Cencora outlines a focused 2026 strategy centered on specialty distribution and MSO platforms, while reclassifying non-core businesses into 'other' and pursuing selective divestitures or partnerships.
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What are Cencora's strategic priorities going forward, including the reclassification of businesses into 'other', potential divestitures or partnerships, plans for MSO growth and acquisitions, and expectations for 2026 and beyond?
Cencora’s strategy is becoming more focused: concentrate capital and management attention on pharmaceutical distribution, specialty healthcare, and related physician-services platforms, while evaluating strategic alternatives for businesses that fit less closely with that direction. Management’s stated growth priorities are to lead with market leaders, enhance patient access to pharmaceuticals, and strengthen the company’s position in specialty. 1
Cencora conducted a portfolio review covering businesses in its U.S. and International Healthcare Solutions segments and identified several activities that do not align as closely with its future strategy. 2
Those businesses are:
Cencora has grouped these businesses into “other” for financial-reporting purposes to provide greater transparency while it evaluates strategic alternatives. 2 The classification does not imply that management considers these businesses poor or distressed; management specifically said they are not necessarily “bad businesses” or troubled, but that they do not align as closely with the areas where Cencora believes it can differentiate and win. 3
The likely strategic outcomes include divestitures, partnerships, or other forms of ownership restructuring, but management has not committed to a specific transaction or timetable. The stated objective is to identify “the right long-term partners” that can maximize the potential of those businesses while Cencora concentrates on its remaining strategic priorities. 2
This is best interpreted as a portfolio-discipline initiative, rather than a broad retreat from healthcare services. Cencora is retaining businesses such as Alliance Healthcare, World Courier, and NMR because they have differentiated capabilities in areas including European specialty distribution, cell and gene therapy logistics, and Canadian hub-and-spoke services. 4
Specialty is the core strategic priority. Management said specialty has been accretive to operating-income growth and expects that to continue because of innovation in specialty markets and Cencora’s ongoing investments in its MSO strategy. 5
The company’s specialty approach extends beyond pharmaceutical distribution. It also includes wraparound services such as GPO capabilities and physician-practice services, which management said have been accretive to margins. 6 This gives Cencora the opportunity to earn returns from a broader set of services surrounding specialty pharmaceuticals rather than relying solely on distribution economics. 6
Cencora is also investing heavily in infrastructure to support the specialty market. It announced approximately $1 billion of investments through 2030, including a second national distribution center and expanded specialty-distribution capacity, including additional cold-chain storage. 7 Fiscal 2026 capital expenditures are expected to be approximately $900 million, including supply-chain and information-technology investments supporting digital transformation. 8
The company’s stated objective is therefore not merely to participate in specialty growth, but to build the infrastructure, clinical capabilities, logistics, and physician relationships needed to remain a leading specialty platform. 71
Cencora intends to continue investing in its MSO platforms within specialty. Management highlighted the completed acquisition of Retina Consultants of America, or RCA, and the pathway toward full ownership of OneOncology as central elements of this strategy. 3
RCA has reportedly performed well since its acquisition, benefiting from both organic and inorganic growth. OneOncology has also continued to grow organically and through acquisitions, contributing positively to Cencora’s distribution and GPO businesses through increased sales to physician practices. 9
The strategic value of the MSO model is broader than revenue growth. Cencora believes the platforms can make care easier for patients and physicians by:
Management also sees opportunities to integrate capabilities across RCA and OneOncology. Potential synergies include sharing clinical-trial expertise between retina and oncology practices and leveraging common back-office functions such as revenue-cycle management. 10
The company has not provided a specific acquisition target list or numerical acquisition plan. However, the strategy clearly includes inorganic growth: management described investments as both organic and inorganic, and said OneOncology has continued to grow through acquisitions. 19
The most concrete near-term transaction expectation is the potential acquisition of the remaining interest in OneOncology. Management said capital deployment is unchanged and that acquiring the remainder of OneOncology is highly likely and already incorporated into the long-term guidance framework. 11
Thus, the likely sequence is:
The key qualification is that management emphasized discipline and strategic fit rather than acquisition volume. Capital will be directed to areas where Cencora believes it can differentiate, win, and earn attractive returns on invested capital. 36
In addition to specialty and MSOs, Cencora identified four strategic drivers supporting execution:
Cencora is also emphasizing its ability to serve market-leading pharmaceutical manufacturers and healthcare providers. Management’s objective is to use the company’s infrastructure and differentiated capabilities to improve patient access while maintaining a pharmaceutical-centric strategy. 12
The company has also sought to improve the predictability of its economics by rebalancing contracts across brand, generic, and specialty products so that it earns a fair return across changing product mixes. 13 Management separately noted that generic-price deflation has moderated, while brand, specialty, and generic businesses all remain valuable parts of the portfolio. 5
Management’s fiscal 2026 outlook remains strong, although reported growth will be affected by portfolio and comparison-related factors.
Cencora expects fiscal 2026 adjusted operating-income growth in the U.S. Healthcare Solutions segment of 9% to 11%. 11 The company estimates that the loss of an oncology customer, partly offset by the additional quarter of RCA contribution, creates a net 1% headwind; excluding that headwind, underlying U.S. growth guidance would be 10% to 12%. 11
The oncology-customer loss will affect the first three quarters of fiscal 2026, with growth expected to improve in the fourth quarter as Cencora begins to lap the loss. 14
Cencora expects approximately $3 billion of adjusted free cash flow in fiscal 2026. 14 It expects approximately $900 million of capital expenditures, reflecting elevated investment in distribution infrastructure and digital systems. 8
The company also contemplates approximately $1 billion of share repurchases during fiscal 2026, with an expected average share count of approximately 194 million shares. 8 At the same time, management has stated that capital deployment priorities have not changed and that the potential acquisition of the remaining OneOncology interest is already contemplated in the long-term outlook. 11
Fiscal 2026 interest expense is expected to be $315 million to $335 million, partly because debt used to fund the RCA acquisition was issued in December 2024 and therefore produces a full additional quarter of interest expense in fiscal 2026. 8
Cencora raised its long-term adjusted operating-income growth guidance to 6% to 9%, from the prior range of 5% to 8%, and raised its long-term adjusted EPS growth guidance to 9% to 13%. 114
Management’s confidence rests on several factors:
The company acknowledged that the “law of large numbers” may gradually make high growth more difficult as the business expands, but management nevertheless expressed confidence in its ability to continue creating value through core pharmaceutical distribution and related services. 11
Cencora’s forward strategy is focused expansion rather than indiscriminate expansion. The company is streamlining peripheral or less strategically aligned activities through the “other” classification, while directing capital toward specialty distribution, specialty infrastructure, physician-practice platforms, and MSO ownership. 327
The most important strategic assets are likely to be the specialty ecosystem and the MSO platforms, particularly RCA and OneOncology. Their value comes not only from direct earnings growth but also from reinforcing Cencora’s distribution, GPO, clinical-trial, physician-practice, and patient-access businesses. 9106
For 2026, the principal risks to reported growth are the lost oncology customer, higher interest expense, substantial infrastructure spending, and the need to integrate and fund further MSO expansion. 814 Nevertheless, management’s guidance implies that these pressures are viewed as manageable and consistent with continued strong underlying growth, while the higher long-term guidance indicates that Cencora believes its specialty and MSO strategy can support durable value creation beyond fiscal 2026. 111
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