(Reuters) – Drug distributor Cencora raised its annual profit outlook on Wednesday, betting on strong demand for costly specialty medicines that treat diseases such as cancer and rheumatoid arthritis.
The Pennsylvania-headquartered company also beat first-quarter profit and revenue estimates, sending shares up nearly 3% in premarket trading.
Cencora has benefited from strong sales of specialty drugs and cheaper versions of complex biotech drugs called biosimilars, even as prices of generic medicines keep falling due to intense competition.
The distributor, however, had said deflation in generic medicines has “moderated” over the last couple of years and that it is now “less of a headwind”.
“As we look ahead to the rest of our fiscal year, we are focused on executing our pharmaceutical-centric strategy and capturing opportunities…within the ever-changing healthcare landscape,” CEO Steven Collis said in a statement.
Cencora has reported “a good start” to FY2024 and has “delivered against high expectations”, Evercore ISI analyst Elizabeth Anderson said in a note.
The company now expects 2024 adjusted earnings per share between $13.25 and $13.50, compared to the range of $12.70 to $13.00 forecast previously. According to LSEG data, analysts were expecting an annual profit of $12.91 per share.
Cencora’s revenue comes mainly from its U.S. healthcare business, which reported sales of $65.18 billion in the first quarter ended Dec. 31, up nearly 16% from the previous year.
Total revenue was $72.25 billion, topping estimates of $69.17 billion. Cencora now forecasts 10% to 12% revenue growth in FY2024, up from the previous forecast of 7% to 10%.
On an adjusted basis, Cencora reported a profit of $3.28 per share, beating LSEG estimates of $2.89 per share.
(Reporting by Mariam Sunny in Bengaluru; Editing by Tasim Zahid)
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