10-KPeriod: FY2019

Cencora, Inc. Annual Report, Year Ended Sep 30, 2019

Filed November 19, 2019For Securities:COR

Summary

Cencora, Inc. (formerly AmerisourceBergen) reported significant revenue growth in its fiscal year ending September 30, 2019, with a 6.9% increase driven primarily by its Pharmaceutical Distribution Services segment. This growth was supported by strong specialty product sales, the consolidation of Profarma, and the acquisition of H.D. Smith. The company's diversification into Animal Health and Global Commercialization Services also contributed positively. Despite revenue increases, operating income saw a substantial decrease of 23.0% due to a significant $570 million impairment of long-lived assets related to its PharMEDium compounding operations, coupled with increased employee severance, litigation, and other costs. However, the company also benefited from gains on antitrust litigation settlements and a favorable LIFO credit compared to the prior year. Significant legal and operational challenges were noted, particularly concerning PharMEDium's regulatory compliance and the ongoing opioid litigation, which continue to be material factors impacting the company's financial performance and outlook.

Financial Highlights

56 data points
Beta

Revenue

$179.59B

2.9% Gross Margin

Net Income

$855.37M

0.5% Net Margin

EPS (Diluted)

$4.04

Total Assets

$39.17B

Cash & Equivalents

$3.37B

Free Cash Flow

$2.03B

Financial Statements
Beta
Revenue$179.59B
Cost of Revenue$174.45B
Gross Profit$5.14B
SG&A Expenses$2.66B
Operating Income$1.11B
Net Income$855.37M
EPS (Basic)$4.07
EPS (Diluted)$4.04
Shares Outstanding (Basic)210.16M
Shares Outstanding (Diluted)211.84M

Key Highlights

  • 1Revenue increased by 6.9% to $179.6 billion for the fiscal year ended September 30, 2019, driven by the Pharmaceutical Distribution Services segment.
  • 2Operating income decreased by 23.0% to $1.1 billion, primarily due to a $570 million impairment of long-lived assets related to PharMEDium.
  • 3The company reported net income attributable to AmerisourceBergen Corporation of $855.4 million, a significant decrease from $1.66 billion in the prior year, largely due to the asset impairment and a large tax benefit in the prior year.
  • 4The company's two largest customers, Walgreens Boots Alliance and Express Scripts, accounted for approximately 34% and 13% of revenue, respectively.
  • 5Significant legal matters, including ongoing opioid litigation and regulatory issues with its PharMEDium subsidiary, continue to represent material risks and potential costs.
  • 6The company repurchased $664.8 million of its common stock under its share repurchase programs during the fiscal year.
  • 7Gross profit increased by 11.4% due to higher distribution revenue, antitrust litigation gains, and a LIFO credit.

Frequently Asked Questions

Cencora's revenue grew by 6.9% to $179.6 billion in fiscal year 2019, primarily driven by the Pharmaceutical Distribution Services segment, which benefited from strong specialty product sales, the consolidation of Profarma, and the acquisition of H.D. Smith. Revenue growth was also observed in its Animal Health and Global Commercialization Services segments.

The operating income decreased by 23.0% to $1.1 billion. This decline was largely due to a substantial $570 million impairment of long-lived assets related to the company's PharMEDium compounding operations, as well as increased expenses for employee severance, litigation, and other costs.

Cencora faces significant challenges from ongoing opioid litigation, where it is involved in numerous lawsuits across the US. Additionally, its PharMEDium subsidiary is dealing with regulatory compliance issues, including a consent decree with the FDA, which has led to operational suspensions and remediation costs.

The company generated $2.3 billion in cash from operations in fiscal year 2019. It continued to return capital to shareholders by repurchasing approximately $664.8 million of its common stock under its authorized repurchase programs and maintained its quarterly cash dividend payments, with recent increases.