10-QPeriod: Q2 FY2010

Cencora, Inc. Quarterly Report for Q2 Ended Mar 31, 2010

Filed May 7, 2010For Securities:COR

Summary

AmerisourceBergen Corporation (now Cencora, Inc.) reported strong revenue growth of 11.5% for the quarter ended March 31, 2010, reaching $19.3 billion. This growth was primarily driven by its Pharmaceutical Distribution segment, with notable contributions from AmerisourceBergen Drug Corporation (ABDC) and AmerisourceBergen Specialty Group (ABSG). The company also saw a significant increase in operating income, up 25.4% year-over-year, driven by gross profit improvements stemming from generic product introductions and enhanced generic program profitability. Diluted earnings per share from continuing operations also saw a substantial rise. The company maintained a strong liquidity position with ample availability under its credit facilities and robust operating cash flow. Despite the positive operational results, investors should note the ongoing legal proceedings, including a qui tam matter and related shareholder derivative action, which could present future uncertainties. The company also continues to manage its debt structure, recently issuing new senior notes and repaying a portion of its revolving credit facility, aiming to extend debt maturities and improve financial flexibility. Management is optimistic about continued revenue growth in fiscal year 2010, projecting a range of 7% to 8%, though it anticipates a moderation in the second half of the year.

Financial Highlights

52 data points
Beta

Revenue

$19.30B

3.2% Gross Margin

Net Income

$181.01M

0.9% Net Margin

EPS (Diluted)

$0.63

Total Assets

$13.82B

Cash & Equivalents

$1.20B

Free Cash Flow

$342.62M

Financial Statements
Beta
Revenue$19.30B
Cost of Revenue$18.69B
Gross Profit$612.07M
SG&A Expenses$279.49M
Operating Income$311.23M
Net Income$181.01M
EPS (Basic)$0.64
EPS (Diluted)$0.63
Shares Outstanding (Basic)281.93M
Shares Outstanding (Diluted)287.16M

Key Highlights

  • 1Revenue increased by 11.5% to $19.3 billion for the quarter ended March 31, 2010, compared to the prior year quarter.
  • 2Operating income rose by 25.4% to $311.2 million for the quarter, indicating improved operational efficiency and profitability.
  • 3Diluted earnings per share from continuing operations increased by 34% to $0.63 for the quarter.
  • 4Gross profit margin improved slightly to 3.17% for the quarter, driven by generic product introductions and enhanced generic program profitability.
  • 5The company maintained strong liquidity, with $1.2 billion in cash and cash equivalents and significant availability under its credit facilities.
  • 6Significant share repurchases continued, with $255.2 million spent in the first six months of the fiscal year, reducing share count and potentially boosting EPS.
  • 7The company is actively managing its debt, having issued $400 million in new senior notes and utilizing these proceeds to repay outstanding amounts under its multi-currency revolving credit facility.

Frequently Asked Questions

The primary driver of revenue growth was the Pharmaceutical Distribution segment, with strong performance from AmerisourceBergen Drug Corporation (ABDC) and AmerisourceBergen Specialty Group (ABSG). This growth was fueled by new customer acquisitions and the overall market growth.

AmerisourceBergen expects to grow its revenues between 7% and 8% in fiscal year 2010. However, growth is anticipated to moderate in the second half of the year as the company reaches the anniversary of onboarding significant new customers in early 2009.

Yes, the company is involved in several legal matters, including a qui tam matter and related shareholder derivative action, which allege violations of health laws related to drug promotion and claims submission. While a district court dismissed some complaints, the relator and intervenors may appeal. The company is also involved in an antitrust litigation settlement with a pharmaceutical manufacturer and a separate matter with the Ontario Ministry of Health. These matters introduce a degree of uncertainty and could have future financial impacts.

AmerisourceBergen has a diversified debt structure including fixed-rate senior notes and variable-rate credit facilities. It recently issued $400 million in senior notes to extend debt maturities and used the proceeds to reduce its revolving credit facility borrowings. The company has strong liquidity from operating cash flow and available credit lines, which are expected to fund working capital, capital expenditures, dividends, and share repurchases.