Cencora, Inc. 10-Q Summary: Quarter Ended December 31, 2025
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended December 31, 2025 (Fiscal Q1 2026). Cencora, Inc. is a leading healthcare solutions provider operating primarily through two reportable segments: U.S. Healthcare Solutions and International Healthcare Solutions. The company reorganized its reporting structure in this quarter, moving certain businesses (including MWI Animal Health and U.S. Consulting Services) into a non-reportable "Other" category as it explores strategic alternatives. The filing includes a subsequent event regarding the acquisition of OneOncology on February 2, 2026.
Key Financial Metrics
| Metric | Q1 2026 (Dec 31, 2025) | Q1 2025 (Dec 31, 2024) |
|---|---|---|
| Revenue | $85.93 billion | $81.49 billion |
| Gross Profit | $3.07 billion | $2.56 billion |
| Operating Income | $760.4 million | $706.3 million |
| Net Income (Attributable to Cencora) | $559.6 million | $488.6 million |
| Diluted EPS | $2.87 | $2.50 |
| Cash and Cash Equivalents | $1.75 billion | $3.22 billion (Dec 31, 2024) |
| Total Debt | $7.92 billion | $7.66 billion (Sep 30, 2025) |
| Operating Cash Flow | ($2.31 billion) used | ($2.72 billion) used |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 5.5% year-over-year, driven by 5.0% growth in U.S. Healthcare Solutions (notably $1.0 billion in GLP-1 specialty products) and 9.6% growth in International Healthcare Solutions.
- Profitability: Gross profit rose 20.1% to $3.07 billion, aided by a $70.2 million increase in the LIFO credit and the impact of the January 2025 Retina Consultants of America (RCA) acquisition.
- Operating Expenses: Total operating expenses increased 24.8% to $2.31 billion. This was primarily due to the RCA acquisition integration costs and a $249.5 million impairment charge related to the U.S. Consulting Services business, which is classified as held for sale.
- Litigation Credits: The company recorded an $86.8 million credit in litigation expenses related to the settlement of a shareholder derivative lawsuit, significantly offsetting other legal costs.
- Working Capital: Operating cash flow was negative $2.31 billion, primarily due to a $3.5 billion increase in inventory and a $0.8 billion increase in accounts receivable, partially offset by a $1.3 billion increase in accounts payable.
Guidance, Outlook, and Risks
- Capital Allocation: The company increased its quarterly dividend by 9% to $0.60 per share. No share repurchases were made in the quarter; $882.2 million remains available under the current repurchase program.
- Subsequent Event: On February 2, 2026, Cencora acquired the majority of OneOncology for approximately $4.6 billion, funded by new debt financing. This acquisition will be consolidated into the U.S. Healthcare Solutions segment.
- Debt Structure: In January 2026, the company amended its revolving credit facility to increase capacity to $5.5 billion and secured new term loan facilities ($1.5 billion multi-year and $3.0 billion 364-day) to fund the OneOncology acquisition.
- Key Risks:
- Opioid Litigation: A $4.3 billion accrued liability remains for opioid-related settlements, payable over 13 years. The company faces ongoing investigations and potential additional liabilities.
- Regulatory Environment: Risks include changes in U.S. healthcare policy, the "One Big Beautiful Bill Act," and pricing pressures on brand and generic pharmaceuticals.
- Geopolitical & Economic: Exposure to foreign currency fluctuations (Euro, Turkish Lira, Brazilian Real) and geopolitical instability in Europe and the Middle East.
Investor Verification Checklist
- Verify the impact of the $249.5 million goodwill impairment on the "Other" segment and the timeline for the sale of U.S. Consulting Services.
- Review the details of the OneOncology acquisition ($4.6 billion) and the associated new debt covenants to assess leverage ratios.
- Monitor the opioid litigation accrual ($4.3 billion) for any updates on non-settling states or new claims that could increase the liability.
- Assess the sustainability of the LIFO credit ($77.6 million) given potential changes in manufacturer pricing and inventory levels.
- Confirm the integration progress of the RCA acquisition and its contribution to the 29.5% gross profit increase in the U.S. segment.