AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 5/6 · 19/10/2026
Moat—
Insufficient evidence for every rubric criterion; no category score is inferred.
structural advantage · — · The network and centralized shipping destination establish operating infrastructure, but comparative cost superiority is only asserted. The catalog cannot establish a durable structural advantage.
durability · — · Primary-supplier status and recurring purchases do not establish how long an advantage can persist. Annual expirations and an actual non-renewal leave durable barriers unproven.
customer dependency · — · Ordering integration and primary-supplier relationships indicate operational relevance, but disclosed departures and absent migration-cost evidence prevent establishing dependency sufficient for a moat.
erosion resilience · — · Growth despite customer losses demonstrates business resilience, but acquisition contributions and unproven competitive barriers prevent establishing resilience of an economic moat.
Pricing power38
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 1/4 · Manufacturer price declines actually reduced fiscal 2026 sales, while manufacturer price increases supported part of international earnings growth. These outcomes show externally driven product pricing and fragile pricing autonomy; they do not establish a cut in Cencora's own fees.
retention · 2/4 · Primary-supplier relationships and increased sales to the two largest customers provide indirect evidence of repeat demand. Actual oncology and grocery customer losses make retention mixed. No retention rate is inferred.
margin resilience · 2/4 · Fiscal 2025 and nine-month fiscal 2026 operating income increased despite customer losses and product-price declines. International nine-month segment margin weakened, while acquisitions and sizable accounting and litigation items complicate attribution. Overall resilience is mixed rather than proof of fee pricing power.
contractual freedom · 1/4 · Selling prices reference manufacturer WAC or negotiated customer prices, and some distribution agreements include price appreciation outside Cencora's control. Contract expirations permit renegotiation but do not demonstrate unilateral freedom to set fees or terms.
Predictability100
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 1.15
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 0.13
Financial strength64
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 80.16
- netDebtEbitGrade
- 74.86
- interestCoverageGrade
- 89.73
- currentRatioGrade
- 12.28
- Debt / FCF (x)
- 2.39
- Net debt / operating income (x)
- 1.26
- Current ratio (x)
- 0.90
- cashInterestPaid
- 356.50
- cashInterestCoverage
- 10.87
Capital allocation100
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 84.01
- 3-year average dilution (%)
- -2.40
- 3-year average SBC / revenue (%)
- 0.05
- cashConversionGrade
- 100.00
Management56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Nine-month fiscal 2026 operating cash flow of $1,687.5 million exceeded $511.0 million of capital expenditures, and $900 million of term loans were repaid. Repeated PharmaLex impairments, substantial OneOncology consideration and $4.5 billion of acquisition borrowing offset that evidence. Long-term acquisition returns remain unproven.
incentive alignment · 3/4 · Actual fiscal 2025 performance awards included a relative TSR modifier and post-vesting holding requirements. The committee also reduced actual bonus payouts for business underperformance. These demonstrate meaningful alignment, tempered by adjusted metrics excluding goodwill impairment and other costs; future vesting and executive ownership are not assumed.
execution · 2/4 · Revenue and operating-income growth and the completed OneOncology transaction support execution indirectly through operating outcomes. Customer losses and repeated PharmaLex impairments offset those achievements. Acquisition contributions limit conclusions about organic execution or completed integration success.
governance · 2/4 · An appointed independent chair, actual independent key committees, an unqualified internal-control audit and exercised bonus discretion support functioning oversight. The $4.2 billion accrued opioid-related liability is a material adverse legacy outcome, limiting a stronger assessment without attributing historical conduct to current directors.
Evidence
We serve our customers (healthcare providers and pharmaceutical and biotech manufacturers) through a geographically diverse network of distribution service centers and other operations in the United States and select global markets.
Item 1, Business: distribution network · Filed 25/11/2025
Our robust distribution facility network includes a national distribution center in Columbus, Ohio, which offers pharmaceutical manufacturers a single shipping destination.
Item 1, Strategy: national distribution center · Filed 25/11/2025
We believe we have one of the lowest operating cost structures among pharmaceutical distributors.
Item 1, Strategy: management cost-structure assertion · Filed 25/11/2025
Our pharmaceutical distribution businesses not only compete with other pharmaceutical distributors, but also with manufacturers who sell directly to customers, chain drugstores who manage their own warehousing, specialty distributors, and packaging and healthcare technology companies.
Item 1A, Risk Factors: competing distribution channels · Filed 25/11/2025
Continued consolidation within the healthcare industry could adversely affect our results of operations, to the extent we experience reduced negotiating power or possible customer losses.
Item 1A, Risk Factors: consolidation and negotiating power · Filed 25/11/2025
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.
MD&A, Revenue: volume growth, manufacturer price declines and customer losses · Filed 05/08/2026
In our pharmaceutical distribution businesses, we are typically the primary supplier of pharmaceutical and related products to our healthcare provider customers.
Item 1, Business: primary-supplier relationships · Filed 25/11/2025
U.S. Healthcare Solutions’ ERP system provides for, among other things, electronic order entry by customers, invoice preparation and purchasing, and inventory tracking.
Item 1, Information Systems: electronic ordering and inventory capabilities · Filed 25/11/2025
Sales, including GLP-1 products, to our two largest customers increased by $6.2 billion from the prior fiscal year.
MD&A, Revenue: increased sales to two largest customers · Filed 25/11/2025
and educational seminars, which we believe closely integrate the animal health business with its customers’ day-to-day operations and provide them with meaningful incentives to remain customers.
Item 1, Strategy: management assertion about animal-health customer integration · Filed 25/11/2025
A number of our contracts with customers, including group purchasing organizations, are typically subject to expiration each year.
MD&A, Revenue: annual contract expirations · Filed 25/11/2025
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.
MD&A, Revenue: oncology customer non-renewal and termination · Filed 25/11/2025
In fiscal 2025, Walgreens and Boots together accounted for approximately 25% of revenue and Evernorth Health Services accounted for approximately 13% of revenue.
Item 1A, Risk Factors: customer revenue concentration · Filed 25/11/2025
We sell brand-name pharmaceutical products to many of our customers using WAC as the reference price and to other customers based on their negotiated contract price.
Item 1A, Risk Factors: WAC references and negotiated selling prices · Filed 25/11/2025
Additionally, certain distribution service agreements that we have entered into with brand-name and generic pharmaceutical manufacturers have a price appreciation component to them.
Item 1A, Risk Factors: distribution agreements with price-appreciation components · Filed 25/11/2025
As a result, our gross profit from brand-name and generic pharmaceuticals continues to be subject to fluctuation based upon the timing and extent of manufacturer price increases, which we do not control.
Item 1A, Risk Factors: manufacturer price increases outside company control · Filed 25/11/2025
Healthcare Solutions $ 3,574,699 $ 2,934,877 $ 2,596,559 International Healthcare Solutions 648,274 713,379 692,562 Total segment operating income $ 4,222,973 $ 3,648,256 $ 3,289,121 81 Table of Contents The following reconciles total segment operating income to income before income taxes for the periods indicated: Fiscal Year Ended September 30, (in thousands) 2025 2024 2023 Total segment operating income $ 4,222,973 $ 3,648,256 $ 3,289,121 Gains from antitrust litigation settlements 236,372 170,904 239,092 LIFO credit (expense) 76,876 52,168 (204,595) Turkey highly inflationary impact (49,571) (54,087) (86,967) Acquisition-related intangibles amortization (553,028) (660,292) (551,046) Litigation and opioid-related (expenses) credit, net (60,671) (227,070) 24,693 Acquisition-related deal and integration expenses (291,044) (103,001) (139,683) Restructuring and other expenses (229,422) (233,629) (229,884) Goodwill impairment (723,884) (418,000) — Operating income 2,628,601 2,175,249 2,340,731 Other loss (income), net 78,717 14,283 (49,036) Interest expense, net 291,548 156,991 228,931 Income before income taxes $ 2,258,336 $ 2,003,975 $ 2,160,836 Segment operating income is evaluated by the CODM of the Company and excludes gains from antitrust litigation settlements; LIFO credit (expense); Turkey highly inflationary impact; acquisition-related intangibles amortization; litigation and opioid-related (expenses) credit, net; acquisition-related deal and integration expenses; restructuring and other expenses; and goodwill impairment.
Note on segment information: fiscal 2023–2025 operating income and reconciliation · Filed 25/11/2025
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three months ended June 30, Nine months ended June 30, (in thousands, except per share data) 2026 2025 2026 2025 Revenue $ 84,754,837 $ 80,663,532 $ 249,042,769 $ 237,604,265 Cost of goods sold 81,147,602 77,756,417 238,775,124 229,079,303 Gross profit 3,607,235 2,907,115 10,267,645 8,524,962 Operating expenses: Distribution, selling, and administrative 2,132,465 1,672,881 5,905,313 4,744,976 Depreciation 150,960 128,128 417,384 362,655 Amortization 118,539 125,867 361,808 429,650 Litigation and opioid-related (credit) expenses, net (88,643) 17,974 (160,936) 46,263 Acquisition and divestiture-related deal and integration expenses 113,069 52,838 355,652 190,930 Restructuring and other expenses, net 60,628 41,773 115,667 140,390 Impairment of assets, including goodwill — — 249,498 — Operating income 1,120,217 867,654 3,023,259 2,610,098 Other income, net (16,882) (110,417) (1,123,921) (48,997) Interest expense, net 140,705 81,794 353,574 213,715 Income before income taxes 996,394 896,277 3,793,606 2,445,380 Income tax expense 219,727 206,528 821,285 544,495 Net income 776,667 689,749 2,972,321 1,900,885 Net income attributable to noncontrolling interests (13,149) (2,347) (7,824) (7,012) Net income attributable to Cencora, Inc.
Unaudited consolidated statements of operations: June 2026 quarter and nine months · Filed 05/08/2026
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.
MD&A, Gross Profit: acquisition contributions to nine-month growth · Filed 05/08/2026
Reconciliation of adjusted free cash flows
Operating cash flows
$1,687.5M
Capital expenditures
$(511.0)M
Free cash flows
$1,176.5M
Gains from antitrust litigation settlements
$(34.2)M
Adjusted free cash flows
$1,142.3M
The Company also presents certain information related to current period operating results in “constant currency,” which is a non-GAAP financial measure.
Supplemental information: operating cash flow, capital expenditures and free cash flow reconciliation · Filed 05/08/2026
We completed our required annual impairment assessments relating to goodwill and indefinite-lived intangible assets in fiscal 2025, 2024, and 2023 and, as a result, recorded goodwill impairments (see Note 5 of the Notes to Consolidated Financial Statements) of $723.9 million and $418.0 million in our PharmaLex reporting unit in fiscal 2025 and 2024, respectively.
Critical Accounting Estimates: repeated PharmaLex goodwill impairments · Filed 25/11/2025
Note 2. Acquisitions OneOncology Acquisition On February 2, 2026, the Company acquired the majority of the outstanding equity interests that it did not previously own in OneOncology, a physician-led national platform empowering independent medical specialty practices rooted in oncology, for total fair value consideration of $7,387.1 million, which included cash consideration of $4,648.7 million, $1,934.2 million of fair value of its previously held equity method investment, $752.1 million of estimated contingent consideration for certain OneOncology physicians and members of management that retained an 8% interest in OneOncology, and $52.0 million for the settlement of a receivable resulting from a pre-existing commercial arrangement between the Company and OneOncology.
Note 2, Acquisitions: completed OneOncology acquisition and consideration · Filed 05/08/2026
Net cash provided by financing activities of $2.3 billion in the nine months ended June 30, 2026 principally resulted from the $3.0 billion issuance of senior notes and $1.5 billion of term loan borrowings to finance a portion of the acquisition of OneOncology, offset in part by $1.0 billion of purchases of our common stock, $900.0 million of term loan repayments, $360.6 million in cash dividends paid on our common stock, and $105.3 million in purchases of our common stock related to employee tax withholdings related to restricted share vesting.
MD&A, Financing Activities: acquisition borrowing, repayments and shareholder distributions · Filed 05/08/2026
Consistent with our design in the prior three years and in consideration of feedback received from our shareholders, the Compensation Committee included the following features in our fiscal 2025 performance share awards: 1.A relative TSR modifier with above median performance required for a target payout, as described in more detail below; and 2.A post-vest holding requirement of two years for the CEO, and one year for the other NEOs at the time of grant on 50% of earned performance shares.* * Because our annual grants are made in the first quarter of the fiscal year, this provision applies to our CFO and the NEOs identified from the prior fiscal year.
Executive Compensation: fiscal 2025 performance-award TSR modifier and holding requirements · Filed 22/01/2026
As shown in the table above, the Company’s performance would have resulted in a 185.3% payout; however, following discussions with Pearl Meyer and management, the Compensation Committee exercised discretion and reduced the total payout percentage to 181.3%.
Executive Compensation: actual discretionary bonus reduction · Filed 22/01/2026
The Compensation Committee determined to make this reduction in recognition of the underperformance of a business within our International Healthcare Solutions reportable segment.
Executive Compensation: business underperformance underlying bonus reduction · Filed 22/01/2026
We have included the following non-GAAP earnings-related financial measures in this proxy statement: Adjusted operating income Adjusted operating income is a non-GAAP financial measure that excludes: •gains from antitrust litigation settlements; •LIFO credit; •Turkey highly inflationary impact; •acquisition-related intangibles amortization; •litigation and opioid-related expenses; •acquisition-related deal and integration expenses; •restructuring and other expenses; and •goodwill impairment.
Appendix A: adjusted operating-income exclusions · Filed 22/01/2026
Appointed independent director D. Mark Durcan as Chair of the Board of Directors following the retirement of Executive Chairman Steven H.
Company Highlights: appointment of independent board chair · Filed 22/01/2026
Our Board determined that each of the members of the Board’s Audit Committee, Compensation and Succession Planning Committee (“Compensation Committee”) and Governance Committee is independent.
Board and Governance Matters: actual committee independence determinations · Filed 22/01/2026
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated November 25, 2025 expressed an unqualified opinion thereon.
Independent auditor report: unqualified internal-control opinion · Filed 25/11/2025
Our accrued litigation liability related to the Distributor Settlement Agreement, as well as other opioid-related litigation for which we have reached settlement agreements on our Consolidated Balance Sheet as of June 30, 2026 is $4.2 billion and is expected to be paid over the next 13 years.
MD&A, Commitments and Obligations: accrued opioid-related litigation liability · Filed 05/08/2026
Healthcare Solutions
Gross profit
2.96%
2.44%
Operating expenses
1.69%
1.27%
Operating income
1.27%
1.17%
International Healthcare Solutions
Gross profit
10.61%
10.60%
Operating expenses
8.49%
8.41%
Operating income
2.12%
2.19%
Other
Gross profit
14.98%
15.68%
Operating expenses
10.45%
11.11%
Operating income
4.53%
4.57%
Cencora, Inc.
Summary Segment Information: nine-month segment operating margins · Filed 05/08/2026
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.
MD&A: international operating-income growth and manufacturer-price contribution · Filed 05/08/2026
Intersegment eliminations
(7,250)
22
Total segment operating income
3,564,149
3,199,903
11.4%
Gains from antitrust litigation settlements
34,184
231,011
LIFO credit
381,896
19,913
Türkiye highly inflationary impact
(38,447)
(36,410)
Acquisition-related intangibles amortization
(358,642)
(426,736)
Litigation and opioid-related credit (expenses), net
160,936
(46,263)
Acquisition and divestiture-related deal and integration expenses
(355,652)
(190,930)
Restructuring and other expenses, net
(115,667)
(140,390)
Impairment of assets, including goodwill
(249,498)
—
Operating income
$
3,023,259
$
2,610,098
15.8%
Percentages of Revenue:
U.S.
Summary Segment Information: nine-month segment-to-GAAP operating-income reconciliation · Filed 05/08/2026
