What was the primary driver of Cencora's revenue growth in the first quarter of 2020?

Cencora's revenue growth of 9.5% was primarily driven by its Pharmaceutical Distribution Services segment. Increased demand related to the onset of COVID-19 and strong specialty product sales also contributed to this growth.

What factors negatively impacted Cencora's gross profit despite revenue growth?

Cencora's gross profit decreased by 2.6% primarily due to significantly lower gains from antitrust litigation settlements compared to the prior year, and unfavorable LIFO (Last-In, First-Out) expense adjustments. These factors more than offset the gross profit increases in the Pharmaceutical Distribution Services and Other segments.

How did the PharMEDium business impact the company's financial results?

The company recorded a significant asset impairment charge related to its decision to permanently exit the PharMEDium compounding business. While this resulted in substantial impairment charges ($223.7 million in the current quarter), the overall operating income saw a significant increase compared to the prior year because the current quarter's impairment was substantially lower than the $570.0 million impairment recorded in the same period of the prior year. Furthermore, a substantial discrete tax benefit was recognized due to the exit from this business.

What is the company's outlook regarding the impact of COVID-19?

The company experienced increased demand in the first quarter of 2020 due to COVID-19, which boosted revenue and gross profit. However, they anticipate a proportionately lower revenue in the subsequent quarter as some of this demand was an acceleration of future purchases. The company is continuing to evaluate the potential impacts of a prolonged disruption on its revenue, operations, and cash flows, including potential impacts on customer financial conditions and supply chain disruptions.

COR 10-Q Quarterly Report Q2 FY2020 — Revenue, Net Income, EPS

Summary

Cencora, Inc. (COR) reported strong revenue growth of 9.5% year-over-year for the quarter ended March 31, 2020, reaching $47.4 billion. This increase was primarily driven by its Pharmaceutical Distribution Services segment, benefiting from growth in specialty product sales and an increase in demand related to the onset of COVID-19, which also boosted gross profit in the short term. Despite revenue growth, gross profit saw a slight decrease of 2.6% due to lower gains from antitrust litigation settlements and unfavorable LIFO (Last-In, First-Out) accounting adjustments. Operating income, however, significantly increased due to a substantial reduction in asset impairment charges related to the PharMEDium business compared to the prior year. A notable factor influencing net income was a significant tax benefit recognized in the current period, largely stemming from the company's decision to exit the PharMEDium business and provisions within the CARES Act.

Financial Highlights

56 data points

Beta

Revenue

$47.42B

0.0% Gross Margin

Net Income

$960.28M

0.0% Net Margin

EPS (Diluted)

$4.64

Total Assets

$42.04B

Cash & Equivalents

$3.69B

Free Cash Flow

$775.82M

Financial Statements

Beta

Revenue	$47.42B
Cost of Revenue	$46.03B
Gross Profit	$1.39B
SG&A Expenses	$693.41M
Operating Income	$309.51M
Net Income	$960.28M
EPS (Basic)	$4.68
EPS (Diluted)	$4.64
Shares Outstanding (Basic)	205.37M
Shares Outstanding (Diluted)	207.06M

Key Highlights

1Revenue increased by 9.5% to $47.4 billion in the quarter ended March 31, 2020, driven by the Pharmaceutical Distribution Services segment and increased demand due to COVID-19.
2Gross profit decreased by 2.6% to $1.39 billion, primarily due to lower gains from antitrust litigation settlements and LIFO expense, partially offset by increased gross profit in key segments.
3Operating income saw a substantial increase, benefiting from a significantly lower impairment charge for the PharMEDium business compared to the prior year.
4The company recognized a substantial discrete income tax benefit in the quarter, significantly boosting net income and EPS.
5Distribution, selling, and administrative expenses increased by 10.4%, partly due to higher freight, warehousing costs, and an increased bad debt expense related to COVID-19.
6The company maintained compliance with its financial leverage ratio covenants, indicating stable debt management.
7Total assets grew to $42.0 billion, with current assets showing a significant increase.

Cencora, Inc. Quarterly Report for Q2 Ended Mar 31, 2020

Summary

Financial Highlights

Key Highlights

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