01—Abstract
Summary
Summary of the 10-K filed November 23, 2021. Cited figures are marked; the original filing is the authoritative source.
Cencora, Inc. (formerly AmerisourceBergen) reported strong revenue growth of 12.7%a for the fiscal year ended September 30, 2021, driven by its core Pharmaceutical Distribution Services segment and the significant acquisition of Alliance Healthcare in June 2021.
This acquisition notably expanded the company's international presence and service offerings. Despite revenue growth, the company faced challenges, particularly from ongoing opioid litigation, for which a significant accrual of $6.6 billionb was made in the prior fiscal year, with an additional $147.7 million in the current year. The company's strategy focuses on optimizing and growing its pharmaceutical distribution and global commercialization services, alongside its animal health business.
While the acquisition of Alliance Healthcare positively impacted revenue and gross profit, it also lowered the gross profit margin for the 'Other' segment due to the acquired entity's lower margin profile. Management anticipates continued revenue growth in the high-single to low-double digits for fiscal year 2022, though this is subject to various industry and economic factors.
02—Key points
Key Highlights
- Revenue increased by 12.7% to $213.99 billion, primarily driven by the acquisition of Alliance Healthcare and growth in the Pharmaceutical Distribution Services segment.
- Gross profit increased by 33.7% to $6.94 billion, benefiting from increased sales of specialty products, a LIFO credit, and gains from antitrust litigation settlements.
- Operating income saw a significant increase of 145.8% to $2.35 billion, largely due to a substantial decrease in operating expenses, mainly from lower legal accruals related to opioid litigation.
- The acquisition of Alliance Healthcare for $6.93 billion in June 2021 was a major event, expanding the company's global reach and services.
- The company continues to manage its substantial opioid litigation liability, recording an additional $147.7 million accrual, bringing the total to $6.7 billion.
- Debt levels increased significantly due to financing the Alliance Healthcare acquisition, with total debt rising to $6.68 billion.
- The company demonstrated a commitment to shareholders through consistent dividend increases and ongoing share repurchase programs.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Cencora, Inc. kept $0.01.
- Revenue$213.99B100.0%
- Cost of revenue−$207.05B96.8%
- Gross profit$6.94B3.2%
- Operating costs−$4.59B2.1%
- Operating income$2.35B1.1%
- Interest, other & tax−$814.3M0.4%
- Net income$1.54B0.7%
Where FY2021 revenue went
$213.99B- Cost of revenue: $207.05B, 97% of revenue
- Net income: $1.54B, 0.7% of revenue
- SG&A: $3.59B, 1.7% of revenue
Kept 0.7% as net incomeNet income $1.54B · 0.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed November 23, 2021Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $213.99B$189.89B | +12.7% |
| Cost of Revenue | $207.05B$184.70B | +12.1% |
| Gross Profit | $6.94B$5.19B | +33.7% |
| SG&A Expenses | $3.59B$2.77B | +29.9% |
| Operating Income | $2.35B-$5.14B | +145.8% |
| Net Income | $1.54B-$3.41B | +145.2% |
| EPS (Basic) | $7.48$-16.65 | +144.9% |
| EPS (Diluted) | $7.39$-16.65 | +144.4% |
| Shares Outstanding (Basic) | 205.92M204.78M | +0.6% |
| Shares Outstanding (Diluted) | 208.47M204.78M | +1.8% |
05—Questions
Frequently Asked Questions
What was the primary driver of Cencora's revenue growth in fiscal year 2021?
The primary drivers of Cencora's revenue growth in fiscal year 2021 were the continued growth in its Pharmaceutical Distribution Services segment and the significant acquisition of Alliance Healthcare in June 2021, which substantially expanded its international operations and service offerings.
What is the company's financial position regarding the opioid litigation?
Cencora recorded a significant accrual for opioid litigation liabilities. In fiscal year 2021, an additional $147.7 million was accrued, bringing the total accrual to $6.7 billion. The company believes a comprehensive settlement is probable and has made payments into escrow as part of a proposed settlement agreement.
How did the acquisition of Alliance Healthcare impact the company's financial performance?
The acquisition of Alliance Healthcare significantly boosted revenue and gross profit. However, it also lowered the gross profit margin within the 'Other' operating segment due to Alliance Healthcare's lower margin profile compared to other businesses in that segment. Debt levels also increased to finance the acquisition.
What are Cencora's key strategies for future growth?
Cencora's strategy focuses on optimizing and growing its core pharmaceutical distribution and global commercialization services, as well as its animal health business. The company also indicates a continued openness to strategic acquisitions and divestitures of non-core assets to align with its strategic focus.
06—Continue