Cencora Announces Common Share Repurchase From Walgreens Boots Alliance and Raises Fiscal 2024 Guidance

Rhea-AI Summary

Cencora (NYSE: COR) has announced a significant share repurchase agreement with Walgreens Boots Alliance Holdings, totaling approximately $400 million. This transaction is part of a broader strategy, with Cencora completing around $550 million in share repurchases in May 2024 alone. Additionally, Cencora has raised its fiscal year 2024 adjusted diluted earnings per share (EPS) guidance to a range of $13.35 to $13.55, up from the previous $13.30 to $13.50. The improved EPS forecast is attributed to a reduced share count, although it is partially offset by increased net interest expenses due to lower investment balances following the repurchases. Cencora, a global pharmaceutical solutions leader, is recognized on the Fortune 500 and Global Fortune 500 lists, with annual revenues exceeding $250 billion.

Positive

• Cencora has announced a $400 million share repurchase, signaling confidence in the company's financial stability.
• Raising FY 2024 EPS guidance to $13.35-$13.55 from the previous $13.30-$13.50 indicates expected higher profitability.
• Completed approximately $550 million in share repurchases in May 2024, reflecting a strong financial position.
• Cencora is ranked #11 on the Fortune 500 and #24 on the Global Fortune 500, showcasing its significant market presence.

Negative

• The share repurchase will lead to increased net interest expenses due to lower investment balances.
• The improved EPS forecast is only marginally higher than the previous guidance, suggesting upside potential.

Insights

Financial Analyst

Cencora's strategic decision to repurchase approximately $400 million worth of common stock from Walgreens Boots Alliance Holdings LLC highlights its intention to optimize shareholder value by reducing the number of outstanding shares, which can potentially increase the earnings per share (EPS). This repurchase adds to the $550 million already completed in May, indicating a robust buyback strategy. The company’s revised guidance for fiscal year 2024 adjusted diluted EPS to $13.35-$13.55, up from $13.30-$13.50, reflects a modest but positive adjustment. This is largely offset by higher net interest expenses due to decreased investment balances resulting from the share repurchase.

Share repurchases can signal confidence in the company's financial health and future prospects. It also suggests that the company views its stock as undervalued, making it a good investment for its capital. However, the increased net interest expense is a slight drawback as it indicates higher cost of capital. Investors should note that while the EPS guidance is slightly improved, the fundamental financial health of the company and its ability to generate cash flow to support such repurchase activities remain important assessments.

Market Research Analyst

From a market perspective, Cencora's actions can be seen as a proactive approach to enhance its market position. The repurchase of shares reduces the public float, which could mitigate market volatility and potentially improve stock price stability. The slight increase in EPS guidance, though not substantial, provides a positive signal to the market, indicating effective cost management and a focus on boosting shareholder returns.

It’s important to understand that stock buybacks can sometimes be viewed as a company having limited growth opportunities, directing excess cash to repurchase shares rather than investing in new ventures or acquisitions. However, Cencora's positioning within the Fortune 500 and its extensive revenue base suggests a stable and mature market position, where share repurchases can be an effective tool for managing equity value and satisfying shareholders.

CONSHOHOCKEN, Pa.--(BUSINESS WIRE)-- Cencora, Inc. (NYSE: COR) today announced that it has agreed to repurchase shares of its common stock from Walgreens Boots Alliance Holdings LLC in the amount of approximately $400 million in a private transaction.

Cencora is also raising its fiscal year 2024 adjusted diluted earnings per share guidance to $13.35 to $13.55, up from the previous range of $13.30 to $13.50, to reflect a lower weighted average diluted share count, partially offset by higher net interest expense due to lower investment balances as a result of cash being used for share repurchases. This transaction is an example of the Company’s opportunistic approach to share repurchases and the Company will now have completed approximately $550 million of share repurchases in the month of May.

About Cencora

Cencora is a leading global pharmaceutical solutions organization centered on improving the lives of people and animals around the world. We partner with pharmaceutical innovators across the value chain to facilitate and optimize market access to therapies. Care providers depend on us for the secure, reliable delivery of pharmaceuticals, healthcare products, and solutions. Our 46,000+ worldwide team members contribute to positive health outcomes through the power of our purpose: We are united in our responsibility to create healthier futures. Cencora is ranked #11 on the Fortune 500 and #24 on the Global Fortune 500 with more than $250 billion in annual revenue.

Cencora’s Cautionary Note Regarding Forward-Looking Statements

Certain of the statements contained in this press release, including, without limitation, those regarding the Company’s updated adjusted diluted earnings per share guidance, are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Securities Exchange Act”). Words such as “aim,” “anticipate,” “believe,” “can,” “continue,” “could,”, “estimate,” “expect,” “intend,” “may,” “might,” “on track,” “opportunity,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “strive,” “sustain,” “synergy,” “target,” “will,” “would” and similar expressions are intended to identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances and speak only as of the date hereof. These statements are not guarantees of future performance and are based on assumptions and estimates that could prove incorrect or could cause actual results to vary materially from those indicated. A more detailed discussion of the risks and uncertainties that could cause our actual results to differ materially from those indicated is included in the “Risk Factors” and “Management’s Discussion and Analysis” sections in the Company’s Annual Report on Form 10-K for the fiscal year ended September, 30, 2023 and elsewhere in that report and (ii) other reports filed by the Company pursuant to the Securities Exchange Act. The Company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by the federal securities laws.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240522040029/en/

Bennett S. Murphy

Senior Vice President, Head of Investor Relations & Treasury

610-727-3693

Bennett.Murphy@cencora.com

Source: Cencora

FAQ

What is the amount of Cencora's share repurchase from Walgreens Boots Alliance?

Cencora is repurchasing approximately $400 million worth of its common stock from Walgreens Boots Alliance.

How much did Cencora repurchase in shares in May 2024?

Cencora completed approximately $550 million in share repurchases in May 2024.

What is Cencora's updated EPS guidance for fiscal year 2024?

Cencora's updated EPS guidance for fiscal year 2024 is $13.35 to $13.55.

Why did Cencora raise its EPS guidance for FY 2024?

Cencora raised its EPS guidance due to a lower weighted average diluted share count, partially offset by higher net interest expenses.

What are the financial impacts of Cencora's $400 million share repurchase?

The share repurchase will reduce the share count, potentially increasing EPS, but also lead to higher net interest expenses due to lower investment balances.

What is Cencora's annual revenue?

Cencora has annual revenues exceeding $250 billion.