What drove the significant increase in Cencora's revenue in fiscal year 2014?

The primary driver of Cencora's substantial revenue increase in fiscal year 2014 was the pharmaceutical distribution segment, particularly the full-year impact of the ten-year distribution agreement with Walgreens, which included the distribution of generic pharmaceutical products.

Why did net income decrease despite strong revenue growth?

Net income decreased due to several factors, including a substantial increase in warrant expenses related to the strategic partnership with Walgreens and Alliance Boots, a significant Last-In, First-Out (LIFO) expense, and a loss recognized from the early retirement of debt.

What is Cencora's strategy for future growth?

Cencora's strategy focuses on optimizing and growing its pharmaceutical distribution and specialty distribution and services businesses. Additionally, the company aims to expand its manufacturer services, which include commercialization support, and selectively divests non-core businesses to concentrate on these strategic areas.

What is the significance of the Walgreens and Alliance Boots partnership for Cencora?

The partnership is significant as it includes a ten-year distribution agreement that substantially boosted Cencora's revenue in FY2014. It also involves warrants issued to subsidiaries of Walgreens and Alliance Boots, which have created significant warrant expenses but are also being hedged and managed through share repurchases to mitigate potential dilution.

COR 10-K FY2014 Annual Report — Revenue, Net Income, EPS

Summary

Cencora, Inc. (formerly AmerisourceBergen Corporation) reported robust revenue growth of 35.9% in fiscal year 2014, reaching $119.6 billion. This surge was primarily driven by the company's pharmaceutical distribution segment, significantly boosted by a new ten-year distribution agreement with Walgreens that commenced in fiscal year 2014, including a full year of generic drug distribution. Despite the strong top-line performance, net income decreased by 36.3% to $276.5 million, largely due to significant warrant expenses related to the Walgreens and Alliance Boots strategic partnership, a large LIFO expense, and a loss on early debt retirement. The company's strategy remains focused on optimizing and growing its pharmaceutical distribution and specialty businesses, alongside its manufacturer services, while selectively divesting non-core assets. Management anticipates continued revenue growth in fiscal year 2015, supported by the ongoing Walgreens relationship and industry trends such as patent expirations leading to increased generic drug availability.

Financial Highlights

55 data points

Beta

Revenue

$119.57B

0.0% Gross Margin

Net Income

$274.23M

0.0% Net Margin

EPS (Diluted)

$1.16

Total Assets

$21.53B

Cash & Equivalents

$1.81B

Free Cash Flow

$1.20B

Financial Statements

Beta

Revenue	$119.57B
Cost of Revenue	$116.59B
Gross Profit	$2.98B
SG&A Expenses	$1.58B
Operating Income	$782.09M
Net Income	$274.23M
EPS (Basic)	$1.21
EPS (Diluted)	$1.16
Shares Outstanding (Basic)	227.37M
Shares Outstanding (Diluted)	235.41M

Key Highlights

1Revenue surged by 35.9% to $119.6 billion in FY2014, primarily driven by increased distribution to Walgreens.
2Net income declined by 36.3% to $276.5 million due to significant warrant expenses, LIFO charges, and debt retirement costs.
3The company's strategic focus includes growing its distribution and specialty businesses and expanding manufacturer services.
4Investments in international expansion were made, including a minority stake in Brazil's Profarma.
5Operating expenses increased by 36.9% mainly due to higher warrant expenses and costs associated with the Walgreens agreement.
6The company declared a quarterly dividend of $0.29 per share, an increase of 23% from the previous year.
7Significant share repurchases were undertaken to mitigate the dilutive effect of warrants issued in connection with the Walgreens partnership.

Cencora, Inc. Annual Report, Year Ended Sep 30, 2014

Summary

Financial Highlights

Key Highlights

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