01—Abstract
Summary
Summary of the 10-K filed November 21, 2023. Cited figures are marked; the original filing is the authoritative source.
Cencora, Inc. (formerly AmerisourceBergen Corporation) reported a significant increase in revenue for the fiscal year ending September 30, 2023, driven primarily by its U.S. Healthcare Solutions segment.
This growth was fueled by increased unit volume, particularly in diabetes and weight loss medications (GLP-1 class), and specialty products. The company also saw a notable rise in gross profit, supported by increased sales, gains from antitrust litigation settlements, and expansion in its International Healthcare Solutions segment, including the acquisition of PharmaLex. However, operating expenses also rose, influenced by integration and rebranding costs associated with the company's name change.
Despite these revenue and gross profit increases, the company's net income saw a slight decrease year-over-year. This was partly due to higher operating expenses, increased amortization from recent acquisitions, and the absence of a prior year goodwill impairment credit.
Cencora continues to navigate a complex regulatory environment and manage the ongoing financial impact of opioid litigation, for which a substantial liability remains. The company also repurchased a significant amount of its own stock and continued to pay dividends, signaling a commitment to shareholder returns.
02—Key points
Key Highlights
- Revenue increased by 9.9% to $262.2 billion, driven by a 10.7% rise in U.S. Healthcare Solutions revenue, boosted by strong sales of GLP-1 products and specialty pharmaceuticals.
- Gross profit grew by 8.0% to $9.0 billion, benefiting from increased sales, gains from antitrust litigation settlements, and contributions from the PharmaLex acquisition.
- Operating expenses increased by 11.6%, primarily due to higher distribution, selling, administrative costs, amortization, and restructuring expenses.
- The company acquired PharmaLex for $1.473 billion, strengthening its specialized services for the life sciences industry, and invested $718.4 million in a joint venture for OneOncology.
- Cencora's U.S. Healthcare Solutions segment's operating income increased by 5.7%, while the International Healthcare Solutions segment's operating income saw a 2.0% decrease, largely due to unfavorable foreign currency exchange rates.
- The company maintained a strong balance sheet with $2.59 billion in cash and cash equivalents and approximately $4.15 billion in additional availability under its credit facilities.
- Cencora repurchased $1.18 billion of its common stock during the fiscal year and increased its quarterly dividend by 5%.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Cencora, Inc. kept $0.01.
- Revenue$262.17B100.0%
- Cost of revenue−$253.21B96.6%
- Gross profit$8.96B3.4%
- Operating costs−$6.62B2.5%
- Operating income$2.34B0.9%
- Interest, other & tax−$595.4M0.2%
- Net income$1.75B0.7%
Where FY2023 revenue went
$262.17B- Cost of revenue: $253.21B, 97% of revenue
- Net income: $1.75B, 0.7% of revenue
- SG&A: $5.31B, 2.0% of revenue
Kept 0.7% as net incomeNet income $1.75B · 0.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed November 21, 2023Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $262.17B$238.59B | +9.9% |
| Cost of Revenue | $253.21B$230.29B | +10.0% |
| Gross Profit | $8.96B$8.30B | +8.0% |
| SG&A Expenses | $5.31B$4.85B | +9.5% |
| Operating Expenses | $5.72B— | — |
| Operating Income | $2.34B$2.37B | −1.1% |
| Net Income | $1.75B$1.70B | +2.7% |
| EPS (Basic) | $8.62$8.15 | +5.8% |
| EPS (Diluted) | $8.53$8.04 | +6.1% |
| Shares Outstanding (Basic) | 202.51M208.47M | −2.9% |
| Shares Outstanding (Diluted) | 204.59M211.21M | −3.1% |
05—Questions
Frequently Asked Questions
What were Cencora's primary drivers of revenue growth in the most recent fiscal year?
Cencora's revenue growth was primarily driven by its U.S. Healthcare Solutions segment, which saw a 10.7% increase. Key factors included unit volume growth, particularly in diabetes and weight loss medications (GLP-1 class), and increased sales of specialty products to physician practices and health systems. International Healthcare Solutions also contributed, supported by acquisitions and increased sales in its European and Canadian businesses.
How did the acquisitions of PharmaLex and the investment in OneOncology impact Cencora?
The acquisition of PharmaLex for $1.473 billion in January 2023 expanded Cencora's specialized services for the life sciences industry and contributed incrementally to its International Healthcare Solutions segment's revenue and gross profit. The $718.4 million investment in the OneOncology joint venture further diversifies the company's healthcare solutions portfolio, particularly in the oncology space.
What are the significant ongoing legal or financial risks facing Cencora?
Cencora faces significant ongoing risks related to opioid litigation, for which it has accrued a substantial liability of $5.5 billion. Additionally, the company is subject to extensive government regulation in the pharmaceutical supply chain, potential customer concentration risks (with its two largest customers accounting for 40% of revenue), and risks associated with foreign currency fluctuations and geopolitical events impacting its international operations.
How did Cencora manage its capital during the fiscal year?
Cencora generated strong operating cash flow, allowing it to fund significant acquisitions, capital expenditures, and shareholder returns. The company repurchased approximately $1.18 billion of its common stock and increased its quarterly dividend by 5%, demonstrating a commitment to returning capital to shareholders while maintaining financial flexibility through its substantial credit facility availability.
06—Continue