Cencora Q1 2026 Cencora Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q1 2026 Cencora Inc Earnings Call
Operator: Hello, everyone, and thank you for joining the Cencora Fiscal 2026 Q1 results call. My name is Lucy, and I'll be coordinating your call today. During the presentation, you can register a question by pressing Star followed by one on your telephone keypad. If you change your mind, please press Star followed by two. It is now my pleasure to hand over to your host, Bennett Murphy, Senior Vice President of Investor Relations and Treasury, to begin. Please go ahead.
Operator: Hello, everyone, and thank you for joining the Cencora Fiscal 2026 Q1 results call. My name is Lucy, and I'll be coordinating your call today. During the presentation, you can register a question by pressing Star followed by one on your telephone keypad. If you change your mind, please press Star followed by two. It is now my pleasure to hand over to your host, Bennett Murphy, Senior Vice President of Investor Relations and Treasury, to begin. Please go ahead.
Hello, everyone, and thank you for joining, the Senora fiscal 2026. First quarter results, call my name is Lucy and I'll be coordinating your call today.
If you change your mind, please press star followed by 2.
Bennett Murphy: Good morning, good afternoon, and thank you all for joining us for this conference call to discuss Cencora's fiscal 2026 Q1 results. I am Bennett Murphy, Senior Vice President, Investor Relations and Enterprise Productivity. Joining me today are Bob Mauch, President and CEO, and Jim Cleary, Executive Vice President and CFO. On today's call, we'll 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. During this conference call, we'll discuss 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. Forward-looking statements are based on management's current expectations, are subject to uncertainty and change.
Bennett Murphy: Good morning, good afternoon, and thank you all for joining us for this conference call to discuss Cencora's fiscal 2026 Q1 results. I am Bennett Murphy, Senior Vice President, Investor Relations and Enterprise Productivity. Joining me today are Bob Mauch, President and CEO, and Jim Cleary, Executive Vice President and CFO. On today's call, we'll 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. During this conference call, we'll discuss 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. Forward-looking statements are based on management's current expectations, are subject to uncertainty and change.
We've also posted a slide presentation to accompany today's press release on our investor website. During this conference call, we will discuss forward looking statements about our business and financial expectations on adjusted non-gaap basis. Including with
Bennett Murphy: 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-K. Cencora assumes no obligation to update any forward-looking statements, and this call cannot be rebroadcast without the permission of the company. You'll have an opportunity to ask questions after today's remarks by management. We expect you to limit your questions to one per participant in order for us to get to as many as possible within the hour. With that, I'll turn the call over to Bob.
Bennett Murphy: 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-K. Cencora assumes no obligation to update any forward-looking statements, and this call cannot be rebroadcast without the permission of the company. You'll have an opportunity to ask questions after today's remarks by management. We expect you to limit your questions to one per participant in order for us to get to as many as possible within the hour. With that, I'll turn the call over to Bob.
To EPS operating income and income taxes or like the same. As our based on Management's, current expectations are subject to uncertainty and change.
For a discussion of key risk and assumptions. We refer to today's press release and our SEC filings including our most recent 10K.
St. Coeur assumes. No obligation to update any 4. Living statements. In this. Call cannot be broadcast without the permission of the company.
Bob Mauch: Thank you, Bennett. Hi, everyone, and thank you for joining Cencora's fiscal 2026 Q1 earnings call. I'll begin by thanking our team members who drive our strong performance while advancing our purpose. This morning, we were pleased to announce that we've completed our acquisition of the majority of the remaining equity interests in OneOncology, and I welcome CEO Dr. Jeff Patton and the entire OneOncology team to Cencora. Your commitment to and expertise in supporting community oncology practices is a cornerstone of the Cencora strategy. In Q1 of fiscal 2026, we delivered adjusted operating income growth of 12% and adjusted diluted EPS growth of 9%, driven by our market-leading capabilities.
Bob Mauch: Thank you, Bennett. Hi, everyone, and thank you for joining Cencora's fiscal 2026 Q1 earnings call. I'll begin by thanking our team members who drive our strong performance while advancing our purpose. This morning, we were pleased to announce that we've completed our acquisition of the majority of the remaining equity interests in OneOncology, and I welcome CEO Dr. Jeff Patton and the entire OneOncology team to Cencora. Your commitment to and expertise in supporting community oncology practices is a cornerstone of the Cencora strategy. In Q1 of fiscal 2026, we delivered adjusted operating income growth of 12% and adjusted diluted EPS growth of 9%, driven by our market-leading capabilities.
You have an opportunity to ask questions after today's remarks by management, we expect you to limit your questions to 1 per participant, or for us to get to as many as possible within the hour with that. I'll turn the call over to Bob.
Thank you Bennett. Hi, everyone. And thank you for joining Senor. Fiscal 2026. First quarter earnings call
I'll begin by thanking our team members who drive our strong performance while advancing our purpose. This morning. We were pleased to announce that we've completed our acquisition of the majority of the remaining Equity interests in 1, oncology and I welcome CEO. Dr. Jeff Patton. And the entire 1 oncology team to Sora.
Your commitment to an expertise in supporting Community, oncology practices is a Cornerstone of the Senora strategy.
In the first quarter of fiscal 2026, we delivered adjusted operating income growth of 12%.
Bob Mauch: To reflect our performance and the contribution from our recently completed acquisition of OneOncology, we are raising our fiscal 2026 guidance to reflect year-over-year Adjusted Operating Income growth of 11.5% to 13.5%. Our results were driven by continued strength in our US Healthcare Solutions business as we executed our pharmaceutical-centric strategy and worked to advance commercial solutions. Our dedication to understanding customer needs and delivering tailored services creates long-standing strategic relationships, fueling our growth. We are furthering the customer experience and our operational excellence, leveraging technology and advanced analytics. Our solutions differentiate us in the market and allow us to capitalize on strong specialty pharmaceutical utilization trends. We have three growth priorities core to our strategy. First, strengthening our leadership and specialty. Second, leading with market leaders. And lastly, enhancing patient access to pharmaceuticals...
Bob Mauch: To reflect our performance and the contribution from our recently completed acquisition of OneOncology, we are raising our fiscal 2026 guidance to reflect year-over-year Adjusted Operating Income growth of 11.5% to 13.5%. Our results were driven by continued strength in our US Healthcare Solutions business as we executed our pharmaceutical-centric strategy and worked to advance commercial solutions. Our dedication to understanding customer needs and delivering tailored services creates long-standing strategic relationships, fueling our growth. We are furthering the customer experience and our operational excellence, leveraging technology and advanced analytics. Our solutions differentiate us in the market and allow us to capitalize on strong specialty pharmaceutical utilization trends. We have three growth priorities core to our strategy. First, strengthening our leadership and specialty. Second, leading with market leaders. And lastly, enhancing patient access to pharmaceuticals...
Market leading capabilities.
To reflect our performance in the contribution. From our recently, completed acquisition of 1 oncology we are raising our fiscal 2026, guidance to reflect year-over-year, adjusted operating income growth of 11.5 to 13.5%
our results were driven by continued strength in our us Healthcare Solutions business as we executed our pharmaceutical Centric strategy and work to advance commercial Solutions
Our dedication to understanding customer needs and delivering tailored Services, creates long-standing strategic relationships, fueling our growth.
We are furthering the customer experience and our operational excellence leveraging, technology and advanced Analytics.
Our Solutions differentiate Us in the market and allow us to capitalize on strong specialty pharmaceutical. Utilization trends.
We have 3 growth, priorities core to our strategy.
First strengthening our leadership and Specialty.
Bob Mauch: On today's call, I'll focus on how our MSO expansion is advancing each growth priority. I'll begin with how our MSO footprint strengthens our leadership and specialty. Our investments in pharmaceutical centric MSOs represent a natural extension of our long-standing leadership in specialty pharmaceuticals, complementing our existing specialty distribution and GPO services. Our MSOs provide practices with critical back office and administrative support, while strengthening our relationship with pharmaceutical companies. We expect to drive significant value for physicians across OneOncology and Retina Consultants of America by creating an MSO platform that leverages the capabilities of these market leaders. We'll unlock new opportunities to enhance our solutions for both providers and biopharma by leveraging our platform strength and scale in areas like clinical research, revenue cycle management, and data-driven clinical insights to support physicians and advance care.
Bob Mauch: On today's call, I'll focus on how our MSO expansion is advancing each growth priority. I'll begin with how our MSO footprint strengthens our leadership and specialty. Our investments in pharmaceutical centric MSOs represent a natural extension of our long-standing leadership in specialty pharmaceuticals, complementing our existing specialty distribution and GPO services. Our MSOs provide practices with critical back office and administrative support, while strengthening our relationship with pharmaceutical companies. We expect to drive significant value for physicians across OneOncology and Retina Consultants of America by creating an MSO platform that leverages the capabilities of these market leaders. We'll unlock new opportunities to enhance our solutions for both providers and biopharma by leveraging our platform strength and scale in areas like clinical research, revenue cycle management, and data-driven clinical insights to support physicians and advance care.
Second leading with Market leaders, and lastly enhancing patient access to Pharmaceuticals.
On today's call, I'll focus on how our MSO expansion is advancing each growth priority.
I'll begin with power. MSO footprint, strengthens our leadership and Specialty?
Our investments in pharmaceutical-centric MSOs represent a natural extension of our long-standing leadership in specialty pharmaceuticals.
Complementing, our existing specialty distribution, and GPO services.
Our msos provide practices with critical back office and administrative support, while strengthening our relationship with pharmaceutical companies.
Bob Mauch: Focusing on our growth priority of leading with market leaders, our MSOs demonstrate the value of our commitment to support healthcare leaders at the forefront of innovation. While much focus today will be appropriately on completing the acquisition of OneOncology, in January, we celebrated the one-year anniversary of RCA joining Cencora. Over the past year, we've been very pleased with the addition of RCA, both in terms of their performance and leadership in driving pharmaceutical innovation. RCA has clearly differentiated itself through its clinical trial and research capabilities, contributing to more than 1/3 of all retina clinical trial research conducted in the United States, and we see significant potential extending this offering across our MSO platform. In addition to expanding research capabilities, RCA physicians continue to enhance the patient care journey by adopting advanced technologies in their practices that have a meaningful impact on patient experience.
Bob Mauch: Focusing on our growth priority of leading with market leaders, our MSOs demonstrate the value of our commitment to support healthcare leaders at the forefront of innovation. While much focus today will be appropriately on completing the acquisition of OneOncology, in January, we celebrated the one-year anniversary of RCA joining Cencora. Over the past year, we've been very pleased with the addition of RCA, both in terms of their performance and leadership in driving pharmaceutical innovation. RCA has clearly differentiated itself through its clinical trial and research capabilities, contributing to more than 1/3 of all retina clinical trial research conducted in the United States, and we see significant potential extending this offering across our MSO platform. In addition to expanding research capabilities, RCA physicians continue to enhance the patient care journey by adopting advanced technologies in their practices that have a meaningful impact on patient experience.
We expect to drive significant value for Physicians across 1, oncology and Retina Consultants of America by creating an MSO platform that leverages the capabilities of these Market. Leaders will unlock new opportunities to enhance our solutions for both providers and bioer by leveraging, our platform strengths, and scale in areas, like clinical research revenue cycle management and data-driven clinical insights to support Physicians and Advanced Care.
Focusing on our growth priority of leading with market leaders, our MSOs, demonstrate the value of our commitment to support healthcare leaders at the forefront of innovation.
Well much focused today will be appropriately on completing the acquisition of 1 oncology. In January, we celebrated the 1 year anniversary of RCA joining Senora
Over the past year, we've been very pleased with the addition of RCA, both in terms of their performance and leadership in driving pharmaceutical innovation.
RCA has clearly differentiated itself through its clinical trial and research capabilities, contributing to more than 1/3 of all retina clinical trial, research conducted in the United States and we see significant potential extending this offering across our MSO platform.
Bob Mauch: Since completing the acquisition, we've supported the deployment of hundreds of advanced imaging devices across RCA practices that enable more precise, non-invasive assessment of patients' clinical conditions. And finally, our MSO expansion is supporting our growth priority of enhancing patient access to pharmaceuticals. As specialty pharmaceutical innovation continues to accelerate, physicians are navigating more advanced treatment options while facing increased operational complexity. Our MSOs help address these challenges by providing a robust portfolio of services that support physicians in delivering the most modern, high-quality care. Both RCA and OneOncology physicians are active contributors at leading retina and oncology conferences, presenting research across a wide range of disease states. Recently, OneOncology partner practices presented dozens of abstracts covering emerging treatments, including cellular therapies, subcutaneous bispecific antibodies, and CAR T.
Bob Mauch: Since completing the acquisition, we've supported the deployment of hundreds of advanced imaging devices across RCA practices that enable more precise, non-invasive assessment of patients' clinical conditions. And finally, our MSO expansion is supporting our growth priority of enhancing patient access to pharmaceuticals. As specialty pharmaceutical innovation continues to accelerate, physicians are navigating more advanced treatment options while facing increased operational complexity. Our MSOs help address these challenges by providing a robust portfolio of services that support physicians in delivering the most modern, high-quality care. Both RCA and OneOncology physicians are active contributors at leading retina and oncology conferences, presenting research across a wide range of disease states. Recently, OneOncology partner practices presented dozens of abstracts covering emerging treatments, including cellular therapies, subcutaneous bispecific antibodies, and CAR T.
In addition to expanding research capabilities RCA Physicians continue to advance the patient care journey by adopting Advanced Technologies in their practices that have a meaningful impact on patient experience.
Since completing the acquisition, we've supported the deployment of hundreds of advanced imaging devices across RCA practices that enable more precise, non-invasive assessment of patients and clinical conditions.
And finally, our MSO expansion is supporting our growth priority of enhancing patient access to Pharmaceuticals.
A specialty pharmaceutical Innovation continues to accelerate Physicians are navigating more advanced treatment options while facing increased operational complexity.
Our msos help address these challenges by providing a robust portfolio of services that support positions in, delivering the most modern high-quality care.
Both RCA and 1. Oncology Physicians are active contributors at leading retina and oncology conferences, presenting research across a wide range of disease States.
Bob Mauch: These activities highlight the important role OneOncology physicians play in advancing cancer care and expanding access to complex treatments for patients in local communities. Another recent example of our MSO physicians' leadership advancing clinical practice is RCA's research chair, Dr. Charles Wyckoff, and team, performing the world's first procedure of a new FDA-approved cell-based gene therapy for MacTel Type 2, a degenerative retinal disease that previously had limited treatment options. We've also seen the real-world impact of this leadership in the retina biosimilar market. RCA physicians were highly involved in supporting research for a key biosimilar product, and due to their clinical familiarity and confidence, were leaders in its early adoption, helping to drive patient access to this high quality, lower cost treatment.
Bob Mauch: These activities highlight the important role OneOncology physicians play in advancing cancer care and expanding access to complex treatments for patients in local communities. Another recent example of our MSO physicians' leadership advancing clinical practice is RCA's research chair, Dr. Charles Wyckoff, and team, performing the world's first procedure of a new FDA-approved cell-based gene therapy for MacTel Type 2, a degenerative retinal disease that previously had limited treatment options. We've also seen the real-world impact of this leadership in the retina biosimilar market. RCA physicians were highly involved in supporting research for a key biosimilar product, and due to their clinical familiarity and confidence, were leaders in its early adoption, helping to drive patient access to this high quality, lower cost treatment.
Recently 1 oncology partner practices presented, dozens of abstracts covering emerging treatments, including cellular therapies, subcutaneous, by specific antibodies and carti
These activities highlight, the important role of 1 oncology Physicians, play in advancing, Cancer, Care, and expanding, access to complex treatments for patients in local communities.
Another recent example of our MSO Physicians leadership, advancing clinical practice is RCA's research chair, Dr. Charles wikoff and team performing the world's first procedure of a new FDA approved. Cell-based gene therapy for mactel. Type 2, a degenerative retina disease. That previously had limited treatment options
this leadership in the retina biosimilar Market,
Bob Mauch: Across both platforms, One Oncology and RCA physicians are leading in the adoption of advanced and individualized treatment approaches, expanding access to its clinical trials, and ensuring patients have access to the most cutting-edge treatments in an accessible setting. In closing, Cencora delivered a strong start to our fiscal 2026 and continues to execute at a high level. We're advancing our strategy and strengthening our position as a leading healthcare company. Guided by our purpose, growth priorities, and strategic drivers, we are well positioned to drive sustainable value creation for our stakeholders over the long term. Before handing it over to Jim for a detailed review of our quarterly results and updated guidance, I want to once again thank the Cencora team. Their expertise, commitment, and dedication to our purpose power our strong performance.
Bob Mauch: Across both platforms, One Oncology and RCA physicians are leading in the adoption of advanced and individualized treatment approaches, expanding access to its clinical trials, and ensuring patients have access to the most cutting-edge treatments in an accessible setting. In closing, Cencora delivered a strong start to our fiscal 2026 and continues to execute at a high level. We're advancing our strategy and strengthening our position as a leading healthcare company. Guided by our purpose, growth priorities, and strategic drivers, we are well positioned to drive sustainable value creation for our stakeholders over the long term. Before handing it over to Jim for a detailed review of our quarterly results and updated guidance, I want to once again thank the Cencora team. Their expertise, commitment, and dedication to our purpose power our strong performance.
RCA Physicians were highly involved in supporting research for a key buyer similar product and due to their clinical familiarity and confidence were leaders in its early. Adoption helping to drive patient access to this high-quality lower-cost treatment.
Across both platforms, 1 Oncology and RC Physicians are leading in the adoption of advanced and individualized treatment approaches, expanding access to its clinical trials and ensuring patients have access to the most cutting-edge treatments in an accessible setting.
In closing some core delivered, a strong start to our fiscal 2026 and continues to execute at a high level.
We're advancing our strategy and strengthening our position as a leading healthcare company.
Guided by our purpose, growth, priorities and strategic drivers. We are well, positioned to drive sustainable value creation for our stakeholders over the long term.
Before handing it over to Jim for a detailed review of our quarterly results and updated guidance, I want to once again thank the Senora team.
Bob Mauch: With that, I'll now hand the call over to Jim for an in-depth review of our performance and updated expectations for the year. Jim?
Bob Mauch: With that, I'll now hand the call over to Jim for an in-depth review of our performance and updated expectations for the year. Jim?
Their expertise, commitment, and dedication to our purpose power our strong performance.
Jim Cleary: Thanks, Bob. Good morning and good afternoon, everyone. Before turning to a review of our fiscal 2026 Q1 financial results and updated guidance expectations, I want to take a moment to echo Bob in expressing my excitement on our announcement that we have completed our acquisition of OneOncology. OneOncology and its partner practices are leaders in community oncology, having built a differentiated MSO platform that has delivered exceptional growth since its founding and has been a key contributor to Cencora's leadership and specialty. As innovation and biosimilars continue to advance, our partnerships with pharmaceutical-centric MSOs will allow us to better support physicians, patients, and manufacturers, enhancing our specialty offering. We are confident our investments in MSOs will unlock new value creation opportunities and support our long-term growth, as evidenced by our recently increased long-term guidance....
Jim Cleary: Thanks, Bob. Good morning and good afternoon, everyone. Before turning to a review of our fiscal 2026 Q1 financial results and updated guidance expectations, I want to take a moment to echo Bob in expressing my excitement on our announcement that we have completed our acquisition of OneOncology. OneOncology and its partner practices are leaders in community oncology, having built a differentiated MSO platform that has delivered exceptional growth since its founding and has been a key contributor to Cencora's leadership and specialty. As innovation and biosimilars continue to advance, our partnerships with pharmaceutical-centric MSOs will allow us to better support physicians, patients, and manufacturers, enhancing our specialty offering. We are confident our investments in MSOs will unlock new value creation opportunities and support our long-term growth, as evidenced by our recently increased long-term guidance....
With that, I'll now hand the call over to Jim for an in-depth review of our performance and updated expectations for the year. Jim.
Thanks, Bob. Good morning and good afternoon, everyone.
Before turning to a review of our fiscal 2026, first quarter, Financial results and updated guidance expectations. I want to take a moment to Echo Bob in expressing. My excitement, on our announcement that we have completed, our acquisition of 1 oncology.
1 oncology and its partner practices are leaders. In community oncology having built a differentiated MSO platform that has delivered exceptional growth since its founding and has been a key contributor to sora's leadership and Specialty.
As Innovation and biosimilars continue to advance our Partnerships. With pharmaceutical Centric msos will allow us to better support Physicians patients and manufacturers and enhancing our specialty offerings.
Jim Cleary: Moving now to our consolidated Q1 results, and as a reminder, unless otherwise stated, my remarks today will focus on our adjusted non-GAAP financial results. For further discussion of our GAAP results, please refer to our earnings press release and presentation. Starting with adjusted diluted earnings per share, we completed the quarter with adjusted diluted EPS of $4.08, an increase of 9%, driven by performance in our US Healthcare Solutions segment. Consolidated revenue was $85.9 billion, up 5.5%, due to solid growth in both reportable segments and in other, the drivers of which I will detail when I speak to our segment-level results. In the quarter, we continued to see strong sales growth in the US for GLP-1 products, which increased by $1 billion or 11% over the prior year quarter.
Jim Cleary: Moving now to our consolidated Q1 results, and as a reminder, unless otherwise stated, my remarks today will focus on our adjusted non-GAAP financial results. For further discussion of our GAAP results, please refer to our earnings press release and presentation. Starting with adjusted diluted earnings per share, we completed the quarter with adjusted diluted EPS of $4.08, an increase of 9%, driven by performance in our US Healthcare Solutions segment. Consolidated revenue was $85.9 billion, up 5.5%, due to solid growth in both reportable segments and in other, the drivers of which I will detail when I speak to our segment-level results. In the quarter, we continued to see strong sales growth in the US for GLP-1 products, which increased by $1 billion or 11% over the prior year quarter.
We are confident our investments in msos will unlock new value creation opportunities, and support our long-term growth as evidenced by our recently increased long-term guidance,
Moving now to our consolidated first quarter results. And as a reminder, unless otherwise stated, my remarks today will focus on our adjusted non-GAAP financial results. For further discussion of our GAAP results, please refer to our earnings press release and presentation.
Starting with adjusted diluted earnings per share. We completed the quarter with adjusted diluted EPS of 4 dollars, an increase of 9% driven by performance in our us, Healthcare Solutions segment.
Jim Cleary: Turning to gross profit, consolidated gross profit was $3.0 billion, up 18%, primarily due to growth in the US Healthcare Solutions segment. Consolidated gross profit margin was 3.48%, an increase of 37 basis points, driven by the January 2025 acquisition of Retina Consultants of America. Moving to operating expenses, in the quarter, consolidated operating expenses were $1.9 billion, up approximately 22%, driven primarily by the RCA acquisition and to support our revenue growth. Consolidated operating income was $1.1 billion, an increase of 12% compared to the prior year quarter, due to strong execution by our teams and continued growth in our US Healthcare Solutions segment. Moving now to our net interest expense and effective tax rate for Q1.
Jim Cleary: Turning to gross profit, consolidated gross profit was $3.0 billion, up 18%, primarily due to growth in the US Healthcare Solutions segment. Consolidated gross profit margin was 3.48%, an increase of 37 basis points, driven by the January 2025 acquisition of Retina Consultants of America. Moving to operating expenses, in the quarter, consolidated operating expenses were $1.9 billion, up approximately 22%, driven primarily by the RCA acquisition and to support our revenue growth. Consolidated operating income was $1.1 billion, an increase of 12% compared to the prior year quarter, due to strong execution by our teams and continued growth in our US Healthcare Solutions segment. Moving now to our net interest expense and effective tax rate for Q1.
Consolidated Revenue was 85.9 billion dollars up 5.5% due to solid growth in both reportable segments. And in other the drivers of which I will detail when I speak to our segment level results in the quarter, we continue to see strong sales growth in the US for glp1 products, which increase by 1 billion dollars or 11% over the prior year quarter.
Turning to gross profit Consolidated gross profit was 3.0 billion dollars up 18%. Primarily due to growth in the US Healthcare Solutions, segment Consolidated, gross profit margin was 3.48% and increase of 37 basis points, driven by the January, 2025 acquisition of Retina, Consultants of America.
Moving to operating expenses in the quarter Consolidated, operating expenses were 1.9 billion up, approximately 22% driven primarily by the RCA acquisition and to support our Revenue growth Consolidated, operating income was 1.1 billion dollars and increase of 12%. Compared to the prior year quarter due to strong execution by our teams and continued growth in our us Healthcare Solutions segment.
Jim Cleary: Net interest expense was $72 million, an increase of $44 million versus the prior year quarter, primarily due to debt raised to finance a portion of the RCA acquisition. Our effective income tax rate was 19%, compared to 20% in the prior year quarter, and as we look at the balance of fiscal year 2026, we now expect our full year effective tax rate to be approximately 20%. Finally, diluted share count was 195.3 million shares, a 0.1% increase compared to the prior year first quarter. As a reminder, due to the One Oncology acquisition, we have paused share repurchases as we prioritize debt paydown and anticipate our full year diluted share count to be approximately 195.5 million shares.
Jim Cleary: Net interest expense was $72 million, an increase of $44 million versus the prior year quarter, primarily due to debt raised to finance a portion of the RCA acquisition. Our effective income tax rate was 19%, compared to 20% in the prior year quarter, and as we look at the balance of fiscal year 2026, we now expect our full year effective tax rate to be approximately 20%. Finally, diluted share count was 195.3 million shares, a 0.1% increase compared to the prior year first quarter. As a reminder, due to the One Oncology acquisition, we have paused share repurchases as we prioritize debt paydown and anticipate our full year diluted share count to be approximately 195.5 million shares.
Moving now to our net interest expense and effective tax rate for the first quarter. Net interest expense was $72 million, an increase of $44 million versus the prior year quarter, primarily due to debt raised to finance a portion of the RCA acquisition. Our effective income tax rate was 19%, compared to 20% in the prior year quarter. And as we look at the balance of fiscal year 2026, we now expect our full-year effective tax rate to be approximately 20%.
Jim Cleary: Regarding our cash balance and Adjusted Free Cash Flow, we ended December with $1.8 billion of cash and had negative Adjusted Free Cash Flow in the quarter of $2.4 billion as a result of seasonal working capital needs. This compares to negative Adjusted Free Cash Flow of $2.8 billion in the first quarter of fiscal 2025. We continue to expect full year Adjusted Free Cash Flow to be approximately $3 billion as the working capital dynamics unwind in the balance of our fiscal year 2026, as they did in fiscal year 2025. This completes the review of our consolidated results. Now I'll turn to our segment results for the first quarter.
Jim Cleary: Regarding our cash balance and Adjusted Free Cash Flow, we ended December with $1.8 billion of cash and had negative Adjusted Free Cash Flow in the quarter of $2.4 billion as a result of seasonal working capital needs. This compares to negative Adjusted Free Cash Flow of $2.8 billion in the first quarter of fiscal 2025. We continue to expect full year Adjusted Free Cash Flow to be approximately $3 billion as the working capital dynamics unwind in the balance of our fiscal year 2026, as they did in fiscal year 2025. This completes the review of our consolidated results. Now I'll turn to our segment results for the first quarter.
Account was 195.3 million shares, a 0.1% increase compared to the prior year. First quarter, as a reminder, due to the one oncology acquisition, we have paused share repurchases as we prioritize debt pay down and anticipate our full-year diluted share count to be approximately 195.5 million shares.
Regarding our cash balance and adjusted free cash flow. We ended December with 1.8 billion dollars of cash and had negative adjusted free cash flow in the quarter of 2.4 billion dollars. As a result of seasonal, working capital needs
This compares to negative adjusted free cash flow of $2.8 billion in the first quarter of fiscal 2025.
We continue to expect full year adjusted free cash flow to be approximately 3 billion dollars as the working capital Dynamics unwind and the balance of our fiscal year 2026 as they did in fiscal year 2025.
Jim Cleary: Beginning with the US Healthcare Solutions segment, US Healthcare Solutions revenue was $76.2 billion, up 5%, as we continued to see good volumes and revenue growth across our customer segments, including growth in GLP-1s and in specialty sales to health systems and physicians. As a reminder, this quarter, we faced a more challenging revenue comparison due to a large grocery customer we off-boarded in the Q2 of fiscal 2025 and the Q4 of fiscal 2025 loss of an oncology customer as a result of it being acquired. US Healthcare Solutions segment operating income increased 21% to $831 million, primarily driven by the RCA acquisition and continued specialty growth in health systems and physician practices, more than offsetting the headwind from the oncology customer loss.
Jim Cleary: Beginning with the US Healthcare Solutions segment, US Healthcare Solutions revenue was $76.2 billion, up 5%, as we continued to see good volumes and revenue growth across our customer segments, including growth in GLP-1s and in specialty sales to health systems and physicians. As a reminder, this quarter, we faced a more challenging revenue comparison due to a large grocery customer we off-boarded in the Q2 of fiscal 2025 and the Q4 of fiscal 2025 loss of an oncology customer as a result of it being acquired. US Healthcare Solutions segment operating income increased 21% to $831 million, primarily driven by the RCA acquisition and continued specialty growth in health systems and physician practices, more than offsetting the headwind from the oncology customer loss.
This completes the review of our consolidated results. Now I'll turn to our segment results for the first quarter.
Beginning with the US Healthcare Solutions segment, US Healthcare Solutions revenue was $76.2 billion, up 5%. As we continue to see good volumes and revenue growth across our customer segments, including growth in GLP-1s and in specialty sales to health systems and physicians. As a reminder,
This quarter, we faced a more challenging Revenue comparison due to a large grocery customer. We offered in the second quarter of fiscal 2025 and the fourth quarter fiscal 2025 loss of an oncology customer as a result of it being acquired,
Jim Cleary: Our teams continue executing at a high level across the segment, contributing to our strong performance. In the quarter, we saw particularly good volumes and trends in our health systems business, where we continue to see benefits from our focus on strategic partnerships, leveraging our expertise in specialty. At RCA, we saw better-than-expected volume, excellent trends in research, and new physicians joining the platform. Turning now to our International Healthcare Solutions segment. In the quarter, International Healthcare Solutions revenue was $7.6 billion, up approximately 10% on an as-reported basis and 6% on a constant currency basis, driven primarily by our European distribution business, but also reflecting revenue growth at each of the businesses within the segment. International Healthcare Solutions operating income was $142 million, down 14% on an as-reported basis and down 17% on a constant currency basis.
Jim Cleary: Our teams continue executing at a high level across the segment, contributing to our strong performance. In the quarter, we saw particularly good volumes and trends in our health systems business, where we continue to see benefits from our focus on strategic partnerships, leveraging our expertise in specialty. At RCA, we saw better-than-expected volume, excellent trends in research, and new physicians joining the platform. Turning now to our International Healthcare Solutions segment. In the quarter, International Healthcare Solutions revenue was $7.6 billion, up approximately 10% on an as-reported basis and 6% on a constant currency basis, driven primarily by our European distribution business, but also reflecting revenue growth at each of the businesses within the segment. International Healthcare Solutions operating income was $142 million, down 14% on an as-reported basis and down 17% on a constant currency basis.
Us Healthcare Solutions. Segment operating income, increased 21% to 831 million. Primarily driven by the RCA, acquisition and continued specialty growth and health systems and physician practices more than off setting the headwind from the oncology customer loss.
Our teams continue executing at a high level across the segments contributing to our strong performance. In the quarter, we saw a particularly good volumes and Trends in our health systems business. Where we continue to see benefits from our focus on strategic Partnerships leveraging, our expertise and Specialty.
At RCA, we saw better than expected volume. Excellent Trends in research and new Physicians, joining the platform.
Turning now to our International Healthcare Solutions, segment.
In the quarter International Healthcare Solutions. Revenue was 7.6 billion dollars up approximately 10% on an as reported basis and 6% on a constant currency basis, driven primarily by our European distribution business but also reflecting Revenue growth at each of the businesses within the segment.
Jim Cleary: The decline was driven by lower operating income in our European distribution business, largely due to the timing of manufacturer price adjustments in a developing market country, partially offset by operating income growth in our global specialty logistics business. In the quarter, we continued to see encouraging trends for our global specialty logistics services, with volumes growing again this quarter. Our teams have been prioritizing operational excellence and targeted business development, which are positioning us for success as the market begins to rebound. Moving to other, revenue in other was $2.1 billion, up 6%, primarily due to growth at MWI Animal Health and Profarma, and offset in part by a revenue decline in our legacy US hub consulting services.
Jim Cleary: The decline was driven by lower operating income in our European distribution business, largely due to the timing of manufacturer price adjustments in a developing market country, partially offset by operating income growth in our global specialty logistics business. In the quarter, we continued to see encouraging trends for our global specialty logistics services, with volumes growing again this quarter. Our teams have been prioritizing operational excellence and targeted business development, which are positioning us for success as the market begins to rebound. Moving to other, revenue in other was $2.1 billion, up 6%, primarily due to growth at MWI Animal Health and Profarma, and offset in part by a revenue decline in our legacy US hub consulting services.
International Healthcare Solutions operating income was $142 million, down 14% on a NAS reported basis and down 17% on a constant currency basis. The decline was driven by lower operating income in our European distribution business, largely due to the timing of manufacturer price adjustments and a developing market country, partially offset by operating income growth in our Global Specialty Logistics business in the quarter. We continue to see encouraging trends for our Global Specialty Logistics services, with volumes growing again this quarter. Our teams have been prioritizing operational excellence and targeted business development, which are positioning us for success as the market begins to rebound.
Jim Cleary: Operating income was $91 million, down 6%, primarily due to a decline in operating income in our U.S. Healthcare Solutions business, resulting from the fiscal 2025 loss on manufacturer program, partially offset by operating income growth at MWI Animal Health, where the teams continue to execute well across companion and production animal markets. That completes a review of our segment-level results. I will now discuss our updated fiscal 2026 guidance expectations. As a reminder, we do not provide forward-looking guidance for certain metrics on a GAAP basis, so the following information is provided on an adjusted non-GAAP basis, except with respect to revenue. Beginning with adjusted diluted earnings per share, when we announced the acquisition of OneOncology, we indicated that we had expected to be towards the lower half of our EPS range due to pausing of share repurchases.
Jim Cleary: Operating income was $91 million, down 6%, primarily due to a decline in operating income in our U.S. Healthcare Solutions business, resulting from the fiscal 2025 loss on manufacturer program, partially offset by operating income growth at MWI Animal Health, where the teams continue to execute well across companion and production animal markets. That completes a review of our segment-level results. I will now discuss our updated fiscal 2026 guidance expectations. As a reminder, we do not provide forward-looking guidance for certain metrics on a GAAP basis, so the following information is provided on an adjusted non-GAAP basis, except with respect to revenue. Beginning with adjusted diluted earnings per share, when we announced the acquisition of OneOncology, we indicated that we had expected to be towards the lower half of our EPS range due to pausing of share repurchases.
Moving to other revenue and other was 2.1 billion dollars up 6%. Primarily due to growth at MWI, Animal Health in profarma and offset in part by a revenue decline. In our legacy US Hub, Consulting Services,
Operating income was 91 million down 6% primarily due to a decline in operating income in our us Hub, Consulting Services business. Resulting from the fiscal 2025 loss of manufacturer program partially offset by operating income growth at MWI Animal Health, where the teams continue to execute, well, across companion and production animal markets.
That completes your review of our segment level results, I will now discuss our updated fiscal 2026. Guidance, expectations as a reminder, we do not provide forward-looking guidance for certain metrics on a gap basis. So the following information is provided on an adjusted non-gaap basis, except with respect to revenue,
Jim Cleary: Today, we are pleased to now be reaffirming our full guidance range of $17.45 to $17.75 to reflect our strong execution, the continued performance of our US Healthcare Solutions segment, and the expected contribution from OneOncology. Moving now to revenue. We expect consolidated revenue growth to be in the range of 7% to 9%, up from the previous expectations of 5% to 7%, reflecting increased growth across both reportable segments and in other. In the US Healthcare Solutions segment, our guidance reflects 7% to 9% revenue growth, which includes the OneOncology MSO revenue and continued solid utilization trends across the segment. In the International Healthcare Solutions segment, we now expect revenue growth to be in the range of 7% to 9% on an as-reported basis to reflect the weakening of the US dollar against many currencies.
Jim Cleary: Today, we are pleased to now be reaffirming our full guidance range of $17.45 to $17.75 to reflect our strong execution, the continued performance of our US Healthcare Solutions segment, and the expected contribution from OneOncology. Moving now to revenue. We expect consolidated revenue growth to be in the range of 7% to 9%, up from the previous expectations of 5% to 7%, reflecting increased growth across both reportable segments and in other. In the US Healthcare Solutions segment, our guidance reflects 7% to 9% revenue growth, which includes the OneOncology MSO revenue and continued solid utilization trends across the segment. In the International Healthcare Solutions segment, we now expect revenue growth to be in the range of 7% to 9% on an as-reported basis to reflect the weakening of the US dollar against many currencies.
Lower half of our EPS range due to pausing of cereal purchases. Today, we are pleased to now, be reaffirming our full guidance range of 17.45 to 17.75 to reflect our strong execution. The continued performance of our us Healthcare Solutions segment and the expected contribution from 1 oncology
Moving now to revenue, we expect consolidated revenue growth to be in the range of 7% to 9%, up from the previous expectations of 5% to 7%, reflecting increased growth across both reportable segments and in other areas.
Jim Cleary: On a constant currency basis, our International Healthcare Solutions segment revenue growth remains unchanged at 6% to 8% growth. For other, we now expect revenue growth to be in the range of 1% to 5%, reflecting updated expectations for Profarma and positive volume trends we have seen at MWI, which represents a significant majority of revenue in other. Moving to operating income, we expect consolidated operating income growth to be in the range of 11.5% to 13.5%, up from the previous guidance of 8% to 10%. This is primarily driven by our increased growth expectations for the US Healthcare Solutions segment, where we now expect operating income growth to be in the range of 14% to 16% due to our acquisition of OneOncology and the continued strong execution and performance of the segment.
Jim Cleary: On a constant currency basis, our International Healthcare Solutions segment revenue growth remains unchanged at 6% to 8% growth. For other, we now expect revenue growth to be in the range of 1% to 5%, reflecting updated expectations for Profarma and positive volume trends we have seen at MWI, which represents a significant majority of revenue in other. Moving to operating income, we expect consolidated operating income growth to be in the range of 11.5% to 13.5%, up from the previous guidance of 8% to 10%. This is primarily driven by our increased growth expectations for the US Healthcare Solutions segment, where we now expect operating income growth to be in the range of 14% to 16% due to our acquisition of OneOncology and the continued strong execution and performance of the segment.
In the U.S. Healthcare Solutions segment, our guidance reflects 7 to 9% revenue growth, which includes the oncology MSO revenue and continued solid utilization trends across the segments and the International Healthcare Solutions segment. We now expect revenue growth to be in the range of 7 to 9% on an as-reported basis to reflect the weakening of the U.S. dollar against many currencies. On a constant currency basis, our International Healthcare Solutions segment revenue growth remains unchanged at 6 to 8% growth.
For other. We now expect Revenue growth to be in the range of 1 to 5% reflecting, updated, expectations, for profarma, and positive volume Trends. We have seen at MWI, which represents a significant majority of Revenue and other
Moving to operating income. We expect consolidated operating income growth to be in the range of 11.5% to 13.5%, up from the previous guidance of 8% to 10%.
Jim Cleary: As a reminder, we expect OneOncology to be neutral, net of financing costs, to adjusted diluted EPS in its first 12 months. There is no change in our full-year operating income expectations for the International Healthcare Solutions segment, as the largest driver of the year-over-year weakness for the first quarter was timing related within the European distribution business, which we expect to pick up in the balance of fiscal 2026. As it relates to our operating income expectations for other, we now expect to see operating income flat to the prior year revised reportable segment results. This is due to the full impairment of depreciable assets of the US consulting business as of December 31, 2025, thereby eliminating the need for future depreciation expense. While this consulting business is small in the context of the Cencora enterprise, we are pleased that we are making progress on focusing our portfolio.
Jim Cleary: As a reminder, we expect OneOncology to be neutral, net of financing costs, to adjusted diluted EPS in its first 12 months. There is no change in our full-year operating income expectations for the International Healthcare Solutions segment, as the largest driver of the year-over-year weakness for the first quarter was timing related within the European distribution business, which we expect to pick up in the balance of fiscal 2026. As it relates to our operating income expectations for other, we now expect to see operating income flat to the prior year revised reportable segment results. This is due to the full impairment of depreciable assets of the US consulting business as of December 31, 2025, thereby eliminating the need for future depreciation expense. While this consulting business is small in the context of the Cencora enterprise, we are pleased that we are making progress on focusing our portfolio.
This is primarily driven by our increased growth, expectations for the US, Healthcare Solutions segment where we now, expect operating income growth to be in the range of 14 to 16% due to our acquisition of 1 oncology and the continued strong execution and performance of the segment.
As a reminder, we expect 1 oncology to be neutral. Net of financing costs to adjusted diluted EPS in its first 12 months
There is no change and are full year operating income expectations for the international Healthcare Solutions segment as the largest driver of the year-over-year. Weakness for the first quarter was timing related within the European distribution business which we expect to pick up in the balance of fiscal 2026.
Jim Cleary: Before moving to our updated interest expense expectations, I wanted to spend a moment providing details on non-operating income contributions we expect from the OneOncology acquisition. Due to the nature of non-wholly owned investments held by OneOncology, we expect to have the following two additional benefits to Cencora's net income. First, we expect to record approximately $30 million of income on our other income and loss line for the full year fiscal 2026, primarily relating to a joint venture in which OneOncology's UUG subsidiary holds a non-controlling stake. Second, we expect to have a non-controlling loss add back to net income, also related to UUG, that will largely offset the non-controlling income we eliminate from Profarma, resulting in our non-controlling interest line being relatively small in fiscal 2026.
Jim Cleary: Before moving to our updated interest expense expectations, I wanted to spend a moment providing details on non-operating income contributions we expect from the OneOncology acquisition. Due to the nature of non-wholly owned investments held by OneOncology, we expect to have the following two additional benefits to Cencora's net income. First, we expect to record approximately $30 million of income on our other income and loss line for the full year fiscal 2026, primarily relating to a joint venture in which OneOncology's UUG subsidiary holds a non-controlling stake. Second, we expect to have a non-controlling loss add back to net income, also related to UUG, that will largely offset the non-controlling income we eliminate from Profarma, resulting in our non-controlling interest line being relatively small in fiscal 2026.
As it relates to our operating income expectations for other. We now expect to see operating income flat to the prior year revised reportable segment results. This is due to the full impairment of depreciable assets of the US Consulting business as of December 312022.
4 moving to our updated interest expense expectations. I wanted to spend a moment. Providing details on non-operating income contributions. We expect from the 1 oncology acquisition.
Due to the nature of non-polyhedron.
first, we expect to record approximately 30 million dollars of income on our other income and loss line for the full year, fiscal 2026, primarily relating to a joint venture in which 1 oncology uug subsidiary, holds a non-controlling stake,
Second. We expect to have a non-controlling loss add back to net income. Also related to uug that will largely offset the non-controlling income. We eliminate from profarma.
Jim Cleary: While these items are helpful callouts as you incorporate OneOncology into your models for Cencora, we do not anticipate them being regular points of discussion. The OneOncology platform is well positioned, high performing, and will be a meaningful contributor to Cencora's operating income both in 2026 and in our long-term plans. Moving now to interest expense. We expect interest expense to be in the range of $480 million to $500 million, up from our previous range of $315 million to $335 million, primarily due to additional borrowings required to fund our acquisition of OneOncology. As a reminder, our Q2 is typically our highest interest expense quarter due to the seasonal working capital needs.
Jim Cleary: While these items are helpful callouts as you incorporate OneOncology into your models for Cencora, we do not anticipate them being regular points of discussion. The OneOncology platform is well positioned, high performing, and will be a meaningful contributor to Cencora's operating income both in 2026 and in our long-term plans. Moving now to interest expense. We expect interest expense to be in the range of $480 million to $500 million, up from our previous range of $315 million to $335 million, primarily due to additional borrowings required to fund our acquisition of OneOncology. As a reminder, our Q2 is typically our highest interest expense quarter due to the seasonal working capital needs.
Resulting in our non-controlling interest line being relatively small in fiscal 2026.
While these items are helpful callouts as you incorporate 1, oncology into your models for signora, we do not anticipate them, being regular points of discussion. The 1 oncology platform is well positioned, high-performing and will be a meaningful contributor to Senora's operating income, both in 2026 and in our long-term plans,
Moving now to interest expense, we expect interest expense to be in the range of 480 million to 500 million dollars up from our previous range of 315 million to 3335 million primarily due to additional borrowings required to fund our acquisition of 1 oncology.
Jim Cleary: And with the OneOncology financing, we would expect second quarter net interest expense to be about double our first quarter interest expense. That concludes our updated full year guidance assumptions. In closing, Cencora delivered a strong start to fiscal 2026 as our purpose-driven team members executed to support our partners and patients. Our strategy, centered on our growth priorities and strategic drivers, is powering our performance, informing our capital deployment, and will allow us to drive long-term value creation for all our stakeholders. Now I'll turn the call over to the operator to open the line for questions. Operator?
Jim Cleary: And with the OneOncology financing, we would expect second quarter net interest expense to be about double our first quarter interest expense. That concludes our updated full year guidance assumptions. In closing, Cencora delivered a strong start to fiscal 2026 as our purpose-driven team members executed to support our partners and patients. Our strategy, centered on our growth priorities and strategic drivers, is powering our performance, informing our capital deployment, and will allow us to drive long-term value creation for all our stakeholders. Now I'll turn the call over to the operator to open the line for questions. Operator?
Expense to be about double our first quarter interest expense.
That concludes our updated full year. Guidance assumptions in closing Senora delivered, a strong start to fiscal 2026 as our purpose-driven team members executed to support our partners and patients our strategy centered on our growth priorities. And strategic drivers is powering our performance. Informing our Capital deployment and will allow us to drive long-term value creation for all our stakeholders.
Operator: Thank you. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. The first question comes from Glenn Santangelo from Barclays. Your line is now open. Please go ahead.
Operator: Thank you. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. The first question comes from Glenn Santangelo from Barclays. Your line is now open. Please go ahead.
Now, I'll turn the call over to the operator to open the line for questions, operator.
Thank you. To ask a question, please press star followed by 1 on your telephone keypad now.
If you change your mind, please press star followed by 2.
When preparing to ask your question, please, ensure your device is unmuted locally.
Glenn Santangelo: Yeah, thanks for taking my question. Hey, Bob and Jim, I just want to talk about operating income growth for a second for the balance of the year. I think with so many moving parts, like around, you know, RC, the Retina deal and Florida Cancer, and now adding One Oncology, I think what the market's kind of confused a little bit about is the deceleration, Jim, that we saw in the US segment from the September to the December quarter. So I'm kind of curious if you can give us a little bit more color there. And within your full year guidance, should we just assume continued deceleration throughout the year due to the more difficult comps?
Glenn Santangelo: Yeah, thanks for taking my question. Hey, Bob and Jim, I just want to talk about operating income growth for a second for the balance of the year. I think with so many moving parts, like around, you know, RC, the Retina deal and Florida Cancer, and now adding One Oncology, I think what the market's kind of confused a little bit about is the deceleration, Jim, that we saw in the US segment from the September to the December quarter. So I'm kind of curious if you can give us a little bit more color there. And within your full year guidance, should we just assume continued deceleration throughout the year due to the more difficult comps?
The first question comes from Glenn, Santa Gallo from Barclays. Your line is now open, please go ahead.
Oh yeah, thanks for taking my question. Uh hey Bob and uh Jim I'm just want to talk about operating income growth for a second for the balance of the year. I think with so many moving Parts like around, you know, RC the retina deal and and Florida Cancer and now adding 1 oncology. I think what the Market's kind of confused a little bit about is the deceleration, uh, Jim that we saw in that in the US segment from the September to the December quarter. And so I'm kind of curious.
Glenn Santangelo: I don't know if there's any other headwinds or tailwinds to that operating income line that you think are worth calling out as we think about the balance of the year. Thanks.
Glenn Santangelo: I don't know if there's any other headwinds or tailwinds to that operating income line that you think are worth calling out as we think about the balance of the year. Thanks.
Jim Cleary: Sure. Sure, Glenn, thanks a lot for asking that, that question. You know, I'll start out with the December quarter. During the December quarters, you know, in the US, we had Adjusted Operating Income growth of 21%. I'll start out talking about our long-term guidance. As you know, our long-term guidance for Adjusted Operating Income growth in the US is 7% to 10%, and we've increased that twice in the last few months.
Jim Cleary: Sure. Sure, Glenn, thanks a lot for asking that, that question. You know, I'll start out with the December quarter. During the December quarters, you know, in the US, we had Adjusted Operating Income growth of 21%. I'll start out talking about our long-term guidance. As you know, our long-term guidance for Adjusted Operating Income growth in the US is 7% to 10%, and we've increased that twice in the last few months.
Serious. If you can give us a little bit more color there and within your full year guidance, should we just assume continued deceleration throughout the year, due to the more difficult comps? And I don't know if there's any other headwinds or Tailwinds to that operating, uh, income line that you think are worth calling out. As we think about the balance of the year,
Thanks.
Sure, sure, Glenn. Uh, thanks a lot for asking that that question. And, um, you know, start out with, uh, the December quarter and during that December quarters, you know, in the US, we had adjusted operating income growth of 21%.
Jim Cleary: The reason I bring that up, if you look at the first quarter and look at that 21% operating income growth in the US, if you back out RCA, and RCA had a very good quarter, but if you back out RCA, our performance in the US was still towards the higher end of our long-term guidance range, and that's even with the headwind from the oncology customer that we lost. So if you back out that headwind, we were meaningfully above our long-term guidance range in the first quarter in the US. Really, those positive results are due to things like utilization trends we've talked about for some time, really strong performance in specialty in the quarter.
Jim Cleary: The reason I bring that up, if you look at the first quarter and look at that 21% operating income growth in the US, if you back out RCA, and RCA had a very good quarter, but if you back out RCA, our performance in the US was still towards the higher end of our long-term guidance range, and that's even with the headwind from the oncology customer that we lost. So if you back out that headwind, we were meaningfully above our long-term guidance range in the first quarter in the US. Really, those positive results are due to things like utilization trends we've talked about for some time, really strong performance in specialty in the quarter.
Jim Cleary: We had particularly good performance with health systems, but also with physician practices and really good sales to both OneOncology and RCA, and then just broad performance across the US segment. And so, as a result of that and as a result of the contribution, of course, from OneOncology, we're increasing our guidance for the full year from, in the US, from 9 to 11% adjusted operating income growth to 14 to 16%. And so if we look at the balance of the year guide that you asked about, and if we exclude RCA and exclude OneOncology, we're still solidly within that long-term guidance range of 7 to 10%, and that's in spite of the headwind that we have from the loss of the oncology customer that was acquired by a competitor.
Jim Cleary: We had particularly good performance with health systems, but also with physician practices and really good sales to both OneOncology and RCA, and then just broad performance across the US segment. And so, as a result of that and as a result of the contribution, of course, from OneOncology, we're increasing our guidance for the full year from, in the US, from 9 to 11% adjusted operating income growth to 14 to 16%. And so if we look at the balance of the year guide that you asked about, and if we exclude RCA and exclude OneOncology, we're still solidly within that long-term guidance range of 7 to 10%, and that's in spite of the headwind that we have from the loss of the oncology customer that was acquired by a competitor.
And I'll start out talking about our long-term guidance as you know, our long-term guidance for adjusted operating income growth. In the US, is 7 to 10 percentage. Increase that twice in the last few months. And the reason I bring that up is, if you look at the first quarter and look at that 21%, operating income growth in the US if you back out RCA and RCA had a very good quarter. But if you back out RCA our performance, in the US was still towards the higher end of our long-term guidance range, and that's even with the headwind from the oncology customer that we lost. And so, if you back out that headwind, we were meaningfully above our long-term guidance range in the first quarter in the US and really those positive results are due to things like utilization Trends, we've talked about for some time, um, really strong performance
Jim Cleary: And again, that, you know, very good performance is, you know, is driven by the same factors, including utilization trends, strength in specialty sales, and, and broad-based performance. So if you look at our performance now, I think we are performing really well. It may not be the same level of outperformance that we've had in some of the recent past. Of course, the comps that we're hitting are very strong comps, but I will say that we, you know, feel very good about our long-term guidance and very good about even when you X out things like RCA and One Oncology, we're performing, you know, solidly within that long-term guidance range that we've increased a couple times in the last few months. So thanks a lot for the question, Glenn.
Jim Cleary: And again, that, you know, very good performance is, you know, is driven by the same factors, including utilization trends, strength in specialty sales, and, and broad-based performance. So if you look at our performance now, I think we are performing really well. It may not be the same level of outperformance that we've had in some of the recent past. Of course, the comps that we're hitting are very strong comps, but I will say that we, you know, feel very good about our long-term guidance and very good about even when you X out things like RCA and One Oncology, we're performing, you know, solidly within that long-term guidance range that we've increased a couple times in the last few months. So thanks a lot for the question, Glenn.
And Specialty in the quarter, we had particularly good performance with health systems but also with physician practices and really good sales to both 1, oncology and RCA and then just broad performance across the US segment. And so as a result of that, and as a result of the contribution, of course, from 1 oncology, we're increasing our guidance, for the full year, from, in the US from 9, to 11 percent, adjusted operating income growth to 14 to 16 percent. And so, if we look at the balance of the Year guide that you asked about, and if we exclude RCA and exclude 1 oncology, we're still solidly within that long-term guidance range of 7 to 10% and that's in spite of the headwind that we have from the loss of the oncology customer that was acquired by a competitor. And again, um, that you know, very good performance is, you know, um, is driven by the same fact.
Including utilization Trends, uh, strength and Specialty sales and, uh, and broad-based performance. And so if you look at our um, performance now, I think we are performing really well. It may not be the same level of outperformance that we've had in some of the recent past, of course, the comps that we're hitting are, um, very strong comps. But I will say that we, you know, feel, um, very good, about our long-term guidance, and very good about, even when you X Out, things like RCA and 1 oncology.
Operator: Thank you. The next question comes from Elizabeth Anderson of Evercore ISI. Your line is now open. Please go ahead.
Operator: Thank you. The next question comes from Elizabeth Anderson of Evercore ISI. Your line is now open. Please go ahead.
We're we're performing, you know, solidly within that long-term guidance range that we've increased a couple times in the last few months. So thanks a lot for the question Gwen.
Elizabeth Anderson: Hi, guys. Good morning, and thanks for the question. Appreciate all the details. I was wondering if you could go into a little bit more detail on some of the MSO platform, AOI, accelerators, such as, you know, you've, you've owned RCA for about a year. You obviously have just rolled up, OneOncology, you know, in terms of closing that. Where are the, like, shorter-term opportunities in terms of helping to drive AOI growth, and what's sort of like a longer-term, you know, driver as we think about that platform, going forward? Thank you.
Elizabeth Anderson: Hi, guys. Good morning, and thanks for the question. Appreciate all the details. I was wondering if you could go into a little bit more detail on some of the MSO platform, AOI, accelerators, such as, you know, you've, you've owned RCA for about a year. You obviously have just rolled up, OneOncology, you know, in terms of closing that. Where are the, like, shorter-term opportunities in terms of helping to drive AOI growth, and what's sort of like a longer-term, you know, driver as we think about that platform, going forward? Thank you.
Thank you. The next question comes from Elizabeth Anderson of evercore, isi. Your line is now open. Please go ahead.
Hi, guys. Good morning, and thanks for the question. Appreciate all the details. I was wondering if
Bob Mauch: Hi, Elizabeth, thank you for the question. You know, I'll just take a step back and just kind of, you know, re-explain a bit kind of why the MSOs fit so well within the Cencora strategy, and I'll get right to your specific question. But the MSO strategy is a natural extension of the relationship that we have with specialty providers, as well as specialty biopharma. It's in addition to the strong businesses that we have in specialty distribution and GPO. So, the acquisition of RCA was a good, important first step. And as we saw the performance of that business, it became clear to us that we should, if we could, accelerate the acquisition of OneOncology, which we're extremely happy that we were able to accomplish.
Bob Mauch: Hi, Elizabeth, thank you for the question. You know, I'll just take a step back and just kind of, you know, re-explain a bit kind of why the MSOs fit so well within the Cencora strategy, and I'll get right to your specific question. But the MSO strategy is a natural extension of the relationship that we have with specialty providers, as well as specialty biopharma. It's in addition to the strong businesses that we have in specialty distribution and GPO. So, the acquisition of RCA was a good, important first step. And as we saw the performance of that business, it became clear to us that we should, if we could, accelerate the acquisition of OneOncology, which we're extremely happy that we were able to accomplish.
A little bit more detail on some of the MSO platform um aoi um accelerators. Such as you know you you've you've owned RCA for almost about a year. You obviously just rolled up 1 oncology, you know in terms of closing that where are the like shorter term opportunities in terms of helping to drive aoi growth and what sort of like a longer term um you know driver as we think about that platform. Uh going forward, thank you.
Bob Mauch: So what that gives us now, which gets to your question, is now we have two platform MSOs who are market leaders with significant capabilities within each MSO. And then the answer to your question is, as we look across those MSOs, we have opportunities to leverage those capabilities, which we've talked about, and we you know restated in the prepared remarks today. But the clinical trial excellence that exists within RCA is something that we believe we can quickly leverage across the entire platform. Revenue cycle management is a very strong capability within the MSOs that can become even stronger. That's a value driver.
Bob Mauch: So what that gives us now, which gets to your question, is now we have two platform MSOs who are market leaders with significant capabilities within each MSO. And then the answer to your question is, as we look across those MSOs, we have opportunities to leverage those capabilities, which we've talked about, and we you know restated in the prepared remarks today. But the clinical trial excellence that exists within RCA is something that we believe we can quickly leverage across the entire platform. Revenue cycle management is a very strong capability within the MSOs that can become even stronger. That's a value driver.
Hi Elizabeth. Uh, thank you for the question. Uh, you know, I'll just I'll take a step back and just kind of uh you know, re explain a bit kind of what why the mso's fit. So, well within the S core strategy and I'll get right to your uh your specific question. But the MSO strategy is is a natural extension of uh the relationship that we have with specialty providers, uh, as well as specialty, uh, biofarma. Uh, it's, uh, in addition to the strong businesses that we have especially distribution and, uh, and GPO. So, uh, the acquisition of of RCA was a good, uh, important first step. And as we saw the performance of that business, that became clear to us that we uh, should if we could accelerate um the acquisition of of 1 oncology which we're extremely happy um, that we were able to accomplish. So what that gives us now, which gets to your question is now we have 2 platform msos, who are Market leaders, uh, with significant
Bob Mauch: And then things, you know, around, you know, future products and future technologies, that these excellent physicians have leadership in, that's where you get to a little bit of the medium and the longer term. We're confident that there will be new capabilities and new services that will be built over time, that most importantly, will be there to support the physicians and, you know, to restate again, the purpose of the MSO is to support the physicians and the physician practice. That allows them more time to focus on their patients, on clinical excellence, and driving. So as we build those capabilities, we have the scale and the footprint now to deploy them in a significant way.
Bob Mauch: And then things, you know, around, you know, future products and future technologies, that these excellent physicians have leadership in, that's where you get to a little bit of the medium and the longer term. We're confident that there will be new capabilities and new services that will be built over time, that most importantly, will be there to support the physicians and, you know, to restate again, the purpose of the MSO is to support the physicians and the physician practice. That allows them more time to focus on their patients, on clinical excellence, and driving. So as we build those capabilities, we have the scale and the footprint now to deploy them in a significant way.
Capabilities within each MSO, and then the answer to your question is, as we look across, uh, those msos we have opportunities to leverage, um, those capabilities, which we, which we've talked about and, and we, you know, re, uh, restated in the in the prepared remarks today. But the, the clinical trial, uh, Excellence that exists, uh, within RCA is something that we believe we can quickly, uh, leverage across the entire platform. Uh, revenue cycle management is a very strong capability within the msos that can become even stronger. Uh, that's a value driver.
Bob Mauch: So we have short-term opportunities, which we talked about, but we're also excited about medium and long-term opportunities that we'll talk more about once they become more apparent.
Bob Mauch: So we have short-term opportunities, which we talked about, but we're also excited about medium and long-term opportunities that we'll talk more about once they become more apparent.
And then things, you know, around, uh, you know, future products, and, and future Technologies. Um, that these excellent Physicians uh, have leadership in. Uh, that's where you get to a little bit of the, the medium and the longer term. Uh, we're confident that there will be new capabilities and new services that, uh, will be built over time that most importantly will be there to support the Physicians and, you know, to, to restate again, the, the purpose of the MSO is to support the Physicians and the physician practice, uh, that allows them, uh, more time to focus on their patients on on a clinical Excellence. Uh, and driving. So as we build those capabilities, uh, we have a scale on the footprint now to, uh, to deploy them, uh, in a significant way. So we have short-term opportunities which we talked about. But we're also excited about, uh, medium and long term opportunities that will
We'll talk more about that once they become more apparent.
Operator: Thank you. The next question is from Lisa Gill of J.P. Morgan. Your line is now open. Please go ahead.
Operator: Thank you. The next question is from Lisa Gill of J.P. Morgan. Your line is now open. Please go ahead.
Lisa Gill: Thanks very much. Bob, I had one question for you, and then just a follow-up for Jim. Bob, on your side, I appreciate everything you're talking about from an MSO perspective and the physician relationship, but one of the comments that stood out to me today is the benefits of strategic partnerships with health systems. Can you talk a little bit more about the opportunities that you see there? You know, what's in the numbers today and what the future opportunity is? And then, Jim, can you just help us to understand the cadence of earnings? I just want to make sure, I know you don't give quarterly guidance, but, you know, anything to call out as we think about the next several quarters.
Lisa Gill: Thanks very much. Bob, I had one question for you, and then just a follow-up for Jim. Bob, on your side, I appreciate everything you're talking about from an MSO perspective and the physician relationship, but one of the comments that stood out to me today is the benefits of strategic partnerships with health systems. Can you talk a little bit more about the opportunities that you see there? You know, what's in the numbers today and what the future opportunity is? And then, Jim, can you just help us to understand the cadence of earnings? I just want to make sure, I know you don't give quarterly guidance, but, you know, anything to call out as we think about the next several quarters.
Thank you. The next question is from Lisa Gil of JP Morgan. Your line is now open. Please go ahead.
Uh, thanks very much. Um, Barb I have 1 question for you and then just a follow-up for Jim. Um Bob on your side I appreciate everything you're talking about from an m so perspective and the physician relationship. But 1 of the comments that stood out to me today is the benefits of strategic Partnerships with Health Systems. Can you talk a little bit more about the opportunity that you see there? Um, you know, what's in the numbers today and what the future opportunity is and then Jim can you just help us to understand the Cadence of earnings? I just want to make sure. I know you don't give quarterly guidance but, you know, anything to call out as we think about the next several quarters,
Bob Mauch: Hi, Lisa. Yeah, thank you for the question. You know, we certainly are focused on the MSOs today, but your question is spot on with our strategy and the way that we think about our specialty business, because certainly the physician community physician side of care is critically important for patients and for Cencora. But we also see significant growth in our relationship with health systems who are also focused on that specialty growth. And we've been, you know, focused there over a number of years. We feel really comfortable with the customer portfolio that we have, and we expect to continue to see growth there.
Bob Mauch: Hi, Lisa. Yeah, thank you for the question. You know, we certainly are focused on the MSOs today, but your question is spot on with our strategy and the way that we think about our specialty business, because certainly the physician community physician side of care is critically important for patients and for Cencora. But we also see significant growth in our relationship with health systems who are also focused on that specialty growth. And we've been, you know, focused there over a number of years. We feel really comfortable with the customer portfolio that we have, and we expect to continue to see growth there.
Bob Mauch: You know, as I mentioned in my prepared remarks, you know, we spend a lot of time understanding those customers, these health systems customers, understanding their strategy, how they want to grow, and then we bring the capabilities of Cencora to help them do that. And so that's worked out well to this point. We expect it will continue. But your question really is indicative of the way that we think about the specialty pharmaceutical growth, and that we want to be a leader in the sites of care where all of our customers are, and we're doing that. So certainly in the physician space, the health systems, but then others as well. We want to make sure that we're the right partner for those providers.
Bob Mauch: You know, as I mentioned in my prepared remarks, you know, we spend a lot of time understanding those customers, these health systems customers, understanding their strategy, how they want to grow, and then we bring the capabilities of Cencora to help them do that. And so that's worked out well to this point. We expect it will continue. But your question really is indicative of the way that we think about the specialty pharmaceutical growth, and that we want to be a leader in the sites of care where all of our customers are, and we're doing that. So certainly in the physician space, the health systems, but then others as well. We want to make sure that we're the right partner for those providers.
Hi, Lisa. Yeah, thank you for the question it, you know, we certainly are focused, um, on the msos today. But your question is spot-on, uh, with our strategy and the way that we think about our, our specialty business because, uh, certainly The Physician, uh, Community physician side of care, is critically important for patients and for, uh, sore. But, uh, we also see significant growth in our relationship with, uh, with Health Systems who are also focused, uh, on that specialty growth. And uh, we've been, you know, focused there over a number of years. Uh, we feel really comfortable with, uh, the customer portfolio that we have. Uh, and we expect to continue to see growth
There, and, uh, you know, as I mentioned in my prepared remarks, you know, we spend a lot of time
we think about,
Bob Mauch: Thanks for the question.
Bob Mauch: Thanks for the question.
Jim Cleary: Lisa, thanks a lot for the follow-up question. I'll just call out two things. The first is, of course, the oncology customer that was acquired by a competitor. That will be a headwind, like it was the last two quarters. That'll be a headwind in the second and third fiscal quarter, and then we'll no longer have that headwind in the fourth quarter, which will enhance our operating income growth rate in the fourth quarter.
Jim Cleary: Lisa, thanks a lot for the follow-up question. I'll just call out two things. The first is, of course, the oncology customer that was acquired by a competitor. That will be a headwind, like it was the last two quarters. That'll be a headwind in the second and third fiscal quarter, and then we'll no longer have that headwind in the fourth quarter, which will enhance our operating income growth rate in the fourth quarter.
Jim Cleary: And then the only other thing I'll call out, which I said in my prepared remarks, and we kind of gave a lot of detail here to help with the modeling, is, due to the debt that we're taking on to fund the OneOncology acquisition, we're indicating that our interest expense in the second quarter will be approximately two times our interest expense in the first quarter. Thanks a lot for that follow-up question.
Jim Cleary: And then the only other thing I'll call out, which I said in my prepared remarks, and we kind of gave a lot of detail here to help with the modeling, is, due to the debt that we're taking on to fund the OneOncology acquisition, we're indicating that our interest expense in the second quarter will be approximately two times our interest expense in the first quarter. Thanks a lot for that follow-up question.
Uh, the specialty pharmaceutical growth. Uh, and that we want to be a leader and uh, the sites of care where all of our customers are. And and we're doing that. So certainly in the physician space, uh, the health systems, uh, but then others as well. Uh, we want to make sure that we're the right right. Partner for those providers. Thanks for the question, Lisa. Thanks a lot for the for the follow-up question and I'll just call out um, 2 things. Um, the first is, of course, the oncology customer that was acquired by a competitor that will be a headwind. Like it was the last 2 quarters. That'll be a headwind in the second and third fiscal quarter, and then we'll no longer have that headwind, um, in the fourth quarter, which will enhance our operating income growth rate in the fourth quarter. And then the only other thing, I'll call out, um, which I said in my prepared remarks and when we kind of gave a lot of detail here to help with the modeling is um, due to the um debt that we're taking on to fund uh the 1 on
Operator: Thank you. The next question comes from Michael Cherny of Leerink Partners. Your line is now open. Please go ahead.
Operator: Thank you. The next question comes from Michael Cherny of Leerink Partners. Your line is now open. Please go ahead.
Acquisition, um, we're indicating that our interest expense in the second quarter will be approximately, 2 times our interest expense in the first quarter. Thanks a lot for that. Follow-up question.
Michael Cherny: Good morning. Thanks for taking the question. Maybe if we can talk about the market construct a little bit. Obviously, the first range of IRA price negotiations hit the market start of this year. Can you just give a sense, as you prepared, for calendar 2026, any changes or discussions relative to the supplier side in terms of how you go to market, and any changes in terms of the contracting relative to any of the list price changes that were absorbed?
Michael Cherny: Good morning. Thanks for taking the question. Maybe if we can talk about the market construct a little bit. Obviously, the first range of IRA price negotiations hit the market start of this year. Can you just give a sense, as you prepared, for calendar 2026, any changes or discussions relative to the supplier side in terms of how you go to market, and any changes in terms of the contracting relative to any of the list price changes that were absorbed?
Thank you. The next question comes from Michael Chaney of Ling Partners. Your line is now open. Please go ahead.
Jim Cleary: Yeah, let me make a couple comments there. Thank you for that question. You know, we have a, you know, very strong strategic global sourcing team, and we were well prepared. And when there were the reductions in list price, as we've said before, we have, you know, terms in our contracts which indicate that we'll get into discussions with manufacturers. And we were, you know, very successful in those discussions with manufacturers because of the value we provide in the supply chain. So we were very successful in maintaining our economics and our gross profit dollars. And so we were, you know, pleased with the way that that turned out.
Jim Cleary: Yeah, let me make a couple comments there. Thank you for that question. You know, we have a, you know, very strong strategic global sourcing team, and we were well prepared. And when there were the reductions in list price, as we've said before, we have, you know, terms in our contracts which indicate that we'll get into discussions with manufacturers. And we were, you know, very successful in those discussions with manufacturers because of the value we provide in the supply chain. So we were very successful in maintaining our economics and our gross profit dollars. And so we were, you know, pleased with the way that that turned out.
Uh, good morning. Thanks for taking the question. Maybe if we can talk about the market construct, a little bit, obviously the first range of Ira price negotiations, hit the market for this year. Can you just give a sense as you prepared? Um, for calendar, 26, any changes or discussions? Um, relative to the supplier side in terms of how you go to market and any changes in terms of the Contracting relative to any of the list, price changes that were absorbed.
Jim Cleary: And we had talked about, you know, for some time, the insulin example and how we have protected our gross profit dollars, and this was just another example at the end of this year of us, because of the value we provide in the supply chain, able to come out of those discussions with maintaining good economics and gross profit dollars. And then the only other thing I'll comment on is just in general what we saw at the end of the year in terms of, you know, brands and any price increases and those sorts of things, was very much in line with our expectations. Thank you very much for the question.
Jim Cleary: And we had talked about, you know, for some time, the insulin example and how we have protected our gross profit dollars, and this was just another example at the end of this year of us, because of the value we provide in the supply chain, able to come out of those discussions with maintaining good economics and gross profit dollars. And then the only other thing I'll comment on is just in general what we saw at the end of the year in terms of, you know, brands and any price increases and those sorts of things, was very much in line with our expectations. Thank you very much for the question.
Yeah, let me make a couple comments there. Thank you for that question. You know, we have, you know, very strong, strategic Global sourcing team and we were well prepared and um, when there were the, um, reductions in list price, as we've said before, we have, you know, terms in our contracts, which indicate that we'll, um, get into discussions with manufacturers and we were, you know, very successful in those discussions with manufacturers because of the value we provide in the supply chain. So we were very, very successful and maintaining our economics and our gross profit dollars. And so we were, you know, um, pleased with the way that that turned out and we had talked about, you know, for some time the insulin example and how we had protected our gross profit dollars. And this was just another example at the end of this year of us, um, because of the value,
Operator: Thank you. The next question is from Erin Wright of Morgan Stanley. Your line is now open. Please go ahead.
Operator: Thank you. The next question is from Erin Wright of Morgan Stanley. Your line is now open. Please go ahead.
We, we provided in the supply chain, were able to come out of those discussions with maintaining good economics and gross profit dollars. And then the only other thing I'll comment on is, just in general, what we saw at the end of the year, in terms of, you know, brands and any price increases and those sorts of things, was very much in line with our expectations. Thank you very much for the questions.
Erin Wright: Great, thanks. So I'll switch to international. It does seem to be more of a timing dynamic. Can you describe that a little bit more? Is there a specific geography that this was attributable to in terms of the quarter? And, I guess, give a little bit more detail on what that headwind was or quantify it for us. And then what gives you confidence in that ramp? What are you seeing in, like, World Courier, for instance, and other areas as well? Thanks.
Erin Wright: Great, thanks. So I'll switch to international. It does seem to be more of a timing dynamic. Can you describe that a little bit more? Is there a specific geography that this was attributable to in terms of the quarter? And, I guess, give a little bit more detail on what that headwind was or quantify it for us. And then what gives you confidence in that ramp? What are you seeing in, like, World Courier, for instance, and other areas as well? Thanks.
Thank you. The next question is from Aaron Wright of Morgan Stanley, your line is now open. Please go ahead.
Jim Cleary: Yeah, thank you. Appreciate the question, Erin. And so, I think the key thing is that in the international segment, we're maintaining our operating income guidance of adjusted operating income growth of 5% to 8% for the fiscal year. And what we saw during Q1 in the international segment was a challenging quarter due to a timing difference for manufacturer price adjustments in a developing market country. And that price adjustment last year happened at the beginning of the fiscal Q1, and this year it happened at the very end of the fiscal Q1. And so that'll really just be a timing difference that we'll see year-over-year.
Jim Cleary: Yeah, thank you. Appreciate the question, Erin. And so, I think the key thing is that in the international segment, we're maintaining our operating income guidance of adjusted operating income growth of 5% to 8% for the fiscal year. And what we saw during Q1 in the international segment was a challenging quarter due to a timing difference for manufacturer price adjustments in a developing market country. And that price adjustment last year happened at the beginning of the fiscal Q1, and this year it happened at the very end of the fiscal Q1. And so that'll really just be a timing difference that we'll see year-over-year.
Great, thanks. So I'll switch to International. It does seem to be more of a timing Dynamic. Can you describe that a little bit more? Is there a specific geography that this was attributable to in terms of in the quarter? And and I guess give a little bit more more detail on what that headwind was or quantify it for us. And then, what gives you confidence in that ramp? What are you seeing in? Like, well, Courier for instance in other areas as well. Thanks,
Yeah, thank you. Um, appreciate the question Aaron. And so, um, I think the key thing is that in the international segment, um, we're maintaining our
Jim Cleary: As a result of that, there's no change in our guidance for the fiscal year, and we expect it to pick up in the balance of the fiscal year. But then I think in the international segment, the thing we were really pleased to see during the quarter is operating income growth in our global specialty logistics business. And what we've seen the last two quarters is really volume growth in that business. And so we're executing well as a team there, and we're, you know, really pleased by the positive signals that we've seen of volume growth there. And of course, that translated in the most recent quarter to operating income growth.
Jim Cleary: As a result of that, there's no change in our guidance for the fiscal year, and we expect it to pick up in the balance of the fiscal year. But then I think in the international segment, the thing we were really pleased to see during the quarter is operating income growth in our global specialty logistics business. And what we've seen the last two quarters is really volume growth in that business. And so we're executing well as a team there, and we're, you know, really pleased by the positive signals that we've seen of volume growth there. And of course, that translated in the most recent quarter to operating income growth.
Jim Cleary: So those are the things that enable us to maintain our guidance of 5 to 8% in international for the fiscal year. Thank you, Erin.
Jim Cleary: So those are the things that enable us to maintain our guidance of 5 to 8% in international for the fiscal year. Thank you, Erin.
Operator: Thank you. The next question comes from Stephen Baxter of Wells Fargo. Your line is now open. Please go ahead.
Operator: Thank you. The next question comes from Stephen Baxter of Wells Fargo. Your line is now open. Please go ahead.
Volume growth in, in that business. And so we're, um, we're we're executing well as a as a team there and we're, you know, really I'm pleased by the positive signals that we've seen volume growth there. And uh of course that translated in the most recent quarter to operating income growth. So those are the things that enable us to maintain our, our guidance of 5 to 8% in international, for the fiscal year. Thank you, Aaron.
Stephen Baxter: Hi, thanks. I was hoping to spend a minute on the revised US EBIT guidance. It looks like that came up about $160 or $170 million. I was hoping you could perhaps break that into perhaps the contribution from OneOncology, whether we should think about any kind of transitory costs or kind of ramping going on with that business to kind of consider. And then in terms of organic guidance provision, is there any organic guidance provision in the segment a lot to point to there? Thank you.
Stephen Baxter: Hi, thanks. I was hoping to spend a minute on the revised US EBIT guidance. It looks like that came up about $160 or $170 million. I was hoping you could perhaps break that into perhaps the contribution from OneOncology, whether we should think about any kind of transitory costs or kind of ramping going on with that business to kind of consider. And then in terms of organic guidance provision, is there any organic guidance provision in the segment a lot to point to there? Thank you.
Thank you. The next question comes from Stephen Baxter of Wells. Fargo, your line is now open. Please go ahead.
Jim Cleary: Yeah, thanks a lot for the question. Of course, in the US, we increased our guidance from 9 to 11%, as you know, to 14 to 16%, and that was driven by the OneOncology acquisition and also by continued performance in our US Healthcare Solutions segment, for all the reasons that we've been talking about. As I said before, if you, you know, back out RCA and you back out OneOncology, in Q1, we're towards the higher end of our long-term guidance range of 7 to 10%. In the last three quarters, if you back out RCA and OneOncology again, we're within that long-term guidance range. Both those things are in spite of the loss of the oncology customer that was acquired.
Jim Cleary: Yeah, thanks a lot for the question. Of course, in the US, we increased our guidance from 9 to 11%, as you know, to 14 to 16%, and that was driven by the OneOncology acquisition and also by continued performance in our US Healthcare Solutions segment, for all the reasons that we've been talking about. As I said before, if you, you know, back out RCA and you back out OneOncology, in Q1, we're towards the higher end of our long-term guidance range of 7 to 10%. In the last three quarters, if you back out RCA and OneOncology again, we're within that long-term guidance range. Both those things are in spite of the loss of the oncology customer that was acquired.
Hi, thanks. Um, also from the spend a minute on the revised. Uh, us evict guidance. It looks like that came up about 160 or 170 million dollars. I was hoping you could perhaps break that into um perhaps the contribution from 1 ontology, whether we should think about any kind of transitory costs or kind of ramping going on with that business to kind of consider. And then in terms of organic guidance, for vision, uh, is there any organic items for vision in the segment? A large Point through there. Thank you.
Yeah. Thanks a lot for the question and of course, can the US. Um, we increased our guidance from 9 to 11 percent as, you know, to 14 to 16%. And that was driven by, uh, the 1 oncology acquisition and also by continued performance in our US Health,
Healthcare solution, segment for all the reasons that that we've been, um, talking about. And, as I said before, um, if you, you know, back out, um,
Jim Cleary: Now, one other thing that I want to raise, and this is why, and we got into a little bit of detail in my prepared remarks, is there are some OneOncology benefits that happen below the operating income line, and part of those benefits are in the other income line, and part of those benefits are in the non-controlling interest line. And these were covered, but just to quickly go through them, we expect approximately $30 million of income in our other income and loss line for the full year, fiscal 2026, and that's primarily related to earnings from a joint venture in which UUG holds a non-controlling stake. And then second, we expect to have a non-controlling loss add back to net income, also related to UUG.
Jim Cleary: Now, one other thing that I want to raise, and this is why, and we got into a little bit of detail in my prepared remarks, is there are some OneOncology benefits that happen below the operating income line, and part of those benefits are in the other income line, and part of those benefits are in the non-controlling interest line. And these were covered, but just to quickly go through them, we expect approximately $30 million of income in our other income and loss line for the full year, fiscal 2026, and that's primarily related to earnings from a joint venture in which UUG holds a non-controlling stake. And then second, we expect to have a non-controlling loss add back to net income, also related to UUG.
RCA and you back out 1 oncology, um, in the first quarter, we're towards the higher end of our long-term, guidance range of 7 to 10%. And then the last 3 quarters, um, if, if you back out RCA and 1 oncology again, where, um, we're we're within that long-term guidance range and both those things are in spite of the, um, loss of the oncology customer that was acquired. Now, 1, other thing that I want to raise and this is why and we got into a little bit of a detail in my prepared. Remarks is there are some 1 oncology benefits, um, that have been, uh, below the operating income line and that part of those benefits are in the other income line and part of those benefits are in the non-controlling interest line. And uh, and that these were were covered but just to quickly go through them. We expect approximately 30 million dollars of income in our other income and loss line for the
Jim Cleary: And just to size it, this add backs will largely offset the non-controlling income we eliminate from ProPharma, and that results in our non-controlling interest line being relatively small in fiscal 2026. And that's a lot of detail there, but we just really wanted to make the point that there's the operating income benefit from OneOncology, and then there's also some income below the operating income line.
Jim Cleary: And just to size it, this add backs will largely offset the non-controlling income we eliminate from ProPharma, and that results in our non-controlling interest line being relatively small in fiscal 2026. And that's a lot of detail there, but we just really wanted to make the point that there's the operating income benefit from OneOncology, and then there's also some income below the operating income line.
Full year, fiscal 2026, and that's primarily related to earnings from a joint venture in which UUG holds a non-controlling stake. And then second, we expect to have a non-controlling loss add back to net income, also related to EUG. And just to size it, those add backs will largely offset the non-controlling income we eliminate from Profarma, and that results in our non-controlling interest line being relatively small in fiscal 2026. And that's a lot of—
Detail there. But we just really wanted to, um, make the point that there's the operating income benefit from 1 oncology. And then there's also some income below the operating income line.
Operator: Thank you. The next question comes from Eric Percher of Nephron Research. Your line is now open. Please go ahead.
Operator: Thank you. The next question comes from Eric Percher of Nephron Research. Your line is now open. Please go ahead.
Eric Percher: Thank you. Jim, I might ask you for a little bit more detail on top of that detailed description. When you look at the US healthcare op profit increase, the 9% to 11% to 14% to 16%, it looks like this quarter's performance would add a point, recognizing there's a range here. But can you remind us, maybe how the OneOncology acquisition contribution flows in at the segment level versus what you gave us at total company being neutral? And how much of that is attributed 2 February to the end of the fiscal year?
Eric Percher: Thank you. Jim, I might ask you for a little bit more detail on top of that detailed description. When you look at the US healthcare op profit increase, the 9% to 11% to 14% to 16%, it looks like this quarter's performance would add a point, recognizing there's a range here. But can you remind us, maybe how the OneOncology acquisition contribution flows in at the segment level versus what you gave us at total company being neutral? And how much of that is attributed 2 February to the end of the fiscal year?
Thank you. The next question comes from Eric percher of nephron research. Your line is now open. Please go ahead.
Thank you, Jim. I I might ask you for a little bit more detail. On top of that detailed description. When you look at the US Healthcare opposite, increase the 9 to 11 to 14 to 16%. It looks like this quarter's performance would add a a point recognizing there's a range here but can you remind us uh, maybe how the
1 anko, acquisition contribution flows in at the segment level versus what you gave us at total company being neutral and how much of that is uh attributed February 2nd, to the end of the fiscal year.
Jim Cleary: Yeah, thanks for asking that follow-up question. And so the increase in guidance from 9% to 11% to 14% to 16% in the US is largely driven by OneOncology, and it's also as a result of the continued strong performance in the US. And, you know, what you'll see is in the other income line for the first 4 months of the fiscal year, we have our, you know, our 35% of the net after-tax earnings from OneOncology, and that's after interest, after tax, so it's a relatively small number. And then, of course, that moves up to operating income for the last 8 months, and so it's really just kinda 8 months there that drives the increase from 9% to 11% to 14% to 16%.
Jim Cleary: Yeah, thanks for asking that follow-up question. And so the increase in guidance from 9% to 11% to 14% to 16% in the US is largely driven by OneOncology, and it's also as a result of the continued strong performance in the US. And, you know, what you'll see is in the other income line for the first 4 months of the fiscal year, we have our, you know, our 35% of the net after-tax earnings from OneOncology, and that's after interest, after tax, so it's a relatively small number. And then, of course, that moves up to operating income for the last 8 months, and so it's really just kinda 8 months there that drives the increase from 9% to 11% to 14% to 16%.
Jim Cleary: You know, just, just one other thing that I'll add is that it does ramp, and so we'll see the OneOncology contribution ramp as the year goes on, which is due to, you know, both organic growth and inorganic growth, some, some inorganic growth that, that we'll see there. But we do see a nice ramp over the course of the fiscal year that'll, of course, continue to ramp in future years. Thanks a lot, Eric.
It's a relatively small number, and then, of course, that moves up to operating income for the last 8 months. And so, it's really just kind of 8 months there that, um, drives the increase from 9 to 11 percent to 14 to 16%.
Jim Cleary: You know, just, just one other thing that I'll add is that it does ramp, and so we'll see the OneOncology contribution ramp as the year goes on, which is due to, you know, both organic growth and inorganic growth, some, some inorganic growth that, that we'll see there. But we do see a nice ramp over the course of the fiscal year that'll, of course, continue to ramp in future years. Thanks a lot, Eric.
Operator: Thank you. The next question is from Allen Lutz of Bank of America. Your line is now open. Please go ahead.
Operator: Thank you. The next question is from Allen Lutz of Bank of America. Your line is now open. Please go ahead.
And um, you know, just just 1 other thing that I'll add is it, it does ramp. And so we'll see the 1 oncology contribution. Um ramp as the year goes on, which is due to you know, both organic growth and inorganic growth, some some inorganic growth that that we'll see there but we do see a nice ramp over the course of the fiscal year. That'll of course, um, continue to ramp in future years. Thanks a lot Eric.
Allen Lutz: Good morning, and thanks for taking the questions. One for Jim. You mentioned if you back out RCA and One Oncology, you're toward the high end of the long-term EBIT guidance in the quarter, and then over the last 3 quarters, you're within that range. How should we think about what's embedded in that core business for the rest of fiscal 2026 if we exclude RCA and, and One Oncology? Should we just assume it's basically within that? And then what gets you within US Healthcare Solutions on the EBIT side? What gets you to the low end and the high end of that range? Thanks.
Allen Lutz: Good morning, and thanks for taking the questions. One for Jim. You mentioned if you back out RCA and One Oncology, you're toward the high end of the long-term EBIT guidance in the quarter, and then over the last 3 quarters, you're within that range. How should we think about what's embedded in that core business for the rest of fiscal 2026 if we exclude RCA and, and One Oncology? Should we just assume it's basically within that? And then what gets you within US Healthcare Solutions on the EBIT side? What gets you to the low end and the high end of that range? Thanks.
Thank you. The next question is from Alan Lutz of Bank of America. Your line is now open. Please go ahead.
Jim Cleary: Yeah, and you know, really, it's the things we've been talking about for quite some time. And so it's solid utilization trends. It's strength in sales of specialty to both health systems and physician practices, and we've seen really strong performance there in health systems. Given our strength in specialty and oncology, that's really helped us with health systems, and then broad-based performance throughout our US business. And so it's really you know, just kinda all those sorts of things, and it's a range because, of course, it's very strong performance, and it's just kinda what's that level of strong performance within the range. And then, of course, you know, our business has been good for you know, for so long that we have strong comps that we're comparing against.
Jim Cleary: Yeah, and you know, really, it's the things we've been talking about for quite some time. And so it's solid utilization trends. It's strength in sales of specialty to both health systems and physician practices, and we've seen really strong performance there in health systems. Given our strength in specialty and oncology, that's really helped us with health systems, and then broad-based performance throughout our US business. And so it's really you know, just kinda all those sorts of things, and it's a range because, of course, it's very strong performance, and it's just kinda what's that level of strong performance within the range. And then, of course, you know, our business has been good for you know, for so long that we have strong comps that we're comparing against.
Good morning and thanks for taking the questions, 1 for Jim. Uh, you mentioned, if you back out RCA 1, oncology you toward the high end of the long term, Heidi guidance in the quarter. And then over the last 3 quarters, you're within that range. How should we think about what's embedded in that Core Business for the rest of fiscal 26. If we exclude RCN and 1 oncology should we just assume? It's basically within that. Um, and then what gets you within us, Healthcare Solutions on the ibid side, what gets you to the low end and the high end of that range. Thanks.
Yeah, and, um, you know, really it's the things we've been talking about for quite some time. Um, and so it's, um, solid utilization trends. It's on strength in sales of specialty, um, to both health systems and physician practices. And we've seen, um, really strong performance there.
Jim Cleary: But also, you know, we have a lot of confidence in our guidance, because of our success and because of those underlying trends that we've been talking about for quite some time. Thanks a lot for the question.
Jim Cleary: But also, you know, we have a lot of confidence in our guidance, because of our success and because of those underlying trends that we've been talking about for quite some time. Thanks a lot for the question.
Operator: Thank you. The next question is from Charles Rhee of TD Cowen. Your line is now open. Please go ahead.
Operator: Thank you. The next question is from Charles Rhee of TD Cowen. Your line is now open. Please go ahead.
In Health Systems, um, given our strength and specialty in oncology, that's really helped us with, uh, Health Systems, and then, um, broad-based performance throughout our US business. And so it's really, um, you know, just kind of all those sorts of things and it's a range, um, because of course, it's very strong performance and it's just kind of what's that level of strong performance within the range. And then, of course, you know, our business has been good for, you know, for so long that, uh, that we have. Um, we have strong comps that we're comparing against, but also, you know, we have a lot of, um, confidence in our guidance, um, because of our success and because of those underlying trends that we've been talking about for quite some time. Thanks a lot for the question.
Charles Rhyee: Yeah, thanks for taking the question. Jim, maybe just to go back to the below-the-line items related to One Oncology. I guess, if I remember correctly, when you announced the deal, you know, you guys did say that, you wouldn't be consolidating 100% of that, and I assume that this is that portion that is not being consolidated and will continue to be below the line. You know, you call it out this time, but is it, is it right to think that this $30 million amount is an ongoing kind of, NCI, piece that we should be modeling? And then, and I guess then, you know, when we think...
Charles Rhyee: Yeah, thanks for taking the question. Jim, maybe just to go back to the below-the-line items related to One Oncology. I guess, if I remember correctly, when you announced the deal, you know, you guys did say that, you wouldn't be consolidating 100% of that, and I assume that this is that portion that is not being consolidated and will continue to be below the line. You know, you call it out this time, but is it, is it right to think that this $30 million amount is an ongoing kind of, NCI, piece that we should be modeling? And then, and I guess then, you know, when we think...
Thank you. The next question is from Charles Reed of TD Cohen. Your line is now open. Please go ahead.
Oh yeah, thanks for the taking question. Um, Jim maybe just to go back to the below the line items related to 1 oncology. Um
Charles Rhyee: You know, how much of that? So I, I guess, really, how much of total OneOncology are you owning in going into the future? Is this, like, you know, is this, like, a 10% piece that will remain kind of staying outside, or is it less? And then, and then if I could just add a follow-up on share repurchase. I understand you're pausing in the short term, but when I look at your total leverage, it's still pretty low. And that would seem like you would have ability to both pay down debt and buy shares. Would love to understand maybe you're thinking why you necessarily have to pause, if there's any kind of covenants or anything like that. Thanks.
Charles Rhyee: You know, how much of that? So I, I guess, really, how much of total OneOncology are you owning in going into the future? Is this, like, you know, is this, like, a 10% piece that will remain kind of staying outside, or is it less? And then, and then if I could just add a follow-up on share repurchase. I understand you're pausing in the short term, but when I look at your total leverage, it's still pretty low. And that would seem like you would have ability to both pay down debt and buy shares. Would love to understand maybe you're thinking why you necessarily have to pause, if there's any kind of covenants or anything like that. Thanks.
I guess if I remember correctly, when you announced the deal, you know, you guys did say that, um, you wouldn't be consolidating 100% of that. And I assume that this is that portion that is not being Consolidated and will continue to be below the line. You know, you call it out this time, but is it, is it alright to think that this 30 million amount is an ongoing, kind of a NCI, uh, piece that we should be modeling. And then I and I guess then, um, you know, when we think, you know, how much of that. So, I guess really how much of total what oncology are you owning in going into the future? Is this, like, you know, is this like a 10% piece that will remain kind of sitting outside or, or is it less? And then, and then if I could just add a follow up on share repurchase, I understand you're pausing in the short term, um, but when I look at your total leverage, it's still pretty low. Um, and don't would seem like you would have ability to do both both paid on that. And and by Cher.
Jim Cleary: Okay, great. There was a lot there in that question, and what I'll say is that the two below-the-line items that I referred to, they're specifically related to One Oncology's UUG subsidiaries, and they will continue to, you know, be there over time and will continue to have those benefits that below the line, below the operating income line contributions as a result of that. The second part of the question had to do with our ownership stake in One Oncology, and we increased our ownership stake when we made the announcement today from 35% to 92%. And we're really pleased to say that the practices and management will own the remaining 8%. And so I think that was the second part of the question.
Jim Cleary: Okay, great. There was a lot there in that question, and what I'll say is that the two below-the-line items that I referred to, they're specifically related to One Oncology's UUG subsidiaries, and they will continue to, you know, be there over time and will continue to have those benefits that below the line, below the operating income line contributions as a result of that. The second part of the question had to do with our ownership stake in One Oncology, and we increased our ownership stake when we made the announcement today from 35% to 92%. And we're really pleased to say that the practices and management will own the remaining 8%. And so I think that was the second part of the question.
Uh would love to understand, maybe you're thinking why uh you you know, so I have to pause if there's any kind of Covenant or anything like that. Thanks.
Jim Cleary: And then the third part of the question was share repo. As we've said, you know, we're pausing share repo and focusing on deleveraging. But I will add that our, you know, long-term capital deployment priorities remain the same, which, of course, investing in the business, strategic acquisitions that you've seen, share repurchases that you've seen over time, and then, you know, having a nice growing dividend, which we grew at 9% this year. So thanks a lot for the question.
Jim Cleary: And then the third part of the question was share repo. As we've said, you know, we're pausing share repo and focusing on deleveraging. But I will add that our, you know, long-term capital deployment priorities remain the same, which, of course, investing in the business, strategic acquisitions that you've seen, share repurchases that you've seen over time, and then, you know, having a nice growing dividend, which we grew at 9% this year. So thanks a lot for the question.
Operator: Thank you. The next question is from George Hill of Deutsche Bank. Your line is now open. Please go ahead.
Operator: Thank you. The next question is from George Hill of Deutsche Bank. Your line is now open. Please go ahead.
%. And we're really pleased to say that the practices and management will own the remaining 8%. And so, I think that was, um, the second part of the question. And then, the third part of the question was Cher repo. And as we've said, um, you know, we're pausing share repo and focusing on deleveraging, but I will add that our, you know, long-term um Capital deployment priorities. Um, remain the same, which, of course investing in the business, strategic Acquisitions that you've seen share repurchases that you've seen over time. And then, you know, having a nice growing dividend which we grew at 9% this year. So thanks a lot for the question.
George Hill: Good morning, guys, and thanks for taking the question. And, Jim, I'm going to ask another one on MSO accounting. So first, I guess my question is, could you unpack a little bit of the revenue guidance change in the US business? It's about $5.7 billion, and I'm interested in if you can provide some color on the One Oncology contribution, the growth in the core, and kinda how to think about any of the puts and takes in WAC price reductions, whether or not that played a point at all. I recognize that you guys have all said it at the earnings line. I'm surprised there's kind of no impact on the revenue line at all, and maybe growth of GLP-1.
George Hill: Good morning, guys, and thanks for taking the question. And, Jim, I'm going to ask another one on MSO accounting. So first, I guess my question is, could you unpack a little bit of the revenue guidance change in the US business? It's about $5.7 billion, and I'm interested in if you can provide some color on the One Oncology contribution, the growth in the core, and kinda how to think about any of the puts and takes in WAC price reductions, whether or not that played a point at all. I recognize that you guys have all said it at the earnings line. I'm surprised there's kind of no impact on the revenue line at all, and maybe growth of GLP-1.
Thank you. The next question is from George Hill of Deutsche Bank. Your line is now open. Please go ahead.
Um, good morning guys. And thanks for taking the question and uh Jim. I'm gonna ask another 1 on MSL accounting. Uh, so first.
George Hill: And then my quick follow-up would be: I know that we were all looking at the One Oncology acquisition as a multiple of EBITDA. Is that EBITDA number the right proxy to use for AOI as we model One Oncology? And, like, are there any significant puts and takes between the AOI line and the EBITDA line for One Oncology? Thank you.
George Hill: And then my quick follow-up would be: I know that we were all looking at the One Oncology acquisition as a multiple of EBITDA. Is that EBITDA number the right proxy to use for AOI as we model One Oncology? And, like, are there any significant puts and takes between the AOI line and the EBITDA line for One Oncology? Thank you.
I guess my question is, could you, could you unpack a little bit of the revenue guidance change, uh, in the US business? It's about 5.7 billion dollars and I'm interested in you. If you can provide some color on the 1 oncology contribution, the growth in the core, and kind of how to think about any of the puts and takes in wac price, reductions whether or not that played, uh, a point at all. I recognize that you guys have all set it up the earnings line. I mean, I'm, I'm surprised there's kind of no impact on the revenue line at all, um, and maybe growth of glp ones and then, my quick fun.
Jim Cleary: Yeah, so there was a couple things there in that question. The first was on revenue and revenue guidance, and you know, OneOncology does not have a large impact on our revenue guidance and the growth there. And of course, the MSO business model is a lower revenue business model, but a really nice operating margin business model. And that's you know, similar to what you've seen from RCA. It really impacts our operating income margin. And then, the other thing I'll say there is, you know, we don't count the revenue twice, that we you know, of course, we sell to MSO, but yeah, but only count the revenue once, of course, and I'm sure you're aware of that.
Jim Cleary: Yeah, so there was a couple things there in that question. The first was on revenue and revenue guidance, and you know, OneOncology does not have a large impact on our revenue guidance and the growth there. And of course, the MSO business model is a lower revenue business model, but a really nice operating margin business model. And that's you know, similar to what you've seen from RCA. It really impacts our operating income margin. And then, the other thing I'll say there is, you know, we don't count the revenue twice, that we you know, of course, we sell to MSO, but yeah, but only count the revenue once, of course, and I'm sure you're aware of that.
Follow-up would be, I know that we were all looking at the 1 Oncology acquisition as a multiple of EBITDA. Is that EBITDA number the right proxy to use for AOI as we model 1 Oncology? And are there any significant puts and takes between the AOI line and the IBA line for 1 Oncology? Thank you.
Yeah, so there was that, um,
Jim Cleary: And then the other things I'll say is that, as we, you know, look at our revenue growth this year, of course, we have a grocery customer that we off-boarded, and we also have the oncology customer that was acquired by a competitor, so that impacts our revenue growth this year. And then also, we fully anticipated the changes in list prices when we put together our revenue guidance for this year. And so we're, you know, pleased with the increase in guidance because it just shows, you know, the underlying strength of our business when we have the increase in revenue guidance. And then you, you know, you asked a question about, you know, kind of any differences between EBITDA and operating income.
Jim Cleary: And then the other things I'll say is that, as we, you know, look at our revenue growth this year, of course, we have a grocery customer that we off-boarded, and we also have the oncology customer that was acquired by a competitor, so that impacts our revenue growth this year. And then also, we fully anticipated the changes in list prices when we put together our revenue guidance for this year. And so we're, you know, pleased with the increase in guidance because it just shows, you know, the underlying strength of our business when we have the increase in revenue guidance. And then you, you know, you asked a question about, you know, kind of any differences between EBITDA and operating income.
Couple things there in that question. The first was on, um, revenue and revenue guidance. And, um, you know, 1 oncology does not have a, um, a large impact on our, um, on our Revenue guidance and the growth there. And, of course, the MSO business model is, um, is a lower Revenue business model, but a really nice operating margin business model and that's, um, you know, similar to what you've seen from RCA, it really impacts our, um, our operating income, um, margin and then, um, the, the other thing I'll say there is, you know, we we don't count the revenue twice that we, um, you know, of course, we, um, sell to, uh, MSO but. But only count the revenue once, of course. And I'm sure you're aware of that. And then the other things I'll say is that, um, as we, you know, look at our Revenue growth this year, of course. Um, we have, uh, we have a,
Grocery customer that we off-boarded, and we also have the oncology customer that was acquired by a competitor. So that impacts our revenue growth this year, and then also the, um,
Jim Cleary: Other than the components, there is no meaningful difference there that I would, you know, call out other than, of course, the depreciation and amortization. Thank you for the questions.
Jim Cleary: Other than the components, there is no meaningful difference there that I would, you know, call out other than, of course, the depreciation and amortization. Thank you for the questions.
Operator: Thank you. The next question is from Steven Valiquette of Mizuho. Your line is now open. Please go ahead.
Operator: Thank you. The next question is from Steven Valiquette of Mizuho. Your line is now open. Please go ahead.
We we fully anticipated the changes in list prices, um, when we put together our Revenue guidance for this year and so we're, you know, pleased with the increase in guidance because it just shows, you know, the underlying strength of our business when we have the increase in Revenue, guidance. And then you, you know, you asked a question about um, you know, kind of any differences between ibida and operating income other than the components. There is no um um meaningful difference there that I would you know call out other than of course the depreciation and amortization. Thank thank you for the questions.
Steven Valiquette: Yeah, great. Thanks. Good morning. So I guess within the international business, your revenue growth is pretty strong. Any color just on the drug pricing trends in Europe, really on the back of all the MFN, you know, drug-related policies from the US might be impacting pricing in Europe or UK? Any impact for that one way or the other, or is it just kind of business as usual in Europe, aside from your one call-out in that developing country? Thanks.
Steven Valiquette: Yeah, great. Thanks. Good morning. So I guess within the international business, your revenue growth is pretty strong. Any color just on the drug pricing trends in Europe, really on the back of all the MFN, you know, drug-related policies from the US might be impacting pricing in Europe or UK? Any impact for that one way or the other, or is it just kind of business as usual in Europe, aside from your one call-out in that developing country? Thanks.
Thank you. The next question is from Stephen Velvet of Mizuho. Your line is now open. Please go ahead.
Yeah, great, thanks. Good morning. So I guess within the international business, you know, revenue growth is pretty strong. Any color just on the drug pricing trends in Europe—uh, really on the back of all the MFN, you know, drug-related, uh, policies from the US? Is it impacting, uh, pricing in Europe or the UK? Any impact for that one way or the other, or is it just kind of business as usual, uh, in Europe aside from your one callout?
Bob Mauch: Hi, Steve. Thanks for the question. I'm going to take this, so we can give Jim a break, and he can take a sip of water here. But no, we haven't seen any real changes in the markets from MFN. So, you know, as Jim said earlier, and you just restated, we did have a timing issue in one market. Overall, the international business is performing, you know, within our expectations, and we expect to, you know, meet our fiscal 2026 commitments there, but no changes based on MFN. We're also seeing, Steve, you know, which maybe a sub-bullet of your question, kind of within...
Bob Mauch: Hi, Steve. Thanks for the question. I'm going to take this, so we can give Jim a break, and he can take a sip of water here. But no, we haven't seen any real changes in the markets from MFN. So, you know, as Jim said earlier, and you just restated, we did have a timing issue in one market. Overall, the international business is performing, you know, within our expectations, and we expect to, you know, meet our fiscal 2026 commitments there, but no changes based on MFN. We're also seeing, Steve, you know, which maybe a sub-bullet of your question, kind of within...
And the, uh, that developing country, thanks.
Bob Mauch: You know, we talked about the World Courier business, improvement, but, you know, I do want to state how, strong our growth is in our global 3PL platform. So again, part of our specialty strategy, and within that specialty strategy in Europe, those products are delivered, you know, through 3PL, not necessarily, through wholesale. And, we have a Pan-European market-leading, service there, that also includes, obviously, the United States and, all of North America, so which is, performing, very well. But full circle, no real changes in, pricing that we're seeing in that market. Thanks for the question.
Bob Mauch: You know, we talked about the World Courier business, improvement, but, you know, I do want to state how, strong our growth is in our global 3PL platform. So again, part of our specialty strategy, and within that specialty strategy in Europe, those products are delivered, you know, through 3PL, not necessarily, through wholesale. And, we have a Pan-European market-leading, service there, that also includes, obviously, the United States and, all of North America, so which is, performing, very well. But full circle, no real changes in, pricing that we're seeing in that market. Thanks for the question.
Changes based on mfn, we're also seeing Steve, you know, uh, which maybe a sub bullet of your question kind of within, you know, we talked about the world Courier business, uh, uh Improvement. But, you know, I do want to State how, uh, strong our growth is in our Global 3pl platform. So again, part of our specialty strategy, uh, and within that specialty strategy in Europe, uh, those products are delivered. You know, through 3pl and not necessarily uh, through wholesaling. And and we have a pan European market leading, uh, service there that also includes, uh, obviously the United States and, and all of North America. So which is, which is performing, uh, very well but full circle. No real changes in in pricing that we're seeing in that market.
Operator: Thank you. The next question comes from Kevin Caliendo of UBS. Your line is now open. Please go ahead.
Operator: Thank you. The next question comes from Kevin Caliendo of UBS. Your line is now open. Please go ahead.
Thanks for the question. Thank you.
The next question comes from Kevin Kendo of UBS. Your line is now open. Please go ahead.
Kevin Caliendo: Hi, thanks for taking my question. I want to change it up a little bit. There was a relatively credible story about a private equity firm potentially being interested in buying MWI. I don't want you to-- I know you're not going to comment on the story, but just broadly speaking, can you talk about how you think about asset divestitures in the context of long-term growth rate or impact to long-term growth rates, impact near term to earnings? Like, does that-- would you contemplate dilution or anything like that, if strategically it made sense for you long term? And also maybe just speak to what's happening in that marketplace right now, in MWI's positioning. You called it out, had a good, good quarter. I'm just wondering strategically how it fits long term for you guys.
Kevin Caliendo: Hi, thanks for taking my question. I want to change it up a little bit. There was a relatively credible story about a private equity firm potentially being interested in buying MWI. I don't want you to-- I know you're not going to comment on the story, but just broadly speaking, can you talk about how you think about asset divestitures in the context of long-term growth rate or impact to long-term growth rates, impact near term to earnings? Like, does that-- would you contemplate dilution or anything like that, if strategically it made sense for you long term? And also maybe just speak to what's happening in that marketplace right now, in MWI's positioning. You called it out, had a good, good quarter. I'm just wondering strategically how it fits long term for you guys.
Hi, thanks for taking my question. Um, want to change it up a little bit. There was a relatively credible story about a private Equity, Firm, potentially being interested in buying MWI. I don't want you to I know you're not going to comment on the story but just broadly speaking, can you talk about how you think about asset deves and the context of
Long-term growth rate, or impact to long-term growth rates. Impact near-term to earnings. Like, does that—would you contemplate dilution or anything like that? Strategically, it made sense for you long term. And also, maybe just speak to what's happening in that marketplace right now. In MWI's positioning, you called it out, had a good quarter. I'm just wondering, strategically, how it fits long term for you guys.
Bob Mauch: Yeah, thank you for the question. As you said, we're certainly not going to comment on any rumors, but I will, you know, reiterate, you know, what we said very specifically last quarter and really have been working on over the past year or so. And that is our strategy is being, you know, refocused, and one of our strategic drivers is to make sure that we're prioritizing growth-oriented investments. And so we went through a process of assessing all of our businesses to make sure that they are very well aligned with our strategy and our future strategy going forward, and made the determination that we would put certain businesses in the other category.
Bob Mauch: Yeah, thank you for the question. As you said, we're certainly not going to comment on any rumors, but I will, you know, reiterate, you know, what we said very specifically last quarter and really have been working on over the past year or so. And that is our strategy is being, you know, refocused, and one of our strategic drivers is to make sure that we're prioritizing growth-oriented investments. And so we went through a process of assessing all of our businesses to make sure that they are very well aligned with our strategy and our future strategy going forward, and made the determination that we would put certain businesses in the other category.
Bob Mauch: And at that time, we said we would be looking at strategic alternatives for those businesses. The purpose of that is really to create that focus, management focus, and strategic focus, and then, we believe, you know, growth rate benefit from doing that. But I'll hand it over to Jim and talk about some of the potential, you know, short-term impacts if that, if any divestitures were to occur.
Bob Mauch: And at that time, we said we would be looking at strategic alternatives for those businesses. The purpose of that is really to create that focus, management focus, and strategic focus, and then, we believe, you know, growth rate benefit from doing that. But I'll hand it over to Jim and talk about some of the potential, you know, short-term impacts if that, if any divestitures were to occur.
Yeah, thank you for the question. As you said, we're certainly not going to comment um, on any rumors but but I will, you know, reiterate uh, you know what we've said very specifically last quarter and uh really have been working on uh over the past uh year or so uh and that is our, our strategy is being, you know, refocused and and 1 of our uh, strategic drivers is to make sure that we're prioritizing uh, growth oriented Investments. And so, we went through a process of assessing all of our businesses to make sure that they are very well aligned with our with our strategy and and our future strategy going forward. Um, and uh, made the determination that we would put certain businesses and the other other category. And at that time we said we would be looking at strategic alternatives for uh for those businesses. Uh and other uh the purpose of that is is really to uh create that Focus uh management focused and strategic focus, and then uh,
Jim Cleary: Yeah. So, let me comment on a couple of things that you said. First of all, MWI continues to perform very well within its market. In this most recent quarter, it had 7% revenue growth and performed well in both the companion and production animal market. So we're pleased that it continues to perform well. With regard to one aspect of your question, is any potential dilution from a divestiture. You know, from some divestitures, there could be potential dilution. But as Bob was saying, you know, we think it's the right thing to do for the long term. And one of Bob's real strategic priorities is to prioritize growth-oriented investments, as he was saying, and that's why we're investing in businesses like MSOs that bring competitive advantage to the balance of the enterprise.
Jim Cleary: Yeah. So, let me comment on a couple of things that you said. First of all, MWI continues to perform very well within its market. In this most recent quarter, it had 7% revenue growth and performed well in both the companion and production animal market. So we're pleased that it continues to perform well. With regard to one aspect of your question, is any potential dilution from a divestiture. You know, from some divestitures, there could be potential dilution. But as Bob was saying, you know, we think it's the right thing to do for the long term. And one of Bob's real strategic priorities is to prioritize growth-oriented investments, as he was saying, and that's why we're investing in businesses like MSOs that bring competitive advantage to the balance of the enterprise.
We, we believe, uh, you know, growth rate, uh, benefit, uh, from from doing that. But I'll, uh, I'll hand it over to to Jim and, and, uh, talk about some of the, uh, potential, you know, short-term impacts if, if any divest assures were to occur.
Jim Cleary: While there might be dilution in the short term, we think it will, you know, it could enhance growth, and enhance returns over the long term. Thanks for the questions.
Jim Cleary: While there might be dilution in the short term, we think it will, you know, it could enhance growth, and enhance returns over the long term. Thanks for the questions.
Yeah, so um, let me comment on a couple of things that you said, first of all MWI continues to perform very well within its Market. In this most recent quarter, I'd have 7% Revenue growth and debt reform well in both the companion and production animal markets. So we're, we're, we're pleased that it continues to perform well with regard to 1 aspect of your question is, um, any potential dilution from a divestiture, you know, from from some divestitures? There could be potential dilution, but as Bob was saying, you know, we think it's the right thing to do for the long term and 1 of Bob's real. Strategic priorities is to, um, prioritize growth oriented Investments as he was saying, and that's why we're investing in, um, businesses like msos that bring competitive advantage to the balance of the Enterprise. And so, while there might be delusion in the short term, we think it will um you know it could enhance growth um and enhance returns over the long term.
Kevin Caliendo: Thank you. The next question is from Daniel Grosslight of Citi. Your line is now open. Please go ahead.
Operator: Thank you. The next question is from Daniel Grosslight of Citi. Your line is now open. Please go ahead.
Thanks for the questions.
Daniel Grosslight: Thanks for taking the question. You know, it sounds like RCA is performing better than initial pre-expectations, which has been the case for the past couple quarters here now. I think when you initially announced that, you know, you were thinking around $0.50 of accretion from RCA in the first full year, there was that kind of accounting change, and so I'm accounting for that. Now that we've passed that one-year mark, I was wondering if you could provide an update on how much accretion you saw from RCA in the first year, or maybe quantify that outperformance for us, and then maybe provide a little bit more detail on the sources of that outperformance. Thanks.
Daniel Grosslight: Thanks for taking the question. You know, it sounds like RCA is performing better than initial pre-expectations, which has been the case for the past couple quarters here now. I think when you initially announced that, you know, you were thinking around $0.50 of accretion from RCA in the first full year, there was that kind of accounting change, and so I'm accounting for that. Now that we've passed that one-year mark, I was wondering if you could provide an update on how much accretion you saw from RCA in the first year, or maybe quantify that outperformance for us, and then maybe provide a little bit more detail on the sources of that outperformance. Thanks.
Thank you. The next question is from Daniel Grosslight of Citi. Your line is now open. Please go ahead.
Hi, thanks for taking the question. No it sounds like RCA is performing better than initial. Uh expectations. Which has been the case for the past couple quarters here. Now I think when you initially um announced that you know you were thinking around 50 cents of accretion from our state in the First full year. There was that kind of accounting change so accounting for that. Um, now that we've passed that 1 year, mark, I was wondering if you could provide an update on how much accretion you saw from RC in the first year or maybe quantify that app performance for us and then maybe provide a little bit more detail on the sources of that outperformance. Thanks.
Bob Mauch: Want to take that?
Bob Mauch: Want to take that?
Jim Cleary: Sure. Yeah, yeah, we've continued to see, you know, very strong performance at RCA. And we've seen, you know, good performance organically, and we've seen good tuck-in acquisition opportunities. So we've been just, you know, really pleased by the performance of the team there. And, you know, it exceeded the expectations that we had in the clinical trial part of the business, but really performed well throughout the business. So we're very pleased with the acquisition and seeing the growth continue to ramp over the balance of the year. And then, hey, just one follow-up I want to make on the on OneOncology.
Jim Cleary: Sure. Yeah, yeah, we've continued to see, you know, very strong performance at RCA. And we've seen, you know, good performance organically, and we've seen good tuck-in acquisition opportunities. So we've been just, you know, really pleased by the performance of the team there. And, you know, it exceeded the expectations that we had in the clinical trial part of the business, but really performed well throughout the business. So we're very pleased with the acquisition and seeing the growth continue to ramp over the balance of the year. And then, hey, just one follow-up I want to make on the on OneOncology.
Take that sure. Yeah, yeah. We've uh, We've continued to see um, you know, very strong performance at, uh, RCA. Um, and we've seen, you know, good performance.
Jim Cleary: Some of the below the operating income line items that I was referring to, I just want to make it clear that, you know, those are accounting nuanced items related to one of the OneOncology subsidiaries related to the UUG subsidiaries. And this will be a part of the model going forward. It's not one time, so we'll continue to have that, benefit from OneOncology below the operating income line. But we don't anticipate that we'll be talking much about it, you know, this year or in the future years, because, you know, we fully expect, given the strength of the very strong performance we've seen of the business in the past and what we expect, that there'll be, you know, very good operating income growth. And thank you for the, RCA question also.
Jim Cleary: Some of the below the operating income line items that I was referring to, I just want to make it clear that, you know, those are accounting nuanced items related to one of the OneOncology subsidiaries related to the UUG subsidiaries. And this will be a part of the model going forward. It's not one time, so we'll continue to have that, benefit from OneOncology below the operating income line. But we don't anticipate that we'll be talking much about it, you know, this year or in the future years, because, you know, we fully expect, given the strength of the very strong performance we've seen of the business in the past and what we expect, that there'll be, you know, very good operating income growth. And thank you for the, RCA question also.
Of organically and we've seen good tuck in acquisition opportunities. So we've been just, you know, really pleased by the performance of the team there. And we've, you know, it exceeded, um, the expectations that we had in the clinical trial part of the business, but really performed well, um, throughout the business. So we're very pleased with the acquisition and seeing the, um, growth, uh, continue to, um, ramp over the balance of of the year and then, hey, just 1 follow-up. I want to, uh, make on the, um, on 1 oncology. Um, some of the below, the operating income line items that I was referring to, I just want to make it clear that um, you know, those are accounting nuanced items related to 1 of the 1 oncology subsidiaries related to the uug subsidiaries and um, and this will be a part of the model going forward. It's not 1 time, so we'll continue to have that, um, benefit from 1 oncology.
Kevin Caliendo: Thank you. That concludes today's Q&A session. I'd like to hand back to you, Bob, for closing remarks.
Operator: Thank you. That concludes today's Q&A session. I'd like to hand back to you, Bob, for closing remarks.
Ology below the operating income line, but we don't anticipate that we'll be talking much about it. You know this year or in the future years because you know, we um, we fully expect. I'm given the strength of the very strong performance we've seen of the business in the past and what we expect that, they'll be, you know, very good operating income growth and thank you for the um, RCA question. Also
Bob Mauch: Yeah, thank you very much. In all seriousness, I do want to thank Jim for carrying the heavy load today, and thank you all for your questions and interest today. I'm proud of how Cencora continues to execute to drive value for all our stakeholders, investing internally in our infrastructure and externally to extend our solutions for customers. We're well positioned to drive long-term growth and are pleased to have raised our long-term guidance this year, demonstrating our confidence and our ability to continue to execute and create shareholder value. Thank you all very much.
Bob Mauch: Yeah, thank you very much. In all seriousness, I do want to thank Jim for carrying the heavy load today, and thank you all for your questions and interest today. I'm proud of how Cencora continues to execute to drive value for all our stakeholders, investing internally in our infrastructure and externally to extend our solutions for customers. We're well positioned to drive long-term growth and are pleased to have raised our long-term guidance this year, demonstrating our confidence and our ability to continue to execute and create shareholder value. Thank you all very much.
Thank you that concludes today's Q&A session, so I'd like to hand back to Bob for closing remarks.
Yeah, thank you very much. Uh, and all seriousness. I do want to thank Jim for carrying the the heavy load today and thank you all for your questions and interests today. Um, I'm proud of asking sore continues to execute to drive value for all our stakeholders investing internally in our infrastructure and externally to extend our solutions for customers.
We're well positioned to drive long-term growth in our business. We have raised our long-term guidance this year, demonstrating our confidence and our ability to continue to execute and create shareholder value. Thank you all very much.
Kevin Caliendo: This concludes today's call. Thank you all for joining. You may now disconnect your lines.
Operator: This concludes today's call. Thank you all for joining. You may now disconnect your lines.
This concludes today's call. Thank you all for joining. You may now disconnect your lines.
