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Cencora (COR) Q2 Earnings Top Estimates, 2024 View Raised
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Cencora, Inc. (COR - Free Report) reported second-quarter fiscal 2024 adjusted earnings per share (EPS) of $3.80, which beat the Zacks Consensus Estimate of 3.65 by 4.1%. The bottom line also improved 21% year over year.
GAAP EPS was $2.09, up 27.9% from that reported in the year-ago period.
Revenue Details
Revenues totaled $68.4 billion, up 7.8% year over year. The top line, however, missed the Zacks Consensus Estimate by 2.8%.
Segmental Analysis
U.S. Healthcare Solutions
Revenues in this segment totaled $61.3 billion, up 8.1% on a year-over-year basis. This improvement was due to overall market growth and increased specialty product sales. High demand for the recently approved GLP-1 drugs for diabetes and/or weight loss has helped accelerate growth during the quarter. A rising demand for COVID-19 vaccines also boosted sales.
Segmental operating income totaled $841.1 million, up 11.2% year over year. Higher gross profit (including fees earned from the distribution of government-owned COVID-19 treatments and gross profit on sales to specialty physician practices) contributed to the upside.
International Healthcare Solutions
This segment includes Alliance Healthcare, World Courier, Innomar and Profarma Specialty.
Revenues totaled $7.1 billion, up 5.3% year over year on the back of increased sales in its European distribution and Canadian businesses. The top line increased 9.8% at constant currency (cc).
Operating income totaled $192.7 million, up 9.5% reportedly and 22.1% at cc. The strong growth was driven by the addition of products, along with the acquisition of PharmaLex last year and strong Canadian business performance.
Margin Analysis
Cencora reported a gross profit of $2.54 billion, up 12.5% on a year-over-year basis. As a percentage of revenues, the gross margin was 3.71%, up 9 basis points (bps) year over year.
The company recorded an operating income of $553.3 million, up 14.4% year over year. As a percentage of revenues, the operating margin was 0.81%, which contracted 7 bps from the year-ago quarter’s number.
Financial Position
COR exited the fiscal second quarter with cash and cash equivalents worth $2.29 billion compared with $2.87 billion in the prior-quarter quarter.
Cumulative net cash used in operating activities totaled $6.7 million compared with $1.34 billion a year ago.
Dividend Update
During the quarter, Cencora's board of directors declared a quarterly dividend of 51 cents per share, payable on May 24, 2024, to shareholders of record at the close of business on May 10, 2024.
Guidance Raised
The company raised its outlook for fiscal 2024 earnings and revenues.
Adjusted EPS is now estimated in the range of $13.30-$13.50 (previously $13.25-$13.50), indicating growth of 10.5-12.6% over the prior-year level. The Zacks Consensus Estimate for the same is currently pegged at $13.43.
Revenues are projected to increase 10-12%, reportedly as well as at cc. The top line at the U.S. Healthcare Solutions segment is now expected to grow 11-13% (previously 7-10%). Revenues at the International Healthcare solutions business are estimated to be up 4-7%.
Adjusted operating income is expected to improve 9-11% (previously 8-10%).
Operating income at the U.S. Healthcare Solutions segment is now projected to grow 10-12% (previously 9-11%). For the International Healthcare Solutions segment, the company maintained its guidance at 5-8%.
Summing Up
Cencora exited the fiscal second quarter on a strong note, wherein both its earnings and revenues beat their respective consensus mark by a significant margin.
The company continues to witness a strong segmental performance due to growth in all markets and strong demand for specialty products, especially GLP-1 drugs. Per management, Cencora delivered a solid performance by playing a crucial role in the healthcare system, while maintaining efficiency throughout its business. The company remains focused on its strategic priorities and thoughtful capital deployment to deliver long-term growth.
However, COR’s gross margin is being hurt by lower-margin GLP-1 drugs. The company’s rising expenses to support business activities amid inflationary challenges are putting pressure on the operating margin. Cut-throat competition in the MedTech space remains a concern.
Some better-ranked stocks in the broader medical space that have announced quarterly results are Align Technology, Inc. (ALGN - Free Report) , Medpace (MEDP - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Revenues of $997.4 million outpaced the consensus mark by 2.6%.
Align Technology has a long-term estimated growth rate of 6.9%. Its earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 5.9%.
Medpace reported first-quarter 2024 adjusted EPS of $3.20, which beat the Zacks Consensus Estimate by 30.61%. Revenues of $511 million missed the Zacks Consensus Estimate by 0.3%. MEDP currently carries a Zacks Rank #2.
Medpace has a long-term estimated growth rate of 17.9%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.83%.
Boston Scientific reported first-quarter 2024 adjusted EPS of 56 cents, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $3.86 billion surpassed the Zacks Consensus Estimate by 4.9%. It currently carries a Zacks Rank #2.
Boston Scientific has a long-term estimated growth rate of 12.5%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.5%.
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Cencora (COR) Q2 Earnings Top Estimates, 2024 View Raised
Cencora, Inc. (COR - Free Report) reported second-quarter fiscal 2024 adjusted earnings per share (EPS) of $3.80, which beat the Zacks Consensus Estimate of 3.65 by 4.1%. The bottom line also improved 21% year over year.
GAAP EPS was $2.09, up 27.9% from that reported in the year-ago period.
Revenue Details
Revenues totaled $68.4 billion, up 7.8% year over year. The top line, however, missed the Zacks Consensus Estimate by 2.8%.
Segmental Analysis
U.S. Healthcare Solutions
Revenues in this segment totaled $61.3 billion, up 8.1% on a year-over-year basis. This improvement was due to overall market growth and increased specialty product sales. High demand for the recently approved GLP-1 drugs for diabetes and/or weight loss has helped accelerate growth during the quarter. A rising demand for COVID-19 vaccines also boosted sales.
Segmental operating income totaled $841.1 million, up 11.2% year over year. Higher gross profit (including fees earned from the distribution of government-owned COVID-19 treatments and gross profit on sales to specialty physician practices) contributed to the upside.
International Healthcare Solutions
This segment includes Alliance Healthcare, World Courier, Innomar and Profarma Specialty.
Revenues totaled $7.1 billion, up 5.3% year over year on the back of increased sales in its European distribution and Canadian businesses. The top line increased 9.8% at constant currency (cc).
Operating income totaled $192.7 million, up 9.5% reportedly and 22.1% at cc. The strong growth was driven by the addition of products, along with the acquisition of PharmaLex last year and strong Canadian business performance.
Margin Analysis
Cencora reported a gross profit of $2.54 billion, up 12.5% on a year-over-year basis. As a percentage of revenues, the gross margin was 3.71%, up 9 basis points (bps) year over year.
The company recorded an operating income of $553.3 million, up 14.4% year over year. As a percentage of revenues, the operating margin was 0.81%, which contracted 7 bps from the year-ago quarter’s number.
Financial Position
COR exited the fiscal second quarter with cash and cash equivalents worth $2.29 billion compared with $2.87 billion in the prior-quarter quarter.
Cumulative net cash used in operating activities totaled $6.7 million compared with $1.34 billion a year ago.
Dividend Update
During the quarter, Cencora's board of directors declared a quarterly dividend of 51 cents per share, payable on May 24, 2024, to shareholders of record at the close of business on May 10, 2024.
Guidance Raised
The company raised its outlook for fiscal 2024 earnings and revenues.
Adjusted EPS is now estimated in the range of $13.30-$13.50 (previously $13.25-$13.50), indicating growth of 10.5-12.6% over the prior-year level. The Zacks Consensus Estimate for the same is currently pegged at $13.43.
Revenues are projected to increase 10-12%, reportedly as well as at cc. The top line at the U.S. Healthcare Solutions segment is now expected to grow 11-13% (previously 7-10%). Revenues at the International Healthcare solutions business are estimated to be up 4-7%.
Adjusted operating income is expected to improve 9-11% (previously 8-10%).
Operating income at the U.S. Healthcare Solutions segment is now projected to grow 10-12% (previously 9-11%). For the International Healthcare Solutions segment, the company maintained its guidance at 5-8%.
Summing Up
Cencora exited the fiscal second quarter on a strong note, wherein both its earnings and revenues beat their respective consensus mark by a significant margin.
The company continues to witness a strong segmental performance due to growth in all markets and strong demand for specialty products, especially GLP-1 drugs. Per management, Cencora delivered a solid performance by playing a crucial role in the healthcare system, while maintaining efficiency throughout its business. The company remains focused on its strategic priorities and thoughtful capital deployment to deliver long-term growth.
However, COR’s gross margin is being hurt by lower-margin GLP-1 drugs. The company’s rising expenses to support business activities amid inflationary challenges are putting pressure on the operating margin. Cut-throat competition in the MedTech space remains a concern.
Cencora, Inc. Price, Consensus and EPS Surprise
Cencora, Inc. price-consensus-eps-surprise-chart | Cencora, Inc. Quote
Zacks Rank
Cencora currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks in the broader medical space that have announced quarterly results are Align Technology, Inc. (ALGN - Free Report) , Medpace (MEDP - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Align Technology, carrying a Zacks Rank of 2 (Buy) at present, reported first-quarter 2024 adjusted EPS of $2.14, which beat the Zacks Consensus Estimate by 8.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Revenues of $997.4 million outpaced the consensus mark by 2.6%.
Align Technology has a long-term estimated growth rate of 6.9%. Its earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 5.9%.
Medpace reported first-quarter 2024 adjusted EPS of $3.20, which beat the Zacks Consensus Estimate by 30.61%. Revenues of $511 million missed the Zacks Consensus Estimate by 0.3%. MEDP currently carries a Zacks Rank #2.
Medpace has a long-term estimated growth rate of 17.9%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.83%.
Boston Scientific reported first-quarter 2024 adjusted EPS of 56 cents, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $3.86 billion surpassed the Zacks Consensus Estimate by 4.9%. It currently carries a Zacks Rank #2.
Boston Scientific has a long-term estimated growth rate of 12.5%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.5%.