管理層發言
Hello, everyone, and welcome to today's Cencora Q4 Full Year 2024 Earnings Call. My name is Drew, and I'll be the operator today. During today's call, there will be a Q&A session. I'll now hand over to our first speaker, Bennett Murphy. Please go ahead when you're ready.
Thank you. Good morning, good afternoon, and thank you all for joining us for this conference call to discuss Cencora's fiscal 2024 fourth quarter and full year results. I am Bennett Murphy, Senior Vice President, Head of Investor Relations and Treasury. Joining me today are Bob Mauch, President and CEO; and Laz Krikorian, Senior Vice President and Chief Accounting Officer. On today's call, we will be discussing non-GAAP financial measures. Reconciliations of these measures to GAAP are provided in today's press release, which is available on our website at investor.cencora.com. We have also posted a slide presentation to accompany today's press release on our investor website. During this conference call, we will make forward-looking statements about our business and financial expectations on an adjusted non-GAAP basis, including but not limited to, EPS, operating income, and income taxes.
Forward-looking statements are based on management's current expectations and are subject to uncertainty and change. For a discussion of key risks and assumptions, we refer you to today's press release and our SEC filings, including our most recent 10-K. Cencora assumes no obligation to update any forward-looking statements, and this call cannot be rebroadcast without the expressed permission of the company. You will have an opportunity to ask questions after today's remarks by management. We ask that you limit your questions to one per participant in order for us to get to as many participants as possible within the hour. With that, I will turn the call over to Bob.
Thank you, Bennett. Hi, everyone, and thank you for joining Cencora's fiscal 2024 fourth quarter earnings call. Before we get started today, I'd like to let everyone know that our CFO, Jim Cleary, has been under the weather for the past few days, after successfully and impressively completing the New York City Marathon. Jim is unable to join the call today, but he was part of preparing today's remarks, which will be presented by our Chief Accounting Officer, Laz Krikorian. We wish Jim a speedy recovery and I know he is looking forward to engaging with everyone in the coming weeks. It's a pleasure to be speaking with you today for the first time since assuming the role of President and CEO of this incredible company to discuss the strong results our global enterprises delivered this year, including growing our adjusted earnings by 15%. I'm honored to take the helm of a purpose-driven, growth-oriented business with an unparalleled portfolio of customers ranging from pharmaceutical companies to healthcare providers across continents. I'm focused on continuing to execute our strategy while amplifying the things within our culture that have made us successful. In fiscal 2024, Cencora continued to benefit from the strength of our customer relationships, the capabilities of our business, our international footprint, and the collective expertise of our team members...
Thanks, Bob. Good morning and good afternoon, everyone. It's an honor and a privilege to fill in today as Jim continues to recover. We all know Jim, so we all know he is listening to the call right now and I will try my best to do him proud. Before I turn to a review of our fourth quarter and full fiscal year results, as a reminder, my remarks will focus on our adjusted non-GAAP financial results unless otherwise stated. For a detailed discussion of our GAAP results, please refer to our earnings press release and presentation...
分析師問答
Thank you very much. Good morning, Bob, and congratulations. I listened to you discuss your strategy and the strong foundation it provides for the company. As we look ahead to 2025 with a new President, could you share your thoughts on how you see your first year as CEO? Are there any changes in your perspective considering the new President and a likely Republican Congress? Additionally, I'd like to understand if there have been any impacts from volume changes related to the IRA, as you mentioned strong results in the quarter regarding volumes and I'm curious about that perspective.
Hey, Lisa, thank you very much for the question and the kind words. Yeah, I'll start with just the first 30 days or so in this new role have been absolutely amazing. I want to start with a sincere thank you to the Cencora Board of Directors for having the trust in me to take on this role. And as you mentioned and as I mentioned in our prepared remarks, we are an incredibly strong enterprise and company. And what we're going to do is continue to execute. What you see in our results through 2024 is the execution of both our operational strength as well as our strategic execution, and that leads to the announcement of RCA today...
Good morning. Congrats on the quarter. And Bob, echoing Lisa's comments, welcome to your new role. I know you're obviously a long-timer here, but congrats on the transition. Maybe if I could just dive in, I guess, two-part question come together. First of all, I know you highlighted a number of the headwinds you have this year from a year-over-year basis as you think about the COVID comp. Is the loss of the customer contemplated specifically in guidance, whether they leave or not? Just trying to get to the baseline growth, which definitely seems stronger than the 5% to 6.5% on an underlying basis. And along those lines, when thinking about specialty in particular, given your market leadership there, how do you think about the moving pieces across the market with regards to specialty inclusive of expectations for biosimilars, the impact we're seeing from changing benefit design with IRA? Curious how that all factors into your expectations across the US Healthcare segments relative to the specialty contribution. Thanks so much.
Sure, Michael. Thanks. This is Bennett, and I'll take that. So as we look at 2025, we're expecting that the US Healthcare Solutions segment operating income will continue to benefit from the pharmaceutical utilization trends that we've seen growth in key markets, including specialty as you call out, which helps to give us a really strong base moving into 2024. And more than offsetting COVID-related headwind, as Laz discussed, including the potential loss of an oncology customer, which is factored into our 2025 expectations...
Hi, guys. Thanks so much for the question. And, Bob, congrats again on your first quarter as officially. And maybe could you talk a little bit more about RCA and sort of how you think about your MSO capabilities more strongly? It's obviously an area that you've been investing in and maybe gets a little bit less like air time than some of your other businesses. So maybe talk about that and what is their leverageable from other strategies you currently have and sort of capabilities, that would be a little bit helpful to hear more about that. Thank you.
Yeah. Thanks, Elizabeth. Thank you for the warm welcome and happy to discuss such an important part of our strategy going forward. So yeah, we're very interested in the MSO space. And the reason is at least two-fold. It's clearly in line with our support and interest in being in the forefront of the specialty pharma market. So where those products, the innovation of those products are coming to market, we expect to be helpful and involved across our entire business.
Yeah, good morning, guys, and Bob, welcome to the call. I'm going to get kind of way out, like look a little further out thinking about the acquisition today and your guys' presence in oncology. And Bob, as you kind of look forward to like the impact of the IRA changes and the impact it could have on Part B drug costs and the profitability of practices that dispense a lot of drugs. I guess, is it too early to think about that because there's still the opportunity for legislative change or kind of how are you guys thinking about how you support those practices given the headwinds that could come from IRA?
Yeah, George, thanks. Thanks for the welcome and thank you for the excellent question. So I would say it's not too early to think about that. So we have been thinking about IRA and modeling a wide range of scenarios of impact for IRA in Part B. As we look forward, not only with the RCA acquisition, but also our relationship with OneOncology, this is something that through innovation in the long run that this will be something that's not necessarily negative for the practices.
Thank you. Again, congrats to Bob. And I want to get a bit more specific on the specialty trend. I think we're hearing from payers that they're seeing a 3Q uptick and some of it is attributed to Part D. We also heard about commercial and specialty pharmacy. My question is, are you seeing an uptick in Q3 versus the first half where you're serving specialty pharmacies, we tend to think of that as low-margin specialty. And then you called out strength in specialty distribution, a higher-margin piece with providers and health systems. Is there an acceleration you saw in 3Q or is that simply continuation of the trend?
No, I would say and once again, this is Bennett. The fourth quarter we saw similar trends as we saw throughout fiscal '24, and honestly for the past several years. The specialty market, particularly for physicians and health systems, has been a key component and driver of our growth for a while. It's a really important segment. It's a part of the market where we play a really important role and add a lot of value. But no, we are not representing this as a deviation. It's a continuation of the good trends that we've seen for a while.
Hey, guys, thanks for taking my question. And Bob, official congratulations on taking the seat. I wanted to dig in a little bit more on the RCA transaction as it's a sizable move into other specialties outside of your core oncology focus. So with that in mind, can you walk us through your specialty roadmap, any other verticals to watch, or any opportunities on the checklist such as RCA's clinical trial strength that you're hoping to shore up? Thank you.
Hi, Stephanie, thank you for the question and for the congratulations. Yeah. So when we look at specialty expansion beyond oncology, we're looking for continued growth and innovation in that market and also the Part B components that are there that we can support. So the obvious one for Cencora is oncology, and that's where we've been for a very long time. And I'll also note we've been a leader in Retina for a very long time.
Thanks for taking my question. And, Bob, again, congrats. I want to take this a little bit further on the RCA stuff because there's been a lot of oncology deals done recently. It feels like there isn't maybe as much opportunity there. You are already a leader in retina, as you said. Is this a stepping stone? Is ophthalmology going to be the next sort of roll-up for you?
Yeah. Thanks, Kevin, for the excellent question. When it comes to RCA, what we've said in the prepared remarks, is RCA is the market leader here. So we're investing in a platform in Retina that we expect to continue to grow. They will grow by adding additional physicians and they will grow due to the strength of the pharmaceutical pipeline in Retina, which includes biosimilars coming to market.
Thanks very much. Well, I had a bunch of RCA questions too, but I'll try to make those brief. Just quickly on ophthalmology, specialty products or maybe the category overall, you're half of one of the leading manufacturers' distribution volume. Is that a similar share across the entire market? Are you half of the specialty market in ophthalmology?
Yeah. So as Bob said, we are a leader in that space and that we've been in for a long time and we feel really good about not only our position but the fact that we know RCA quite well because they've been a customer for some time.
Thanks. Could you speak a little bit to World Courier? Just give an update on fundamental demand trends across that business and customer base. And then, going back to sort of a little bit of an RCA question or related is on how do you balance investments in terms of an MSO type of investment versus a more direct relationship with biopharma and life sciences partners? I know it's all kind of intertwined but curious kind of how you think about that.
Sure. You rattled off a couple there and I'm going to try and make sure that we hit them all. I'll start with the Express Scripts one. No change there. A continuation of a good relationship with them. World Courier, that market continues to have some softness stemming from clinical trial development. But that being said, still it's a good growing business and you saw that in the quarter.
Yeah, Erin, I'll probably touch on the broader kind of biopharma focus. World Courier is a terrific business, a leading business, and it leads in clinical trial logistics. To the extent that clinical trial volumes continue to be down, even though they are beginning to grow, we feel great about the business.
And you did write off a bunch there. So I want to go back to one you asked about this versus biopharma services. We've always talked about looking for ways to build on our strength in specialty and to add to our services and solutions for manufacturers.
Good morning, and thanks for taking the questions. There was a really nice revenue acceleration quarter-over-quarter. And Bennett, you mentioned that it didn't seem like that was coming from specialty accelerating. So I guess the assumption that we have here is that that's mostly driven by GLP-1s. But is there anything outside of that piece that's worth calling out around that sequential acceleration of top line growth in the US Healthcare business?
Yeah. Hi, Allen. This is Laz Krikorian. So we definitely talked about GLP-1s. We continue to see strong growth in the GLP-1 class as sales of those products in the quarter increased 55% year-over-year and 14% on a sequential basis.
Yeah. Thanks for taking the question. Kind of an RCA question, but maybe more broadly about the MSO strategy. Obviously, Senator Warren had written a letter expressing some concerns about distributors owning group practices or owning these MSOs. Can you talk about sort of your thoughts on that and your response?
Yeah, thanks. This is Bob. I'll take that. Good questions. First of all, I start with we have utmost respect for the process that any governmental agency will go through to look at this and any senators who want to weigh in, we're happy to participate and be helpful there. To your question specifically, though, we view the MSO model as a way to really support community providers. So we believe our ownership and participation in the MSO space enhances patient access, enhances cost-effectiveness of healthcare, and allows Cencora to continue to support these very important providers. Thank you very much. Thanks all for the excellent questions and for the kind welcome. Again, I'm honored to be in this position. It's an incredibly strong company with an amazing culture, an incredible portfolio of customers, services, and geographies. We're very well positioned and we're going to continue to execute both operationally and strategically. So thank you all very much for your time.
Thank you all for your participation on today's call. That concludes the call. You may now disconnect your line.