Cencora Inc at Leerink Partners Healthcare Crossroads Conference Transcript

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

Question: Mike Cherney - Leerink Partners LLC - Analyst : Maybe just to start, you've had of obviously multi-year really strong performance, culminating with the most recent quarter, another quarter of strong pharma performance. I think you're all in apples to apples, you pretend that COVID didn't exist, 11% give or take core growth first half of the year on segment operating profit. How do we think about what are the key drivers behind this, especially given this is clearly outpacing what your long-term growth algorithm?

Question: Mike Cherney - Leerink Partners LLC - Analyst : It's May 30, so if you want to go for the hat trick you start from where they left off, we are not expecting that just to be clear, you touched a bit about some of the drivers of performance in the quarter, and I think obviously just more in the quarter, but specialty is one that's clearly stood out. Maybe give us a lay of the land now and where the biggest pockets, both category growth and then I would say also capability services growth that leads that outsized performance for Cencora?

Question: Mike Cherney - Leerink Partners LLC - Analyst : It's a helpful reminder just how broad the portfolio is in specialty. And I want to pull on the OneOncology acquisition again for a bit because felt like a very logical extension that I'm almost surprised it didn't happen five years ago. But why was this the right time right company to be the one to build on the MSO capabilities? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 30, 2024 / 2:20PM, COR.N - Cencora Inc at Leerink Partners Healthcare Crossroads Conference

Question: Mike Cherney - Leerink Partners LLC - Analyst : And maybe give us a little flavor especially now give or take a year and about the work that you're doing as an organization, having the three Board seats. Helps drive strategy, but especially when I think about MSO businesses that are successful, typically they're consolidators and the seems like a strong platform for them to consolidate. And so how do you think about the role that Cencora is playing in terms of driving the growth of OneOncology ahead of the potential closure of the put-call?

Question: Mike Cherney - Leerink Partners LLC - Analyst : You know, it seems like a very logical expansion of strategy. So makes all sense to me. Maybe sticking in specialty, but on another topic is biosimilars. It feels like maybe Jim, as long as you've been part of the company we've been two years away from being two years away on real biosimilar adoption. But now we've actually seen some movement more on the mail side, PBM focus, but at least growing awareness of where you see biosimilar adoption being taken. How are you thinking about what's embedded in your general growth use of biosimilars? And B, where you see the greatest opportunities on a medium-term basis?

Question: Mike Cherney - Leerink Partners LLC - Analyst : No, I know we don't talk specifically about unit economics or anything like that, but for Cencore as a business, you're always focused on trying to lower your costs for your providers, lower your cost for your customers. But the other day, It's likely more impactful on a like-for-like basis, the drug, the biosimilar conversions in the Part B versus Part D market, correct?

Question: Mike Cherney - Leerink Partners LLC - Analyst : Turning to a recent hot button topic, but I'll make sure we get this out of the way is this whole dynamic of changing calculation on the NADAC pricing and how it filters across the supply chain. My understanding is first derivative impact on distributors are nothing. And then maybe we're thinking long term about some second derivative if there's some economic changes. But can you just remind us at least relative to your business, what, if any, NADAC impact there is.

Question: Mike Cherney - Leerink Partners LLC - Analyst : Well, this doesn't -- this isn't like a pricing change for your contracts at all? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 30, 2024 / 2:20PM, COR.N - Cencora Inc at Leerink Partners Healthcare Crossroads Conference

Question: Mike Cherney - Leerink Partners LLC - Analyst : It just turning the thing about broad-based price across the market. The other potential moving pieces on IRA, we're in the process of finalizing negotiations in the first 10 prices. Is there any way to think about how your business is affected impacted by IRA? And maybe is there anything in terms of a microcosm we can look at on the recent changes, insulin pricing as a way to think about how the economic flow-through would occur for Cencora?

Question: Mike Cherney - Leerink Partners LLC - Analyst : And just one last one on the distribution side, there's been relative to the market, some elevated customer contract moves versus previous levels of, headlines too, which elevated the more normal. When you think about when you go back to market now, especially with your broader service levels with everything you're building around specialty, as you go to reengage customers on contract renewals, go to pitch for new business, has REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 30, 2024 / 2:20PM, COR.N - Cencora Inc at Leerink Partners Healthcare Crossroads Conference the contracting process changed at all. In terms of how you go to market, what you're offering, what types of services a new customer or upselling existing customers starting to take?

Question: Mike Cherney - Leerink Partners LLC - Analyst : The stability always works for me. Maybe turning to parts of the Alliance business. I think one of the things that got overlooked with the acquisition was you bought a primarily European wholesale distribution business, but came with a whole suite of manufacturer services assets, and you talked about PharmaLex before. But as you sit now 2.5 years, three years post deal how's the integration gone on, especially the manufacturer services assets, wrapping into what you already had with World Courier and layer on PharmaLex as well?

Question: Mike Cherney - Leerink Partners LLC - Analyst : Well, good timing. I turn to the acquisition you came from, which is MWI in the animal health side, it's an area you talked about in the calls, when you go and look at the K's and Q's to figure out where the growth rate is and we've seen some recent acceleration growth if my math is correct. Where you see those pockets of growth coming from and is especially as we sit here now, how do you see the balance of demand between companion production relative to the growth for MWI?

Question: Mike Cherney - Leerink Partners LLC - Analyst : Got it. Great check in there. I'm going to run on, and that's another you mentioned earlier, the increase in guidance from the Walgreens related share buyback. This is obviously the largest purchase you made of shares that they've sold in the last few iterations. So maybe give us a little bit of rationale on why the elevated level and of the balance sheet obviously has gotten meaningfully delevered post Alliance pay down, but how do you think about signaled that this is trending relative to your cash availability and other capital deployment opportunities?

Question: Mike Cherney - Leerink Partners LLC - Analyst : Appreciate that. Coming down to zero is always a fun exercise if and when we get there. But you did mention the $500 million of investments and maybe I think sometimes people miss some of the targeted IT that you and your peers are rolling out, not just internally focused, however, the ERP invitation couple of years back. What other ways to do it on a growth basis? Can you maybe just talk about some of those targeted investments and where you see the opportunities to use IT as an outbound advantage versus simply an inbound efficiency tool?

Question: Mike Cherney - Leerink Partners LLC - Analyst : Last really quick question. I'm now old enough to remember the last time you went through an internal CEO transition, which feels like a long time ago, Steve being the last man standing in the space. Now you're in the process of another one, how is Bob preparing for the job and moving up in the seats of the CEO role.