How does that factor into how you think about the trajectory going forward for your business? Yeah, I'll, I'll start out.

Speaker Change: Where do you see, relative to where you'd expect, I mean, Jim, you mentioned the long-term trajectory, but where do you see the health of the markets?

Jim Cleary: And in terms of what could be a positive negative dynamic, obviously you have a lot of customers, some big, some small going through strategic changes. How does that factor into how you think about the trajectory going forward for your business. Yeah, I'll start out and talk about the overall health of the market. You know, we continue to see very good utilization trends. We saw solid utilization trends in the quarter, which is something we've talked about for quite some time. You know, those include continued growth of GLP ones, which of course drive top line, but are minimally profitable on the bottom line.

Speaker Change: Today, as you prepare to give us that full guidance and in terms of what could be a positive negative dynamic, obviously, you have a lot of customers, some big, some small going through strategic changes. How does that factor into how you think about the trajectory going forward for your business?

Jim Cleary: And talking about the overall health of the market, you know, we continue to see very good utilization trends. We saw solid utilization trends in the quarter, which is something we've talked about for quite some time. You know, those include continued growth of GLP ones, which of course, of course, drive the top line but are minimally profitable on the bottom line. But we are also seeing, you know, particularly strong sales of specialty products to physician practices and health systems that continue to outpace the broader market growth.

Speaker Change: Continue to see very good utilization trends. We saw solid utilization trends in the quarter, which is something we've talked about for quite some time. You know, those include continued growth of GLP-1s, which, of course, drive top line but are minimally profitable on the bottom line.

Jim Cleary: But we are also seeing, you know, particularly strong sales of specialty products to position practices and health systems that continue to outpace the broader market growth. And within specialty, we're seeing positive trends in both oncology and ophthalmology. You know, other kind of macro things, as you're asking about drug pricing, really no new commentary there. Brand inflation, that we would have talked more about last quarter because the timing, brand inflation, it continues to be in mind with our expectations. But then, of course, over 90%, 95% of our brand five side dollars are fee-for-service. And generic deflation, really the same commentary that we've had for quite some time now, that, you know, we've seen a moderation of generic inflation.

Speaker Change: But we are also seeing, you know, particularly strong sales of specialty products to physician practices and health systems that continue to outpace the broader market growth. And within specialty, we're seeing, you know, positive trends in both oncology and ophthalmology, you know, other kind of macro things as you're asking about drug pricing, really no new commentary there, brand inflation, that we would have talked more about last quarter, because the timing brand inflation continues to be in line with our expectations. And but then, of course, over 90% 95% of our brand by side dollars or fee per service.

Jim Cleary: And within specialty, we're seeing, you know, positive trends in both oncology and ophthalmology, you know, other kind of macro things as you're asking about drug pricing, really no new commentary there. Brand inflation, which we would have talked more about last quarter, because the timing of brand inflation continues to be in line with our expectations. And of course, our business model is not as reliant on generic pricing because of our contract rebalancing. But overall, in terms of, you know, market trends, it's, you know, very consistent with our recent commentary. Thank you. The next question comes from the line of Elizabeth Anderson with Everport ISI. Your line is now open.

Speaker Change: Generic deflation, really the same commentary that we've had for quite some time now, that, you know, we've seen a moderation of generic deflation, and of course, our business model is not as reliant on generic pricing because of our contract rebalancing. But overall, in terms of

Jim Cleary: And of course, our business model is not as reliant on generic pricing because of our contract rebalancing. But overall, in terms of, you know, market trends. It's, you know, very consistent with our recent commentary.

Speaker Change: You know, market trends, it's, you know, very consistent with our recent commentary.

Jim Cleary: Thank you.

Elizabeth Anderson: The next question comes from a line of Elizabeth Anderson: whatever for is your line is not open. Hey guys, thanks so much for the question. Congrats to even looking forward to working more with you, Bob, going forward.

Speaker Change: Thank you. The next question comes from the line of Elizabeth Anderson with Everport ISI. Your line is now open.

Elizabeth Anderson: Hey guys, thanks so much for the question. Congratulations, Steve, and looking forward to working more with you, Bob, going forward. Maybe just a question about the PharmaLex business. Can you talk about sort of how pharma, you know, how that cycle is going? You know, we've heard across the spectrum that, you know, we've seen some weaker spending in that. You know, where do you think we are in that cycle?

Elizabeth Anderson: Hey guys, thanks so much for the question. Congrats, Steve, and looking forward to working more with you, Bob, going forward.

Elizabeth Anderson: Maybe just a question about the Pharma Lex business. I know, can you talk about sort of how pharma, you know, how that cycle is going, you know, we've heard across the spectrum that, you know, we've seen some weaker spending in that. You know, where do you think we are in that cycle? And how, what have been your sort of penitive comments from your customers in terms of 2025 budget there? Thank you.

Elizabeth Anderson: Maybe just a question about the PharmaLex business, I know, can you talk about sort of how pharma, you know, how that cycle is going, you know, we've heard across the spectrum that, you know, we've seen some weaker spending in that, you know, where do you think we are in that cycle? And how, what have been your sort of tentative comments from your customers in terms of 2025 budgets there? Thank you.

Elizabeth Anderson: And how, what have been your sort of tentative comments from your customers in terms of 2025 budgets there? Yeah, so I will start. We've seen some softness in our consulting business, as we commented on in our prepared remarks.

Jim Cleary: Yeah, so I will start. We've seen some softness in our consulting business, as we commented on and are prepared remarks. And you know, that's been noted by some other companies in the space. There's some early positive indicators in the market. It's too early to call it a rebound, but we are seeing some early positive indicators. And our team is really focused on identifying and prioritizing revenue-generating action items. And I'll also say that, you know, we do remain confident in our strategic decision to acquire the business.

Jim Cleary: And you know, that's been noted by some other companies in the space. There are some early positive indicators in the market. It's too early to call it a rebound, but we are seeing some early positive indicators.

Speaker Change: Yeah, so I will start. We've seen some softness in our consulting business, as we commented on in our prepared remarks.

Speaker Change: And, you know, that's been noted by some other companies in the space. There's some early positive indicators in the market. It's too early to call it a rebound, but we are seeing some early positive indicators. And our team is really focused on identifying and prioritizing revenue generating action items. And I'll also say that, you know, we do remain confident in our strategic decision to acquire the business.

Bob Mauch: Jim Alderson, Elizabeth First, thanks for the question and thank you for the warm welcome, but I'll just, you know, reinforce what Jim said at the end there. You know, we have a strong belief in the strategic thesis that, you know, the innovation and farmer will continue over a long period of time and that our farmer services businesses, which are our higher growth, higher margin businesses, will benefit that. And from time to time, there will be, you know, partial slowdowns in that area. But, as Jim said, we are seeing improvement.

Jim Cleary: And our team is really focused on identifying and prioritizing revenue-generating action items. And I'll also say that, you know, we do remain confident in our strategic decision to, You know, Tim, I'll just add, and Elizabeth first, thanks for the question. And thank you for the warm welcome.

Speaker Change: Jim, I'll just add, and Elizabeth first, thanks for the question and thank you for the warm

Robert P. Mauch: But I'll just, you know, reinforce what Jim said at the end there. We have a strong belief in the strategic thesis that, you know, innovation and pharma will continue for a long period of time and that our pharma services businesses, which are our higher growth, higher margin businesses, will benefit from that. And from time to time, there will be, you know, partial slowdowns in that area. But, as Jim said, we are seeing improvement. Thank you. The next question comes from the line of Allen Lutz with Bank of America. Your line is now open.

Jim Cleary: Welcome, but I'll just...

Speaker Change: You know, reinforce what Jim said at the end there, you know, we have a strong belief in the strategic thesis that, you know, the innovation and pharma will continue.

Jim Cleary: Over a long period of time and that our pharma services businesses, which are our higher growth, higher margin businesses will benefit that. And from time to time, there will be, you know, partial slowdowns in that area. But as Jim said, we are seeing improvement.

Bob Mauch: Thank you. The next question comes from a line of Allen. Look, would think of America. Your line is now open. Good morning, and thanks for taking the question. First, congrats, Steve, on a really nice run here over the past 13 years. One question for Jim: the gross margin was relatively flat quarter or year over year last quarter, but now it seems to be continuing the normal trend down. Is that all due to the re-acceleration of GOP ones? I know there's a lot going on underneath the hood: insulin pricing, vaccine currency, headwinds, and GOP ones, but I'm curious if there's anything else to call out there.

Speaker Change: Thank you. The next question comes from the line of Allen Lutz with Bank of America. Your line is now open.

Allen Lutz: Good morning, and thanks for taking the question. First, congrats, Steve, on a really nice run here over the past 13 years. One question for Jim, the gross margin was relatively flat quarter or year over year last quarter, but now it seems to be continuing the normal trend down. Is that all due to the reacceleration of GLP-1s?

Allen Lutz: Good morning, and thanks for taking the question. First, congrats, Steve, on a really nice run here over the past 13 years. One question for Jim.

Speaker Change: The gross margin was relatively flat year-over-year last quarter, but now it seems to be continuing the normal trend down.

Allen Lutz: I know there's a lot going on underneath the hood, insulin pricing, vaccines, currency headwinds, and GLP-1s, but I'm curious if there's anything else to call out there. Thanks. Yeah, thanks a lot for asking that question. And the decline in growth profit margin exporter is very explainable. First, let me say, year over year in the US, it's due to an increase in sales of lower margin GLP ones. And then if you look at it on a consolidated basis, really, the balance is simply due to mix. The U.S. business grew faster in the quarter, of course, than the international business did.

Speaker Change: Is that all due to the re-acceleration of GLP-1s? I know there's a lot going on underneath the hood, insulin pricing, vaccine, currency headwinds in GLP-1s, but I'm curious if there's anything else to call out there. Thanks.

Jim Cleary: Thanks. Yeah, thanks a lot for asking that question, and the decline in growth profit margin exporter is very explainable. First, let me say you're over a year in the US; it's due to an increase in sales of lower margin GLP ones. And then if you look at it on a consolidated basis, really the balance is simply due to mix. The US business grew faster in the quarter, of course, than the international business did. And the US business has a lower gross profit margin; the international business has more of the kind of higher margin businesses in it, and so that mix also had an impact during the quarter.

Speaker Change: Yeah, thanks a lot for asking that question, and the decline in gross profit margin this quarter is very explainable. First, let me say year over year in the U.S., it's due to increase in sales of lower margin GLP-1s.

Speaker Change: And then if you look at it on a consolidated basis.

Speaker Change: Really, the balance is simply due to mix.

Speaker Change: The U.S. business grew faster in the quarter, of course, than the international business did, and the U.S. business

Jim Cleary: And the U.S. business has lower gross profit margins. The international business has more of the kind of higher-margin businesses in it. And so that mix also had an impact during the quarter.

Speaker Change: has lower gross profit margins. The international business has more of the kind of higher margin businesses in it. And so that mix also had an impact during the quarter. Thank you for asking.

Jim Cleary: Thank you for asking.

Jim Cleary: Thank you for asking. Thank you. The next question comes from the line of Eric Percher with Nefron Research.

Eric Percher: Thank you. The next question goes on a line of Eric Percher with never on research. Your line is now open. Thanks.

Speaker Change: Thank you. The next question goes from the line of Eric Percher with Nefron Research. Your line is now open.

Eric Percher: Your line is now open. Thanks. I can't resist a kind of historical question for Steve, and I will welcome you to comment as well. Of late, we've seen quite a few large oncology groups up for sale. And obviously, one of those benefited you last year with one oncology group and another now in Florida, in the news on a possible sale. Did you think that there was a change going on? Is there, you know, pressure on these businesses that's leading to this change? Or do you think that they're looking to monetize from a position of strength?

Eric Percher: I can't resist a kind of historic question for Steve, and Bob will welcome you to comment as well. Of late, we've seen quite a few large oncology groups up for sale, and obviously one of those benefited you last year with One Oncology, and another now in Florida in the news on a possible sale. Steve, do you think that there's a change going on? Is there pressure on these businesses that's leading to this change, or do you think that they're looking to monetize from a position of strength? And then the follow through there is does that ultimately create opportunity or risk for some core.

Eric Percher: Thanks. I can't resist a kind of historic question for Steve, and Bob, I'll welcome you to comment as well.

Eric Percher: Of late, we've seen quite a few large oncology groups up for sale, and obviously one of those benefited you last year with one oncology and another now in Florida in the news on a possible sale.

Speaker Change: Steve, do you think that there's a change going on? Is there, you know, pressure on these businesses that's leading to this change? Or do you think that they're looking to monetize from a position of strength? And then the follow through there is does that ultimately create opportunity or risk for CENCORA?

Steve Collis: Hi Eric, and thanks to everyone for the kind congratulations. And on that question, look at the specialty markets; very dynamic. There's no doubt that you know the aggregators in oncology are becoming more pronounced in their market share, with even with our own business as many community oncologists look to every day. With you know shared services and you know offering the more comprehensive offerings, but it's not for all of the customers that we have and I think geography and you know certain paying mixes within regions mixes within the practice between Medicare and Medicaid, you know, philosophy around value based care all of that can make a difference.

Steve Collis: And then the follow-through there is, does that ultimately create opportunity or risk for? Yeah, hi, Eric, and thanks to everyone for their kind congratulations. And, you know, on that question, look, the specialty market's very dynamic. There's no doubt that, you know, the aggregators in oncology are becoming more prominent in their market share, even within our own business, as many community oncologists look to aggregate with, with, you know, shared services and, you know, offerings, more comprehensive offerings, but it's not for all of the customers that we have. And I think geography and, you know, certain payer mixes within regions, mixes within the practice between Medicare and Medicaid, you know, philosophy around value-based care, all of that can make a difference.

Speaker Change: Eric, and thanks to everyone for their kind congratulations.

Eric: You know, on that question, look, the specialty market's very dynamic. There's no doubt that, you know, the aggregators in oncology are becoming more pronounced in their market share, even within our own business.

Eric Percher: As many community oncologists look to aggregate with shared services and more comprehensive offerings. But it's not for all of the customers that we have. I think geography and certain payer mixes within regions.

Eric: mixes within the practice between Medicare and Medicaid, you know, philosophy around value-based care, all of that can make a difference.

Steve Collis: You know, we intend to be, you know, the leader in the market for oncology. And we've demonstrated that, you know, for well over two decades. I think Bob is as committed to that as I am, and we all will look to participate vigorously in the market. And sometimes that means investing; we've shown with one oncology that we will do that. Bob, anything to add?

Bob Mauch: You know, we intend to be, you know, the leader in the market in oncology, and we've demonstrated that, you know, for well over two decades.

Eric: You know, we intend to be, you know, the leader in the market in oncology and we've demonstrated that, you know, for well over two decades.

Bob Mauch: I think Bob is committed to that as I've been, and we'll look to participate vigorously in the market, and sometimes that means investing. We've shown with one oncology that we will do that. Bob, anything to add? Yes, Steve, there, thanks for the question that you know I would add, you know I think what we're seeing is a real demonstration of the value of community oncology within the healthcare system and. You know they are a high quality lower cost side of care, and as they come together, they're building scale which will actually make them more efficient and more effective in a state said they'll be even better prepared to participate in value based care programs when.

Robert P. Mauch: I think Bob is as committed to that as I've been, and we'll look to participate vigorously in the market, and sometimes if that means investing, we've shown with One Oncology that we will do that. Bob, anything to add?

Robert P. Mauch: Yeah, Steve, Eric, thanks for the question. You know, I would add that I think what we're seeing is a real demonstration of the value of community oncology within the healthcare system. And, you know, they are a high quality, lower cost side of care. And as they come together, they're building scale, which will actually make them more efficient and more effective.

Robert P. Mauch: Yes, Steve, Eric, thanks for the question. You know, I would add, you know, I think what we're seeing is a real demonstration of the value of community oncology within the healthcare system.

Robert P. Mauch: You know, they are a high-quality, lower-cost site of care.

Robert P. Mauch: And as they come together, they're building scale, which will actually make them more efficient and more effective. And as Steve said, they'll be even better prepared to participate in value-based care programs when...

Bob Mauch: Those are more widely available, so I think as a macro trend it's positive, and as Steve said, you know we will, you know, do our best to make sure we continue to lead in that area.

Robert P. Mauch: And as Steve said, they'll be even better prepared to participate in value-based care programs when those are more widely available. So I think as a macro trend, it's positive. And as Steve said, we will, you know, do our best to make sure that we continue to lead in that area. Thank you. The next question comes from the line of Charles Rhyee with TD Cowan.

Steve: when those are more widely available. So I think as a macro trend, it's positive. And as Steve said, you know, we will, you know, do our best to make sure we continue to lead in that area.

Unknown Executive: Thank you.

Charles Rhyee: The next question, thanks for the next question, thanks for the line of Charles Rhyee with TD Cowan. Your line is now open. Yeah, thanks. Thanks for taking the question and Steve.

Cencora: Thank you. The next question, Cencora.

Charles Rhyee: Your line is now open. Yeah, thanks for taking the question, and Steve, I'd like to congratulate you on a successful tenure here at Bob LaForte. Working more with you. You know, I just want to kind of maybe follow up on some of the earlier questions here.

Speaker Change: The next question comes from the line of Charles Rhyee with TD Cowan. Your line is now open.

Charles Rhyee: The congrats on a successful tenure here and Bob look forward to working more with you. You know, I just want to kind of maybe follow up on some of the other questions here. You know, I'm going to obviously, you know, when your large customers are undergoing sort of a restructuring here and a lot of details probably have yet to be kind of worked out, but I guess when you guys are doing your planning, you know, is it fair to think that you are in discussions with your clients to kind of work through, do they share with you sort of their plans on how they're working thinking through, you know, things like closures, etc.

Charles Rhyee: Yeah, thanks for taking the question, and Steve, I'd like to congrats on a successful tenure here, and Bob, look forward to it.

Robert P. Mauch: to working more with you.

Charles Rhyee: You know, obviously, when you're a large customer is undergoing sort of a restructuring here, and a lot of details probably have yet to be kind of worked out. But I guess when you guys are doing your planning, you know, or is it fair to think that you are in discussions with your clients to kind of work through things, do they share with you sort of their plans on how they're working, thinking through, you know, things like closures, etc.? Or is that something that you will find out along the way?

Bob Mauch: Or is that something that you find out along the way and just maybe sort of how you factor that in when you're thinking about, you know, setting up sort of your projections for the coming year. Thanks.

Robert P. Mauch: And just maybe sort of how you factor that in when you're thinking about, you know, setting up sort of your projections for the coming year. Thanks. I'll start with that. So the answer to your question in terms of, you know, how we work together and make sure that, you know, their strategic execution goes well, as you'd expect, we work very, very closely together. So, you know, these are not plans that we would find out about after the fact.

Bob Mauch: Yeah, I'll start with that. So they answered your question in terms of how we work together and making sure that, you know, their strategic execution goes well. As you'd expect, we work very, very closely together. So, you know, these are not your plans that we would find out about after the fact that we would, you know, expect to and be involved in supporting that and helping, right? So that the most successful outcome possible is achieved. In an example of store closures, that's something that will work very closely with Walgreens on, and we expect that they'll have a good level of success and maintaining the volume.

Speaker Change: Yeah, I'll start with with that. So the answer to your question in terms of, you know, how we work together and

Speaker Change: making sure that, you know, their strategic execution goes well. As you'd expect, we work very, very closely together. So, you know, these are not, you know, plans that we would find out about after the fact. In fact, we would, we would, you know,

Robert P. Mauch: In fact, we would, you know, expect to be involved in supporting that and helping, right? So that the most successful outcome possible is achieved. And in the example of store closures, that's something that we'll work very closely with Walgreens on, and we expect that they'll have a good level of success in maintaining the volume. But we do work very closely together, not only on that, but overall, in our position with Walgreens and really all of our customers is to make sure that we're doing everything that we can to support their strategy and build, you know, long-term strategic relationships. And that's exactly what we're doing as we sit here today with Walgreens.

Speaker Change: of store closures. That's something that we'll work very closely with Walgreens on and we expect that they'll have a good level of success in maintaining the volume. But we do work very closely together not only on that, but but overall and our

Bob Mauch: But we do work very closely together, not only on that, but overall, and our, you know, our position with Walgreens and really all of our customers is to make sure that we're doing everything that we can to support their strategy and build, you know, long-term strategic relationships, and that's exactly what we're doing as we sit here today with Walgreens. Yeah, I know just very briefly answer the last part of the question, and I think it goes without saying, but of course we, you know, stay close to our key customers, and, you know, we always are estimating growth and take that into account is where developing our annual plans.

Robert P. Mauch: You know, our position with Walgreens and really all of our customers is to make sure that we're doing everything that we can to support their strategy and build, you know, long-term strategic relationships, and that's exactly what we're doing as we sit here today with Walgreens.

Jim Cleary: Yeah, and I'll just very briefly answer the last part of the question. And, I think it goes without saying, but, you know, we always stay close to our key customers. And, you know, we always estimate growth and take that into account as we're developing our annual plan.

Jim Cleary: Thank you.

Aaron Wright: The next question sounds on a lot of Alan right with Morgan Stanley. Your line is now open. Great, thanks so excluding some of the effects dynamics in the international business key details, some of those moving pieces that you're seeing there like the technology investments that you're making, but also underlying utilization trend kind of internationally, is there anything else to kind of call out there. And then just a second question on animal health, any sort of update on underlying demand trend there across left ducking campaign animal, thanks.

Erin Wilson Wright: Thank you. The next question comes from Aaron Wright with Morgan Stanley. Your line is now open. Great, thanks. So excluding some of the FX dynamics in the international business, can you detail some of those moving pieces that you're seeing there, like the technology investments that you're making, but also underlying utilization trends kind of internationally? Is there anything else to kind of call out there?

Speaker Change: Thank you.

Erin Wilson Wright: And then just a second question on animal health, any sort of update on underlying demand trends there across livestock and companion animals? Thanks. Okay, there's a lot there, Aaron. And let me, let me quickly go through it.

Speaker Change: And then just a second question on animal health, any sort of update on underlying demand trends there across livestock and companion animal. Thanks.

Jim Cleary: Okay, there's a lot there, Aaron, and let me, let me quickly go through it. So first of all on international, you know, as we said during the prepared remarks, and the international segment operating income was down 4.1% the squad around a reported basis and up 1% on a constant currency basis. And the results, you know, there are a couple of things that we called out, and as we previously called out, there were higher IP expenses in our European distribution businesses, and we continue to do the right thing, which is, you know, kind of investing in IT there, so we have very good systems there.

Jim Cleary: So first of all, on international, you know, as we said during the prepared remarks, in the international segment, operating income was down 4.1% this quarter on a reported basis and up 1% on a constant currency basis. And on the results, you know, there are a couple things that we called out. And as we previously called out, there were higher IT expenses in our European distribution businesses, and we've continued to do the right thing, which is, you know, kind of investing in IT there.

Speaker Change: Okay, there's a lot there, Aaron, and let me, let me quickly go through it. So, first of all, on international, you know, as we said during the prepared remarks,

Jim Cleary: So we have very good systems there. And then the one other thing that we called out was lower operating income at our global specialty logistics business, which is, long term, a great performing business. But what we saw this quarter was less international shipments and some lower weights for shipments.

Jim Cleary: And then the one other thing that we called out is lower operating income and our global specialty logistics business, which is long term, a great performing business, but what we saw this border was less international shipments and some lower ways for shipment. So those are those are two things that impacted international the squatter and we did have the squatter very good performance by our. Canadian business. And so, from a guidance perspective, we brought down the top end of the operating income growth range by one percentage point in our international segment. And just to put it into perspective, one percentage point is about $7 million.

Speaker Change: Systems there. And then the one other thing that we called out is lower operating income at our global specialty logistics business, which is long term, a great performing business. But what we saw this quarter was less international shipments and some lower wages for shipments.

Jim Cleary: So those are those are two things that impacted international this quarter. And we did have a very good Canadian business this quarter. And so from a guidance perspective, we brought down the top end of the operating income growth range by one percentage point in our international segment. And just to put it into perspective, one percentage point is about $7 million.

Jim Cleary: And, and, you know, we indicated we were modestly lowering that range due to the third quarter results and some softness in the pharma lex business. But overall, what I would say is that results will tend to be a little bit more lumpy in our international business than in our US business because our US business is really driven by pharmaceutical distribution and utilization trends there, whereas the international business has more of the high-margin, high-growth businesses in it that can tend to be a bit more lumpy from time to time.

Speaker Change: Canadian Business. And so, from a guidance perspective, we brought down the top end of the operating income growth range by one percentage point in our international segment. And just to put it into perspective, one percentage point is about seven.

Jim Cleary: And we indicated we were modestly lowering that range due to the third quarter results and some softness in the pharmaceutical business. But overall, what I will say is that results will tend to be a little bit more lumpy in our international business and in our US business because our US business is really driven by pharmaceutical distribution and the utilization trends there, where the international business has more of the high margin, high growth businesses and it can tend to be a bit more lumpy from time to time.

Speaker Change: And, you know, we indicated we were modestly lowering that range to the third quarter results and some softness in the

Speaker Change: Pharmalex business. But overall, what I will say is that results will tend to be a little bit more lumpy in our international business than in our U.S. business, because our U.S. business is really driven by pharmaceutical distribution and the utilization trends there, where the international business has more of the high margin, high growth businesses in it that can tend to be a bit more

Jim Cleary: And so the second part of the question, really, nothing new to call out in animal health; year to date, revenue growth has been 7%. You know, we're basically continuing to see the same sorts of trends in companion animal and production animal that we talked about. And I would say we are seeing, you know, just kind of very good execution by our team there. And I think that fully covers it, Aaron.

Jim Cleary: And so, the second part of the question really nothing new to call out in animal health. Year to date of revenue growth has been 7%. You know, we're basically continuing to see the same sorts of trends in companion animal and production animal that we talked about. And I would say we are seeing, you know, just kind of very good execution by our team there.

Speaker Change: lumpy from time to time. And so the second part of the question really nothing new to call out in animal health year to date of revenue growth has been 7%.

Speaker Change: You know, we're basically continuing to see the same sorts of trends in companion animal and production animal that we talked about. And I would say we are seeing, you know, just kind of very good execution by our team there. And I think that fully covers it, Aaron. Thank you for those questions.

Daniel Grosslight: And I think that fully covers it, and thank you for those questions. Thank you.

Jim Cleary: Thank you for those questions. Thank you. The next question comes from the line of Daniel Grosslight with Citi. Your line is now open.

Jim Cleary: The next question comes from a line of Daniel Grosslight with City. Your line is now open. Hi, thanks for taking the question, and I'll add my congrats to see for a tremendous run here and offer to officially taking the range. And then maybe one for you on guidance. It does imply on the US side a bit of an outside sequential decline in operating income for your fiscal 4Q. Curious if you could provide a little more detail on what specifically is driving that sequential decline, particularly given, you know, I would assume that you'd see a bit more operating income from commercial COVID vaccines in 4Q versus 3Q.

Speaker Change: Thank you. The next question comes from the line of Daniel Grosslight with Citi. Your line is now open.

Daniel R. Grosslight: Hi, thanks for taking the question, and I'll add my congratulations to Steve for a tremendous run here and Bob for officially taking the reins. Jim, maybe one for you on guidance. It does imply on the U.S. side a bit of an outside sequential decline in operating income for your fiscal 4Q. I'm curious if you could provide a little more detail on what specifically is driving that sequential decline, particularly given, you know, I would assume that you'd see a bit more operating income from commercial COVID vaccines in 4Q versus 3Q.

Daniel R. Grosslight: Hi, thanks for taking the question, and I'll add my congrats to Steve for a tremendous run here, and Bob for officially, um...

Speaker Change: Jake and the Reigns.

Daniel R. Grosslight: Jim, maybe one for you on guidance. It does imply on the U.S. side a bit of an outside sequential decline.

Speaker Change: Operating Income for your fiscal 4Q.

Speaker Change: Curious if you could provide a little more detail on what specifically is driving that sequential decline, particularly given, you know, I would assume that you'd see a bit more operating income from commercial COVID vaccines in 4Q versus 3Q. Thanks.

Jim Cleary: Thanks.

Jim Cleary: Yeah, so let me dress that, and I believe your question was with focus on the US segment. And of course, we are increasing our operating income guidance in the US towards the upper end of the previous range. So we were guiding at 10 to 12% adjusted operating income growth. And now we're guiding at 11 to 12% adjusted operating income growth, and really nothing specific to call out there beyond, you know, what we have been talking about is solid utilization trends and, you know, broad based. Good performance across many business units and, you know, particularly strong sales of specialty products to position practices and health systems.

Daniel R. Grosslight: Thanks. Yeah, so let me address that. And I believe your question was focused on the US segment. And, of course, we are increasing our operating income guidance in the US towards the upper end of the previous range. So we were guiding at 10 to 12% adjusted operating income growth.

Speaker Change: We are...

Jim Cleary: And now we're guiding at 11 to 12% adjusted operating income growth, and really nothing specific to call out there beyond, you know, what we have been talking about is solid utilization trends and, you know, broad-based, good performance across many business units and, you know, particularly strong sales of specialty products to physician practices and health systems. So the things that could move us within that guidance range as we kind of get to the end of our fiscal year are just, you know, kind of, you know, just kind of how well businesses perform as the year ends. And then the COVID part of it is key. And so, thank you for asking that. We expect the contribution from total COVID to be down year over year in our fourth quarter.

Speaker Change: Adjusted Operating Income Growth, and really nothing specific to call out there beyond, you know, what we have been talking about is solid utilization trends and, you know, broad-based good performance across many business units.

Jim Cleary: So the things that could move us within that guidance range. As we kind of get to the end of our fiscal years, just kind of, you know, just kind of how well businesses perform as the year ends. And then the COVID part of it is key. And so, thank you for asking that. We expect the contribution from total COVID to be down year over year in our fourth quarter. And the contribution from commercial vaccines, we expect to be comparable year over year, but we expect very little contribution from therapies in the fourth quarter. And we are laughing the fourth quarter of last year when we had a contribution of eight cents from exclusive therapies.

Speaker Change: and, you know, particularly strong sales of specialty products to physician practices and health systems. So the things that could move us within that guidance range.

Speaker Change: We expect the contribution from total COVID to be down year over year in our fourth quarter.

Speaker Change: When we had a contribution of eight cents from exclusive therapies, and so that is kind of the, you know, one, one thing that.

Jim Cleary: And so that is kind of the, you know, one, one thing that creates a bit of a, you know, a headwind in the comp year over years. So we did have the eight cents from Exclusive Therapies last year. And we're expecting very little contribution from those from commercial therapies this year. Thank you for asking the question.

Speaker Change: Creates a bit of, you know, a headwind in the comp year over year is we did have the eight cents from exclusive therapies last year, and we're expecting very little contribution from those from from commercial therapies this this year. Thank you for asking the question.

George Hill: Anderson. Thank you. The next question comes on a line of George Hill with Dowsha Bank. Your line is now open.

Jim Cleary: And the contribution from commercial I expect very little contribution from those from commercial therapies this year. Thank you for asking the question. Thank you. The next question comes from the line of George Hill with Dozier Bank. Your line is now open. Yeah, good morning, guys.

Speaker Change: Thank you. The next question comes from the line of George Hill with Dozier Bank. Your line is now open.

George Hill: And I'll extend my well wishes to Bob and Steve. It's been great working with you. And Jim, I look forward to continuing to work with you, but I guess I'll ask a little bit of a pointed question about the Walgreens relationship. Just because the management team at Walgreens has been pretty pointed about the idea of trying to extract more value from its relationship with you guys. I know there's a tremendous amount of investor concern.

George Hill: Yeah, good morning guys, and I'll extend my well wishes to Bob and Steve. It's been great working with you and Jim. I look forward to continuing work with you, but I guess I'll ask a little bit of a pointed question about the Walgreens relationship, just because the management team at Walgreens has been pretty pointed about the idea of trying to extract more value from its relationship. With you guys, I know there's a tremendous amount of investor concern. I think regarding both the relationship and the earning stream that's in court generates us at Walgreens. So, you know, Steve, Bob, would love to hear you guys kind of open like on the status of the relationship, kind of earnings exposure if there's a way that you can kind of talk about that on the call.

George Hill: Good morning, guys, and I'll extend my well wishes to Bob and Steve. It's been great working with you, and Jim, I look forward to continuing to work with you.

Speaker Change: I'll ask a little bit of a pointed question about the Walgreens relationship, just because the management team at Walgreens has been pretty pointed.

Speaker Change: about the idea of trying to extract more value from its relationship with you guys. I know there's a tremendous amount of investor concern, I think, regarding both the relationship and the earnings stream that Cencora generates as it relates to Walgreens. So, you know, Steve or Bob would love to hear you guys kind of open mic on the status of the relationship, kind of earnings exposure, if there's a way that you can kind of talk about that on the call. I can see why that would be a challenge. But just kind of like – Or maybe even just talk about how you guys are collaborating to drive value for Walgreens. I think any color there would be appreciated.

George Hill: I think regarding both the relationship and the earnings stream that Cencora generates as it relates to Walgreens. So, you know, Steve or Bob would love to hear you guys kind of open mic on the status of the relationship and the earnings exposure. If there's a way that you can kind of talk about that on the call, I can see why that would be a challenge. But just kind of like, or maybe even just talk about how you guys are collaborating to drive value for Walgreens. I think any color there would be appreciated.

Steve Collis: I can see why that would be a challenge, but just kind of like, well, maybe you can just talk about how you guys are collaborating to drive value for Walgreens. I think any color there would be appreciated.

Steve Collis: Hi George, thanks for the question and the warm wishes. Yeah, look, Walgreens is an incredibly strategic relationship for us and a strategic partnership between the two of us. As I mentioned earlier, in one of the operational questions, you know, we work every day to make sure that we're supporting the strategy of WBA as they go forward. And I think it's important to note that we have a very broad and strategic relationship. So there certainly is the Walgreens distribution relationship. There's also the boots distribution relationship and, of course, we buy generics together. So, as you'd expect, we're working very closely with them.

Robert P. Mauch: Yeah, hi, George. Thanks for that for the question and and the warm wishes. Yeah, look, Walgreens is an incredibly strategic relationship for us and a strategic partnership between the two of us. As I mentioned earlier, in one of the operational questions, we work every day to make sure that we're supporting the strategy of WBA as they go forward. And I think it's important to note that we have a very broad and strategic relationship. So there certainly is the Walgreens distribution relationship. There's also the Boots distribution relationship.

Speaker Change: Hi, George. Thanks for the question and the warm wishes. Yeah, look, you know, Walgreens is an incredibly

Speaker Change: strategic relationship for us and a strategic partnership between

Speaker Change: Between the two of us, as I mentioned earlier, in one of the operational questions, you know, we work

George Hill: every day to make sure that we're supporting.

George Hill: on the strategy of WBA.

Speaker Change: As they as they go forward and I think it's important to note that we have a very broad and strategic relationship So there certainly is the Walgreens

Speaker Change: Distribution Relationship, there's also the Boots Distribution Relationship, and of course we buy generics together.

Steve Collis: And of course, we buy generics together. So, as you'd expect, we're working very closely with them. We want to do everything that we can to support their strategy as they go forward. But as long-term strategic partners, we're, you know, we're at the table doing everything that we can. Yeah, and, of course, George, as you well recall, it's been since 2013.

Bob Mauch: We want to do everything that we can to support their strategy as they go forward. But as long-term strategic partners, we were, you know, at the table doing everything we can. Yeah, you know, of course, George, as you, as you well recall, it's since 2013, and, you know, I think Bob's got it. We also support boots; that's a key relationship. So, you know, it's something that we're proud of, and you can expect that Singapore and our usual diligent way will approach this thoughtfully and with a mantra creating long term value. Thank you.

Speaker Change: So, as you'd expect, we're working very closely with them. We want to do everything that we can to support their strategy as they go forward, but as long-term strategic partners, we're at the table doing everything that we can.

Speaker Change: Yeah, and, you know, it's, of course, George, as you well recall, it's since 2013, and...

Steve Collis: And, you know, I think Bob's got it. We also support Boots. That's a key relationship. So, you know, it's something that we're proud of. And you can expect that Cencora, in our usual diligent way, will approach this thoughtfully and with a mind to creating long-term value. Thank you. The next question comes from the line of Stephanie Davis with Barclays. Your line is now open.

Robert P. Mauch: I think Bob's got it. We also support Boots. That's a key relationship. It's something that we're proud of, and you can expect that Cencora, in our usual diligent way, will approach this thoughtfully and with a mind to creating long-term value.

Stephanie Davis: The next question comes on a line of Stephanie Davis with Barclays. Your line is now open. Hey guys, congrats on the quarter and echoing everyone else. He's congrats on a really sterling track record of the years. We've seen a lot of movement in your end market as George is called out. And as contrast can go change hands this year, I won't feel like an accelerator rate.

Speaker Change: Thank you. The next question comes from the line of Stephanie Davis with Barclays. Your line is now open.

Stephanie July Davis: Hey guys, congrats on the quarter and, echoing everyone else, Steve, congrats on a really sterling track record over the years. We've seen a lot of movement in your end market, as George has called out, and as stocks have changed hands this year at what feels like an accelerated rate. So I wanted to ask you a two-part question. First, how are you differentiating yourself versus your peers during your renewals? Like, what are the big ways you're highlighting that you are able to add value?

Stephanie July Davis: Hey guys, congrats on the quarter and echoing everyone else, congrats on a really sterling track record over the years.

Stephanie July Davis: And secondly, I know you've had some kind of changeover in how your contracts are structured as they go through the years of the contract. Could you remind us how that changes the renewal dynamics? Yeah, I'll take that.

Stephanie July Davis: We've seen a lot of movement in your end market as George has called out and as contrasts have changed hands this year at what feels like an accelerated rate. So I wanted to ask you a two-parter.

Stephanie Davis: So I want to ask you a true partner. First, how are you differentiating yourself versus your peers during your renewal? Like what are the big ways you're highlighting? You are able to add value.

Speaker Change: First, how are you differentiating yourself versus your peers during your renewals? Like, what are the big ways you're highlighting you are able to add value? And secondly, I know you've had some kind of changeover in how your contracts are structured as it goes through the years of the contract. Could you remind us on how that changes renewal dynamics?

Bob Mauch: And secondly, I know you've had some kind of change over and have your contract or structured as it goes through the years of the contract. Could you remind us on how that changes renewal dynamics? Thank you so much.

Bob Mauch: Yeah, I'll take that. Thank you, Stephanie, very much. The environment is, you know, as it has been for a long period of time, you know, competitive, but also very stable. You know, we work diligently to make sure that we're supporting all of our customers across our entire portfolio, which is really, you know, from end to end from a provider standpoint. You know, we're working here in the United States and outside of the United States, you know, specifically, you know, we're working to help drive efficiency; we'll work to help improve, you know, service levels where that's important to those customers, and, you know, it's a customized approach.

Robert P. Mauch: Thank you, Stephanie, very much. The environment is, you know, as it has been for a long period of time, competitive, but also very stable. You know, we work diligently to make sure that we're supporting all of our customers, you know, across our entire portfolio, which is really, you know, from end to end from a provider standpoint, here in the United States and outside of the United States, specifically, we're working to help drive efficiency.

Speaker Change: Yeah, I'll take that. Thank you, Stephanie, very much.

Speaker Change: Look, the environment is, you know, as it has been for a long period of time, you know, competitive, but also very stable. You know, we work diligently to make sure that we're

Stephanie July Davis: supporting all of our customers, you know, across our entire portfolio, which is is really, you know, from end to end, from a provider standpoint, you know, here in the United States and outside of the United States, you know, specifically, you know, we're working to help drive efficiency, we'll work to help

Robert P. Mauch: We'll work to help improve, you know, service levels where that's important to those customers. And, you know, it's a customized approach, and that's really important for the large customers in particular. Then we also have our programmatic services that, you know, Steve mentioned, our Thought Spot Conference and our Good Neighbor Pharmacy, you know, independent pharmacy customers. Different customer segments require a different approach.

Stephanie July Davis: Improve, you know, service levels where that's important to those customers and you know it's a customized approach and and that's that's really important for the large customers in particular. Then we also have our programmatic

Bob Mauch: And that's, that's really important for the large customers in particular. Then we also have our programmatic services that, you know, Steve mentioned our thoughts, Plot Conference and our Good Neighbor Pharmacy, you know, independent. Farming customers, and of course, we talked about the community oncologists as we go through so each of those. Customer Seignants requires a different approach, but in every case, we work diligently, and we invest in having long-term strategic partnership so that we bring the resources of CECOR to support that customer strategy. You know, specifically on the pricing front that you asked about, Stephanie, we have over many years, you know, worked to balance our contracts so that when we work with a provider customer or pharmacy customer, that we are, you know, not subsidizing one product category over another so that as mixed changes, as mixed changes happen, there's not a detriment to the customer or to Cencora. So it's a bit more predictable as we go forward and as the market dynamics continue.

Stephanie July Davis: Services that, you know, Steve mentioned, our Thought Spot Conference and our Good Neighbor Pharmacy, you know, independent pharmacy customers, and of course we've talked about the community oncologist as we go through. So each of those

Robert P. Mauch: But in every case, we work diligently, and we invest in having long-term strategic partnerships so that we bring the resources of CENCORA to support that customer strategy. You know, specifically on the pricing front that you asked about, Stephanie, we have for many years worked to balance our contracts so that when we work with a provider customer, a pharmacy customer, we are not, you know, subsidizing one product category over another, so that has had mixed changes. As mixed changes happen, there's no detriment to the customer or to Cencora, so it's a bit more predictable as we go forward and as the market dynamics continue.

Stephanie July Davis: Customer segments requires a different approach, but in every case...

Stephanie July Davis: We work

Stephanie July Davis: Diligently, and we invest in having long-term strategic partnerships so that we bring the resources of SIGCHR to support

Stephanie July Davis: that customer strategy.

Stephanie July Davis: You know, specifically on the pricing front that you asked about, Stephanie, we have over many years, you know, worked to.

Stephanie July Davis: balance our contracts so that when we work with a provider customer pharmacy customer that we are you know not subsidizing one product category over another so that as mixed changes

Stephanie July Davis: As mixed changes happen, there's not a detriment to the customer or to Cencora, so it's a bit more predictable as we go forward and as the market dynamics continue. So we believe it's healthy and a positive in terms of our customer relationships.

Bob Mauch: So we believe it's healthy and positive in terms of our customer relationships. Thank you.

Robert P. Mauch: So we believe it's healthy and positive in terms of our customer relationship. Thank you. The next question comes from the line of Eric Coldwell with Baird.

Eric Coldwell: The next question comes from the line of Eric Coldwell with Beard. Your line is not open. Thanks very much. I think most of mine have been covered.

Stephanie July Davis: Thank you. The next question comes from the line of Eric Coldwell with Baird. Your line is now open.

Eric White Coldwell: Your line is now open. Thanks very much. I think most of mine have been covered.

Eric Coldwell: I wanted to come back to just quickly on it sounded like a combination of both specialty logistics and pharma Lex. If I understood correctly, it sounded like you referenced early positive signs of a rebound. Just correct me if I'm wrong if it was just in specialty logistics, but you know, what are those early positive signs or leading indicators that you referenced? Do you have any details you can share? Thanks. Yes, and in the discussion of specialty logistics, the specific things that we were referring to when we said early positive signs were some volume trends. And so Eric, it was specifically that, and I'll also just comment on that as you know, you know, that's a business that has just outperformed and grown really nicely for many years, and it's just a, you know, it is a fantastic business for the long term.

Eric White Coldwell: Thanks very much. I think most of mine have been covered. I wanted to come back to just quickly on it sounded like a combination of

Eric White Coldwell: I wanted to come back to just quickly on, it sounded like a combination of both specialty logistics and PharmaLEX. If I understood correctly, it sounded like you referenced early positive signs of a rebound. Just correct me if I'm wrong, if it was just in specialty logistics. But, you know, what are those early positive signs or leading indicators that you referenced? Do you have any details you could share?

Eric White Coldwell: Both Specialty Logistics and PharmaLex, if I understood correctly, it sounded like you referenced early positive signs of a rebound.

Speaker Change: Just correct me if I'm wrong if it was just in specialty logistics, but you know what what are those early positive signs or leading indicators that you referenced? Do you have any details you can share? Thanks.

Jim Cleary: Yes, in the discussion of specialty logistics, the specific things that we were referring to when we said early positive signs were some volume trends. And so Eric, it was specifically that. And I'll also just comment on that, as you know, you know, that's a business that has just outperformed and grown really nicely for many years. And it's just a, you know, it is a fantastic business for the long term. I think I have realized that.

Speaker Change: Yes, and the...

Speaker Change: and the end.

Speaker Change: Discussion of Specialty Logistics. The specific things that we were referring to when we said early positive signs were some volume trends. And so, Eric, it was specifically that. And I'll also just comment on that, as you know, you know, that's a business that is just outperformed and grown really nicely for many years. And it's just, you know, it is a fantastic business for the long term.

Eric Percher: I think I realized that.

Jim Cleary: Thank you.

Jim Cleary: Thank you. Thank you, Eric. The next question comes from the line of Kevin Caliendo with UBS. Your line is now open. Thanks, appreciate the time, and Steve, just wanted to say I always appreciate your calming voice in this crazy world in which we operate, sometimes super helpful. Oh, guys, I just wanted to ask, have you been approached yet, or have you seen any? Has there been any disruption at all from any of your independents from what's been going on with NADAC? Have they come to you for relief or help?

Kevin Caliendo: Thank you, Eric. The next question comes from a lot of Kevin Caliando with you. Yes, your line is not open. Thanks.

Speaker Change: Thank you. Thank you, Eric. The next question comes from a line of Kevin Caliendo with UPS. Your line is now open.

Steve Collis: Appreciate the time, and Steve just want to say always appreciated your calming voice in this crazy world in which we operate sometimes. Super helpful. Guys, I just wanted to ask, have you, have you been approached yet, or have you seen any disruption at all from any of your independence from what's been going on with Nadak? Have they come to you for relief or help, or is there anything that you can do? You know, try to offset, you know, what's been upwards now to 20% hit to their reimbursement. I'm just wondering how, with the feedback then from your, from your independent and small regional chains who are being hit hardest by this.

Kevin Caliendo: Thanks, appreciate the time. And Steve, just want to say, always appreciated your calming voice in this crazy world in which we operate sometimes, super helpful. Guys, I just wanted to ask.

Speaker Change: Have you, have you been approached yet or have you seen any?

Kevin Caliendo: Disruption at all from any of your independents from what's been going on with NADAC? Have they come to you for relief or help or is there anything that you can do?

Kevin Caliendo: Or is there anything that you can do to try to offset, you know, what's been upwards now the 20% hit to their reimbursement? I'm just wondering how the feedback's been from your, from your independent and small regional chains who are being hit hardest by this? Yeah, thanks. Thanks, Kevin. You know, I'll start with just, you know, macro, you know, the independents have been incredibly resilient over a long period of time

Speaker Change: Try to offset, you know, what's been upwards now the 20% hit to their reimbursement. I'm just wondering how What the feedbacks been from your from your independent and small regional chains who are being hit hardest by this?

Steve Collis: Yeah, thanks. Thanks, David. You know, I'll, I'll start with just, you know, macro. You know, the independence have been incredibly resilient over a long period of time. And as we said a few times, you know, during this, this called, you know, our, our intent is to be really close to them at all times. So we're always talking to our customers, including the independent customers, about, you know, how we can best support them. And, you know, Nadak specifically, you know, it's a voluntary survey. We've seen the volatility in that survey, and, you know, we're not seeing, you know, specific requests from our independent customers around this at this time.

Kevin Caliendo: And as we've said a few times during this call, our intent is to be really close to them at all times. So we're always talking to our customers, including independent customers, about, you know, how we can best support them. NADAC specifically, it's a voluntary survey. We've seen the volatility in that survey, and, you know, we're not seeing specific requests from our independent customers around this at this time. But it's, you know, obviously, this and all things in the market around reimbursement; we stay very, very close to and close to our customers.

Speaker Change: Yeah, thanks. Thanks, Kevin. You know, I'll start with just, you know, macro, you know, the independents have been incredibly

Speaker Change: Resilient over a long period of time and

Speaker Change: As we've said a few times during this call, our intent is to be really close to them at all times. So we're always talking to our customers, including the independent customers, about how we can best support them.

Speaker Change: NADAC specifically, you know, it's a voluntary survey, we've seen the volatility in that survey, and, you know, we're not seeing, you know, specific requests from our independent customers.

Steve Collis: But it's, you know, obviously this and all things in the market around reimbursement. We, we stayed very, very close to and close to our customers. Schlimers.

Speaker Change: around this at this time. But it's, you know, obviously, this and all things in the market around reimbursement, we stay very, very close to and, and close to our customers.

Operator: Thank you.

Robert P. Mauch: Thank you. With that, we'll conclude our call. And I'll just make some concluding remarks. I just wanted to thank the analyst community for their interest and support and bearing through 53 quarters of the South African accent, which, of course, has been well shared. And also thank all the people that I don't usually call out on the call, including, you know, the people on Jim's team who helped prepare these numbers and Bennett's team, who are so outstanding and so committed to the purpose of Cencora.

Steve Collis: But that will compute our poll, and I'll just make some concluding remarks. I just wanted to thank the analyst community for their interest and support and bearing through 53 quarters of the South African accent, which of course has been well shared. And also thank all the people that I don't necessarily call out on the call, including, you know, the people in Jim's team. We help prepare these numbers and Bennett's team that are so outstanding and so committed to the purpose of Cencora.

Speaker Change: Thank you.

Speaker Change: The best we'll come to that for.

Speaker Change: And I'll just make some concluding remarks.

Jim Cleary: I just wanted to thank the analyst community for their interest and support and bearing through 53 quarters of the South African accent, which of course has been well shared. And also thank all the people that I don't usually call out on the call, including the people on Jim's team.

Robert P. Mauch: who helped prepare these numbers and Bennett's team that are so outstanding and so committed to the purpose of Cencora. So in concluding, I just would also like to wish Bob as much success and performance and pride during his tenure as CEO as I've enjoyed. Thank you for your time today. Thank you.

Operator: So, in concluding, I just would also like to wish Bob as much success and performance and pride during his tenure here as I've enjoyed. Thank you for your time today. Thank you for your participation.

Robert P. Mauch: So, in conclusion, I just would also like to wish Bob as much success, performance, and pride during his tenure as I've enjoyed. Thank you for your time today. That concludes today's conference call. Thank you for your participation. You may now disconnect your lines.

You may now disconnect your lines.

Speaker Change: That concludes today's conference call. Thank you for your participation. You may now disconnect your lines.