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
- Revenue: In the second quarter of
fiscal 2024, revenue was $68.4 billion, up 7.8 percent compared to
the same quarter in the previous fiscal year, reflecting an 8.1
percent increase in revenue within U.S. Healthcare Solutions and a
5.3 percent increase in revenue within International Healthcare
Solutions.
- Gross Profit: Gross profit in the
second quarter of fiscal 2024 was $2.5 billion, a 10.6 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 3.71 percent, an increase of 9 basis
points from the prior year quarter.
- Operating Expenses: In the second
quarter of fiscal 2024, operating expenses were $2.0 billion, a
14.4 percent increase compared to the same period in the previous
fiscal year, primarily due to higher litigation and opioid-related
expenses and an increase in distribution, selling, and
administrative expenses compared to the prior year quarter.
- Operating Income: In the second
quarter of fiscal 2024, operating income was $553.3 million, a 1.3
percent decrease compared to the same period in the previous fiscal
year as the increases in litigation and opioid-related expenses and
distribution, selling, and administrative expenses exceeded the
increase in gross profit. Operating income as a percentage of
revenue was 0.81 percent in the second quarter of fiscal 2024, a
decrease of 7 basis points when compared to the prior year
quarter.
- Interest Expense, Net: In the
second quarter of fiscal 2024, net interest expense of $64.1
million was flat compared to the prior year quarter. Interest
expense increased as a result of increases in borrowings and
interest rates associated with variable-rate debt offset, in part,
by the September 30, 2023 divestiture of our less-than-wholly-owned
subsidiary in Egypt. The increase in interest expense was offset by
the increase in interest income due to higher investment interest
rates.
- Effective Tax Rate: The effective
tax rate was 9.8 percent for the second quarter of fiscal 2024 due
to discrete tax benefits associated with a foreign valuation
allowance adjustment. The effective tax rate was 16.4 percent in
the prior year quarter.
- Diluted Earnings Per Share:
Diluted earnings per share was $2.09 in the second quarter of
fiscal 2024, a 1.9 percent decrease compared to $2.13 in the
previous fiscal year’s second quarter.
- Diluted Shares Outstanding:
Diluted weighted average shares outstanding for the second quarter
of fiscal 2024 were 201.2 million, a decrease of 1.5 percent versus
the prior fiscal year second quarter primarily as a result of share
repurchases.
Second Quarter Adjusted (non-GAAP)
Results
- Revenue: No adjustments were made
to the GAAP presentation of revenue. In the second quarter of
fiscal 2024, revenue was $68.4 billion, up 7.8 percent compared to
the same quarter in the previous fiscal year, reflecting an 8.1
percent increase in revenue within U.S. Healthcare Solutions and a
5.3 percent increase in revenue within International Healthcare
Solutions.
- Adjusted Gross Profit: Adjusted
gross profit in the second quarter of fiscal 2024 was $2.5 billion,
a 7.4 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 3.70
percent in the fiscal 2024 second quarter, a decrease of 1 basis
point from the prior year quarter.
- Adjusted Operating Expenses: In
the second quarter of fiscal 2024, adjusted operating expenses were
$1.5 billion, a 5.2 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
second quarter of fiscal 2024, adjusted operating income was $1.0
billion, a 10.9 percent increase compared to the same period in the
prior fiscal year, driven by an 11.2 percent increase in U.S.
Healthcare Solutions and a 9.5 percent increase in International
Healthcare Solutions. Adjusted operating income as a percentage of
revenue was 1.51 percent in the fiscal 2024 second quarter, an
increase of 4 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 second quarter of fiscal 2024, net interest expense
of $64.1 million was flat compared to the prior year quarter.
Interest expense increased as a result of increases in borrowings
and interest rates associated with variable-rate debt offset, in
part, by the September 30, 2023 divestiture of our
less-than-wholly-owned subsidiary in Egypt. The increase in
interest expense was offset by the increase in interest income due
to higher investment interest rates.
- Adjusted Effective Tax Rate: The
adjusted effective tax rate was 20.9 percent for the second quarter
of fiscal 2024 compared to 19.0 percent in the prior year
quarter.
- Adjusted Diluted Earnings Per
Share: Adjusted diluted earnings per share was $3.80 in the
second quarter of fiscal 2024, an 8.6 percent increase compared to
$3.50 in the previous fiscal year’s second quarter.
- Diluted Shares Outstanding: No
adjustments were made to the GAAP presentation of diluted shares
outstanding. Diluted weighted average shares outstanding for the
second quarter of fiscal 2024 were 201.2 million, a decrease of 1.5
percent versus the prior fiscal year second 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 $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
- Cencora announced its leadership succession plan on March 12,
2024. Steven H. Collis will retire as President and Chief Executive
Officer and transition to the role of Executive Chair of the Board
of Directors, effective October 1, 2024. Robert P. Mauch, PharmD,
PhD, current Chief Operating Officer, will succeed Collis as
President and CEO, and will also be appointed as a member of the
Board effective the same date.
- Gina Clark, EVP and Chief Communications & Administration
Officer, informed the Company that she intends to retire from her
position, effective September 30, 2024.
- Cencora was recognized by Newsweek on its inaugural list of
“America’s Greenest Companies," which is a list that recognizes the
top 300 companies in the United States who are making progress to
positively change their sustainability footprint.
- Cencora released its 2023 DEI Progress Report and microsite,
detailing Cencora’s commitment to DEI, company progress, and the
impact for our people, our culture, and our communities.
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:
- Adjusted diluted earnings per share to be in the range of
$13.30 to $13.50, from the previous range of $13.25 to $13.50.
Additional expectations now include:
- International Healthcare Solutions segment revenue growth to be
in the range of 4 to 7 percent, narrowed from the previous range of
4 to 8 percent;
- Adjusted consolidated operating income growth to be in the
range of 9 to 11 percent, up from the previous range of 8 to 10
percent;
- U.S. Healthcare Solutions segment operating income growth to be
in the range of 10 to 12 percent, up from the previous range of 9
to 11 percent;
- The Company does not expect exclusive COVID-19 therapy
contributions for the balance of fiscal 2024 and no longer expects
to guide to ex-COVID growth rates;
- The fiscal year to date EPS contribution from exclusive
COVID-19 therapies in the U.S. Healthcare Solutions segment was
$0.06, all of which was recognized in the first quarter. Fiscal
2023 included $0.38 of consolidated exclusive COVID-19 contribution
with $0.31 in the U.S. Healthcare Solutions segment;
- Adjusted effective tax rate to be approximately 21 percent,
from the previous range of 20 percent to 21 percent; and
- Weighted average diluted shares outstanding are expected to be
approximately 201 to 202 million, from the previous range of
approximately 200 to 202 million.
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:
- Steven H. Collis, Chairman, President & Chief Executive
Officer
- James F. Cleary, Executive Vice President & Chief Financial
Officer
- Robert P. Mauch, Executive Vice President & Chief Operating
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 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:
- Leerink Healthcare Crossroads Conference May 30, 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
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:
- 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, net; 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, net 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 six
months ended March 31, 2024 and 2023. 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 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, net;
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 items, and the per share
impact of certain expenses relating to 2020 Swiss tax reform for
the six months ended March 31, 2024 and 2023 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
six months ended March 31, 2024, net cash provided by operating
activities of $6.7 million plus $237.7 million for the prepayment
of a future obligation as permitted under our opioid settlement
agreements was largely offset by capital expenditures of $187.0
million and gains from antitrust litigation settlements of $57.0
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
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.
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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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