01—Abstract
Summary
Summary of the 10-K filed November 24, 2015. Cited figures are marked; the original filing is the authoritative source.
Cencora, Inc. (formerly AmerisourceBergen Corporation) reported strong revenue growth of 13.7% to $135.96 billiona for the fiscal year ended September 30, 2015, driven by increased distribution to Walgreens Boots Alliance (WBA), growth in specialty pharmaceuticals, and the acquisition of MWI Veterinary Supply.
Despite this top-line growth, the company reported a net loss of $134.9 millionb, or a diluted loss of $0.62 per share. This loss was primarily attributed to significant "Warrant expense" ($912.7 million) related to its strategic partnership with WBA and higher "LIFO expense" ($542.8 million) due to changes in the generics pricing environment. The company also made substantial strategic moves, including the acquisition of MWI Veterinary Supply and PharMEDium Healthcare Holdings, signaling a focus on expanding its services into animal health and specialized pharmaceutical preparations.
Investors should note the significant impact of warrant valuation on earnings and the company's ongoing efforts to mitigate potential dilution. The company's financial health remains robust with total assets of $27.7 billionc, but liabilities also increased significantly to $24.3 billion, largely due to the new debt taken on for acquisitions.
The company continued its dividend growth, increasing its quarterly dividend by 17% to $0.34d per share, demonstrating a commitment to returning value to shareholders. However, the significant warrant expense and its impact on reported earnings are key points for investor consideration.
02—Key points
Key Highlights
- Revenue increased by 13.7% to $135.96 billion, driven by strong performance across key business segments and strategic acquisitions.
- The company reported a net loss of $134.9 million, primarily due to significant "Warrant expense" and increased "LIFO expense".
- Acquisitions of MWI Veterinary Supply and PharMEDium Healthcare Holdings were completed, expanding the company's reach into animal health and compounded sterile preparations.
- The strategic relationship with Walgreens Boots Alliance (WBA) continues to be a major driver of revenue growth.
- The company continued to return capital to shareholders, increasing its quarterly dividend by 17% to $0.34 per share.
- Debt levels increased significantly due to financing for recent acquisitions, impacting the company's leverage.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2015, Cencora, Inc. lost $0.00.
- Revenue$135.96B100.0%
- Cost of revenue−$132.43B97.4%
- Gross profit$3.53B2.6%
- Operating costs−$3.11B2.3%
- Operating income$422.2M0.3%
- Interest, other & tax−$560.4M0.4%
- Net income−$138.2M0.1%
Where FY2015 revenue went
$135.96B- Cost of revenue: $132.43B, 97% of revenue
- Operating income: $422.2M, 0.3% of revenue
- SG&A: $1.91B, 1.4% of revenue
- Other operating costs: $1.20B, 0.9% of revenue
Kept 0.3% as operating incomeOperating income $422.2M · 0.3%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed November 24, 2015Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $135.96B$119.57B | +13.7% |
| Cost of Revenue | $132.43B$116.59B | +13.6% |
| Gross Profit | $3.53B$2.98B | +18.3% |
| SG&A Expenses | $1.91B$1.58B | +20.7% |
| Operating Income | $422.22M$782.09M | −46.0% |
| Net Income | -$138.16M$274.23M | −150.4% |
| EPS (Basic) | $-0.63$1.21 | −152.1% |
| EPS (Diluted) | $-0.63$1.16 | −154.3% |
| Shares Outstanding (Basic) | 217.79M227.37M | −4.2% |
| Shares Outstanding (Diluted) | 217.79M235.41M | −7.5% |
05—Questions
Frequently Asked Questions
What was the primary reason for the company's net loss in fiscal year 2015?
The company reported a net loss of $134.9 million primarily due to significant "Warrant expense" of $912.7 million related to its strategic partnership with Walgreens Boots Alliance (WBA) and increased "LIFO expense" of $542.8 million, which impacted reported earnings despite strong revenue growth.
What were the major strategic initiatives undertaken by Cencora in fiscal year 2015?
Cencora completed two significant acquisitions: MWI Veterinary Supply, Inc. to expand into the animal health distribution market, and PharMEDium Healthcare Holdings, Inc. to strengthen its offerings in compounded sterile preparations for acute care hospitals.
How did the company's relationship with Walgreens Boots Alliance (WBA) impact its performance?
The distribution agreement with WBA was a significant driver of revenue growth, contributing an additional $7.3 billion in sales. However, the related "Warrant expense" also had a substantial impact on net income.
What is the company's outlook for dividends to shareholders?
Cencora demonstrated a commitment to returning value to shareholders by increasing its quarterly dividend by 17% to $0.34 per share in November 2015, and anticipates continuing to pay quarterly cash dividends.
What are the key risks facing the company as highlighted in the filing?
Key risks include intense competition, potential loss of major customers like WBA and Express Scripts, the impact of regulatory changes in the healthcare industry, fluctuations in pharmaceutical pricing, and the potential dilutive effect of outstanding warrants issued to WBA.
06—Continue