Cencora Revises Up 2026 Sales Projections Despite Missing Q1 Revenue Estimates

Cencora Inc. (NYSE: COR), a global drug wholesaler and distributor, released its first-quarter fiscal year results on Wednesday, reporting revenue of $85.93 billion. This figure marked a 5.5% increase from the previous year but fell just short of Wall Street consensus expectations of $86.03 billion. Despite the revenue miss, the company delivered adjusted earnings per share of $4.08, surpassing the consensus estimate of $4.03. This combination of near-miss revenue and stronger profitability presents a nuanced picture of Cencora's operational and financial footing entering 2026. The upward movement in sales was largely driven by expansion within both business segments. The U.S. Healthcare Solutions segment registered a revenue increase of roughly 5%, with overall market growth and unit volume gains as key contributors. This volume increase included enhanced sales of specialty pharmaceutical products targeted to health systems and physician practices. Furthermore, the segment experienced notable inflows from products related to diabetes and weight loss, specifically those within the GLP-1 category. However, these gains were partially offset by lost sales stemming from the departure of a grocery customer and an oncology client. International Healthcare Solutions exhibited an even stronger top-line growth rate, with revenues climbing 9.6% year-over-year to $7.6 billion. This rise is attributed principally to growth in the company’s European distribution operations, reflecting successful market penetration or expanded demand. Profitability measures revealed positive momentum for Cencora. Gross profit amounted to $3.1 billion, representing a significant 20.1% increase from the prior year’s comparable quarter. This boost in gross margin to 3.58%, up 44 basis points, was influenced notably by both healthcare segments as well as a favorable LIFO inventory credit recognized during the quarter. The improvement was particularly linked to the U.S. Healthcare Solutions segment, supported by the January 2025 acquisition of Retina Consultants of America (RCA), which enhanced gross profit margin performance. Operating income rose 7.7% year-over-year to $760.4 million, with operating margin inching up slightly from 0.87% to 0.88%. This incremental gain underscores modest operational leverage despite the challenging environment. Looking forward, Cencora maintained its adjusted earnings guidance for fiscal 2026 at a range of $17.45 to $17.60 per share, slightly below analysts’ consensus of $17.61. However, the company materially raised its sales growth forecast from 5%-7% previously to 7%-9%, signaling confidence in continued revenue expansion opportunities. Correspondingly, fiscal 2026 sales guidance was increased, now expected between $343.79 billion and $350.22 billion, compared with a consensus estimate near $341.04 billion. Stock market response has been negative amid these mixed results and guidance adjustments, with COR shares trading down approximately 6.67% to $337.62 during intraday trading on Wednesday. Segment Analysis

• U.S. Healthcare Solutions: Revenue of $76.2 billion, up 5%, primarily propelled by market-wide growth and volume enhancement across specialty and chronic care products, mitigated somewhat by losses from select customers.
• International Healthcare Solutions: $7.6 billion in revenue, representing a near 10% increase, driven mainly by expansion in European drug distribution operations.

Financial Metrics and Drivers

• Adjusted earnings per share beat consensus estimates despite revenues slightly missing expectations.
• Gross profit surged over 20%, fueled by both segment gains and inventory accounting benefits.
• Margin improvements, though incremental on the operating income front, reflect effective cost controls and integration benefits post-acquisitions.

Outlook Revisions Cencora’s decision to affirm adjusted earnings guidance while raising sales-growth targets indicates management’s balanced perspective on profitability and top-line momentum. The raised sales guidance suggests the company anticipates accelerated volume increases or pricing power, even as earnings growth is expected to remain steady within the outlined range. Risks and Uncertainties

• Revenue fell short of analyst estimates due to lost business from a grocery customer and an oncology client, illustrating vulnerability to client-level concentration risk.
• Operating margin stands at less than 1%, indicating potential operational constraints or competitive pressures in the drug wholesale market.
• The reliance on LIFO inventory accounting adjustments could introduce volatility or may mask underlying cost pressures over time.
• Shares trading down sharply post-earnings reflect market concerns regarding growth sustainability or margin expansion potential.

Cencora's first-quarter report sketches a profile of a pharmaceutical distributor maintaining solid earnings performance and refining growth expectations amidst mixed revenue signals. The substantial sales increases within both U.S. and International segments, combined with margin gains, support a cautiously optimistic outlook for fiscal 2026, albeit tempered by specific client losses and modest operating income margins. The coming quarters will be critical to validate the raised sales guidance and to assess how effectively the company can convert volume gains into expanded profitability.