10-QPeriod: Q1 FY2022

Cencora, Inc. Quarterly Report for Q1 Ended Dec 31, 2021

Filed February 2, 2022For Securities:COR

Summary

Cencora, Inc. (COR), formerly AmerisourceBergen, reported strong revenue growth of 13.5% to $59.6 billion for the quarter ended December 30, 2021, compared to the prior year. This growth was primarily driven by the significant contribution from the acquisition of Alliance Healthcare in June 2021, which substantially expanded the company's international presence. While the U.S. Healthcare Solutions segment saw a more modest 2.7% revenue increase, the International Healthcare Solutions segment experienced a remarkable 604.2% surge, largely due to the Alliance Healthcare acquisition. The company also demonstrated robust growth in gross profit, which increased by 41.9% to $2.06 billion, benefiting from both the Alliance Healthcare acquisition and organic growth within its segments. Operating income saw a healthy increase of 17.8% to $644.4 million. Investors should note the significant increase in operating expenses, up 56.5%, largely attributable to the integration of Alliance Healthcare, and a substantial increase in interest expense due to debt financing for the acquisition. The company continues to manage significant litigation related to opioid settlements, with a $6.7 billion accrual in place.

Financial Highlights

56 data points
Beta

Revenue

$59.63B

3.5% Gross Margin

Net Income

$449.11M

0.8% Net Margin

EPS (Diluted)

$2.13

Total Assets

$57.58B

Cash & Equivalents

$3.17B

Free Cash Flow

$783.72M

Financial Statements
Beta
Revenue$59.63B
Cost of Revenue$57.57B
Gross Profit$2.06B
SG&A Expenses$1.17B
Operating Income$644.40M
Net Income$449.11M
EPS (Basic)$2.15
EPS (Diluted)$2.13
Shares Outstanding (Basic)208.56M
Shares Outstanding (Diluted)211.17M

Key Highlights

  • 1Revenue increased by 13.5% to $59.6 billion, primarily driven by the acquisition of Alliance Healthcare.
  • 2International Healthcare Solutions revenue grew by an impressive 604.2% due to the Alliance Healthcare acquisition.
  • 3Gross profit rose by 41.9% to $2.06 billion, reflecting strong performance across segments and the impact of the acquisition.
  • 4Operating income increased by 17.8% to $644.4 million, indicating improved profitability.
  • 5Operating expenses increased by 56.5%, largely due to acquisition integration costs.
  • 6The company has accrued $6.7 billion for opioid litigation settlements, highlighting a significant ongoing contingent liability.
  • 7The company declared a cash dividend of $0.46 per share, a 5% increase from the previous quarter.

Frequently Asked Questions

The primary driver of Cencora's revenue growth was the acquisition of Alliance Healthcare in June 2021, which significantly expanded the company's international operations and contributed substantially to the reported revenue increase.

Cencora has accrued a total of $6.7 billion for opioid litigation and investigations. This amount includes a proposed global settlement with state and local governmental entities, which could involve payments of up to approximately $6.4 billion over 18 years. The company is actively engaged in settlement negotiations and litigation, but the ultimate outcome and exact payment amounts are subject to various contingencies.

The acquisition of Alliance Healthcare significantly impacted the company's financial structure by increasing total assets and liabilities. It was financed through a combination of cash on hand and new debt, leading to higher interest expenses. The integration also contributed to increased operating expenses, particularly in distribution, selling, and administrative costs.

The company expects its revenue growth percentage to be in the high-single to low-double digits in fiscal 2022. This outlook is influenced by industry growth trends, new product introductions, generic drug availability, economic conditions, and competitive dynamics.