Revenue of $72.3 billion for the First Quarter,
a 15.0% Percent Increase Year-Over-Year
First Quarter GAAP Diluted EPS of $2.98 and
Adjusted Diluted EPS of $3.28
Adjusted Diluted EPS Guidance Range Raised to
$13.25 to $13.50 for Fiscal 2024
Cencora, Inc. (NYSE: COR) today reported that in its fiscal year
2024 first quarter ended December 31, 2023, revenue increased 15.0
percent year-over-year to $72.3 billion. On the basis of U.S.
generally accepted accounting principles (GAAP), diluted earnings
per share (EPS) was $2.98 for the first quarter of fiscal 2024
compared to $2.33 in the prior year first quarter. Adjusted diluted
EPS, which is a non-GAAP financial measure that excludes items
described below, increased 21.0 percent to $3.28 in the fiscal
first quarter from $2.71 in the prior year first quarter.
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
$12.70 to $13.00 to a range of $13.25 to $13.50.
“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
$72.3B
$72.3B
Gross Profit
$2.5B
$2.4B
Operating Expenses
$1.6B
$1.5B
Operating Income
$823M
$886M
Interest Expense, Net
$41M
$41M
Effective Tax Rate
23.0%
21.0%
Net Income Attributable to Cencora,
Inc.
$602M
$661M
Diluted Earnings Per Share
$2.98
$3.28
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, up 15.0 percent compared to
the same quarter in the previous fiscal year, reflecting a 15.9
percent increase in revenue within 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, a 15.0 percent
increase compared to the same period in the previous fiscal year,
primarily due to increases in gross profit in both reportable
segments and a LIFO credit in the current year quarter in
comparison to LIFO expense in the prior year quarter. Gross profit
as a percentage of revenue was 3.42 percent, an increase of 1 basis
point from the prior year quarter.
- Operating Expenses: In the first
quarter of fiscal 2024, operating expenses were $1.6 billion, an
8.8 percent increase compared to the same period in the previous
fiscal year, driven by increases in distribution, selling, and
administrative expenses and amortization expense. This increase was
partially offset by a $0.1 billion opioid litigation settlement
accrual reduction primarily as a result of our commitment, which we
made in December 2023, to prepay the net present value of a future
obligation as permitted under our opioid settlement agreements. The
prepayment was made in January 2024.
- Operating Income: In the first
quarter of fiscal 2024, operating income was $822.9 million, a 30.0
percent increase compared to the same period in the previous fiscal
year due to the increase in gross profit, offset in part by the
increase in operating expenses. Operating income as a percentage of
revenue was 1.14 percent in the first quarter of fiscal 2024, an
increase of 13 basis points when compared to the prior year
quarter.
- Interest Expense, Net: In the
first quarter of fiscal 2024, net interest expense of $40.6 million
decreased 11.8 percent versus the prior year quarter primarily due
to an increase in interest income as a result of higher investment
interest rates in the current year quarter in comparison to the
prior year quarter and a decrease in interest expense primarily due
to the September 30, 2023 divestiture of our less-than-wholly-owned
subsidiary in 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 in the first quarter of fiscal
2024, a 27.9 percent increase compared to $2.33 in the previous
fiscal year’s first quarter.
- 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, up 15.0 percent compared to
the same quarter in the previous fiscal year, reflecting a 15.9
percent increase in revenue within 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,
a 12.5 percent increase compared to the same period in the previous
fiscal year due to increases in gross profit in both reportable
segments. Adjusted gross profit as a percentage of revenue was 3.31
percent in the fiscal 2024 first quarter, a decrease of 7 basis
points from the prior year quarter, due to the decline in the 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, an 8.1 percent increase compared to the same period
in the previous fiscal year, primarily driven by an increase in
distribution, selling, and administrative expenses to support the
growth in our businesses.
- Adjusted Operating Income: In the
first quarter of fiscal 2024, adjusted operating income was $885.7
million, a 20.7 percent increase compared to the same period in the
prior fiscal year, driven by a 22.0 percent increase in 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 was
1.23% 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 decreased 11.8 percent versus the prior year
quarter primarily due to an increase in interest income as a result
of higher investment interest rates in the current year quarter in
comparison to the prior year quarter and a decrease in interest
expense primarily due to the September 30, 2023 divestiture of our
less-than-wholly-owned subsidiary in 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 in the
first quarter of fiscal 2024, a 21.0% increase compared to $2.71 in
the previous fiscal year’s first quarter. On a constant currency
basis, adjusted diluted earnings per share increased 21.8 percent
compared to the prior year quarter.
- 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: U.S. Healthcare Solutions and International Healthcare
Solutions.
U.S. Healthcare Solutions
U.S. Healthcare Solutions revenue was $65.2 billion in the first
quarter of fiscal 2024, an increase of 15.9 percent compared to the
same quarter in the previous fiscal year due to overall market
growth primarily driven by unit volume growth, including increased
sales of products labeled for diabetes and/or weight loss in the
GLP-1 class, increased sales of specialty products to physician
practices and health systems, and increased sales of COVID-19
vaccines. Segment operating income of $698.1 million in the first
quarter of fiscal 2024 was up 22.0 percent compared to the same
period in the previous fiscal year reflecting an increase in gross
profit, partially offset by an increase in operating expenses.
International Healthcare
Solutions
Revenue in International Healthcare Solutions was $7.1 billion
in the first quarter of fiscal 2024, an increase of 6.9 percent
from the previous fiscal year’s first quarter primarily due to
increased sales in our European distribution business and increased
sales in our Canadian business. Segment operating income in the
first quarter of fiscal 2024 was $187.6 million, an increase of
16.3 percent, primarily due to higher operating income at our
global specialty logistics business, the January 2023 acquisition
of PharmaLex, and growth at our Canadian business, partially offset
by foreign currency pressure and higher information technology
expenses in our European distribution business, and the September
2023 divestiture of the Company’s less-than-wholly-owned subsidiary
in Egypt, which was profitable in the prior year quarter. On a
constant currency basis, International Healthcare Solutions revenue
and operating income increased by 8.7 percent and 20.2 percent,
respectively.
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 to $13.50, up from the previous range of $12.70 to
$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 to $215
million, down from the previous range of $210 to $230 million;
and
- 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 $0.51 per common share, payable February 26, 2024, to
stockholders of record at the close of business on February 9,
2024.
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 the United States and Canada, dial +1 (404) 975-4839.
The access code for the call will be 457478. The live call will
also be webcast via the Company’s website at investor.cencora.com.
Users are encouraged to log on to the webcast approximately 10
minutes in advance of the scheduled start time of the call.
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 U.S. and Canada, dial
(866) 813-9403. From outside the United States, dial +1 (929)
458-6194. The access code for the replay is 308642.
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
$250 billion in annual revenue. Learn more at
investor.cencora.com
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
December 31, 2023
% of
Revenue
Three Months Ended
December 31, 2022
% 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 $48.2 million gain from
antitrust litigation settlements, a $48.4 million LIFO credit, and
Turkey foreign currency remeasurement expense of $17.2 million in
the three months ended December 31, 2023. Includes a $49.9 million
gain from antitrust litigation settlements, a $25.1 million LIFO
expense, and Turkey foreign currency remeasurement expense of $3.6
million in the three months ended December 31, 2022.
2
The three months ended December 31, 2023
includes a net $92.2 million opioid litigation settlement accrual
reduction primarily as a result of the Company’s commitment, which
it made in December 2023, to prepay the net present value of a
future obligation as permitted under its opioid settlement
agreements.
CENCORA, INC.
GAAP TO NON-GAAP
RECONCILIATIONS
(in thousands, except per share
data)
(unaudited)
Three Months Ended December
31, 2023
Gross Profit
Operating Expenses
Operating Income
Income Before Income
Taxes
Income Tax
Expense
Net Income Attributable to
Noncontrolling Interests
Net Income Attributable
to Cencora
Diluted Earnings Per
Share
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
)
Turkey highly inflationary impact
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
Non-GAAP
Gross profit
3.42
%
3.31
%
Operating expenses
2.28
%
2.08
%
Operating income
1.14
%
1.23
%
________________________________________ 1
Includes a net $92.2 million opioid
litigation settlement accrual reduction primarily as a result of
the Company's commitment, which it made in December 2023, to prepay
the net present value of a future obligation as permitted under its
opioid settlement agreements.
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
Turkey highly inflationary impact
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
U.S. Healthcare Solutions
$
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
U.S. Healthcare Solutions
$
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
)
Turkey highly inflationary impact
(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:
U.S. Healthcare Solutions
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 $28.4 million of purchases in
September 2022 that cash settled in October 2022.
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,
2023
September 30,
2023
December 31,
2022
September 30,
2022
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
U.S. generally accepted accounting principles (GAAP), the Company
uses the non-GAAP financial measures described below. The non-GAAP
financial measures should be viewed in addition to, and not in lieu
of, financial measures calculated in accordance with GAAP. These
supplemental measures may vary from, and may not be comparable to,
similarly titled measures by other companies.
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), and Turkey 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.
- 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.
- 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 consisted of net cash provided by operating
activities of $885.2 million, minus capital expenditures of $74.2
million and the gains from antitrust litigation settlements of
$48.2 million. The Company does not provide forward looking
guidance on a GAAP basis for free cash flow because the timing and
amount of favorable and unfavorable settlements excluded from this
metric, the probable significance of which cannot be determined,
are unavailable and cannot be reasonably estimated.
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 the United States reporting
in currencies other than the U.S. dollar and this presentation
provides a framework to assess how its business performed excluding
the impact of foreign currency exchange rate fluctuations. For the
first quarter of fiscal 2024, (i) revenue of $72.3 billion was
negatively impacted by foreign currency translation of $119
million, resulting in revenue on a constant currency basis of $72.4
billion, and (ii) operating income of $886 million was negatively
impacted by foreign currency translation of $6 million, resulting
in operating income on a constant currency basis of $892 million.
For the first quarter of fiscal 2024 in the International
Healthcare Solutions segment, (i) revenue of $7.1 billion was
negatively impacted by foreign currency translation of $119
million, resulting in revenue on a constant currency basis of $7.2
billion, and (ii) operating income of $188 million was negatively
impacted by foreign currency translation of $6 million, resulting
in operating income on a constant currency basis of $194
million.
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
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