01—Abstract
Summary
Summary of the 10-K filed November 21, 2017. Cited figures are marked; the original filing is the authoritative source.
Cencora, Inc. (formerly AmerisourceBergen Corporation) reported a revenue increase of 4.3% for the fiscal year ended September 30, 2017, reaching $153.14 billiona.
This growth was primarily driven by its Pharmaceutical Distribution Services segment. Despite increased revenue, operating income saw a decline from $1.53 billion in the prior year to $1.06 billionb, largely due to significant litigation settlements and accruals totaling $914.4 million recognized during the fiscal year. The company also experienced a substantial increase in its effective tax rate to 60.3% in fiscal year 2017, impacted by non-deductible legal settlements.
The company continues to execute its strategy focused on optimizing and growing its pharmaceutical distribution and global sourcing businesses, as well as its global commercialization services and animal health segments. Strategic acquisitions remain a key component of its growth strategy.
Cencora operates a vast distribution network and serves a diverse customer base, with its two largest customers, Walgreens Boots Alliance and Express Scripts, accounting for approximately 45%c of its revenue. The company also highlighted its commitment to shareholder returns through dividend increases and share repurchases.
02—Key points
Key Highlights
- Revenue increased by 4.3% to $153.14 billion in fiscal year 2017, driven by the Pharmaceutical Distribution Services segment.
- Operating income decreased to $1.06 billion from $1.53 billion in the prior year, primarily due to $914.4 million in litigation settlements and accruals.
- The company's effective tax rate increased significantly to 60.3% in fiscal year 2017, impacted by non-deductible legal settlements.
- Cencora continues to focus on strategic growth through its core distribution services, global commercialization, and animal health businesses, alongside pursuing acquisitions.
- The company announced a plan to acquire H.D. Smith for $815 million, signaling continued investment in expanding its distribution scale.
- Walgreens Boots Alliance and Express Scripts remain significant customers, collectively representing approximately 45% of total revenue.
- Quarterly dividends per share have seen consistent increases, with a 4% rise announced in November 2017.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Cencora, Inc. kept $0.00.
- Revenue$153.14B100.0%
- Cost of revenue−$148.60B97.0%
- Gross profit$4.55B3.0%
- Operating costs−$3.49B2.3%
- Operating income$1.06B0.7%
- Interest, other & tax−$695.9M0.5%
- Net income$364.5M0.2%
Where FY2017 revenue went
$153.14B- Cost of revenue: $148.60B, 97% of revenue
- Net income: $364.5M, 0.2% of revenue
- SG&A: $2.13B, 1.4% of revenue
- Other operating costs: $1.36B, 0.9% of revenue
Kept 0.2% as net incomeNet income $364.5M · 0.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed November 21, 2017Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $153.14B$146.85B | +4.3% |
| Cost of Revenue | $148.60B$142.58B | +4.2% |
| Gross Profit | $4.55B$4.27B | +6.4% |
| SG&A Expenses | $2.13B$2.09B | +1.8% |
| Operating Income | $1.06B$1.53B | −30.5% |
| Net Income | $364.48M$1.43B | −74.5% |
| EPS (Basic) | $1.67$6.73 | −75.2% |
| EPS (Diluted) | $1.64$6.32 | −74.1% |
| Shares Outstanding (Basic) | 218.38M212.21M | +2.9% |
| Shares Outstanding (Diluted) | 221.60M225.96M | −1.9% |
05—Questions
Frequently Asked Questions
What was Cencora's revenue performance in fiscal year 2017?
Cencora reported a revenue of $153.14 billion for the fiscal year ended September 30, 2017, representing a 4.3% increase compared to the prior fiscal year. This growth was primarily attributed to its Pharmaceutical Distribution Services segment.
What were the primary drivers of the decline in operating income?
The operating income decreased significantly in fiscal year 2017 due to substantial litigation settlements and accruals, totaling $914.4 million. This also impacted the company's effective tax rate, making a portion of these settlements non-deductible.
What is Cencora's strategy for growth?
Cencora's strategy focuses on optimizing and growing its core pharmaceutical distribution and global sourcing businesses, as well as its global commercialization services and animal health segments. The company also actively considers strategic acquisitions to enhance its offerings and market presence, as demonstrated by the planned acquisition of H.D. Smith.
How reliant is Cencora on its major customers?
Cencora has a degree of customer concentration, with its two largest customers, Walgreens Boots Alliance and Express Scripts, accounting for approximately 45% of its total revenue in fiscal year 2017. The company acknowledges that the loss of any major customer or renegotiation of contracts at less favorable terms could adversely affect its financial results.
What is Cencora's approach to shareholder returns?
Cencora demonstrates a commitment to shareholder returns through consistent dividend increases and active share repurchase programs. The company announced a 4% increase in its quarterly dividend in November 2017 and had significant availability remaining under its share repurchase programs.
06—Continue