10-QPeriod: Q3 FY2022

Cencora, Inc. Quarterly Report for Q3 Ended Jun 30, 2022

Filed August 3, 2022For Securities:COR

Summary

Cencora, Inc. (formerly AmerisourceBergen Corporation) reported solid revenue growth of 12.5% in the third quarter of fiscal year 2022, reaching $60.1 billion. This growth was primarily driven by the strategic acquisition of Alliance Healthcare in June 2021 and organic growth across both its U.S. and International Healthcare Solutions segments. Despite increased operating expenses, largely due to integration costs and a goodwill impairment, the company demonstrated robust segment operating income growth of 19.9%, indicating effective operational management post-acquisition. While the company continues to navigate significant legal liabilities, particularly related to opioid litigation, substantial progress has been made in resolving these matters with a comprehensive settlement agreement in place. Management anticipates continued revenue growth and maintains a strong liquidity position supported by operating cash flows and available credit facilities, allowing for ongoing investments in technology and capital expenditures, as well as continued shareholder returns through dividends and share repurchases.

Financial Highlights

55 data points
Beta

Revenue

$60.06B

3.4% Gross Margin

Net Income

$406.96M

0.7% Net Margin

EPS (Diluted)

$1.92

Total Assets

$57.17B

Cash & Equivalents

$3.03B

Free Cash Flow

$295.23M

Financial Statements
Beta
Revenue$60.06B
Cost of Revenue$58.05B
Gross Profit$2.02B
SG&A Expenses$1.21B
Operating Income$487.30M
Net Income$406.96M
EPS (Basic)$1.95
EPS (Diluted)$1.92
Shares Outstanding (Basic)208.88M
Shares Outstanding (Diluted)211.74M

Key Highlights

  • 1Revenue increased by 12.5% to $60.1 billion in Q3 FY2022, driven by the Alliance Healthcare acquisition and organic growth.
  • 2Total segment operating income grew by 19.9%, demonstrating strong performance in both U.S. and International Healthcare Solutions segments.
  • 3The company made significant progress on opioid litigation settlements, with a comprehensive agreement impacting its accrued liability.
  • 4Operating expenses increased due to acquisition integration costs and a goodwill impairment of $75.9 million related to the Profarma reporting unit.
  • 5The company successfully divested two non-core subsidiaries, generating proceeds and refining its business portfolio.
  • 6Cencora's liquidity remains strong, with $3.0 billion in cash and cash equivalents and substantial availability under its credit facilities.

Frequently Asked Questions

The primary driver of revenue growth was the acquisition of Alliance Healthcare in June 2021, coupled with organic growth across both the U.S. and International Healthcare Solutions segments. The U.S. segment saw growth from increased sales to specialty physician practices and overall market growth, while the International segment benefited significantly from the Alliance Healthcare integration.

Cencora has reached a comprehensive settlement agreement for a substantial majority of opioid lawsuits filed by state and local governmental entities, which became effective for 46 states. The company's accrued litigation liability related to opioid settlements was $6.4 billion as of June 30, 2022. While a significant portion is settled, the company also has an estimated additional liability of $0.8 billion for states and subdivisions not initially part of the settlement. The company expects to pay approximately $5.9 billion over 18 years related to the comprehensive settlement.

Yes, the company recorded a goodwill impairment of $75.9 million related to its Profarma reporting unit. Additionally, operating expenses were impacted by integration costs associated with the Alliance Healthcare acquisition and other employee severance, litigation, and other charges.

Cencora maintains a strong liquidity position with $3.0 billion in cash and cash equivalents as of June 30, 2022. The company has significant availability under its multi-currency revolving credit facility ($2.4 billion commitment) and receivables securitization facility ($1.45 billion commitment). Debt management includes repaying certain senior notes and a term loan, while also utilizing credit facilities for seasonal working capital needs.