01—Abstract
Summary
Summary of the 10-K filed November 19, 2019. Cited figures are marked; the original filing is the authoritative source.
Cencora, Inc. (formerly AmerisourceBergen) reported significant revenue growth in its fiscal year ending September 30, 2019, with a 6.9%a 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 millionb 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.
02—Key points
Key Highlights
- Revenue increased by 6.9% to $179.6 billion for the fiscal year ended September 30, 2019, driven by the Pharmaceutical Distribution Services segment.
- Operating income decreased by 23.0% to $1.1 billion, primarily due to a $570 million impairment of long-lived assets related to PharMEDium.
- The 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.
- The company's two largest customers, Walgreens Boots Alliance and Express Scripts, accounted for approximately 34% and 13% of revenue, respectively.
- Significant legal matters, including ongoing opioid litigation and regulatory issues with its PharMEDium subsidiary, continue to represent material risks and potential costs.
- The company repurchased $664.8 million of its common stock under its share repurchase programs during the fiscal year.
- Gross profit increased by 11.4% due to higher distribution revenue, antitrust litigation gains, and a LIFO credit.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Cencora, Inc. kept $0.00.
- Revenue$179.59B100.0%
- Cost of revenue−$174.45B97.1%
- Gross profit$5.14B2.9%
- Operating costs−$4.03B2.2%
- Operating income$1.11B0.6%
- Interest, other & tax−$256.6M0.1%
- Net income$855.4M0.5%
Where FY2019 revenue went
$179.59B- Cost of revenue: $174.45B, 97% of revenue
- Net income: $855.4M, 0.5% of revenue
- SG&A: $2.66B, 1.5% of revenue
- Other operating costs: $1.36B, 0.8% of revenue
Kept 0.5% as net incomeNet income $855.4M · 0.5%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed November 19, 2019Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $179.59B$167.94B | +6.9% |
| Cost of Revenue | $174.45B$163.33B | +6.8% |
| Gross Profit | $5.14B$4.61B | +11.4% |
| SG&A Expenses | $2.66B$2.46B | +8.3% |
| Operating Income | $1.11B$1.44B | −23.0% |
| Net Income | $855.37M$1.66B | −48.4% |
| EPS (Basic) | $4.07$7.61 | −46.5% |
| EPS (Diluted) | $4.04$7.53 | −46.3% |
| Shares Outstanding (Basic) | 210.16M217.87M | −3.5% |
| Shares Outstanding (Diluted) | 211.84M220.34M | −3.9% |
05—Questions
Frequently Asked Questions
What were the main drivers of Cencora's revenue growth in fiscal year 2019?
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.
What caused the significant decrease in operating income in fiscal year 2019?
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.
What are the major legal and operational challenges facing Cencora?
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.
How is Cencora managing its capital and shareholder returns?
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.
06—Continue