Cencora, Inc. (COR)

ITEM 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

In reviewing this Management’s Discussion and Analysis of Financial Condition and Results of Operations, please note that we face many uncertainties and risks related to various economic, political and regulatory environments in which we operate, both within the U.S. and internationally. Refer to the headings “Item 1A. Risk Factors” in Part I of our Annual Report on Form 10-K for the year ended September 30, 2025, as well as the heading “Cautionary Note Regarding Forward-Looking Statements” above for additional information related to our present business environment.

Executive Summary

This executive summary provides highlights from the results of operations that follow:

•Revenue increased by $4.1 billion, or 5.1%, and $11.4 billion, or 4.8%, from the prior year quarter and nine-month period, respectively, primarily due to growth in both reportable segments. U.S. Healthcare Solutions’ revenue increased by $3.5 billion, or 4.9%, and $9.1 billion, or 4.3%, from the prior year quarter and nine-month period, respectively, primarily due to overall market growth largely driven by unit volume growth, including increased sales of specialty products to health systems and physician practices and increased sales of $2.3 billion, or 25.5%, and $5.2 billion, or 19.7%, from the prior year quarter and nine-month period, respectively, of products labeled for diabetes and/or weight loss in the GLP-1 class, offset in part by a decline in manufacturer prices related to certain brand pharmaceutical products, a decrease in sales due to losses of an oncology customer and a grocery customer (in the nine-month period only), and lower sales to our large mail order customer as a result of brand conversions. International Healthcare Solutions’ revenue increased by $0.4 billion, or 5.9%, and $2.0 billion, or 9.4%, from the prior year quarter and nine-month period, respectively, primarily due to increased sales at our European distribution business.

•Gross profit increased by $700.1 million, or 24.1%, and $1,742.7 million, or 20.4%, from the prior year quarter and nine-month period, respectively, primarily due to the increases in gross profit in both reportable segments and higher last-in, first-out (“LIFO”) credits in the current year periods, offset in part by lower gains from antitrust litigation settlements in the current year nine-month period in comparison to the prior year nine-month period. U.S. Healthcare Solutions’ gross profit increased by $565.4 million, or 31.2%, and $1,365.1 million, or 26.5%, from the prior year quarter and nine-month period, respectively. The increase from the prior year quarter is primarily due to the February 2026 acquisition of OneOncology and increased pharmaceutical sales. The increase from the prior year nine-month period is primarily due to the February 2026 acquisition of OneOncology, the January 2025 acquisition of RCA, and increased pharmaceutical sales. International Healthcare Solutions’ gross profit increased by $86.5 million, or 11.8%, and $209.7 million, or 9.5%, from the prior year quarter and nine-month period, respectively, primarily due to increases in gross profit at our European distribution business and our global specialty logistics business.

•Total operating expenses increased by $447.6 million, or 21.9%, and $1,329.5 million, or 22.5%, from the prior year quarter and nine-month period, respectively. The increase from the prior year quarter is primarily due to the February 2026 acquisition of OneOncology, offset in part by the litigation and opioid-related credit in the current year quarter in comparison to an expense in the prior year quarter. The increase from the prior year nine-month period is primarily due to the February 2026 acquisition of OneOncology, the January 2025 acquisition of RCA, and an impairment of assets of our U.S. Consulting Services business that was divested in April 2026, offset in part by the litigation and opioid-related credit in the current year nine-month period in comparison to an expense in the prior year nine-month period.

•Total segment operating income increased by $179.8 million, or 17.0%, and $364.2 million, or 11.4%, from the prior year quarter and nine-month period, respectively. U.S. Healthcare Solutions’ operating income increased by $132.5 million, or 15.9%, and $330.3 million, or 13.4%, from the prior year quarter and nine-month period, respectively. The increase from the prior year quarter is primarily due to the February 2026 acquisition of OneOncology and overall growth, and the increase from the prior year nine-month period is primarily due to the January 2025 acquisition of RCA, the February 2026 acquisition of OneOncology, and overall growth. International Healthcare Solutions’ operating income increased by $28.6 million, or 20.8%, from the prior year quarter and increased by $26.8 million, or 5.9%, from the prior year nine-month period. The increase from the prior year quarter is primarily due to increased operating income at our European distribution business, which was primarily driven by manufacturer price increases in a developing market country, and our global specialty logistics business, and the increase from the prior year nine-month period is primarily due to an increase in operating income at our global specialty logistics business.

•Our effective tax rates were 22.1% and 21.6% for the three and nine months ended June 30, 2026, respectively. Our effective tax rates were 23.0% and 22.3% for the three and nine months ended June 30,

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2025, respectively. The effective tax rates for the three and nine months ended June 30, 2026 and 2025 were higher than the U.S. statutory rate primarily due to U.S. state income taxes, offset in part by the benefit of income taxed at rates lower than the U.S. statutory rate and tax benefits associated with equity compensation.

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Results of Operations

Revenue

Our future revenue growth will continue to be affected by various factors, such as industry growth trends, including drug utilization (e.g., products labeled for diabetes and/or weight loss in the GLP-1 class), the introduction of new, innovative brand therapies and vaccines, the likely increase in the number of generic drugs and biosimilars that will be available over the next few years as a result of the expiration of certain drug patents held by brand-name pharmaceutical manufacturers and the rate of conversion from brand products to those generic drugs and biosimilars, price inflation and price deflation, general economic conditions in the United States and Europe, currency exchange rates, competition within the industry, customer consolidation, changes in pharmaceutical manufacturer pricing and distribution policies and practices, increased downward pressure on government and other third-party reimbursement rates to our customers, and changes in government rules and regulations.

Revenue increased by $4.1 billion, or 5.1%, and $11.4 billion, or 4.8%, from the prior year quarter and nine-month period, respectively, primarily due to growth in both reportable segments.

U.S. Healthcare Solutions’ revenue increased by $3.5 billion, or 4.9%, and $9.1 billion, or 4.3%, from the prior year quarter and nine-month period, respectively, primarily due to overall market growth largely driven by unit volume growth, including increased sales of specialty products to health systems and physician practices and increased sales of $2.3 billion, or 25.5%, and $5.2 billion, or 19.7%, from the prior year quarter and nine-month period, respectively, of products labeled for diabetes and/or weight loss in the GLP-1 class, offset in part by a decline in manufacturer prices related to certain brand pharmaceutical products, a decrease in sales due to losses of an oncology customer and a grocery customer (in the nine-month period only), and lower sales to our large mail order customer as a result of brand conversions.

International Healthcare Solutions’ revenue increased by $0.4 billion, or 5.9%, and $2.0 billion, or 9.4%, from the prior year quarter and nine-month period, respectively, primarily due to increased sales of $0.4 billion and $1.6 billion at our European distribution business from the prior year quarter and nine-month period, respectively.

Revenue in Other increased by $0.1 billion, or 6.9%, and $0.4 billion, or 6.1%, from the prior year quarter and nine-month period, respectively, due to increased sales at our less-than-wholly-owned Brazil distribution business and at our animal health business, offset in part by a decrease in sales at our consulting services businesses.

A number of our contracts with customers, including group purchasing organizations, are typically subject to expiration each year. We may lose a key customer if an existing contract with such customer expires without being extended, renewed, or replaced. Over the next twelve months, there are no key contracts scheduled to expire. Additionally, from time to time, key contracts may be terminated in accordance with their terms or extended, renewed, or replaced prior to their expiration dates. If those contracts are extended, renewed, or replaced at less favorable terms, they may also negatively impact our revenue, results of operations, and cash flows.

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Gross Profit

Gross profit increased by $700.1 million, or 24.1%, and $1,742.7 million, or 20.4%, from the prio

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ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) includes the following: an overview that provides a summary of our segments and highlights from fiscal 2025; a more detailed analysis of our results of operations; our capital resources and liquidity, which discusses key aspects of our statements of cash flows, changes in our balance sheets and our financial commitments; and a summary of our critical accounting estimates that involve a significant level of estimation uncertainty. Our MD&A should be read in conjunction with the Consolidated Financial Statements and notes thereto contained herein.

Our MD&A focuses on discussion of year-over-year comparisons between fiscal 2025 and fiscal 2024. Discussion of fiscal 2023 results and year-over-year comparisons between fiscal 2024 and fiscal 2023 that are not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for fiscal 2024.

The following discussion contains forward-looking statements that are subject to risks and uncertainties. Actual results may differ from those referred to herein due to a number of factors, including but not limited to risks described in Item 1A, Risk Factors, in this Annual Report on Form 10-K.

Overview

We are one of the largest global pharmaceutical sourcing and distribution services companies, helping both healthcare providers and pharmaceutical and biotech manufacturers improve patient access to products and enhance patient care. We deliver innovative programs and services designed to increase the effectiveness and efficiency of the pharmaceutical supply chain in both human and animal health.

We are organized geographically based upon the products and services we provide to our customers, and we report our results under two reportable segments: U.S. Healthcare Solutions and International Healthcare Solutions.

U.S. Healthcare Solutions Segment

The U.S. Healthcare Solutions reportable segment distributes a comprehensive offering of brand-name, specialty brand-name and generic pharmaceuticals, over-the-counter healthcare products, home healthcare supplies and equipment, and related services to a wide variety of healthcare providers, including acute care hospitals and health systems, independent and chain retail pharmacies, mail order pharmacies, medical clinics, long-term care and alternate site pharmacies, and other customers. The U.S. Healthcare Solutions reportable segment also provides pharmaceutical distribution (including plasma and other blood products, injectable pharmaceuticals, vaccines, and other specialty pharmaceutical products) and additional services to physicians who specialize in a variety of disease states, especially oncology and retina, and to other healthcare providers, including hospitals, specialty retinal practices, and dialysis clinics. The U.S. Healthcare Solutions reportable segment also provides pharmacy management, staffing and additional patient access and adherence support services, and supply management software to a variety of retail and institutional healthcare providers. Additionally, it delivers packaging solutions to institutional and retail healthcare providers. Through its animal health business, the U.S. Healthcare Solutions reportable segment sells pharmaceuticals, vaccines, parasiticides, diagnostics, micro feed ingredients, and various other products to customers in both the companion animal and production animal markets. It also offers demand-creating sales force services to manufacturers.

International Healthcare Solutions Segment

The International Healthcare Solutions reportable segment consists of businesses that focus on international pharmaceutical wholesale and related service operations and global commercialization services. The International Healthcare Solutions reportable segment distributes pharmaceuticals and other healthcare products and provides related services to healthcare providers, including pharmacies, doctors, health centers and hospitals primarily in Europe. It is a leading global specialty transportation and logistics provider for the biopharmaceutical industry. It is also a provider of specialized services, including regulatory affairs, market access, pharmacovigilance, development consulting and scientific affairs, and quality management and compliance, for the life sciences industry. In Canada, the business drives innovative partnerships with manufacturers, providers, and pharmacies to improve product access and efficiency throughout the healthcare supply chain.

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Recent Development

Recently, we undertook a strategic review of our business to ensure alignment with our growth priorities and strategic drivers. As a result of this review, we have reorganized certain business components within our reporting structure. Beginning in the first quarter of fiscal 2026, our reporting structure will be comprised of U.S. Healthcare Solutions, International Healthcare Solutions, and Other. The U.S. Healthcare Solutions reportable segment will consist of U.S. Human Health (excluding legacy U.S. Consulting Services). The International Healthcare Solutions reportable segment will consist of Alliance Healthcare, Innomar, World Courier, and strategic components of PharmaLex. Other, which is not considered a reportable segment, will consist of businesses for which we have begun to explore strategic alternatives and includes MWI Animal Health, Profarma, U.S. Consulting Services and the other components of PharmaLex.

Executive Summary

This executive summary provides highlights from the results of operations that follow:

•Revenue increased by $27.4 billion, or 9.3%, from the prior fiscal year due to growth in both reportable segments. The U.S. Healthcare Solutions segment grew its revenue by $25.6 billion, or 9.7%, from the prior fiscal year due to overall market growth largely driven by unit volume growth, including increased sales of specialty products to health systems and physician practices and increased sales of products labeled for diabetes and/or weight loss in the GLP-1 class of $7.7 billion, or 26.9%. International Healthcare Solutions’ revenue increased by $1.7 billion, or 6.1%, from the prior fiscal year.

•Gross profit increased by $1,568.5 million, or 15.8%, from the prior fiscal year primarily due to the increase in gross profit in the U.S. Healthcare Solutions reportable segment and larger gains from antitrust litigation settlements. U.S. Healthcare Solutions’ gross profit increased by $1,482.3 million, or 23.1%, from the prior fiscal year primarily due to increased sales and the January 2025 acquisition of RCA. Gross profit in International Healthcare Solutions decreased $5.6 million, or 0.2%, from the prior fiscal year.

•Total operating expenses increased by $1,115.2 million, or 14.4%, from the prior fiscal year primarily due to the January 2025 acquisition of RCA, a larger goodwill impairment in fiscal 2025, and an increase in acquisition-related deal and integration expenses, offset in part by a decrease in litigation and opioid-related expenses in the current fiscal year.

•Total segment operating income increased by $574.7 million, or 15.8%, from the prior fiscal year. U.S. Healthcare Solutions’ operating income increased by $639.8 million, or 21.8%, from prior fiscal year in part due to the January 2025 acquisition of RCA. International Healthcare Solutions’ operating income decreased by $65.1 million, or 9.1%, from the prior fiscal year.

•Our effective tax rates were 30.6% and 24.2% in fiscal 2025 and 2024, respectively. Our effective tax rate in fiscal 2025 was higher than the U.S. statutory rate primarily due to the impairments of PharmaLex goodwill and an equity investment, which are largely not deductible for income tax purposes, U.S. state income taxes, and an increase in the amount of unrecognized tax benefits, offset in part by the benefit of income taxed at rates lower than the U.S. statutory rate.

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Results of Operations

Fiscal 2025 compared to Fiscal 2024

Revenue

Our future revenue growth will continue to be affected by various factors, such as industry growth trends, including drug utilization (e.g., products labeled for diabetes and/or weight loss in the GLP-1 class), the introduction of new, innovative brand therapies and vaccines, the likely increase in the number of generic drugs and biosimilars that will be available over the next few years as a result of the expiration of certain drug patents held by brand-name pharmaceutical manufacturers and the rate of conversion from brand products to those generic drugs and biosimilars, price inflation and price deflation, general economic conditions in the United States and Europe, currency exchange rates, competition within the industry, customer consolidation, changes in pharmaceutical manufacturer pricing and distribution policies and practices, increased downward pressure on government and other third-party reimbursement rates to our customers, and changes in government rules and regulations.

Revenue increased by $27.4 billion, or 9.3%, from the prior fiscal year due to growth in both reportable segments.

The U.S. Healthcare Solutions segment grew its revenue by $25.6 billion, or 9.7%, from the prior fiscal year primarily due to overall market growth largely driven by unit volume growth, including increased sales of specialty products to health systems and physician practices and increased sales of products labeled for diabetes and/or weight loss in the GLP-1 class of $7.7 billion, or 26.9%. Sales, including GLP-1 products, to our two largest customers increased by $6.2 billion from the prior fiscal year.

International Healthcare Solutions’ revenue increased by $1.7 billion, or 6.1%, from the prior fiscal year primarily due to increased sales at our European distribution business of $1.3 billion.

A number of our contracts with customers, including group purchasing organizations, are typically subject to expiration each year. We may lose a key customer if an existing contract with such customer expires without being extended, renewed, or replaced. As previously disclosed, we received notice of non-renewal from an oncology customer, and in June 2025, our sales contract with that customer was terminated. Over the next twelve months, there are no key contracts scheduled to expire. Additionally, from time to time, key contracts may be terminated in accordance with their terms or extended, renewed, or replaced prior to their expiration dates. If those contracts are extended, renewed, or replaced at less favorable terms, they may also negatively impact our revenue, results of operations, and cash flows.

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Gross Profit

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