Cencora’s adjusted gross margin expanded 61 basis points during fiscal Q3 2026 as the February acquisition of OneOncology strengthened the economics of its U.S. Healthcare Solutions business, more than offsetting some of the margin pressure created by rapidly growing sales of lower-margin GLP-1 pharmaceuticals.
Adjusted gross profit increased 23.2% to approximately $3.5 billion, while adjusted gross profit as a percentage of revenue reached 4.16%, up from 3.55% in the prior-year quarter.
Cencora attributed the margin expansion primarily to higher U.S. Healthcare Solutions gross margin following the OneOncology acquisition. The benefit was partially offset by increased sales of GLP-1 drugs, which the pharmaceutical distributor said carry lower gross profit margins.
On a GAAP basis, gross profit increased even faster, rising 24.1% to $3.61 billion. GAAP gross margin increased 66 basis points to 4.26% from 3.60%, benefiting from both segment gross-profit growth and a higher LIFO credit during the quarter.
Revenue increased 5.1% to approximately $84.8 billion, with U.S. Healthcare Solutions revenue increasing 4.9% and International Healthcare Solutions revenue increasing 5.9%.
Within U.S. Healthcare Solutions, revenue reached $74.9 billion, supported by overall pharmaceutical market growth, increased specialty-product sales to health systems and physician practices, and higher sales of drugs labeled for diabetes and weight loss in the GLP-1 class.
The segment’s operating income increased much faster than revenue, rising 15.9% to $966.2 million. Cencora attributed the increase to higher gross profit generated by OneOncology and increased pharmaceutical sales, partially offset by higher expenses and the prior-year loss of an oncology customer.
Adjusted operating income companywide increased 17% to approximately $1.2 billion, while adjusted operating margin rose 15 basis points to 1.46%. Adjusted operating expenses increased 26.8% to $2.3 billion, primarily because of expenses associated with OneOncology.
The acquisition has also increased Cencora’s financing costs. Net interest expense rose $58.9 million to $140.7 million, primarily because of senior notes and variable-rate term loans issued to finance part of OneOncology and because of lower interest income.
During the first nine months of fiscal 2026, Cencora issued $3 billion of senior notes and $1.5 billion of term loans to finance a portion of the February acquisition.
Despite the higher interest burden, adjusted diluted EPS increased 12% to $4.48 from $4.00, and GAAP diluted EPS increased 11.9% to $3.94 from $3.52.
Cencora also repurchased approximately $1 billion of stock during fiscal Q3. Diluted weighted-average shares declined 0.7% year-over-year to 193.9 million, with the company attributing the reduction to opportunistic share repurchases.
Following the quarter, Cencora raised its fiscal 2026 adjusted diluted EPS outlook to $17.75 to $17.95 from $17.70 to $17.90.
The results highlight an important change in Cencora’s earnings mix. GLP-1 demand is helping increase pharmaceutical volumes but carries lower margins, while the OneOncology acquisition is providing a higher-margin specialty oncology component that has helped lift consolidated gross profitability.
KEY QUOTES:
“Our third quarter results reflect the power of our pharmaceutical-centric strategy and the continued execution of our team members. Our strong performance and confidence in our outlook enabled us to raise our fiscal 2026 guidance, underscoring the value we deliver for our stakeholders.”
“Our investments in specialty, digital transformation and talent are strengthening our ability to support our customers across the healthcare ecosystem while positioning Cencora for sustainable long-term growth. The capabilities we have built, and the strength of our core businesses provide a solid foundation for continued growth as we close fiscal 2026.”
Robert P. Mauch, President and CEO of Cencora
