Summary
Cencora, Inc. (formerly AmerisourceBergen Corporation) reported revenue of $37.15 billion for the third quarter ended March 31, 2017, a 4.1% increase compared to the prior year period. This growth was primarily driven by increased sales within the Pharmaceutical Distribution Services segment, particularly from larger customers and specialty oncology products. Despite the revenue increase, net income saw a notable decline, falling to $411.5 million from $603.5 million in the prior year quarter. This decrease was largely attributed to a significant year-over-year reduction in LIFO expense, which had inflated the prior year's profitability, and an absence of warrant income that benefited the prior year's results. The company's operational efficiency initiatives helped keep distribution, selling, and administrative expenses relatively flat as a percentage of revenue. Looking at the balance sheet, total assets grew to $34.4 billion, with current assets increasing due to higher merchandise inventories and accounts receivable. Total liabilities also rose, largely driven by substantial accounts payable. Stockholders' equity increased, reflecting retained earnings growth, though partially offset by share repurchases. The company continues to manage its debt effectively, with strong availability under its credit facilities. Investors should note the significant ongoing legal matters, particularly those related to controlled substances and government investigations, which represent a material uncertainty and potential financial risk.
Financial Highlights
54 data points| Revenue | $37.15B |
| Cost of Revenue | $35.89B |
| Gross Profit | $1.26B |
| SG&A Expenses | $521.84M |
| Operating Income | $624.98M |
| Net Income | $411.47M |
| EPS (Basic) | $1.89 |
| EPS (Diluted) | $1.86 |
| Shares Outstanding (Basic) | 217.65M |
| Shares Outstanding (Diluted) | 221.22M |
Key Highlights
- 1Revenue increased by 4.1% to $37.15 billion year-over-year for the third quarter, driven by the Pharmaceutical Distribution Services segment.
- 2Net income decreased significantly to $411.5 million from $603.5 million in the prior year quarter, primarily due to a favorable LIFO adjustment in the prior year and the absence of warrant income.
- 3Gross profit saw a substantial increase of 16.8% to $1.26 billion, largely due to a significant reduction in LIFO expense compared to the prior year.
- 4Distribution, selling, and administrative expenses as a percentage of revenue decreased by 6 basis points to 1.40%, reflecting improved operating efficiency.
- 5The company renewed its contract with Express Scripts in April 2017, extending it by five years to September 2022.
- 6Total assets increased to $34.4 billion, with growth in current assets driven by higher merchandise inventories and accounts receivable.
- 7The company faces significant legal and regulatory risks, including ongoing government investigations related to controlled substance diversion and marketing practices, which have the potential for material adverse financial impact.