Cencora Inc at Leerink Partners Global Healthcare Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Mike Cherny - Leerink Partners LLC - Analyst : I got a ton of questions. Obviously, if anyone in the room has anything at any point, let us know, raise your hand. But for now, maybe I'll just start. Jim, you had an 8-K this morning, increased guidance about $0.05 at the top and bottom of the range, called out US Healthcare Solutions. Maybe just go into a little bit more detail about the drivers behind that and maybe use that as a framework for what you're seeing across the market, obviously, building off of a strong 1Q as well.

Question: Mike Cherny - Leerink Partners LLC - Analyst : And maybe just to dive in a little bit more, you mentioned specialty, I'll start there. Cencora has a long history of being a no pun intended core specialty provider. You've always performed well in specialty, but we've seen what appears to be elevated market growth as well. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 10, 2025 / 12:40PM, COR.N - Cencora Inc at Leerink Partners Global Healthcare Conference As you think about the dynamic, especially flipping the calendar from second half of last year, calendar-wise to the first quarter, you mentioned both provider and bulk dynamics. Anything else you're seeing, anything on the condition states, anything else you can call out relative to the specialty growth and particularly your ability to gain share with your current customer base?

Question: Mike Cherny - Leerink Partners LLC - Analyst : And as you think about biosimilars in particular, the last year, the biggest focus has been on Humira, Stelara, as biosimilar introductions, which my understanding is that they're not huge, differentiated growth drivers for the distributors. So what are you seeing from a biosimilar adoption dynamic for your customers given that especially for drugs that fall into the provider channel, that seems to be like a later in the decade opportunity for maybe upsized growth given some of the patent expiries we're expected to see?

Question: Mike Cherny - Leerink Partners LLC - Analyst : Got it. We'll probably circle back to specialty a bit more as we go. But maybe just thinking about the more traditional side of the world, the comments we always use on pricing are competitive but stable. I think that's -- it's a very common term, I think we hear from you and your peers. As you think about the recent set of customer renewals, especially as you've got -- you expanded your service offering, additional capabilities, how does that factor into the pricing dynamics? And where do you see the -- I guess, A, can you confirm the competitive and stable pricing? And then B, how much of upsell opportunities do you have given that maybe versus the last time you went through an RFP, your service offering has expanded?

Question: Mike Cherny - Leerink Partners LLC - Analyst : So just to repeat, the question was about the Walgreens announcement from last week and what it means for Cencora's relationship and the potential for store closures.

Question: Mike Cherny - Leerink Partners LLC - Analyst : Maybe to use that as a backdrop, Walgreens is not the first of your customers that's closed stores. Clearly, the US pharmacy channel is one that's been in years of flux. As you think about your role as a partner for all these pharmacies, especially pharmacies going through those store closures, how does the typical relationship work where you can make it win-win for those customers where you can help them on store closures, inventory management, making sure that they're not falling short on those script transfers. You don't want to transfer to a store and then they don't have enough volume. And maybe just give some specific examples, but this isn't the first time where you've seen companies like this going through some level of store disruption.

Question: Mike Cherny - Leerink Partners LLC - Analyst : And Jim, maybe back to your previous comment, you talked about the dynamics of customers and renewals and constant renewals. I don't think there's been a press released customer you've won since Walgreens. So we don't see all of the wins. Clearly, there's been -- come to next, but a lot of consolidation of some of your customers, other customers that are ongoing in process. But maybe just talk about your win rate. It doesn't come up a lot, but what type of customers are still turning to Cencora? And when you win them, what are you offering? Because I know your net shift is not negative, which obviously be M&A driven more than anything else.

Question: Mike Cherny - Leerink Partners LLC - Analyst : And so maybe thinking a bit about the consolidation, let's jump into some of your provider services that continue to expand. The OneOncology investment now is at least announced almost two years old, Retina Consultants of America. I always have to look at what the C stands for to remind myself, but obviously, it's the newest one. Maybe give a little compare and contrast on what attracted you to both those businesses. OneOncology clearly felt right down the middle, given your historical strength in oncology. RCA, maybe analogy that's important, but a little different. But maybe give a little sense on the background behind both of those and what you hope to achieve and do better with them that they weren't doing before.

Question: Mike Cherny - Leerink Partners LLC - Analyst : And when you think about growing the businesses, I mean, you have an oncology platform, obviously, with a 35% investment, you have a retina platform now. How do you think about the buy versus build expansion opportunities for both against the backdrop of making sure you keep your market leadership position?

Question: Mike Cherny - Leerink Partners LLC - Analyst : Easy enough.

Question: Mike Cherny - Leerink Partners LLC - Analyst : And just on OneOncology, because of the investment structure, how active can you be with the business as a 35% owner versus the eventual option, assuming you're going to consolidate and obviously have more operational control?

Question: Mike Cherny - Leerink Partners LLC - Analyst : And just from a technical perspective, I know cash flow is not an issue for the company, but is there anything at this point in time that would change your capital deployment priorities knowing the high likelihood of consolidating the business over the next couple of years? Or are you still on the same type of capital deployment opportunities?

Question: Mike Cherny - Leerink Partners LLC - Analyst : Thinking back to last quarter, most of the businesses were at or above plan. We obviously already talked about the core US pharma business. The one that was more of a -- a little bit of a struggle is World Courier. I don't think you're immune -- you're not alone in terms of some of the clinical trial service providers having market-oriented headwinds. Maybe talk about the puts and takes right now going on with that business and anything interesting you're seeing called out from some of your manufacturer partners?

Question: Mike Cherny - Leerink Partners LLC - Analyst : And has anything changed in terms of the visibility you have on that business? Again, you are far from alone in running through these issues. But are you seeing anything in terms of contracting, in terms of anything on the manufacturer side that would give pause on how well you can predict the business on a near-term basis?

Question: Mike Cherny - Leerink Partners LLC - Analyst : But along those lines, World Courier is not your only manufacturer services business. Can you give us a little update? I know it got probably a little lost in the last earnings call with everything else going on, but how PharmaLex is performing and the juxtaposition of PharmaLex versus World Courier, especially in the most recent quarter and where it sits competitively right now?

Question: Mike Cherny - Leerink Partners LLC - Analyst : We're going to run out of time shortly, and so I'd be remiss not to ask about the topic of tariffs. Obviously, you have a big provider, a big inventory manager. How are you as a company thinking about planning around tariffs? What are you hearing from customers? And what are the puts and takes you're considering right now about any potential tariff impact knowing that we may have them tomorrow, we may have them in a month, we may never have them. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 10, 2025 / 12:40PM, COR.N - Cencora Inc at Leerink Partners Global Healthcare Conference

Question: Mike Cherny - Leerink Partners LLC - Analyst : And relative to the manufacturer conversations, have you seen any hiccups yet on their front on product access? And anything about contractually thought process on tariff pass-through, how they're managing their pricing and how you factor that in going forward?

Question: Mike Cherny - Leerink Partners LLC - Analyst : As we wrap, Jim, you mentioned you just went through a five-year strategic planning. Obviously, this is the first five-year strategic plan with new leadership, not new to Cencora in terms of Bob, but obviously, with Steve having retired. The last five years, I think, have been characterized, especially on an underlying basis by outperformance. I have to go back and check all of the math on this, but I'm pretty sure if you back out all the COVID moving pieces that you -- at least especially in the US business, you've outperformed your 5% to 8% targets or at least right at the high end. As you think about your competitive positioning right now and eventually once we roll off of these COVID comps, how do you think about the dynamics of that 5% to 8% going forward? I'm not asking you to comment on specifically on a -- if you would change it, so to speak. But with the strong performance of the business, what are the puts and takes that at least now versus when you first introduced it about three years ago, get you to the upside, downside of that range?