The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Michael Cherny - Leerink Partners - Analyst
: Good morning, and congrats on another great quarter and guidance. Maybe just, Bob, this is your second quarter as CEO, I'll start
on the strategic question, I'll say some of the other modeling ones down the road. But as you think now about your specialty business
as a whole, it clearly is a driver of some of the outperformance.
As you think about the mix of market growth versus your assets, especially off the back of the OneOncology investment and now
RCA, where do you think the company is best positioned to outgrow the market on specialty, how much within the guidance do
you think is market-oriented growth? And where do you think going forward, the different dynamics of your specialty growth versus
your peers could lie in terms of continuing to drive this potential sources of upside?
Question: Lisa Gill - JPMorgan Chase & Co - Analyst
: Thanks very much and good morning. Thanks for taking my question. I want to ask numbers question. When I look at the strong
revenue, especially with the US segment of roughly 14% in the quarter, the updated guidance is for 9% to 11%. I understand previously
7% to 9%. But can you -- how many the elements going forward are we seeing deceleration in some areas? Is it around GLP-1s, any
of the store closings Walgreens or just the natural Cencora conservatism. So if you can just help us understand the cadence of that
and what you're seeing as far as potential deceleration in revenue in the quarters going forward.
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FEBRUARY 05, 2025 / 1:30PM, COR.N - Q1 2025 Cencora Inc Earnings Call
Question: Elizabeth Anderson - Evercore ISI - Analyst
: Hi guys. Thanks so much for the question and congrats on a really nice quarter. I had a question on sort of the World Courier business
and the pharma services and sort of how you're thinking about that over the course of FY25. Could you just maybe go into a little
bit more detail about sort of what happened to to World Courier in the quarter and sort of how to think about that versus the rest
of the year?
And then broadly, sort of where do you think we are in the pharma services demand cycle? It seems like we haven't gotten too many
additional pharma cuts in the last month or two. Are we sort of getting through the cycle? I'd just be curious to hear sort of your
thoughts on where we are on that.
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FEBRUARY 05, 2025 / 1:30PM, COR.N - Q1 2025 Cencora Inc Earnings Call
Question: Steven Valiquette - Mizuho Securities - Analyst
: Thanks. Good morning. So just a quick question in relation to Walgreens. I think no one was really surprised by this last month, but
when they kind of more officially disclosed that in their earnings call that they're in active discussions with you guys in relation to
the current contract. I'm just curious, I know you're probably limited on what you can say on this topic, but just open ended is there
any update or additional comments that you have on this topic from your side, given their disclosures last month. And also just to
confirm, your guidance presumably reflects any potential changes in that contract, at least as it pertains to your fiscal '25. I just want
to confirm that one way or the other as well.
Question: Eric Percher - Nephron Research LLC - Analyst
: Thank you. Bob, you mentioned that you studied the MSO business with OneOncology in real time. And I'd be interested in your
perspectives on the challenges we've seen in practice management 20 years ago and physician enablement more recently and
what's key to motivating and growing practices.
And then, Jim, on the financial mechanics of RCA, I want to make sure we understand how much of a retention element is paid out,
and we're seeing the accretion in US health care, but I assume that's flowing through minority interest.
Question: Daniel Grosslight - Citi - Analyst
: Hi. Thanks for taking the question, and congrats on a strong quarter here. I'll stick with the MSO topic. I'm sure you saw this, but one
of your competitors made an acquisition in the ophthalmology focused MSO space. I was wondering if you could talk a little bit
about the competitive environment within the MSO space specifically, ophthalmology and retina, both from competition from MSO
assets as you seek to acquire those. And for the physicians, affiliated physicians as you try to attract more of those to your MSOs.
Question: Steven Baxter - Wells Fargo - Analyst
: Hi, thanks for the question. I was hoping you might be willing to give us an update on what the guidance revision for the US business
would have been on an organic basis? Just trying to compare that on an apples-to-apples basis. And similarly, when we think about
the accretion from RCA that you're going to get in this fiscal year, it sounds like it's not quite as simple as just taking the $0.35 and
scaling it based on the nine months. But maybe just give us a better sense of kind of the ramping in the second quarter and when
we're going to get closer to that full rate.
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FEBRUARY 05, 2025 / 1:30PM, COR.N - Q1 2025 Cencora Inc Earnings Call
Question: Charles Rhyee - TD Cowen - Analyst
: Yeah, thanks for taking the question. I wanted to ask about going back to sort of the specialty business and related to if I'm not
mistaken, right, I think you guys are the largest distributor for Regeneron on EYLEA. And Amgen just launched, I think they announced
last quarter, the launch of their version [PAT Blu] into the market. And I think there's another one supposed to be coming maybe
this summer.
Just curious, those scripts are kind of hard to track through sources like (inaudible) just wanted to understand how that launch is
going for you? And what kind of opportunity do you see biosimilar EYLEA being? And how does your ownership of RCA perhaps
allow you to -- does that allow you to drive better adoption of biosimilars? And I guess that's a more general question across all your
M&A practices.
Question: Allen Lutz - BofA Securities - Analyst
: Good morning, and thanks for taking the question. As we kind of look back to 2024, utilization was really strong in US health care. I
think we've seen that broad across the different distributors. And some of that, I think, was due to just sort of this post-COVID
reacceleration of scripts as patients are going back to the physician. There were a few things you called out, GLP-1s than HUMIRA.
If we back those things out, how should we think about new script growth more broadly in 2025 versus 2024.
Is -- what's embedded in the current guidance a normalization of utilization. Is there anything that you're seeing from the benefit
design changes that were put forth on January 1. Just curious if there's anything embedded within the guide outside of the things
you called out that is a little bit different in 2025 versus 2024?
Question: George Hill - Deutsche Bank - Analyst
: Good morning, guys, and thanks for taking the question. I'm going to come back to the MSO businesses for a second. And Jim, you
talked about the clinical trial component. But what I was going to ask is could you rank order the value drivers that allow, whether
it's Cencora or RCA or OneOncology to add value to its physician partners in these practices. Like we know GPL was a piece, clinical
trials, is a piece to recycle the piece. Just like if you could kind of lang out the three or four main drivers of value creation, I think that
would be very helpful for investors.
Question: Erin Wright - Morgan Stanley - Analyst
: Great. Thanks. I think you mentioned specialty strength was broad-based, but any key therapeutic categories to call out there? And
if I can ask a two parter here I'm switching species, but I'm just curious what you're seeing in animal health. There seems to be just
a lot of promotion in the space and competition at both the manufacturer and the distributor level to some extent.
And just bigger picture, it's been roughly 10 years in the MWI deal close? And how would you characterize how you see MWI sitting
in the enterprise now, your commitment to the business does it detract at all from some of the broader efforts and long-term vision
across like specialty or your MSO strategy? And just curious on your bigger picture thoughts there.
Question: Kevin Caliendo - UBS - Analyst
: Thank you. Thanks for taking my question. Does your fiscal '25 guidance embed any incremental customer loss beyond FCS. I know
you detailed that back in November. That was the first part. And just specifically on the (inaudible) or the COVID headwind, was it
better or worse than expectations in fiscal 1Q?
Question: Kevin Caliendo - UBS - Analyst
: I'm sorry. Yes, sure. No, just on the COVID headwind, was it better or worse than expectations? In fiscal 1Q versus what you originally
thought when you originally guided?
Question: Eric Coldwell - Baird Capital Partners LP - Analyst
: Thanks very much. I didn't think World Courier could get this much attention on the call, but I do have some world courier questions.
First, I wouldn't disagree that there are some market challenges subdued clinical trial activity that all makes sense for the softness
you cited. You also do cell and gene therapy and other specialty shipments unrelated to clinical trials.
So I'm wondering how those are faring Part B, what is the basis for saying clinical trial activity will pick up later this year and Part C
on World Courier any additional commentary on competition in the market? We've seen some noise from UPS Healthcare and others.
I just want to make sure that the weakness in World Courier is more temporary and end market related as opposed to something
going on in the competitive front?
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FEBRUARY 05, 2025 / 1:30PM, COR.N - Q1 2025 Cencora Inc Earnings Call
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