Cencora Inc at Morgan Stanley Global Healthcare Conference Transcript

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

Question: Erin Wright - Morgan Stanley - Analyst : So with that, you do have big shoes to fill, Bob on that note. But I do want to speak a little bit, a higher level vision question here, in terms of what is that high-level vision and the relevant learnings that you've already had from your extensive 10-year at Cencora and how you can best leverage that in your upcoming role before we get into the 8-K today.

Question: Erin Wright - Morgan Stanley - Analyst : And with that, I guess let's turn it over to the big news today, too, as well in terms of -- you updated your near-term guidance as well as gave us some initial look at next year in terms of fiscal '25 and how you're thinking about that now at the low end of the long-term guidance range. Can you walk us through, Bob or Jim, the key components of that and understand the different moving pieces, both near term and as we go into next year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 8:05PM, COR.N - Cencora Inc at Morgan Stanley Global Healthcare Conference

Question: Erin Wright - Morgan Stanley - Analyst : Great. And breaking down some of the components of the guide in terms of the Florida contract, I guess, how meaningful is that in terms of the updated guide? And is there anything incorporated into the updated guide in terms of a headwind or a tailwind, I guess, from the Express Scripts contract?

Question: Erin Wright - Morgan Stanley - Analyst : Okay. I may come back to some of the customer relationships in a second, but let's talk a little bit about underlying utilization trends. What's embedded in your expectations now with the updated guidance in terms of the strength we've seen in core distribution -- US distribution business, like how sustainable that is and what's incorporated, embedded in your guidance?

Question: Erin Wright - Morgan Stanley - Analyst : Okay. And then drug pricing. Any changes from a drug pricing perspective? It's been a relatively more favorable, if I want to call it that, or less deflationary environment from a generic standpoint. Is your anticipation that that continues? And I guess likewise on the branded side, any dynamics there, whether it's IRA or otherwise, that you should be thinking about?

Question: Erin Wright - Morgan Stanley - Analyst : Okay. And then just switching to specialty, I guess the latest trends, it sounds like it's still continuing to be an area of strength for you. Can you talk a little bit about your strategies, whether it's OneOncology or otherwise, and the rationale behind the structure, for instance, of that relationship, but just your overall strategy from a specialty standpoint? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 8:05PM, COR.N - Cencora Inc at Morgan Stanley Global Healthcare Conference

Question: Erin Wright - Morgan Stanley - Analyst : And just the Florida contract, I guess it'll roll off at the mid-2025. Does that change anything in terms of purchasing power for you? More meaningfully, I think we were calculating about a $0.25 headwind, but you can correct me if I'm wrong or right if you want. But how do we think about other transactions that you can do, for instance, in the space?

Question: Erin Wright - Morgan Stanley - Analyst : Okay. And with -- under the new Evernorth relationship, in terms of their own insourcing, that CuraScript, I guess, does the new contract allow for that to happen? Or is there a component of that embedded in the current -- or the updated Evernorth contract?

Question: Erin Wright - Morgan Stanley - Analyst : Okay, okay. And then biosimilars, I do want to talk a little bit about that. I know your exposure is more -- your sweet spot is more in the part B as opposed to part D segment of that market. But can you talk a little bit about what's embedded in your expectations as well in terms of biosimilars and what that means for you from an economic standpoint?

Question: Erin Wright - Morgan Stanley - Analyst : And then as you think about -- and this goes back to broader customer relationships as well and just the underlying environment across retail pharmacy. We have Rite Aid that's coming out of bankruptcy. You have Walgreens that's obviously seen some commotion as a partner of yours. Just how do you think about the landscape from here? You also have some DTC relationships or initiatives from some of the pharma manufacturers as well. I don't think that really changes anything from a pharmaceutical supply chain standpoint. But I would love to hear your perspective on how you see this all playing out in terms of -- and how you navigate that and still play a role in that, evolving retail pharmacy landscape. Sorry, that was a bigger question. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 8:05PM, COR.N - Cencora Inc at Morgan Stanley Global Healthcare Conference

Question: Erin Wright - Morgan Stanley - Analyst : Okay, great. I have to ask a policy question, just regulatory dynamics. Anything on the forefront in this election cycle that you're paying attention to? I think we've already addressed a lot of the pricing dynamics with IRA, but is there anything more to come that you're paying attention to from the regulatory front?

Question: Erin Wright - Morgan Stanley - Analyst : Okay. And as we think about the components of both the guidance -- and I want to shift gears a little bit to international here. What is your thought process in terms of performance there relative to your long-term goals? And how are you thinking about some of the key drivers? Let's say over the next five years, how does that international business evolve for you? What's the vision?

Question: Erin Wright - Morgan Stanley - Analyst : Okay. And we talked a lot about customer relationships, but you mentioned World Courier, for instance, and others. But part of your strategy, too, in terms of evolving, I would think, would be to partner to -- with the life sciences, partner with your former customers. And how is that the next step in the evolution of Cencora? And how does that become a bigger part of the story and the narrative? Because I think that that's something that's underappreciated. I mean, World Courier has been great, and I think that that's something that is a testament to what -- how you can leverage your presence in both pharma as well as -- or pharma distribution as well as being a partner in life sciences. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 8:05PM, COR.N - Cencora Inc at Morgan Stanley Global Healthcare Conference

Question: Erin Wright - Morgan Stanley - Analyst : Okay, great. And then in terms of -- as we think about the World Courier business in particular, just -- could you give us an update just on underlying demand trends across that business, too, in terms of what you're currently seeing?

Question: Erin Wright - Morgan Stanley - Analyst : And you mentioned cell and gene therapy. And I think you recently had an extended relationship-partnership initiative with, with Walgreens as well on that front. Can you talk a little bit about just the Walgreens relationship in general, where that stands today? Does anything change in terms of how you implement your strategic vision when they're going through, obviously, some changes at their end? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 8:05PM, COR.N - Cencora Inc at Morgan Stanley Global Healthcare Conference

Question: Erin Wright - Morgan Stanley - Analyst : Okay. And then I think everyone won't let me walk out of this room without asking about animal health. So I do have to ask, what's the status in terms of underlying demand trends across both production animal and companion animal and opportunities you see, whether it's innovation across the space or otherwise, as you're thinking about growth across MWI?

Question: Erin Wright - Morgan Stanley - Analyst : Okay. And then as we model out -- and you gave us, obviously, the high-level guidance today for 2025. But anything to think about? We can all map out the COVID dynamics, but in terms of first half versus second half and in terms of the fiscal '25 or any other moving pieces we should be aware of.

Question: Erin Wright - Morgan Stanley - Analyst : Lastly, in the last couple of minutes here, I did want to ask about just capital deployment in terms of all the things you talked about, where the focus lies, whether it's on buybacks and whether it's M&A, where that M&A priority lies as well. And is there a robust pipeline that you're looking at?

Question: Erin Wright - Morgan Stanley - Analyst : And just because I have some extra time, on contract renewals, anything coming up? You just renewed, obviously, Evernorth. Anything coming up for renewal that we think about or that's contemplated in that 2025 guide?

Question: Erin Wright - Morgan Stanley - Analyst : Okay, alright. Okay. Thank you so much for your time. I really appreciate it.