10-QPeriod: Q3 FY2008

Cencora, Inc. Quarterly Report for Q3 Ended Jun 30, 2008

Filed August 6, 2008For Securities:COR

Summary

Cencora, Inc. (COR), formerly AmerisourceBergen Corporation, reported its financial results for the quarter ended June 30, 2008. The company saw a notable increase in total revenue, driven by growth in its Pharmaceutical Distribution segment and the acquisition of Bellco Health. However, this top-line growth was accompanied by a significant decrease in net income, largely due to a substantial impairment charge related to the planned divestiture of its PMSI business. This charge, combined with other operating expenses and a shift in revenue recognition from bulk deliveries, impacted overall profitability. Despite the decline in net income, the company's core pharmaceutical distribution business demonstrated resilience with increased operating income. Cencora also continued its share repurchase program, indicating a commitment to returning value to shareholders. Investors should monitor the impact of the PMSI divestiture and ongoing industry trends, such as changes in pharmaceutical reimbursement policies and competition, on future financial performance.

Financial Highlights

29 data points
Beta

Revenue

$18.00B

2.8% Gross Margin

Net Income

-$108.02M

-0.6% Net Margin

EPS (Diluted)

$-0.34

Cash & Equivalents

$583.09M

Free Cash Flow

$142.33M

Financial Statements
Beta
Revenue$18.00B
Cost of Revenue$17.50B
Gross Profit$498.05M
SG&A Expenses$271.10M
Operating Income$197.53M
Net Income-$108.02M
EPS (Basic)$-0.34
EPS (Diluted)$-0.34
Shares Outstanding (Basic)319.06M
Shares Outstanding (Diluted)322.23M

Key Highlights

  • 1Total revenue increased by 10% to $18.0 billion for the quarter ended June 30, 2008, compared to the prior year period, driven by the Pharmaceutical Distribution segment and the Bellco acquisition.
  • 2Net loss for the quarter was $(108.0 million), a significant decline from a net income of $129.9 million in the prior year quarter, primarily due to a $222.5 million non-cash charge for the divestiture of the PMSI business.
  • 3The Pharmaceutical Distribution segment's operating income increased by 22% to $205.4 million for the quarter, demonstrating strength in the core business.
  • 4The company recorded a $222.5 million non-cash charge related to the planned divestiture of its PMSI business, which included a $199.1 million goodwill impairment.
  • 5The company repurchased approximately $553.7 million of its common stock during the first nine months of fiscal 2008.
  • 6As of June 30, 2008, the company had $144.0 million remaining under its share repurchase program.

Frequently Asked Questions

The primary driver for the significant decrease in net income was a substantial non-cash charge of $222.5 million recognized in the quarter ended June 30, 2008. This charge was related to the company's commitment to divest its workers' compensation business, PMSI, and included a $199.1 million goodwill impairment and a $23.4 million estimated loss on sale.

The acquisition of Bellco Health contributed to revenue growth. For the quarter ended June 30, 2008, the acquisition accounted for approximately 3% of the total revenue increase in the Pharmaceutical Distribution segment.

The company committed to a plan to divest its workers' compensation business, PMSI, as of June 30, 2008. On July 23, 2008, an agreement was signed to sell PMSI for approximately $40 million, with an expected closing by the end of September 2008. The financial impact in the current quarter was a $222.5 million non-cash charge due to goodwill impairment and an estimated loss on sale.

As of June 30, 2008, the company had $144.0 million remaining under its share repurchase program and expected to utilize the majority of this availability by the end of September 2008, indicating a continued commitment to returning capital to shareholders.