Cencora Fiscal Q4 Earnings: OneOncology Lifts Margins and Adjusted EPS

Cencora (NYSE: COR) reported fiscal 2026 fourth-quarter revenue of $88.4 billion, up 5.5% year over year, while GAAP diluted EPS improved to $2.71 from a loss of $1.75 and adjusted diluted EPS rose 21.4% to $4.66. The OneOncology acquisition supported margin expansion and faster profit growth, although it also increased operating expenses and acquisition-related financing costs.

Core Earnings Results

Revenue growth was accompanied by a much larger increase in profitability. Gross profit rose 21.9%, and GAAP gross margin expanded by 55 basis points as OneOncology strengthened the U.S. Healthcare Solutions margin, partially offset by increased sales of lower-margin GLP-1 products.

The GAAP comparison was also affected by a $723.9 million PharmaLex goodwill impairment recorded in the prior-year quarter. Excluding adjustments, operating income still increased 22.1% and adjusted operating margin expanded by 19 basis points, indicating that the improvement was not solely due to the easier GAAP comparison.

Business and Segment Performance

U.S. Healthcare Solutions remained Cencora’s largest business and accounted for most of the quarter’s revenue. All three reported business groupings increased revenue and operating income, with profit growth running ahead of sales growth.

U.S. growth reflected higher unit volumes, including increased specialty-product sales to health systems and physician practices, as well as GLP-1 demand. Declining manufacturer prices for certain branded pharmaceuticals and lower sales to a large mail-order customer partly offset those gains.

International Healthcare Solutions grew across all of its businesses. At constant currency, revenue increased 7.8% and operating income rose 18.9%, led by improved results in Canada and global specialty logistics.

The Other category benefited from growth at Profarma and MWI Animal Health. Its operating income also received support from lower depreciation expense after MWI Animal Health was classified as held for sale, while the April 2026 divestiture of U.S. Consulting Services reduced consulting revenue.

New Fiscal 2027 Reporting Structure

Beginning in fiscal 2027, Cencora will report Pharmaceutical Distribution and Services, Specialty Pharmaceutical and Provider Services, and Other. The new specialty segment will combine specialty distribution, management services organizations, World Courier, third-party logistics, Innomar, and selected PharmaLex operations. This change means future segment comparisons will use a different structure from the fiscal 2026 fourth-quarter presentation.

OneOncology Lifted Margins but Also Raised Costs

The February 2026 acquisition of OneOncology was the central driver connecting Cencora’s margin improvement, expense growth, and higher financing costs. It helped adjusted gross margin increase by 57 basis points, allowing adjusted gross profit to rise 23.0% despite revenue growth of 5.5%.

At the same time, adjusted operating expenses increased 23.5%, primarily because of OneOncology. Net interest expense rose by $58.5 million to $136.3 million following the issuance of senior notes and variable-rate term loans used to finance part of the acquisition, along with lower interest income. Even after these costs, adjusted operating income increased 22.1% and adjusted operating margin reached 1.41%.

Full-Year Cash Flow and Capital Returns

Cencora generated $3.8 billion of adjusted free cash flow in fiscal 2026 and recorded $910 million of capital expenditures. Fourth-quarter diluted weighted-average shares declined 1.1% to 191.7 million because of repurchases, providing some support to per-share results.

The company also increased its quarterly dividend by 10%, from $0.60 to $0.66 per common share. The new dividend is payable on November 30, 2026, to shareholders of record on November 13.

Fiscal 2027 Guidance

Cencora expects adjusted EPS to grow faster than total revenue in fiscal 2027, with Specialty Pharmaceutical and Provider Services projected to deliver the highest segment growth. The outlook is presented entirely on an adjusted, non-GAAP basis.

The guidance assumes that the Profarma sale closes in the first quarter of fiscal 2027 and that the MWI Animal Health merger with Covetrus closes on March 31, 2027. These transactions explain much of the projected decline in Other revenue and operating income. Cencora also expects approximately 190 million diluted weighted-average shares and an adjusted effective tax rate of about 20%.

Longer term, the company reaffirmed targets of 7% to 10% adjusted operating income growth and 10% to 14% adjusted diluted EPS growth. Under the new reporting structure, it targets mid-single-digit operating income growth for Pharmaceutical Distribution and Services and mid-teens growth for Specialty Pharmaceutical and Provider Services.

Risks Investors Should Monitor

• Acquisition costs and financing: OneOncology improved margins but also raised adjusted operating expenses and interest expense. The balance between acquisition-driven profit growth and incremental costs remains important.
• Lower-margin product mix: Rising GLP-1 sales supported revenue but partially offset gross-margin expansion because these products carry lower margins.
• Pricing and customer pressure: Declining prices for certain branded pharmaceuticals and reduced sales to a large mail-order customer offset part of the U.S. segment’s volume growth.
• Portfolio transaction timing: Fiscal 2027 guidance assumes specific closing dates for the Profarma sale and MWI Animal Health merger. Different timing could affect reported revenue and profit in Other.
• Lower projected free cash flow: Adjusted free cash flow is expected to decline to approximately $3.5 billion while capital expenditures rise to about $1.0 billion, despite expected adjusted EPS growth.

Summary

Cencora’s fiscal 2026 fourth quarter combined moderate revenue growth with substantially faster adjusted profit growth, led by OneOncology and gains across both major healthcare segments. The acquisition improved margins but also increased operating and financing costs, while lower-margin GLP-1 sales remained a partial offset. Fiscal 2027 guidance points to specialty services as the fastest-growing business, with portfolio divestitures, cash-flow performance, and acquisition-related costs serving as the main areas to monitor.