Cencora, Inc. (COR Quick QuoteCOR - Free Report) reported third-quarter fiscal 2024 adjusted earnings per share (EPS) of $3.34, which beat the Zacks Consensus Estimate of 3.18 by 5%. The bottom line also improved 14.4% year over year.

GAAP EPS was $2.42, up 3% from that reported in the year-ago period.

Revenue Details

Revenues totaled $74.2 billion, up 10.9% year over year. The top line beat the Zacks Consensus Estimate by 0.8%.

Segmental Analysis

U.S. Healthcare Solutions

Revenues in this segment totaled $67.2 billion, up 12.2% on a year-over-year basis. This improvement was due to higher volume on the back of high demand for the GLP-1 drugs for diabetes and/or weight loss during the quarter.

Segmental operating income totaled $698.3 million, up 9.9% 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, flat year over year. The top line increased 5.8% at constant currency (cc).

Operating income totaled $179.4 million, down 4.1% reportedly but up 0.8% at cc. The decline was due to higher information technology expenses in European distribution business and lower operating income at the global specialty logistics business, partially offset by the strong performance of Canadian business.

Margin Analysis

Cencora reported a gross profit of $2.4 billion, up 6.5% on a year-over-year basis. As a percentage of revenues, the gross margin was 3.25%, down 13 basis points (bps) year over year.

The company recorded an operating income of $672.5 million, flat year over year. As a percentage of revenues, the operating margin was 0.91%, which contracted 9 bps from the year-ago quarter’s number.

Cencora, Inc. Price, Consensus and EPS Surprise

Cencora, Inc. price-consensus-eps-surprise-chart | Cencora, Inc. Quote

Financial Position

COR exited the fiscal third quarter with cash and cash equivalents worth $3.31 billion compared with $2.29 billion in the prior-quarter quarter.

Cumulative net cash used in operating activities totaled $2.48 billion compared with $2.08 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 Aug 26, 2024, to shareholders of record at the close of business on Aug 9, 2024.

Guidance Raised

The company raised its outlook for fiscal 2024 earnings and revenues.

Adjusted EPS is now estimated to be in the range of $13.55-$13.65 (previously $13.35-$13.55), indicating growth of 13-13.8% over the prior-year level. The Zacks Consensus Estimate for the same is currently pegged at $13.46.

Revenues are now projected to increase 12% compared with the previous guidance of 10-12%. The top line at the U.S. Healthcare Solutions segment is now expected to grow 12-13% (previously 11-13%). Revenues at the International Healthcare solutions business are now estimated to be up 4-6% (previously 4-7%).

Adjusted operating income is expected to improve 10-11% (previously 9-11%).

Operating income at the U.S. Healthcare Solutions segment is now projected to grow 11-12% (previously 10-12%). For the International Healthcare Solutions segment, the company updated its guidance to 5-7% (previously 5-8%).

Summing Up

Cencora exited the fiscal third quarter on a strong note, wherein both its earnings and revenues beat their respective consensus mark.

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.

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 Boston Scientific Corporation (BSX Quick QuoteBSX - Free Report) , Hologic (HOLX Quick QuoteHOLX - Free Report) and Universal Health Services (UHS Quick QuoteUHS - Free Report) .

Boston Scientific reported second-quarter 2024 adjusted EPS of 62 cents, which beat the Zacks Consensus Estimate by 6.9%. Revenues of $4.12 billion surpassed the Zacks Consensus Estimate by 2.5%. It currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Boston Scientific has a long-term growth rate of 12.5%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.18%.

Hologic, carrying a Zacks Rank of 2 at present, has a long-term growth rate of 7.4%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 4.50%.

Hologic reported second-quarter 2024 adjusted EPS of $1.06, which beat the Zacks Consensus Estimate by 3.9%. Revenues of $1 billion surpassed the Zacks Consensus Estimate by 1.1%.

Universal Health Services reported second-quarter 2024 adjusted EPS of $4.31, which beat the Zacks Consensus Estimate by 27.9%. Revenues of $3.9 billion surpassed the Zacks Consensus Estimate by 1.5%.

Universal Health Services has a long-term growth rate of 18%. UHS’ earnings surpassed estimates in each of the trailing four quarters, the average surprise being 14.58%