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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Cencora Inc | NYSE:COR | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.33 | -0.15% | 216.75 | 217.8175 | 216.20 | 216.85 | 1,179,960 | 01:00:00 |
Revenue of $68.4 billion for the Second Quarter, a 7.8 Percent Increase Year-Over-Year
Second Quarter GAAP Diluted EPS of $2.09 and Adjusted Diluted EPS of $3.80
Adjusted Diluted EPS Guidance Range Raised to $13.30 to $13.50 for Fiscal 2024
Cencora, Inc. (NYSE: COR) today reported that in its fiscal year 2024 second quarter ended March 31, 2024, revenue increased 7.8 percent year-over-year to $68.4 billion. On the basis of U.S. generally accepted accounting principles (GAAP), diluted earnings per share (EPS) was $2.09 for the second quarter of fiscal 2024 compared to $2.13 in the prior year second quarter. Adjusted diluted EPS, which is a non-GAAP financial measure that excludes items described below, increased 8.6 percent to $3.80 in the fiscal second quarter from $3.50 in the prior year second 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 on the lower end from the previous range of $13.25 to $13.50 to a range of $13.30 to $13.50.
“Cencora’s critical role at the center of healthcare and the pharmaceutical supply chain was on full display during the quarter as our purpose-driven team members’ solutions-oriented mindset helped our customers navigate through complexity and uncertainty,” said Steven H. Collis, Chairman, President, and Chief Executive Officer of Cencora.
“Our strong second quarter results and updated full-year guidance, reflect the importance of the value we deliver across our footprint,” continued Mr. Collis. “As we move into the second half of our fiscal year, our focus on creating a best-in-class customer experience, embracing innovation and investing in our infrastructure will allow us to continue to further our pharmaceutical-centric strategy and drive differentiated value for our customers, partners and all our stakeholders.”
Second Quarter Fiscal Year 2024 Summary Results
GAAP
Adjusted (Non-GAAP)
Revenue
$68.4B
$68.4B
Gross Profit
$2.5B
$2.5B
Operating Expenses
$2.0B
$1.5B
Operating Income
$553M
$1.0B
Interest Expense, Net
$64M
$64M
Effective Tax Rate
9.8%
20.9%
Net Income Attributable to Cencora, Inc.
$421M
$765M
Diluted Earnings Per Share
$2.09
$3.80
Diluted Shares Outstanding
201.2M
201.2M
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.
Second Quarter GAAP Results
Second Quarter Adjusted (non-GAAP) Results
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 $61.3 billion in the second quarter of fiscal 2024, an increase of 8.1 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 and increased sales of specialty products to physician practices and health systems. Segment operating income of $841.1 million in the second quarter of fiscal 2024 was up 11.2 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 second quarter of fiscal 2024, an increase of 5.3 percent from the previous fiscal year’s second quarter due to increased sales in our European distribution business, increased sales in our Canadian business, and increased sales at our less-than-wholly-owned Brazil full-line distribution business. Segment operating income in the second quarter of fiscal 2024 was $192.7 million, an increase of 9.5 percent, primarily due to higher operating income at our less-than-wholly-owned Brazil full-line distribution business and our Canadian business. On a constant currency basis, International Healthcare Solutions revenue and operating income increased by 9.8 percent and 22.1 percent, respectively.
Recent Company Highlights & Milestones
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 expected continued solid business performance for the full year and a higher effective tax rate and expected share count. The Company now expects:
Additional expectations now include:
For additional details regarding updated guidance expectations on a constant currency 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 May 24, 2024, to stockholders of record at the close of business on May 10, 2024.
New Share Repurchase Program
In March 2024, the Company’s Board of Directors authorized a new share repurchase program allowing the Company to purchase up to $2.0 billion of its outstanding common stock, subject to market conditions.
Conference Call & Slide Presentation
The Company will host a conference call to discuss its operating results at 8:30 a.m. ET on May 1, 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:
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 161532. 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 702498.
Upcoming Investor Event
Cencora management will be attending the following investor event in the coming months:
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 March 31, 2024
% of Revenue
Three Months Ended March 31, 2023
% of Revenue
% Change
Revenue
$
68,414,307
$
63,457,205
7.8%
Cost of goods sold
65,876,284
61,161,763
7.7%
Gross profit 1
2,538,023
3.71%
2,295,442
3.62%
10.6%
Operating expenses:
Distribution, selling, and administrative
1,388,810
2.03%
1,321,087
2.08%
5.1%
Depreciation and amortization
271,732
0.40%
241,466
0.38%
12.5%
Litigation and opioid-related expenses 2
225,985
15,813
Acquisition-related deal and integration expenses
22,610
59,113
Restructuring and other expenses
75,627
97,444
Total operating expenses
1,984,764
2.90%
1,734,923
2.73%
14.4%
Operating income
553,259
0.81%
560,519
0.88%
(1.3)%
Other loss (income), net
22,063
(15,720
)
Interest expense, net
64,130
64,109
—
Income before income taxes
467,066
0.68%
512,130
0.81%
(8.8)%
Income tax expense
45,861
83,917
Net income
421,205
0.62%
428,213
0.67%
(1.6)%
Net (income) loss attributable to noncontrolling interests
(430
)
7,189
Net income attributable to Cencora, Inc.
$
420,775
0.62%
$
435,402
0.69%
(3.4)%
Earnings per share:
Basic
$
2.11
$
2.15
(1.9)%
Diluted
$
2.09
$
2.13
(1.9)%
Weighted average common shares outstanding:
Basic
199,406
202,316
(1.4)%
Diluted
201,177
204,256
(1.5)%
_______________________
1 Includes an $8.7 million gain from antitrust litigation settlements, a $22.8 million LIFO credit, and Turkey foreign currency remeasurement expense of $23.1 million in the three months ended March 31, 2024. Includes a $54.3 million LIFO expense and Turkey foreign currency remeasurement expense of $4.9 million in the three months ended March 31, 2023. 2 Includes a $214.0 million opioid litigation accrual in the three months ended March 31, 2024.CENCORA, INC.
FINANCIAL SUMMARY
(in thousands, except per share data)
(unaudited)
Six Months Ended March 31, 2024
% of Revenue
Six Months Ended March 31, 2023
% of Revenue
% Change
Revenue
$
140,667,140
$
126,304,037
11.4%
Cost of goods sold
135,660,305
121,862,642
11.3%
Gross profit 1
5,006,835
3.56%
4,441,395
3.52%
12.7%
Operating expenses:
Distribution, selling, and administrative
2,787,557
1.98%
2,612,015
2.07%
6.7%
Depreciation and amortization
542,335
0.39%
413,406
0.33%
31.2%
Litigation and opioid-related expenses, net 2
147,068
28,519
Acquisition-related deal and integration expenses
43,673
80,109
Restructuring and other expenses
110,068
113,684
Total operating expenses
3,630,701
2.58%
3,247,733
2.57%
11.8%
Operating income
1,376,134
0.98%
1,193,662
0.95%
15.3%
Other loss (income), net
20,976
(22,048
)
Interest expense, net
104,694
110,125
(4.9)%
Income before income taxes
1,250,464
0.89%
1,105,585
0.88%
13.1%
Income tax expense
226,251
201,202
Net income
1,024,213
0.73%
904,383
0.72%
13.2%
Net (income) loss attributable to noncontrolling interests
(1,938
)
10,764
Net income attributable to Cencora, Inc.
$
1,022,275
0.73%
$
915,147
0.72%
11.7%
Earnings per share:
Basic
$
5.12
$
4.50
13.8%
Diluted
$
5.07
$
4.46
13.7%
Weighted average common shares outstanding:
Basic
199,747
203,188
(1.7)%
Diluted
201,510
205,306
(1.8)%
_______________________
1
Includes a $57.0 million gain from antitrust litigation settlements, a $71.3 million LIFO credit, and Turkey foreign currency remeasurement expense of $40.3 million in the six months ended March 31, 2024. Includes a $49.9 million gain from antitrust litigation settlements, a $79.3 million LIFO expense, and Turkey foreign currency remeasurement expense of $8.4 million in the six months ended March 31, 2023.2
The six months ended March 31, 2024 includes a $214.0 million opioid litigation accrual, offset in part by a $92.2 million opioid settlement accrual reduction primarily as a result of the Company's prepayment of 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 March 31, 2024
Gross Profit
Operating Expenses
Operating Income
Income Before Income Taxes
Income Tax Expense
Net Income Attributable to Cencora
Diluted Earnings Per Share
GAAP
$
2,538,023
$
1,984,764
$
553,259
$
467,066
$
45,861
$
420,775
$
2.09
Gains from antitrust litigation settlements
(8,714
)
—
(8,714
)
(8,714
)
(4,259
)
(4,455
)
(0.02
)
LIFO credit
(22,835
)
—
(22,835
)
(22,835
)
(7,915
)
(14,920
)
(0.07
)
Turkey highly inflationary impact
23,053
—
23,053
23,210
—
23,210
0.12
Acquisition-related intangibles amortization
—
(164,799
)
164,799
164,799
49,444
114,922
0.57
Litigation and opioid-related expenses 1
—
(225,985
)
225,985
225,985
51,093
174,892
0.87
Acquisition-related deal and integration expenses
—
(22,610
)
22,610
22,610
7,144
15,466
0.08
Restructuring and other expenses
—
(75,627
)
75,627
75,627
16,453
59,174
0.29
Loss on remeasurement of equity investment
—
—
—
1,230
—
1,230
0.01
Other, net
—
—
—
6,150
916
5,234
0.03
Tax reform and discrete tax items 2
—
—
—
13,230
43,658
(30,428
)
(0.15
)
Adjusted Non-GAAP
$
2,529,527
$
1,495,743
$
1,033,784
$
968,358
$
202,395
$
765,100
$
3.80
3
Adjusted Non-GAAP % change vs. prior year
7.4
%
5.2
%
10.9
%
10.6
%
21.7
%
7.0
%
8.6
%
Percentages of Revenue:
GAAP
Adjusted
Non-GAAP
Gross profit
3.71%
3.70%
Operating expenses
2.90%
2.19%
Operating income
0.81%
1.51%
_______________________
1
Includes a $214.0 million opioid litigation accrual.2
Includes a tax benefit attributable to an adjustment of the Swiss valuation allowance (due to an increase in projected Swiss income and DTA utilization), tax expense relating to 2020 Swiss tax reform, and the currency remeasurement of the related deferred tax assets, the latter of which is recorded within Other Loss (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 March 31, 2023
Gross Profit
Operating Expenses
Operating Income
Income Before Income Taxes
Income Tax Expense
Net Income Attributable to Cencora
Diluted Earnings Per Share
GAAP
$
2,295,442
$
1,734,923
$
560,519
$
512,130
$
83,917
$
435,402
$
2.13
Gains from antitrust litigation settlements
—
—
—
—
2
(2
)
—
LIFO expense
54,270
—
54,270
54,270
12,676
41,594
0.20
Turkey highly inflationary impact
4,855
—
4,855
4,455
—
4,455
0.02
Acquisition-related intangibles amortization
—
(140,114
)
140,114
140,114
32,727
106,403
0.52
Litigation and opioid-related expenses
—
(15,813
)
15,813
15,813
3,693
12,120
0.06
Acquisition-related deal and integration expenses
—
(59,113
)
59,113
59,113
13,808
45,305
0.22
Restructuring and other expenses
—
(97,444
)
97,444
97,444
22,763
74,681
0.37
Foreign currency gain
—
—
—
(5,663
)
—
(5,663
)
(0.03
)
Tax reform 1
—
—
—
(2,182
)
(3,244
)
1,062
0.01
Adjusted Non-GAAP
$
2,354,567
$
1,422,439
$
932,128
$
875,494
$
166,342
$
715,357
$
3.50
Percentages of Revenue:
GAAP
Adjusted
Non-GAAP
Gross profit
3.62%
3.71%
Operating expenses
2.73%
2.24%
Operating income
0.88%
1.47%
_______________________
1
Includes tax expense relating to Swiss tax reform and the currency remeasurement of the related deferred tax assets, the latter of which is recorded within Other Loss (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.
GAAP TO NON-GAAP RECONCILIATIONS
(in thousands, except per share data)
(unaudited)
Six Months Ended March 31, 2024
Gross Profit
Operating Expenses
Operating Income
Income Before Income Taxes
Income Tax Expense
Net Income Attributable to Cencora
Diluted Earnings Per Share
GAAP
$
5,006,835
$
3,630,701
$
1,376,134
$
1,250,464
$
226,251
$
1,022,275
$
5.07
Gains from antitrust litigation settlements
(56,962
)
—
(56,962
)
(56,962
)
(14,715
)
(42,247
)
(0.21
)
LIFO credit
(71,280
)
—
(71,280
)
(71,280
)
(18,413
)
(52,867
)
(0.26
)
Turkey highly inflationary impact
40,279
—
40,279
40,129
—
40,129
0.20
Acquisition-related intangibles amortization
—
(330,523
)
330,523
330,523
85,357
244,298
1.21
Litigation and opioid-related expenses, net 1
—
(147,068
)
147,068
147,068
39,065
108,003
0.54
Acquisition-related deal and integration expenses
—
(43,673
)
43,673
43,673
11,708
31,965
0.16
Restructuring and other expenses
—
(110,068
)
110,068
110,068
23,916
86,152
0.43
Loss on remeasurement of equity investment
—
—
—
11,431
—
11,431
0.06
Other, net
—
—
—
6,372
807
5,565
0.03
Tax reform and discrete tax items 2
—
—
—
(3,455
)
24,742
(28,197
)
(0.14
)
Adjusted Non-GAAP
$
4,918,872
$
2,999,369
$
1,919,503
$
1,808,031
$
378,718
$
1,426,507
$
7.08
3
Adjusted Non-GAAP % change vs. prior year
9.8
%
6.6
%
15.2
%
15.6
%
27.1
%
11.9
%
14.0
%
Percentages of Revenue:
GAAP
Adjusted
Non-GAAP
Gross profit
3.56%
3.50%
Operating expenses
2.58%
2.13%
Operating income
0.98%
1.36%
_______________________
1
Includes a $214.0 million opioid litigation accrual, offset in part by a $92.2 million opioid settlement accrual reduction primarily as a result of the Company's prepayment of the net present value of a future obligation as permitted under its opioid settlement agreements.2
Includes a tax benefit attributable to an adjustment of the Swiss valuation allowance (due to an increase in projected Swiss income and DTA utilization), tax expense relating to 2020 Swiss tax reform, and the currency remeasurement of the related deferred tax assets, the latter of which is recorded within Other Loss (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)
Six Months Ended March 31, 2023
Gross Profit
Operating Expenses
Operating Income
Income Before Income Taxes
Income Tax Expense
Net Income Attributable to Cencora
Diluted Earnings Per Share
GAAP
$
4,441,395
$
3,247,733
$
1,193,662
$
1,105,585
$
201,202
$
915,147
$
4.46
Gains from antitrust litigation settlements
(49,899
)
—
(49,899
)
(49,899
)
(11,657
)
(38,242
)
(0.19
)
LIFO expense
79,320
—
79,320
79,320
18,529
60,791
0.30
Turkey highly inflationary impact
8,439
—
8,439
8,441
—
8,441
0.04
Acquisition-related intangibles amortization
—
(211,992
)
211,992
211,992
49,522
160,328
0.78
Litigation and opioid-related expenses
—
(28,519
)
28,519
28,519
6,662
21,857
0.11
Acquisition-related deal and integration expenses
—
(80,109
)
80,109
80,109
18,714
61,395
0.30
Restructuring and other expenses
—
(113,684
)
113,684
113,684
26,557
87,127
0.42
Foreign currency gain
—
—
—
(5,663
)
—
(5,663
)
(0.03
)
Recovery of non-customer note receivable
—
—
—
(1,148
)
—
(1,148
)
(0.01
)
Tax reform 1
—
—
—
(6,639
)
(11,608
)
4,969
0.02
Adjusted Non-GAAP
$
4,479,255
$
2,813,429
$
1,665,826
$
1,564,301
$
297,921
$
1,275,002
$
6.21
2
Percentages of Revenue:
GAAP
Adjusted
Non-GAAP
Gross profit
3.52%
3.55%
Operating expenses
2.57%
2.23%
Operating income
0.95%
1.32%
_______________________
1
Tax expense relating to 2020 Swiss tax reform and the currency remeasurement of the related deferred tax assets, the latter of which is recorded within Other Loss, Net.2
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.SUMMARY SEGMENT INFORMATION
(in thousands)
(unaudited)
Three Months Ended March 31,
Revenue
2024
2023
% Change
U.S. Healthcare Solutions
$
61,292,897
$
56,693,456
8.1%
International Healthcare Solutions
7,123,385
6,764,935
5.3%
Intersegment eliminations
(1,975
)
(1,186
)
Revenue
$
68,414,307
$
63,457,205
7.8%
Three Months Ended March 31,
Operating income
2024
2023
% Change
U.S. Healthcare Solutions
$
841,064
$
756,137
11.2%
International Healthcare Solutions
192,720
175,991
9.5%
Total segment operating income
1,033,784
932,128
10.9%
Gains from antitrust litigation settlements
8,714
—
LIFO credit (expense)
22,835
(54,270
)
Turkey highly inflationary impact
(23,053
)
(4,855
)
Acquisition-related intangibles amortization
(164,799
)
(140,114
)
Litigation and opioid-related expenses
(225,985
)
(15,813
)
Acquisition-related deal and integration expenses
(22,610
)
(59,113
)
Restructuring and other expenses
(75,627
)
(97,444
)
Operating income
$
553,259
$
560,519
(1.3)%
Percentages of Revenue:
U.S. Healthcare Solutions
Gross profit
2.74
%
2.74
%
Operating expenses
1.37
%
1.40
%
Operating income
1.37
%
1.33
%
International Healthcare Solutions
Gross profit
11.95
%
11.88
%
Operating expenses
9.24
%
9.28
%
Operating income
2.71
%
2.60
%
Cencora, Inc. (GAAP)
Gross profit
3.71
%
3.62
%
Operating expenses
2.90
%
2.73
%
Operating income
0.81
%
0.88
%
Cencora, Inc. (Non-GAAP)
Adjusted gross profit
3.70
%
3.71
%
Adjusted operating expenses
2.19
%
2.24
%
Adjusted operating income
1.51
%
1.47
%
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)
Six Months Ended March 31,
Revenue
2024
2023
% Change
U.S. Healthcare Solutions
$
126,476,699
$
112,930,035
12.0%
International Healthcare Solutions
14,193,612
13,376,213
6.1%
Intersegment eliminations
(3,171
)
(2,211
)
Revenue
$
140,667,140
$
126,304,037
11.4%
Six Months Ended March 31,
Operating income
2024
2023
% Change
U.S. Healthcare Solutions
$
1,539,188
$
1,328,553
15.9%
International Healthcare Solutions
380,315
337,273
12.8%
Total segment operating income
1,919,503
1,665,826
15.2%
Gains from antitrust litigation settlements
56,962
49,899
LIFO credit (expense)
71,280
(79,320
)
Turkey highly inflationary impact
(40,279
)
(8,439
)
Acquisition-related intangibles amortization
(330,523
)
(211,992
)
Litigation and opioid-related expenses, net
(147,068
)
(28,519
)
Acquisition-related deal and integration expenses
(43,673
)
(80,109
)
Restructuring and other expenses
(110,068
)
(113,684
)
Operating income
$
1,376,134
$
1,193,662
15.3%
Percentages of Revenue:
U.S. Healthcare Solutions
Gross profit
2.57
%
2.60
%
Operating expenses
1.35
%
1.42
%
Operating income
1.22
%
1.18
%
International Healthcare Solutions
Gross profit
11.76
%
11.53
%
Operating expenses
9.08
%
9.01
%
Operating income
2.68
%
2.52
%
Cencora, Inc. (GAAP)
Gross profit
3.56
%
3.52
%
Operating expenses
2.58
%
2.57
%
Operating income
0.98
%
0.95
%
Cencora, Inc. (Non-GAAP)
Adjusted gross profit
3.50
%
3.55
%
Adjusted operating expenses
2.13
%
2.23
%
Adjusted operating income
1.36
%
1.32
%
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)
March 31,
September 30,
2024
2023
ASSETS
Current assets:
Cash and cash equivalents
$
2,068,858
$
2,592,051
Accounts receivable, net
22,642,880
20,911,081
Inventories
17,630,985
17,454,768
Right to recover assets
1,194,915
1,314,857
Prepaid expenses and other
623,414
526,069
Total current assets
44,161,052
42,798,826
Property and equipment, net
2,089,497
2,135,171
Goodwill and other intangible assets
13,794,611
14,005,900
Deferred income taxes
256,890
200,667
Other long-term assets
3,565,996
3,418,182
Total assets
$
63,868,046
$
62,558,746
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
46,320,774
$
45,836,037
Accrued expenses and other
2,371,885
2,353,817
Short-term debt
1,069,152
641,344
Total current liabilities
49,761,811
48,831,198
Long-term debt
4,180,306
4,146,113
Accrued income taxes
315,559
310,676
Deferred income taxes
1,701,735
1,657,944
Accrued litigation liability
4,719,545
5,061,795
Other long-term liabilities
1,962,068
1,884,733
Total equity
1,227,022
666,287
Total liabilities and stockholders’ equity
$
63,868,046
$
62,558,746
CENCORA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended March 31,
2024
2023
Operating Activities:
Net income
$
1,024,213
$
904,383
Adjustments to reconcile net income to net cash provided by operating activities
635,324
527,840
Changes in operating assets and liabilities, excluding the effects of acquisitions:
Accounts receivable
(1,682,145
)
(861,202
)
Inventories
(119,023
)
(1,413,515
)
Accounts payable
497,670
2,391,172
Other, net
(349,325
)
(209,090
)
Net cash provided by operating activities
6,714
1,339,588
Investing Activities:
Capital expenditures
(186,970
)
(178,581
)
Cost of acquired companies, net of cash acquired 1
(2,310
)
(1,409,681
)
Non-customer note receivable
(50,000
)
—
Other, net
6,993
(11,633
)
Net cash used in investing activities
(232,287
)
(1,599,895
)
Financing Activities:
Net debt borrowings (repayments)
472,409
(685,101
)
Purchases of common stock 2
(436,378
)
(807,214
)
Exercises of stock options
18,629
31,712
Cash dividends on common stock
(212,692
)
(201,479
)
Employee tax withholdings related to restricted share vesting
(60,086
)
(67,954
)
Other, net
(10,381
)
(3,355
)
Net cash used in financing activities
(228,499
)
(1,733,391
)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
(13,671
)
88,822
Decrease in cash, cash equivalents, and restricted cash
(467,743
)
(1,904,876
)
Cash, cash equivalents, and restricted cash at beginning of period 3
2,752,889
3,593,539
Cash, cash equivalents, and restricted cash at end of period 3
$
2,285,146
$
1,688,663
_______________________
1
Includes $1,406.3 million for the acquisition of PharmaLex in the six months ended March 31, 2023.2
Includes $28.4 million of purchases in September 2022 that cash settled in October 2022.3
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:
March 31, 2024
September 30, 2023
March 31, 2023
September 30, 2022
Cash and cash equivalents
$
2,068,858
$
2,592,051
$
1,539,406
$
3,388,189
Restricted cash (included in Prepaid Expenses and Other)
151,446
97,722
87,740
144,980
Restricted cash (included in Other Long-Term Assets)
64,842
63,116
61,517
60,370
Cash, cash equivalents, and restricted cash
$
2,285,146
$
2,752,889
$
1,688,663
$
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:
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 second quarter of fiscal 2024, (i) revenue of $68.4 billion was negatively impacted by foreign currency translation of $304.2 million, resulting in revenue on a constant currency basis of $68.7 billion, and (ii) operating income of $1.0 billion was negatively impacted by foreign currency translation of $22.2 million, resulting in operating income on a constant currency basis of $1.1 billion. For the second quarter of fiscal 2024 in the International Healthcare Solutions segment, (i) revenue of $7.1 billion was negatively impacted by foreign currency translation of $304.2 million, resulting in revenue on a constant currency basis of $7.4 billion, and (ii) operating income of $192.7 million was negatively impacted by foreign currency translation of $22.2 million, resulting in operating income on a constant currency basis of $215.0 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/20240430709626/en/
Bennett S. Murphy Senior Vice President, Head of Investor Relations and Treasury 610-727-3693 bennett.murphy@cencora.com
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