10-QPeriod: Q1 FY2017

Cencora, Inc. Quarterly Report for Q1 Ended Dec 31, 2016

Filed January 31, 2017For Securities:COR

Summary

Cencora, Inc. (COR) reported its financial results for the quarter ending December 31, 2016. The company demonstrated revenue growth of 4.0% year-over-year, reaching $38.17 billion, driven by increases in both its Pharmaceutical Distribution and Other segments. While revenue expanded, net income saw a decline from $329.6 million in the prior year to $247.2 million in the current quarter. This decrease was primarily influenced by a significant shift in income tax expenses, with a substantial benefit recorded in the prior year versus an expense in the current period, and the absence of a large warrant expense that impacted the prior year quarter. Despite the lower net income, the company maintained a strong operational performance with an increase in total segment operating income by 2.0%. The company also continued its commitment to shareholder returns through increased dividends and active share repurchases. Management highlighted initiatives to improve operating efficiency and expects continued revenue growth in fiscal year 2017. Investors should note the ongoing legal matters and investigations, which, while not currently quantifiable, represent a potential risk factor.

Financial Highlights

54 data points
Beta

Revenue

$38.17B

2.7% Gross Margin

Net Income

$247.25M

0.6% Net Margin

EPS (Diluted)

$1.11

Total Assets

$33.92B

Cash & Equivalents

$1.79B

Free Cash Flow

-$567.64M

Financial Statements
Beta
Revenue$38.17B
Cost of Revenue$37.13B
Gross Profit$1.04B
SG&A Expenses$520.55M
Operating Income$399.99M
Net Income$247.25M
EPS (Basic)$1.13
EPS (Diluted)$1.11
Shares Outstanding (Basic)218.66M
Shares Outstanding (Diluted)221.98M

Key Highlights

  • 1Revenue increased by 4.0% to $38.17 billion, driven by growth in Pharmaceutical Distribution and Other segments.
  • 2Net income decreased to $247.2 million from $329.6 million in the prior year quarter, largely due to a shift in income tax expense/benefit.
  • 3Total segment operating income increased by 2.0% to $486.2 million, indicating continued operational strength.
  • 4Distribution, selling, and administrative expenses decreased by 0.9%, reflecting efficiency improvement initiatives.
  • 5The company repurchased $229.9 million of its common stock during the quarter, with $888.9 million remaining under a new authorization.
  • 6The quarterly cash dividend was increased by 7% to $0.365 per share.
  • 7The company is actively involved in several ongoing legal investigations and proceedings, the outcomes of which are not yet estimable.

Frequently Asked Questions

Revenue grew by 4.0% to $38.17 billion, primarily driven by increased sales to larger customers within the Pharmaceutical Distribution segment and strong performance from specific business units within the Other segment, including ABCS and MWI.

Net income decreased from $329.6 million to $247.2 million mainly due to a significant change in income tax items. The prior year quarter benefited from a large income tax benefit related to an IRS private letter ruling on warrants, while the current quarter recorded income tax expense. Additionally, a large warrant expense in the prior year quarter was absent in the current period, but the tax impact was the primary driver of the year-over-year net income difference.

The company maintained a robust liquidity position with $1.79 billion in cash and cash equivalents. Total debt was $4.14 billion, with significant availability under revolving credit facilities and a receivables securitization facility, providing ample resources for ongoing operations, capital expenditures, and shareholder returns.

Yes, Cencora is involved in several ongoing government investigations and legal proceedings, particularly related to the distribution of controlled substances and other pharmaceutical products. While the company is actively engaged in discussions and defense, the outcomes and potential financial impact are not currently estimable and represent a significant contingency.