Okay. You can hear me. All right. Good. Let's get started. All right. Good morning, everybody. Thank you for our next presentation. We're obviously excited to have St. Corey here with us today. For those of you who don't know me, I'm Glenn Santangelo. I'm the analyst at Barclays that covers the stock. We recently picked up the stock a couple months ago, almost three months ago in December. But before that, I had covered this earlier in my career for over two decades. So I'm very excited to be back covering the company. Let me just do some quick introductions. We have the CFO to my right, Jim Cleary, who I think maybe many of you know, and to his right, Bennett Murphy, who's Senior Vice President, Head of IR and Enterprise Productivity. So I think he wears a number of different hats inside Sancora these days. So with that, why don't we sort of dive right into it. Jim Bennett, welcome. Thank you guys for joining us today. Thank you. Glad to have you back, Glenn. Okay, excellent. You know, maybe as a good place to start, why don't, Jim, I don't know if you just want to give us a quick level set on some of the recent fiscal first quarter results and kind of the guidance for the year and stuff like that, just to set the table, then we'll dive right in. Sure. Well, Glenn, first of all, it's fantastic

to be back here at your conference, and, you know, it's a great opportunity for us to meet with investors and for us to talk about our growth priorities and our strategic drivers. You know, we were pleased with our first quarter results, and, you know, we had nice growth. We had 21% growth in our U.S. segment and really kind of good performance across our U.S. segment. We were also very pleased during the quarter to be able to announce that we were going to do the One Oncology acquisition. And then we were also very, you know, pleased when we announced our quarterly results that we had closed that acquisition. And I'll say we feel, you know, very good about our MSO strategy. And during the quarter, we not only were able to announce One Oncology, but we also had, you know, very nice performance in our Retina Consultants of America business. You know, we were very pleased once we announced One Oncology that we were able to increase our operating income guidance and increased it on an enterprise level by 3.5 percentage points at the low end and the high end of the range, so we're now at 11.5% to 13.5%. And then also in our U.S. segment, able to increase our operating income guidance for the year to 14% to 16%. And so overall, we were very pleased with the first fiscal quarter results.

That's a good start to the year. All right, so why don't we dive right into that, into your U.S. healthcare solutions business. I mean, I think you just said you posted 5% revenue growth, but more importantly, the 21% operating profit growth. And what I found, you know, surprisingly, for a very short period of time, and it's always interesting kind of coming back into new coverage of the stock and where the expectations are, that people for a couple of hours at least viewed that 21% as sort of disappointing because it was slower than the 29% I think you reported the quarter before that. But as you know, there were a lot of moving pieces in there around M&A and sort of on the contracting front that may be screwing around with that quarterly cadence and the growth rate, which I think makes it harder for investors to sort of unpack all the pieces and actually get a better sense of what the underlying trend is. So maybe if you could just shed a little bit of light on that 21% operating profit growth you generated in the quarter and maybe disaggregate a couple of the pieces and help us just think about the core underlying trend. Sure.

Right, excellent question, Glenn. So we felt, as I said, very good about the quarter with that 21% growth in the U.S. And as Glenn mentioned when we announced that, The stock traded down for a bit, but swung back to where it was within two days. And what we see in that 21% is really broad-based good growth across our U.S. business. And even if we exclude the incremental quarter of RCA, because we didn't anniversary the RCA acquisition until the beginning of our second fiscal quarter. So if we exclude the incremental benefit of RCA, we still grew at the high end of our long-term guidance. And that even includes the headwind that we have from the loss of an oncology customer that was acquired by a competitor. And so, you know, we feel kind of, as you unpack those sorts of things, we feel very good about the U.S. performance during the quarter, you know, being at the high end of our long-term guidance range, even in spite of the loss of the oncology customer. And so we had great performance. Now, it wasn't at the same level of outperformance that we had seen in the fourth quarter where basically everything went right, but we still feel great about that 21% growth rate.

Okay, so let's just wind the clock forward and looking forward through some of those moving pieces. You talked about RCA, and I think you closed that deal in January of 2025, right? So now that's no longer, you know, we've now comped that. And Florida Cancer, I think we still have as a headwind for the next two quarters. And now you've recently increased the acquisition of One Oncology, right? So help us think about sort of those headwinds and tailwinds as we think about, you know, the remaining sort of three fiscal quarters.

in your year sure so as you look at our so we're certainly of q1 in the books which had the the stub period from RCA which is Jim Center and he's called November if you take the two the RCA tailwind and then the Florida cancer headwind those two net out to a 1% headwind to our full year operating income as you look at the balance of our fiscal year Q2 would be the lowest growth quarter because you think about the annualization of RCA on January 1 as you said, and then the one oncology transaction closed on effectively February 1, so you get two months of one, the initial two months of one oncology, you know, three months in each of the subsequent two quarters. And then, as you said, Florida Cancer has two more quarters, so we begin to annualize that on July 1, which would then, you know, create a more normal trajectory in the

fourth quarter. Okay, perfect. All right, listen, you know, the specialty deals, they always take all the oxygen out of the room. And what I wanted to do before we talk about those in a little bit

more detail is just sort of focus on the core a little bit. You know, can we talk about sort of

the volumes that you've been seeing in the underlying business and how they've sort of trended, right? People are starting to say, is the job market starting to wobble? And, you know, how have you, if you could just talk about the second half of calendar 25 and the outlook for sort of 26, what's sort of embedded within your guidance?

Yeah, at 25, certainly we saw extremely strong growth, which, as we said, on our November earnings call, we'd start to annualize and comp against higher contribution periods. As I think about turning into calendar 26, certainly IQVIA data showed softness in January, which a number of the sales hours attributed to weather and things like that. But as I think about our business overall and labor in the big picture, it's that pharmaceuticals have historically been generally inelastic in terms of the demand for them because they are the most effective course of care. A lot of users are on government programs, so there is more support, particularly Medicare. And then there is good commercial coverage. So we've seen, you know, over the various economic cycles over the past 25 years, we've seen that inelasticity of pharmaceutical demand generally play out over cycles like this.

So, I mean, I guess the simple take is you haven't seen any sort of any volatility to that growth rate relative to some of the macroeconomic news that's transpired.

The macroeconomic, there's a lot of macroeconomic news. Yeah, there's a lot of macroeconomic news. I think the truth holds that over cycles we see general inelasticity of demand.

All right. Excellent. Maybe if we could just focus on generic pricing for a second, that's always kind of important. And, you know, we've reported in our research that it feels like to us, you know, as we move from 25 into 26, that the generic pricing has gotten maybe one turn a little bit better as opposed to one turn a little bit late. And for those of you who are here, at lunchtime we're hosting a panel with one of the consultants we like to use in this space to try to dig into the generic manufacturers and pricing in a little bit more detail. And so I don't know if there's any sort of high-level commentary you can make with respect to generic pricing and any recent trends that you might be seeing in that business.

Yeah, Glenn, great question. We don't really have anything new to call out there. We've been talking for some time now about the moderation of generic deflation, and that's still what we're seeing as manufacturers have been prioritizing their portfolios. There's also been some increased inspections and those sorts of things. And so we just kind of continue to see a moderation of generic deflation and that sort of price stability. So thanks.

And then maybe, I don't know if there's anything else to call out on sort of the generics or sort of biosimilar pipeline. One of the things that is new and differentiated when we think about our coverage is we also cover some of the generic and biosim manufacturers. And, you know, for example, we hosted Teva this morning. They're already talking about, you know, 10 new biosimilars. They plan to have the market by 2027. And we look at the pipeline of sort of complex generics that we have a steady diet coming from now through 2030, which seems like it just is a natural sort of ongoing tailwind that just seems to sort of get blended into everything else within your business. But, you know, when you think about maybe what that pipeline of generics, complex generics, biosimilar is like, how do you think about that sort of, you know, layering itself into your business over the coming years?

Yeah, it's really a great opportunity for us, and it's one of the really strong things about our business model. As we look over the next several years, we'll really benefit from generics and biosimilars, but also they create room for innovation in the market also. And so just a great thing about our business model is we'll benefit from innovation, and at the same time will benefit from generic and biosimilars. And we see that our sweet spot in biosimilars is in Part B, and it's an area where we've been quite successful, and it's an area that also plays into our MSO strategy.

Yeah, and as I think about what brings investors to our company industry often is the ability to get access or exposure to specialty coming to market and then the added benefit of as products go generic or as products go buy somewhere, that not only being good for us from a commercial standpoint, but it's also good for patients and good for the health care system overall in that it takes cost out to make room for that innovation. Okay. Excellent point.

Maybe can we talk about sort of the IRA pricing issues? And, you know, when we were doing our work in the fall and we started talking with reengaging with investors on these names, it was pretty apparent to us that one of the things that people were concerned about, right, was the impact of lower pricing on certain branded pharmaceuticals from the IRA. And would these companies be able to renegotiate their fee-for-service agreements, you know, effectively enough to sort of make themselves whole? And, you know, not only yourselves, but your two other competitors have sort of commented that they sort of feel comfortable around that. I mean, is there any sort of message or anything you want to deliver to the investors with respect to the IRA pricing changes scheduled for this year and next year and Sancor's sort of readiness to, you know, embrace those pricing changes?

Sure. Well, excellent question. And so we have terms in our contracts that indicate if there are meaningful reductions in price that we're able to renegotiate with the manufacturers. And we've seen very good success. We've seen very good success this year. and we have a strong strategic global sourcing department, and what we really look at is maintaining gross profit dollars. So whether it was the negotiations that we went through this year or the insulin-related negotiations that we went through some time back, we've seen good success maintaining gross profit dollars.

So you feel like you've had enough of a lead time to sort of have those conversations. Okay, excellent. All right. Maybe just one more on sort of the core business. It was around the public's loss this year. I mean, I think people sort of always generally ask the question, you know, fortunately we haven't seen many contracts move, right, in the last X amount of years, but people always ask, is there anything else on the contracting front, anything else that we should be mindful of when we think about, you know, contracting over the next kind of couple of years?

No, and I think, I mean, that example would be something more tying back to Sincorra strategy and our priorities and focus areas. But as I look forward, no, there's no contract that we've disclosed expiring in the next 12 months.

All right. Maybe let's shift over to specialty.

Big investments, you know, in the last sort of 18 months in RCA and One Oncology.

And, you know, Jim, you talked about the MSO strategy a little bit. But maybe for those that are maybe a little bit less familiar, if you could just maybe spend a minute, you know, talk about those deals, talk about the MSO strategy, and then we can maybe segue into where we go from here. But maybe just it's worth spending a minute to bring people up to speed on where we're at.

Yeah, and so as I said earlier, we feel very good about our MSO strategy, and it's really the natural evolution of the most successful part of our business. Of course, the specialty distribution has been a growth driver for us for quite some time. And then we got into businesses like GPO. And so getting into the management services is really the natural evolution of this business. And we feel very good about our experiences thus far. We've owned RCA for over a year now and are very pleased with the business, are very pleased with all aspects of the business. The clinical trial site part of the business has exceeded our expectations. The growth in attracting top doctors has really exceeded expectations, and we had a very good quarter. And, of course, we made the initial 35% investment in One Oncology, and then we, of course, acquired most of the rest of it that we announced on about February 2nd when we announced our earnings. And we feel that the opportunities for synergy and working together between RCA and One Oncology is quite strong, whether it be in terms of clinical trial sites, whether it be in terms of back office functions such as revenue cycle management and IT and staffing, whether it be longer term things like data and analytics. And so we feel very good about the way that we're prioritizing growth-oriented investments. And that's one of Bob's kind of four strategic drivers for the business is prioritizing growth-oriented investments. And this is just a great example for that. And it just is good for our company, but also we feel that these businesses are just excellent sites of care and very efficient sites of care and so really good for patients also.

Yeah, I think the – as you think about Sancora, you think about pharmaceutical-centric, and you think about specialty. And the MSOs that we've moved into are retina, which is predominantly pharmaceutical-centric course of care, and oncology, which is also predominantly pharmaceutical course of care, and the largest part of the physician-administered part of the market. And we think those are the right places for us to play. We think that's where we can be really good strategic partners. We have long-term distribution relationships. We have long-term GPO relationships. And this gives us an extension of those relationships into the MSO stream.

Bennett, those are such important points that I think as you look at Sencora and what you'll see us do, you know, kind of two of the key things are strengthening our position and specialty. And then also you'll see that, you know, kind of all the key moves we make will be pharmaceutical-centric. And so that's what, you know, kind of makes kind of what we're doing with RCA and One Oncology just is, you know, so well aligned with those two things. And just one other thing that I didn't mention is just, you know, how pleased our company has been with the strength of the management teams also.

And maybe that's a good segue into my next question because it seems like from my perspective, and, Ben, I think you were sort of touching on this a little bit, when I look at sort of Sancor and McKesson, it feels like you're pursuing somewhat similar strategies where it feels like Cardinal has done acquisitions that are maybe somewhat differentiated maybe from what you were discussing. And maybe my question is not, is one strategy better than the other? I'm not asking you to opine on that. But maybe do you believe that you guys are maybe heading in slightly different directions? And you sort of, I think you and Jim were just sort of outlining why, you know, yours is more of a pharmaceutical-centric strategy. If you could maybe just draw that differentiation for people, because I think that's important.

Having the position that we have in specialty means we have exposure to all the different therapy verticals that exist within the physician-administered market. There are a number of great customers across that landscape that we are very happy to serve as customers. as we think about where we want to extend ourselves into the MSO space, the retina and oncology being really the only two specialties that are predominantly pharmaceutical-centric gives us significant confidence strategically.

All right, we've got three minutes left, so we're going to fly through the last three or four questions, if that's okay. All right, the longer-term outlook for acquisitions in this market, I mean, you just announced a major deal last month, so I'm not asking when the next one is. But, you know, could you sort of comment on the market and how we should think about it, even beyond fiscal 26? Are you starting to see upward pressure for acquisition multiples, or do you think there will be ample opportunity in the future? Any high-level thoughts?

Yeah, so very quickly, we talked about this before, strengthening our position and specialty, pharmaceutical-centric. We now have two very strong platforms in terms of RCA and one oncology. And so what I would expect to see is kind of bolt-on, add-on investments there, but nothing of that size in the MSO market because we have two leading platforms now.

All right, just shifting on to your other segment, a little bit of mixed emotions for you, maybe seeing the MWI business go. For those of you who don't know, Jim used to be the CFO of MWI when it was acquired by Sancora. And so, okay, well, that's kind of gone. But there are a couple of other assets in there, Proforma, some consulting businesses that are still maybe you're considering strategic alternatives. Any update on that other segment?

Yeah, let me be quick there. In November, we set up Other, and these are very good businesses, but they don't bring competitive advantage to the balance of the enterprise. And so we think that they'll be even better off if they're focused on the markets that they are in. And MWI, for instance, has performed very well for a long time, but we think by coming together with Cvetris, It can really kind of focus on the animal health space, have a lot more efficiency, can bring affordability to the customer base, and so we kind of feel very good at the direction we're going in there. The other businesses in other are much smaller, but you'll see us continue to do those sorts of things with that business to look at strategic alternatives so that they can be more focused on those markets. And one of the businesses, our legacy U.S. consulting business, we're now accounting for as an asset held for sale because of the progress there.

The leverage on the balance sheet, it sort of ticked up post the one oncology deal. I mean, and I think you've talked about maybe suspending some share repo in the interim to bring that leverage back down to a range that you're more comfortable with. Can you just remind people, you know, do you have any specific leverage targets in mind and how we should think about repo? and should we just assume it continues in fiscal 27?

Yeah, and so the way to think about that is for a period of time we're prioritizing, de-leveraging. We have very strong relationships with the rating agencies. And then over time, we'll get back to balanced capital deployment, which we've always focused on, which is really continuing to make the investments in the business, looking at strategic acquisitions, and we talked about the MSO strategy there. We'll always look at opportunistic share repurchases that we'll get back to after we prioritize the deleveraging and then also have a reasonable growing dividend rate. So thank you.

You touched on the guidance. You raised the operating profit guidance in the U.S. business on 1Q. It's hard to believe that we're almost halfway through your fiscal year 2026, right? I mean, any sort of high-level thoughts with respect to the guidance or anything you want to share with people on maybe what motivated you to raise that guidance at the time, given it was just your fiscal first quarter?

Yeah, we raised the guidance because we had closed the acquisition of One Oncology. And then what I'll also say, in the past six months, we've raised our long-term guidance twice, which is 7% to 10% organic operating income growth, 3% to 4% a year from capital deployment. and so a 10% to 14% long-term guide.

All right. Well, listen, we're out of time, but I want to give you guys the last word. I mean, there seems like things are clearly moving in the right direction. I mean, in the core trends, you have the strong growth in specialty. We talked about the steady stream of generics and biosimilars. What sort of last word do you want to leave our investors with today and anything else that we didn't cover that you think you just want to conclude with?

Glenn, I think that we covered it well. Your questions were excellent. We feel good about the first quarter. We were pleased to increase our long-term guide twice in the last six months. We feel very good about the execution of our teams, particularly across the U.S. segment. And so we're pleased with the progress that we've been making in many areas, including the MSO strategy, which we've talked a lot about.

Jim Cleary, Bennett Murphy, thank you guys very much. Really appreciate it. Thank you, Glenn.