10-QPeriod: Q3 FY2010

Cencora, Inc. Quarterly Report for Q3 Ended Jun 30, 2010

Filed August 3, 2010For Securities:COR

Summary

AmerisourceBergen Corporation (COR) reported a solid financial performance for the quarter ended June 30, 2010, demonstrating growth in revenue and operating income compared to the prior year. Revenue increased by 6.6% to $19.6 billion, driven by strong performance in its Pharmaceutical Distribution segment, particularly within AmerisourceBergen Drug Corporation (ABDC) and AmerisourceBergen Specialty Group (ABSG). The company also saw a significant improvement in gross profit margin, up 18 basis points to 3.00%, largely attributed to the robust performance of its generic programs and a notable benefit from a new generic oncology drug launch. This growth, coupled with operating expense leverage, led to a 32.3% increase in operating income for the quarter. From a balance sheet perspective, the company maintained a strong liquidity position with substantial cash and cash equivalents, while also actively managing its debt structure. AmerisourceBergen continued its commitment to shareholder returns through share repurchases and dividend increases. Despite the positive financial trends, investors should remain aware of ongoing legal proceedings and potential risks outlined in the filing, which could impact future results.

Financial Highlights

55 data points
Beta

Revenue

$19.60B

3.0% Gross Margin

Net Income

$163.21M

0.8% Net Margin

EPS (Diluted)

$0.57

Total Assets

$14.00B

Cash & Equivalents

$1.31B

Free Cash Flow

$168.73M

Financial Statements
Beta
Revenue$19.60B
Cost of Revenue$19.01B
Gross Profit$588.37M
SG&A Expenses$289.29M
Operating Income$281.85M
Net Income$163.21M
EPS (Basic)$0.58
EPS (Diluted)$0.57
Shares Outstanding (Basic)281.19M
Shares Outstanding (Diluted)286.69M

Key Highlights

  • 1Revenue for the quarter increased by 6.6% to $19.6 billion, driven by growth in both ABDC and ABSG segments.
  • 2Gross profit increased by 13.3% to $588.4 million, with gross profit margin improving by 18 basis points to 3.00%, benefiting from generic programs and a new generic oncology drug launch.
  • 3Operating income saw a substantial increase of 32.3% to $281.9 million, reflecting revenue growth and improved operating expense leverage.
  • 4Diluted earnings per share from continuing operations rose to $0.57 from $0.42 in the prior year's quarter.
  • 5The company repurchased $350.3 million of its common stock during the nine months ended June 30, 2010, demonstrating a commitment to shareholder value.
  • 6Cash and cash equivalents stood at $1.31 billion at the end of the period, indicating a strong liquidity position.
  • 7The company is actively managing its debt, with total debt at $1.36 billion and significant availability under its revolving credit and securitization facilities.

Frequently Asked Questions

Revenue growth was primarily driven by the Pharmaceutical Distribution segment, with AmerisourceBergen Drug Corporation (ABDC) showing 8% growth and AmerisourceBergen Specialty Group (ABSG) showing 3% growth. This was due to factors such as growth from existing large customers, new customer additions, and overall pharmaceutical market growth.

Profitability improved due to a combination of factors: a 13.3% increase in gross profit, a strong performance from generic drug programs, a significant benefit from a new generic oncology drug launch, and increased contributions from fee-for-service agreements with manufacturers. Additionally, operating expenses as a percentage of revenue decreased, leading to operating leverage and a substantial rise in operating income.

AmerisourceBergen maintained a strong liquidity position with $1.31 billion in cash and cash equivalents at June 30, 2010. Total debt was $1.36 billion. The company also had significant availability under its multi-currency revolving credit facility ($673.4 million) and its receivables securitization facility ($700 million), providing ample resources for working capital and operational needs.

Yes, the company is involved in several significant legal matters, including a qui tam matter related to the sale of Amgen's Aranesp drug, a shareholder derivative action, and matters in Canada related to rebate payments and potential violations of the Food and Drug Act. While the company believes it has strong defenses and is actively litigating these matters, their ultimate outcome is uncertain and could potentially have a material adverse effect on financial condition or results of operations.