10-QPeriod: Q1 FY2012

Cencora, Inc. Quarterly Report for Q1 Ended Dec 31, 2011

Filed February 7, 2012For Securities:COR

Summary

Cencora, Inc. (formerly AmerisourceBergen Corporation) reported solid revenue growth in the quarter ended December 31, 2011, driven by its Pharmaceutical Distribution segment. The company acquired TheraCom, LLC for $250 million, expanding its consulting services, which is expected to contribute positively to future revenue. Despite a slight increase in interest expenses due to new debt issuance, the company demonstrated improved operating income and net income compared to the prior year period. The company also actively managed its capital structure, issuing new senior notes and continuing its share repurchase program, signaling confidence in its financial health and commitment to shareholder returns. Financially, AmerisourceBergen maintained a strong liquidity position with substantial cash and cash equivalents and significant availability under its revolving credit facilities and receivables securitization program. While facing some headwinds such as the loss of a major retail customer and potential impacts from generic drug conversions and changes in reimbursement rates, the company's diversified business model and strategic acquisitions position it for continued operational performance. Investors should monitor the integration of TheraCom and the impact of upcoming generic drug launches on gross profit margins.

Financial Highlights

55 data points
Beta

Revenue

$19.98B

2.9% Gross Margin

Net Income

$162.12M

0.8% Net Margin

EPS (Diluted)

$0.62

Total Assets

$15.98B

Cash & Equivalents

$2.37B

Free Cash Flow

$386.17M

Financial Statements
Beta
Revenue$19.98B
Cost of Revenue$19.41B
Gross Profit$573.26M
SG&A Expenses$257.19M
Operating Income$283.40M
Net Income$162.12M
EPS (Basic)$0.63
EPS (Diluted)$0.62
Shares Outstanding (Basic)258.46M
Shares Outstanding (Diluted)263.08M

Key Highlights

  • 1Revenue increased by 2.4% to $20.36 billion for the quarter ended December 31, 2011, compared to the prior year period.
  • 2Acquired TheraCom, LLC for $250 million to enhance consulting services (ABCS segment).
  • 3Operating income grew by 2.9% to $284.9 million, reflecting solid operational performance.
  • 4Net income increased by 1% to $162.1 million, with diluted EPS rising 9% to $0.62.
  • 5Issued $500 million in 3.5% senior notes due 2021 to fund general corporate purposes.
  • 6Continued share repurchase program, buying back $119.9 million worth of common stock during the quarter.
  • 7Maintained strong liquidity with $2.37 billion in cash and cash equivalents and over $1.3 billion in additional availability under credit facilities and securitization programs.

Frequently Asked Questions

Revenue growth was driven by a 2% increase from AmerisourceBergen Drug Corporation (ABDC) and a 4% increase from AmerisourceBergen Specialty Group (ABSG). Additionally, recent acquisitions, notably TheraCom, contributed approximately 0.6% to revenue growth.

The acquisition of TheraCom for $250 million on November 1, 2011, is expected to significantly increase the size and scope of the company's consulting services within the ABCS segment. TheraCom's annualized revenues are approximately $700 million. While its revenue and earnings impact was not material enough to require pro forma disclosure, it is a strategic addition to the company's service offerings.

AmerisourceBergen maintained a strong liquidity position with $2.37 billion in cash and cash equivalents at December 31, 2011. The company also had significant availability under its revolving credit facilities ($1.3 billion total availability) and its receivables securitization facility, providing ample capital resources to fund working capital, acquisitions, and other operational needs.

Key risks include the loss of a major retail customer (formerly Long's Drugs), the pending merger of Medco Health Solutions with Express Scripts (which could impact future contracts), potential adverse impacts from changes in medical guidelines or Medicare reimbursement rates for certain drugs (especially oncology and anemia drugs), and the anticipated decrease in gross profit from certain specialty generic drugs, partially offset by new generic conversions.