Cencora Reports Fiscal 2024 First Quarter Results
- 15.0% increase in revenue to $72.3 billion for the first quarter of fiscal year 2024
- 21.0% increase in adjusted diluted EPS to $3.28
- U.S. Healthcare Solutions revenue grew by 15.9%
- International Healthcare Solutions revenue grew by 6.9%
- Fiscal year 2024 expectations include revenue growth of 10-12% and adjusted diluted earnings per share of $13.25 to $13.50
- None.
Insights
The reported 15.0% year-over-year revenue increase to $72.3 billion for Cencora, Inc. signifies robust growth, outpacing inflationary pressures and potentially indicating effective business strategies and market expansion. The raised adjusted diluted EPS guidance from $12.70-$13.00 to $13.25-$13.50 suggests confidence in continued fiscal health and operational efficiency. This upward revision is particularly noteworthy for investors as EPS is a critical measure of profitability and often influences stock valuations.
From a financial perspective, the 30.0% increase in operating income and the reduction in net interest expense by 11.8% reflect strong cost management and strategic financial structuring. The decrease in diluted shares outstanding by 2.2% due to share repurchases could be viewed positively by the market, as it often leads to higher EPS and can be a signal of undervalued stock or a bullish stance by the company's management regarding future performance.
Examining the sector-specific performance, the U.S. Healthcare Solutions segment's 15.9% revenue growth and the International Healthcare Solutions segment's 6.9% growth highlight the company's strong domestic performance while also indicating significant international potential. The specific mention of increased sales in products labeled for diabetes and/or weight loss in the GLP-1 class, COVID-19 vaccines and specialty products to physician practices and health systems provides insight into market trends and demand drivers.
Furthermore, the strategic acquisition of PharmaLex and expansion in global specialty logistics underscore Cencora's commitment to diversifying services and enhancing its international footprint. These moves could potentially mitigate risks associated with market volatility and regional economic fluctuations, offering a more stable growth trajectory for the company.
The increased sales of GLP-1 class products and COVID-19 vaccines are indicative of evolving healthcare needs and Cencora's ability to adapt its product portfolio accordingly. The GLP-1 class products, which are used for diabetes and weight loss management, are becoming increasingly relevant due to rising global diabetes prevalence. The profitability from COVID-19 vaccines points to the company's successful navigation of the pandemic-related healthcare environment.
However, the noted decline in the U.S. Healthcare Solutions gross profit margin related to these products, due to their lower gross profit margins, could be a concern for long-term profitability if not offset by higher-margin products or volume growth. It will be important to monitor how Cencora balances its product mix and pricing strategies to maintain profit margins while meeting market demand.
Revenue of
First Quarter GAAP Diluted EPS of
Adjusted Diluted EPS Guidance Range Raised to
Cencora is updating its outlook for fiscal year 2024. The Company does not provide forward-looking guidance on a GAAP basis, as discussed below in Fiscal Year 2024 Expectations. Adjusted diluted EPS guidance has been raised from the previous range of
“Cencora had an exceptional start to our fiscal 2024 year, delivering strong results as we capitalize on the strength of the trends in our business, continue to prioritize customer centricity and enhance the services we provide, further differentiating the value we bring to our customers and stakeholders,” said Steven H. Collis, Chairman, President, and Chief Executive Officer at Cencora.
“As we look ahead to the rest of our fiscal year, we are focused on executing on our pharmaceutical-centric strategy and capturing opportunities through the robust capabilities our business offers within the ever-changing healthcare landscape,” continued Mr. Collis. “I remain inspired by our team members’ drive to deliver on our purpose by demonstrating passion and adaptability as we work through a complex, global healthcare system to improve lives every day.”
First Quarter Fiscal Year 2024 Summary Results
|
GAAP |
Adjusted (Non-GAAP) |
Revenue |
|
|
Gross Profit |
|
|
Operating Expenses |
|
|
Operating Income |
|
|
Interest Expense, Net |
|
|
Effective Tax Rate |
|
|
Net Income Attributable to Cencora, Inc. |
|
|
Diluted Earnings Per Share |
|
|
Diluted Shares Outstanding |
201.8M |
201.8M |
Below, Cencora presents descriptive summaries of the Company’s GAAP and adjusted (non-GAAP) quarterly results. In the tables that follow, GAAP results and GAAP to non-GAAP reconciliations are presented. For more information related to non-GAAP financial measures, including adjustments made in the periods presented, please refer to the “Supplemental Information Regarding Non-GAAP Financial Measures” following the tables.
First Quarter GAAP Results
-
Revenue: In the first quarter of fiscal 2024, revenue was
$72.3 billion U.S. Healthcare Solutions and a 6.9 percent increase in revenue within International Healthcare Solutions.
-
Gross Profit: Gross profit in the first quarter of fiscal 2024 was
$2.5 billion
-
Operating Expenses: In the first quarter of fiscal 2024, operating expenses were
$1.6 billion $0.1 billion
-
Operating Income: In the first quarter of fiscal 2024, operating income was
$822.9 million
-
Interest Expense, Net: In the first quarter of fiscal 2024, net interest expense of
$40.6 million Egypt .
- Effective Tax Rate: The effective tax rate was 23.0 percent for the first quarter of fiscal 2024 and included a discrete tax expense. The effective tax rate was 19.8 percent in the prior year quarter.
-
Diluted Earnings Per Share: Diluted earnings per share was
$2.98 $2.33
- Diluted Shares Outstanding: Diluted weighted average shares outstanding for the first quarter of fiscal 2024 were 201.8 million, a decrease of 2.2 percent versus the prior fiscal year first quarter primarily as a result of share repurchases.
First Quarter Adjusted (non-GAAP) Results
-
Revenue: In the first quarter of fiscal 2024, revenue was
$72.3 billion U.S. Healthcare Solutions and a 6.9 percent increase in revenue within International Healthcare Solutions. On a constant currency basis, revenue was up 15.2 percent, reflecting 8.7 percent constant currency growth in International Healthcare Solutions revenue.
-
Adjusted Gross Profit: Adjusted gross profit in the first quarter of fiscal 2024 was
$2.4 billion U.S. Healthcare Solutions gross profit margin related to increased sales of products labeled for diabetes and/or weight loss in the GLP-1 class, which have lower gross profit margins, partially offset by increased sales of COVID-19 vaccines, which have higher gross profit margins.
-
Adjusted Operating Expenses: In the first quarter of fiscal 2024, adjusted operating expenses were
$1.5 billion
-
Adjusted Operating Income: In the first quarter of fiscal 2024, adjusted operating income was
$885.7 million U.S. Healthcare Solutions and a 16.3 percent increase in International Healthcare Solutions. On a constant currency basis, the Company’s adjusted operating income increased 21.6 percent compared to the prior year quarter. On a constant currency basis, International Healthcare Solutions segment operating income increased 20.2 percent. Adjusted operating income as a percentage of revenue was1.23% in the fiscal 2024 first quarter, an increase of 6 basis points when compared to the prior year quarter.
-
Interest Expense, Net: No adjustments were made to the GAAP presentation of net interest expense. In the first quarter of fiscal 2024, net interest expense of
$40.6 million Egypt .
- Adjusted Effective Tax Rate: The adjusted effective tax rate was 21.0 percent for the first quarter of fiscal 2024 compared to 19.1 percent in the prior year quarter.
-
Adjusted Diluted Earnings Per Share: Adjusted diluted earnings per share was
$3.28 21.0% increase compared to$2.71
- Diluted Shares Outstanding: No adjustments were made to the GAAP presentation of diluted shares outstanding. Diluted weighted average shares outstanding for the first quarter of fiscal 2024 were 201.8 million, a decrease of 2.2 percent versus the prior fiscal year first quarter primarily as a result of share repurchases.
Segment Discussion
The Company is organized geographically based upon the products and services it provides to its customers under two reportable segments:
International Healthcare Solutions
Revenue in International Healthcare Solutions was
Recent Company Highlights & Milestones
-
Cencora’s premier global specialty logistics business announced expansion of storage capacity and cold chain capabilities with three new transport stations in
the United States . - Cencora earned a top score in Human Rights Campaign Foundation’s 2023-2024 Corporate Equality Index.
- On January 30, 2024, Cencora released its 2023 ESG Reporting Index and microsite, detailing the impact of its environmental, social, and governance programs and progress. For the sixth year in a row, selected information within the 2023 report was assured by ERM Certification and Verification Services.
Fiscal Year 2024 Expectations
The Company does not provide forward-looking guidance on a GAAP basis as certain financial information, the probable significance of which cannot be determined, is not available or cannot be reasonably estimated. Please refer to the Supplemental Information Regarding Non-GAAP Financial Measures following the tables for additional information.
Fiscal Year 2024 Expectations on an Adjusted (non-GAAP) Basis
Cencora is updating its fiscal year 2024 financial guidance to reflect its expected strong business performance for the full fiscal year, including the incremental contributions from commercial COVID-19 vaccine distribution in the first quarter. The Company’s previously communicated expectations for exclusive COVID-19 treatment contributions remain unchanged. The Company now expects:
-
Revenue growth to be in the range of 10 to 12 percent, up from the previous range of 7 to 10 percent;
-
U.S. Healthcare Solutions revenue growth to be in the range of 11 to 13 percent, up from the previous range of 7 to 10 percent; and
-
-
Adjusted diluted earnings per share to be in the range of
$13.25 $13.50 $12.70 $13.00
Additional expectations now include:
-
Adjusted consolidated operating income growth to be in the range of 8 to 10 percent, up from the previous range of 4 to 6 percent. Excluding certain contributions related to COVID-19, adjusted consolidated operating income growth to be in the range of 11 to 13 percent, up from the previous range of 7 to 9 percent;
-
U.S. Healthcare Solutions segment operating income growth to be in the range of 9 to 11 percent, up from the previous range of 4 to 7 percent. Expectations for segment operating income growth excluding exclusive COVID-19 therapy contributions to be in the range of 12 to 14 percent, up from the previous range of 7 to 10 percent; - International Healthcare Solutions segment operating income growth to be in the range of 5 to 8 percent, up from the previous range of 1 to 4 percent;
-
-
Net interest expense to be in the range of
$185 $215 million $210 $230 million - For additional details regarding updated guidance expectations on a constant currency and ex-COVID-19 contribution basis, please refer to our slide presentation for investors.
Dividend Declaration
The Company’s Board of Directors declared a quarterly cash dividend of
Conference Call & Slide Presentation
The Company will host a conference call to discuss the results at 8:30 a.m. ET on January 31, 2024. A slide presentation for investors has also been posted on the Company’s website at investor.cencora.com. Participating in the conference call will be:
- Steven H. Collis, Chairman, President & Chief Executive Officer
- James F. Cleary, Executive Vice President & Chief Financial Officer
The dial-in number for the live call will be (833) 470-1428. From outside
Replays of the call will be made available via telephone and webcast. A replay of the webcast will be posted on investor.cencora.com approximately one hour after the completion of the call and will remain available for one year. The telephone replay will also be available approximately one hour after the completion of the call and will remain available for seven days. To access the telephone replay from within the
Upcoming Investor Event
Cencora management will be attending the following investor event in the coming months:
- Barclays Global Healthcare Conference March 14, 2024.
Please check the website for updates regarding the timing of the live presentation webcasts, if any, and for replay information.
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
Cencora’s Cautionary Note Regarding Forward-Looking Statements
Certain of the statements contained in this press release 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.
CENCORA, INC. |
|||||||||||||||||
FINANCIAL SUMMARY |
|||||||||||||||||
(in thousands, except per share data) |
|||||||||||||||||
(unaudited) |
|||||||||||||||||
|
|
Three Months Ended
|
|
% of Revenue |
|
Three Months Ended
|
|
% of Revenue |
|
% Change |
|||||||
Revenue |
|
$ |
72,252,833 |
|
|
|
|
$ |
62,846,832 |
|
|
|
|
15.0 |
% |
||
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cost of goods sold |
|
|
69,784,021 |
|
|
|
|
|
60,700,879 |
|
|
|
|
15.0 |
% |
||
|
|
|
|
|
|
|
|
|
|
|
|||||||
Gross profit 1 |
|
|
2,468,812 |
|
|
3.42 |
% |
|
|
2,145,953 |
|
|
3.41 |
% |
|
15.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|||||||
Distribution, selling, and administrative |
|
|
1,398,747 |
|
|
1.94 |
% |
|
|
1,290,928 |
|
|
2.05 |
% |
|
8.4 |
% |
Depreciation and amortization |
|
|
270,603 |
|
|
0.37 |
% |
|
|
171,940 |
|
|
0.27 |
% |
|
57.4 |
% |
Litigation and opioid-related (credit) expenses 2 |
|
|
(78,917 |
) |
|
|
|
|
12,706 |
|
|
|
|
|
|||
Acquisition-related deal and integration expenses |
|
|
21,063 |
|
|
|
|
|
20,996 |
|
|
|
|
|
|||
Restructuring and other expenses |
|
|
34,441 |
|
|
|
|
|
16,240 |
|
|
|
|
|
|||
Total operating expenses |
|
|
1,645,937 |
|
|
2.28 |
% |
|
|
1,512,810 |
|
|
2.41 |
% |
|
8.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|||||||
Operating income |
|
|
822,875 |
|
|
1.14 |
% |
|
|
633,143 |
|
|
1.01 |
% |
|
30.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|||||||
Other income, net |
|
|
(1,087 |
) |
|
|
|
|
(6,328 |
) |
|
|
|
|
|||
Interest expense, net |
|
|
40,564 |
|
|
|
|
|
46,016 |
|
|
|
|
(11.8 |
)% |
||
|
|
|
|
|
|
|
|
|
|
|
|||||||
Income before income taxes |
|
|
783,398 |
|
|
1.08 |
% |
|
|
593,455 |
|
|
0.94 |
% |
|
32.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|||||||
Income tax expense |
|
|
180,390 |
|
|
|
|
|
117,285 |
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net income |
|
|
603,008 |
|
|
0.83 |
% |
|
|
476,170 |
|
|
0.76 |
% |
|
26.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net (income) loss attributable to noncontrolling interests |
|
|
(1,508 |
) |
|
|
|
|
3,575 |
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net income attributable to Cencora, Inc. |
|
$ |
601,500 |
|
|
0.83 |
% |
|
$ |
479,745 |
|
|
0.76 |
% |
|
25.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|||||||
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|||||||
Basic |
|
$ |
3.01 |
|
|
|
|
$ |
2.35 |
|
|
|
|
28.1 |
% |
||
Diluted |
|
$ |
2.98 |
|
|
|
|
$ |
2.33 |
|
|
|
|
27.9 |
% |
||
|
|
|
|
|
|
|
|
|
|
|
|||||||
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|||||||
Basic |
|
|
200,081 |
|
|
|
|
|
204,032 |
|
|
|
|
(1.9 |
)% |
||
Diluted |
|
|
201,837 |
|
|
|
|
|
206,327 |
|
|
|
|
(2.2 |
)% |
||
| ________________________________________ | ||
1 |
Includes a |
|
2 |
The three months ended December 31, 2023 includes a net |
|
CENCORA, INC. |
|||||||||||||||||||||||||||||||||
GAAP TO NON-GAAP RECONCILIATIONS |
|||||||||||||||||||||||||||||||||
(in thousands, except per share data) |
|||||||||||||||||||||||||||||||||
(unaudited) |
|||||||||||||||||||||||||||||||||
|
|
Three Months Ended December 31, 2023 |
|
||||||||||||||||||||||||||||||
|
|
Gross Profit |
|
Operating
|
|
Operating
|
|
Income
|
|
Income Tax Expense |
|
Net Income
|
|
Net Income
|
|
Diluted
|
|
||||||||||||||||
GAAP |
|
$ |
2,468,812 |
|
|
$ |
1,645,937 |
|
|
$ |
822,875 |
|
|
$ |
783,398 |
|
|
$ |
180,390 |
|
|
$ |
(1,508 |
) |
|
$ |
601,500 |
|
|
$ |
2.98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Gains from antitrust litigation settlements |
|
|
(48,248 |
) |
|
|
— |
|
|
|
(48,248 |
) |
|
|
(48,248 |
) |
|
|
(10,456 |
) |
|
|
— |
|
|
|
(37,792 |
) |
|
|
(0.19 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
LIFO credit |
|
|
(48,445 |
) |
|
|
— |
|
|
|
(48,445 |
) |
|
|
(48,445 |
) |
|
|
(10,498 |
) |
|
|
— |
|
|
|
(37,947 |
) |
|
|
(0.19 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
17,226 |
|
|
|
— |
|
|
|
17,226 |
|
|
|
16,919 |
|
|
|
— |
|
|
|
— |
|
|
|
16,919 |
|
|
|
0.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Acquisition-related intangibles amortization |
|
|
— |
|
|
|
(165,724 |
) |
|
|
165,724 |
|
|
|
165,724 |
|
|
|
35,913 |
|
|
|
(435 |
) |
|
|
129,376 |
|
|
|
0.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Litigation and opioid-related credit, net 1 |
|
|
— |
|
|
|
78,917 |
|
|
|
(78,917 |
) |
|
|
(78,917 |
) |
|
|
(12,028 |
) |
|
|
— |
|
|
|
(66,889 |
) |
|
|
(0.33 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Acquisition-related deal and integration expenses |
|
|
— |
|
|
|
(21,063 |
) |
|
|
21,063 |
|
|
|
21,063 |
|
|
|
4,564 |
|
|
|
— |
|
|
|
16,499 |
|
|
|
0.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Restructuring and other expenses |
|
|
— |
|
|
|
(34,441 |
) |
|
|
34,441 |
|
|
|
34,441 |
|
|
|
7,463 |
|
|
|
— |
|
|
|
26,978 |
|
|
|
0.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Loss on remeasurement of equity investment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10,201 |
|
|
|
— |
|
|
|
— |
|
|
|
10,201 |
|
|
|
0.05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Other, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
222 |
|
|
|
(109 |
) |
|
|
— |
|
|
|
331 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Tax reform 2 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(16,685 |
) |
|
|
(18,916 |
) |
|
|
— |
|
|
|
2,231 |
|
|
|
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Adjusted Non-GAAP |
|
$ |
2,389,345 |
|
|
$ |
1,503,626 |
|
|
$ |
885,719 |
|
|
$ |
839,673 |
|
|
$ |
176,323 |
|
|
$ |
(1,943 |
) |
|
$ |
661,407 |
|
|
$ |
3.28 |
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Adjusted Non-GAAP % change vs. prior year |
|
|
12.5 |
% |
|
|
8.1 |
% |
|
|
20.7 |
% |
|
|
21.9 |
% |
|
|
34.0 |
% |
|
|
|
|
18.2 |
% |
|
|
21.0 |
% |
|
||
Percentages of Revenue: |
|
GAAP |
|
Adjusted
|
||
Gross profit |
|
3.42 |
% |
|
3.31 |
% |
Operating expenses |
|
2.28 |
% |
|
2.08 |
% |
Operating income |
|
1.14 |
% |
|
1.23 |
% |
| ________________________________________ | ||
| 1 |
Includes a net |
|
| 2 | Tax expense relating to 2020 Swiss tax reform and a gain on the currency remeasurement of the related deferred tax assets, the latter of which is recorded within Other Income, Net. |
|
| 3 | The sum of the components does not equal the total due to rounding. |
|
| Note: For more information related to non-GAAP financial measures, refer to the section titled “Supplemental Information Regarding Non-GAAP Financial Measures” of this release. | ||
CENCORA, INC. |
|||||||||||||||||||||||||||||||||
GAAP TO NON-GAAP RECONCILIATIONS |
|||||||||||||||||||||||||||||||||
(in thousands, except per share data) |
|||||||||||||||||||||||||||||||||
(unaudited) |
|||||||||||||||||||||||||||||||||
|
|
Three Months Ended December 31, 2022 |
|
||||||||||||||||||||||||||||||
|
|
Gross Profit |
|
Operating Expenses |
|
Operating Income |
|
Income Before Income Taxes |
|
Income Tax Expense |
|
Net Loss Attributable to Noncontrolling Interests |
|
Net Income Attributable to Cencora |
|
Diluted Earnings Per Share |
|
||||||||||||||||
GAAP |
|
$ |
2,145,953 |
|
|
$ |
1,512,810 |
|
|
$ |
633,143 |
|
|
$ |
593,455 |
|
|
$ |
117,285 |
|
|
$ |
3,575 |
|
|
$ |
479,745 |
|
|
$ |
2.33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Gains from antitrust litigation settlements |
|
|
(49,899 |
) |
|
|
— |
|
|
|
(49,899 |
) |
|
|
(49,899 |
) |
|
|
(11,659 |
) |
|
|
— |
|
|
|
(38,240 |
) |
|
|
(0.19 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
LIFO expense |
|
|
25,050 |
|
|
|
— |
|
|
|
25,050 |
|
|
|
25,050 |
|
|
|
5,853 |
|
|
|
— |
|
|
|
19,197 |
|
|
|
0.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
3,584 |
|
|
|
— |
|
|
|
3,584 |
|
|
|
3,986 |
|
|
|
— |
|
|
|
— |
|
|
|
3,986 |
|
|
|
0.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Acquisition-related intangibles amortization |
|
|
— |
|
|
|
(71,878 |
) |
|
|
71,878 |
|
|
|
71,878 |
|
|
|
16,795 |
|
|
|
(1,158 |
) |
|
|
53,925 |
|
|
|
0.26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Litigation and opioid-related expenses |
|
|
— |
|
|
|
(12,706 |
) |
|
|
12,706 |
|
|
|
12,706 |
|
|
|
2,969 |
|
|
|
— |
|
|
|
9,737 |
|
|
|
0.05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Acquisition-related deal and integration expenses |
|
|
— |
|
|
|
(20,996 |
) |
|
|
20,996 |
|
|
|
20,996 |
|
|
|
4,906 |
|
|
|
— |
|
|
|
16,090 |
|
|
|
0.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Restructuring and other expenses |
|
|
— |
|
|
|
(16,240 |
) |
|
|
16,240 |
|
|
|
16,240 |
|
|
|
3,794 |
|
|
|
— |
|
|
|
12,446 |
|
|
|
0.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Recovery of non-customer note receivable |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,148 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1,148 |
) |
|
|
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Tax reform 1 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,457 |
) |
|
|
(8,364 |
) |
|
|
— |
|
|
|
3,907 |
|
|
|
0.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Adjusted Non-GAAP |
|
$ |
2,124,688 |
|
|
$ |
1,390,990 |
|
|
$ |
733,698 |
|
|
$ |
688,807 |
|
|
$ |
131,579 |
|
|
$ |
2,417 |
|
|
$ |
559,645 |
|
|
$ |
2.71 |
|
|
Percentages of Revenue: |
|
GAAP |
|
Adjusted Non-GAAP |
||
Gross profit |
|
3.41 |
% |
|
3.38 |
% |
Operating expenses |
|
2.41 |
% |
|
2.21 |
% |
Operating income |
|
1.01 |
% |
|
1.17 |
% |
| ________________________________________ | ||
1 |
Tax expense relating to 2020 Swiss tax reform and a gain on the currency remeasurement of the related deferred tax assets, the latter of which is recorded within Other Income, Net. |
|
|
||
| Note: For more information related to non-GAAP financial measures, refer to the section titled “Supplemental Information Regarding Non-GAAP Financial Measures” of this release. | ||
CENCORA, INC. |
|||||||||||
SUMMARY SEGMENT INFORMATION |
|||||||||||
(in thousands) |
|||||||||||
(unaudited) |
|||||||||||
|
|
Three Months Ended December 31, |
|||||||||
Revenue |
|
|
2023 |
|
|
|
2022 |
|
|
% Change |
|
|
|
$ |
65,183,802 |
|
|
$ |
56,236,579 |
|
|
15.9 |
% |
International Healthcare Solutions |
|
|
7,070,227 |
|
|
|
6,611,278 |
|
|
6.9 |
% |
Intersegment eliminations |
|
|
(1,196 |
) |
|
|
(1,025 |
) |
|
|
|
|
|
|
|
|
|
|
|||||
Revenue |
|
$ |
72,252,833 |
|
|
$ |
62,846,832 |
|
|
15.0 |
% |
|
|
Three Months Ended December 31, |
|||||||||
Operating income |
|
|
2023 |
|
|
|
2022 |
|
|
% Change |
|
|
|
$ |
698,124 |
|
|
$ |
572,416 |
|
|
22.0 |
% |
International Healthcare Solutions |
|
|
187,595 |
|
|
|
161,282 |
|
|
16.3 |
% |
Total segment operating income |
|
|
885,719 |
|
|
|
733,698 |
|
|
20.7 |
% |
|
|
|
|
|
|
|
|||||
Gains from antitrust litigation settlements |
|
|
48,248 |
|
|
|
49,899 |
|
|
|
|
LIFO credit (expense) |
|
|
48,445 |
|
|
|
(25,050 |
) |
|
|
|
|
|
|
(17,226 |
) |
|
|
(3,584 |
) |
|
|
|
Acquisition-related intangibles amortization |
|
|
(165,724 |
) |
|
|
(71,878 |
) |
|
|
|
Litigation and opioid-related credit (expenses) |
|
|
78,917 |
|
|
|
(12,706 |
) |
|
|
|
Acquisition-related deal and integration expenses |
|
|
(21,063 |
) |
|
|
(20,996 |
) |
|
|
|
Restructuring and other expenses |
|
|
(34,441 |
) |
|
|
(16,240 |
) |
|
|
|
Operating income |
|
$ |
822,875 |
|
|
$ |
633,143 |
|
|
30.0 |
% |
|
|
|
|
|
|
|
|||||
Percentages of Revenue: |
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|||||
Gross profit |
|
|
2.41 |
% |
|
|
2.46 |
% |
|
|
|
Operating expenses |
|
|
1.34 |
% |
|
|
1.45 |
% |
|
|
|
Operating income |
|
|
1.07 |
% |
|
|
1.02 |
% |
|
|
|
|
|
|
|
|
|
|
|||||
International Healthcare Solutions |
|
|
|
|
|
|
|||||
Gross profit |
|
|
11.56 |
% |
|
|
11.17 |
% |
|
|
|
Operating expenses |
|
|
8.91 |
% |
|
|
8.73 |
% |
|
|
|
Operating income |
|
|
2.65 |
% |
|
|
2.44 |
% |
|
|
|
|
|
|
|
|
|
|
|||||
Cencora, Inc. (GAAP) |
|
|
|
|
|
|
|||||
Gross profit |
|
|
3.42 |
% |
|
|
3.41 |
% |
|
|
|
Operating expenses |
|
|
2.28 |
% |
|
|
2.41 |
% |
|
|
|
Operating income |
|
|
1.14 |
% |
|
|
1.01 |
% |
|
|
|
|
|
|
|
|
|
|
|||||
Cencora, Inc. (Non-GAAP) |
|
|
|
|
|
|
|||||
Adjusted gross profit |
|
|
3.31 |
% |
|
|
3.38 |
% |
|
|
|
Adjusted operating expenses |
|
|
2.08 |
% |
|
|
2.21 |
% |
|
|
|
Adjusted operating income |
|
|
1.23 |
% |
|
|
1.17 |
% |
|
|
|
Note: For more information related to non-GAAP financial measures, refer to the section titled “Supplemental Information Regarding Non-GAAP Financial Measures” of this release. |
CENCORA, INC. |
||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||
(in thousands) |
||||||
(unaudited) |
||||||
|
December 31, |
|
September 30, |
|||
|
2023 |
|
2023 |
|||
ASSETS |
|
|
|
|||
|
|
|
|
|||
Current assets: |
|
|
|
|||
Cash and cash equivalents |
$ |
2,872,351 |
|
$ |
2,592,051 |
|
Accounts receivable, net |
|
21,576,594 |
|
|
20,911,081 |
|
Inventories |
|
18,652,240 |
|
|
17,454,768 |
|
Right to recover assets |
|
1,242,978 |
|
|
1,314,857 |
|
Prepaid expenses and other |
|
514,568 |
|
|
526,069 |
|
Total current assets |
|
44,858,731 |
|
|
42,798,826 |
|
|
|
|
|
|||
Property and equipment, net |
|
2,117,283 |
|
|
2,135,171 |
|
Goodwill and other intangible assets |
|
14,036,973 |
|
|
14,005,900 |
|
Deferred income taxes |
|
218,325 |
|
|
200,667 |
|
Other long-term assets |
|
3,458,985 |
|
|
3,418,182 |
|
|
|
|
|
|||
Total assets |
$ |
64,690,297 |
|
$ |
62,558,746 |
|
|
|
|
|
|||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|||
|
|
|
|
|||
Current liabilities: |
|
|
|
|||
Accounts payable |
$ |
47,743,474 |
|
$ |
45,836,037 |
|
Accrued expenses and other |
|
2,437,219 |
|
|
2,353,817 |
|
Short-term debt |
|
592,779 |
|
|
641,344 |
|
Total current liabilities |
|
50,773,472 |
|
|
48,831,198 |
|
|
|
|
|
|||
Long-term debt |
|
4,185,944 |
|
|
4,146,113 |
|
|
|
|
|
|||
Accrued income taxes |
|
335,293 |
|
|
310,676 |
|
Deferred income taxes |
|
1,690,785 |
|
|
1,657,944 |
|
Accrued litigation liability |
|
4,731,945 |
|
|
5,061,795 |
|
Other long-term liabilities |
|
1,911,602 |
|
|
1,884,733 |
|
|
|
|
|
|||
Total equity |
|
1,061,256 |
|
|
666,287 |
|
|
|
|
|
|||
Total liabilities and stockholders’ equity |
$ |
64,690,297 |
|
$ |
62,558,746 |
|
CENCORA, INC. |
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
(in thousands) |
||||||||
(unaudited) |
||||||||
|
Three Months Ended December 31, |
|||||||
|
|
2023 |
|
|
|
2022 |
|
|
Operating Activities: |
|
|
|
|||||
Net income |
$ |
603,008 |
|
|
$ |
476,170 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities |
|
336,514 |
|
|
|
242,947 |
|
|
Changes in operating assets and liabilities, excluding the effects of acquisitions: |
|
|
|
|||||
Accounts receivable |
|
(504,086 |
) |
|
|
(59,872 |
) |
|
Inventories |
|
(1,095,530 |
) |
|
|
(1,178,035 |
) |
|
Accounts payable |
|
1,765,103 |
|
|
|
1,381,079 |
|
|
Other, net |
|
(219,852 |
) |
|
|
(152,209 |
) |
|
Net cash provided by operating activities |
|
885,157 |
|
|
|
710,080 |
|
|
|
|
|
|
|||||
Investing Activities: |
|
|
|
|||||
Capital expenditures |
|
(74,217 |
) |
|
|
(75,727 |
) |
|
Prefunded business acquisition |
|
— |
|
|
|
(1,438,124 |
) |
|
Other, net |
|
8,417 |
|
|
|
2,693 |
|
|
Net cash used in investing activities |
|
(65,800 |
) |
|
|
(1,511,158 |
) |
|
|
|
|
|
|||||
Financing Activities: |
|
|
|
|||||
Net debt repayments |
|
(10,469 |
) |
|
|
(10,518 |
) |
|
Purchases of common stock 1 |
|
(385,533 |
) |
|
|
(807,214 |
) |
|
Exercises of stock options |
|
10,926 |
|
|
|
21,863 |
|
|
Cash dividends on common stock |
|
(105,690 |
) |
|
|
(99,713 |
) |
|
Employee tax withholdings related to restricted share vesting |
|
(56,248 |
) |
|
|
(65,217 |
) |
|
Other, net |
|
(4,655 |
) |
|
|
(3,145 |
) |
|
Net cash used in financing activities |
|
(551,669 |
) |
|
|
(963,944 |
) |
|
|
|
|
|
|||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
15,544 |
|
|
|
84,140 |
|
|
|
|
|
|
|||||
Increase (decrease) in cash, cash equivalents, and restricted cash |
|
283,232 |
|
|
|
(1,680,882 |
) |
|
|
|
|
|
|||||
Cash, cash equivalents, and restricted cash at beginning of period 2 |
|
2,752,889 |
|
|
|
3,593,539 |
|
|
|
|
|
|
|||||
Cash, cash equivalents, and restricted cash at end of period 2 |
$ |
3,036,121 |
|
|
$ |
1,912,657 |
|
|
| ________________________________________ | ||
| 1 |
Includes |
|
| 2 | The following represents a reconciliation of cash and cash equivalents in the Condensed Consolidated Balance Sheets to cash, cash equivalents, and restricted cash used in the Condensed Consolidated Statements of Cash Flows: |
|
|
|
December 31,
|
|
September 30,
|
|
December 31,
|
|
September 30,
|
||||
Cash and cash equivalents |
|
$ |
2,872,351 |
|
$ |
2,592,051 |
|
$ |
1,692,205 |
|
$ |
3,388,189 |
Restricted cash (included in Prepaid Expenses and Other) |
|
|
99,796 |
|
|
97,722 |
|
|
159,599 |
|
|
144,980 |
Restricted cash (included in Other Long-Term Assets) |
|
|
63,974 |
|
|
63,116 |
|
|
60,853 |
|
|
60,370 |
Cash, cash equivalents, and restricted cash |
|
$ |
3,036,121 |
|
$ |
2,752,889 |
|
$ |
1,912,657 |
|
$ |
3,593,539 |
SUPPLEMENTAL INFORMATION REGARDING
NON-GAAP FINANCIAL MEASURES
To supplement the financial measures prepared in accordance with
The non-GAAP financial measures are presented because management uses non-GAAP financial measures to evaluate the Company’s operating performance, to perform financial planning, and to determine incentive compensation. Therefore, the Company believes that the presentation of non-GAAP financial measures provides useful supplementary information to, and facilitates additional analysis by, investors. The presented non-GAAP financial measures exclude items that management does not believe reflect the Company’s core operating performance because such items are outside the control of the Company or are inherently unusual, non-operating, unpredictable, non-recurring, or non-cash. We have included the following non-GAAP earnings-related financial measures in this release:
-
Adjusted gross profit and adjusted gross profit margin: Adjusted gross profit is a non-GAAP financial measure that excludes gains from antitrust litigation settlements, LIFO expense (credit), and
Turkey highly inflationary impact. Adjusted gross profit margin is the ratio of adjusted gross profit to total revenue. Management believes that these non-GAAP financial measures are useful to investors as a supplemental measure of the Company’s ongoing operating performance. Gains from antitrust litigation settlements, LIFO expense (credit), andTurkey highly inflationary impact are excluded because the Company cannot control the amounts recognized or timing of these items. Gains from antitrust litigation settlements relate to the settlement of lawsuits that have been filed against brand pharmaceutical manufacturers alleging that the manufacturer, by itself or in concert with others, took improper actions to delay or prevent generic drugs from entering the market. LIFO expense (credit) is affected by changes in inventory quantities, product mix, and manufacturer pricing practices, which may be impacted by market and other external influences.
- Adjusted operating expenses and adjusted operating expense margin: Adjusted operating expenses is a non-GAAP financial measure that excludes acquisition-related intangibles amortization; litigation and opioid-related expenses (credit); acquisition-related deal and integration expenses; and restructuring and other expenses. Adjusted operating expense margin is the ratio of adjusted operating expenses to total revenue. Acquisition-related intangibles amortization is excluded because it is a non-cash item and does not reflect the operating performance of the acquired companies. We exclude acquisition-related deal and integration expenses and restructuring and other expenses that relate to unpredictable and/or non-recurring business activities. We exclude the amount of litigation and opioid-related expenses (credit) that is unusual, non-operating, unpredictable, non-recurring or non-cash in nature because we believe these exclusions facilitate the analysis of our ongoing operational performance.
- Adjusted operating income and adjusted operating income margin: Adjusted operating income is a non-GAAP financial measure that excludes the same items that are described above and excluded from adjusted gross profit and adjusted operating expenses. Adjusted operating income margin is the ratio of adjusted operating income to total revenue. Management believes that these non-GAAP financial measures are useful to investors as a supplemental way to evaluate the Company’s performance because the adjustments are unusual, non-operating, unpredictable, non-recurring or non-cash in nature.
- Adjusted income before income taxes: Adjusted income before income taxes is a non-GAAP financial measure that excludes the same items that are described above and excluded from adjusted operating income. In addition, the loss on remeasurement of an equity investment, the recovery of a non-customer note receivable, a foreign currency gain, and the gain (loss) on the currency remeasurement of the deferred tax asset relating to 2020 Swiss tax reform are excluded from adjusted income before income taxes because these amounts are unusual, non-operating, and non-recurring. Management believes that this non-GAAP financial measure is useful to investors because it facilitates the calculation of the Company’s adjusted effective tax rate.
- Adjusted income tax expense: Adjusted income tax expense is a non-GAAP financial measure that excludes the income tax expense associated with the same items that are described above and excluded from adjusted income before income taxes. Certain discrete tax expense (benefits) are also excluded from adjusted income tax expense. Further, certain expenses relating to 2020 Swiss tax reform are excluded from adjusted income tax expense for the three months ended December 31, 2023 and 2022. Management believes that this non-GAAP financial measure is useful to investors as a supplemental way to evaluate the Company’s performance because the adjustments are unusual, non-operating, unpredictable, non-recurring or non-cash in nature.
- Adjusted effective tax rate: Adjusted effective tax rate is a non-GAAP financial measure that is determined by dividing adjusted income tax expense by adjusted income before income taxes. Management believes that this non-GAAP financial measure is useful to investors because it presents an effective tax rate that does not reflect unusual, non-operating, unpredictable, non-recurring, or non-cash amounts or items that are outside the control of the Company.
- Adjusted net income/loss attributable to noncontrolling interests: Adjusted net income/loss attributable to noncontrolling interests excludes the non-controlling interest portion of the same items described above. Management believes that this non-GAAP financial measure is useful to investors because it facilitates the calculation of adjusted net income attributable Cencora.
- Adjusted net income attributable to Cencora: Adjusted net income attributable to the Company is a non-GAAP financial measure that excludes the same items that are described above. Management believes that this non-GAAP financial measure is useful to investors as a supplemental way to evaluate the Company’s performance because the adjustments are unusual, non-operating, unpredictable, non-recurring or non-cash in nature.
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Adjusted diluted earnings per share: Adjusted diluted earnings per share excludes the per share impact of adjustments including gains from antitrust litigation settlements; LIFO expense (credit);
Turkey highly inflationary impact; acquisition-related intangibles amortization; litigation and opioid-related expenses (credit); acquisition-related deal and integration expenses; restructuring and other expenses; the loss on remeasurement of an equity investment; recovery of a non-customer note receivable; and the gain (loss) on the currency remeasurement related to 2020 Swiss tax reform, in each case net of the tax effect calculated using the applicable effective tax rate for those items. In addition, the per share impact of certain discrete tax expense (benefit), and the per share impact of certain expenses relating to 2020 Swiss tax reform for the three months ended December 31, 2023 and 2022 are also excluded from adjusted diluted earnings per share. Management believes that this non-GAAP financial measure is useful to investors because it eliminates the per share impact of the items that are outside the control of the Company or that we consider to not be indicative of our ongoing operating performance due to their inherent unusual, non-operating, unpredictable, non-recurring, or non-cash nature.
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Adjusted Free Cash Flow: Adjusted free cash flow is a non-GAAP financial measure defined as net cash provided by operating activities, excluding significant unpredictable or non-recurring cash payments or receipts relating to legal settlements, minus capital expenditures. Adjusted free cash flow is used internally by management for measuring operating cash flow generation and setting performance targets and has historically been used as one of the means of providing guidance on possible future cash flows. For the three months ended December 31, 2023, adjusted free cash flow of
$762.7 million $885.2 million $74.2 million $48.2 million
The Company also presents certain information related to current period operating results in “constant currency,” which is a non-GAAP financial measure. These amounts are calculated by translating current period results at the foreign currency exchange rates used in the comparable period in the prior year. The Company presents such constant currency financial information because it has significant operations outside of
In addition, the Company has provided non-GAAP fiscal year 2024 guidance for diluted earnings per share, operating income, effective income tax rate, and free cash flows that excludes the same or similar items as those that are excluded from the historical non-GAAP financial measures, as well as significant items that are outside the control of the Company or inherently unusual, non-operating, unpredictable, non-recurring or non-cash in nature. The Company does not provide forward looking guidance on a GAAP basis for such metrics because certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated. For example, LIFO expense (credit) is largely dependent upon the future inflation or deflation of brand and generic pharmaceuticals, which is out of the Company’s control, and acquisition-related intangibles amortization depends on the timing and amount of future acquisitions, which cannot be reasonably estimated. Similarly, the timing and amount of favorable and unfavorable settlements, the probable significance of which cannot be determined, are unavailable and cannot be reasonably estimated.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240130014076/en/
Bennett S. Murphy
Senior Vice President, Head of Investor Relations and Treasury
610-727-3693
bennett.murphy@cencora.com
Source: Cencora
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