10-QPeriod: Q1 FY2023

Cencora, Inc. Quarterly Report for Q1 Ended Dec 31, 2022

Filed February 1, 2023For Securities:COR

Summary

Cencora, Inc. (COR), formerly AmerisourceBergen, reported solid revenue growth for the quarter ended December 31, 2022, with a 5.4% increase year-over-year, driven primarily by its U.S. Healthcare Solutions segment. This growth was fueled by increased unit volumes and expanded sales to specialty physician practices, though partially offset by declining sales of COVID-19 treatments. The company also demonstrated improved gross profit, up 4.2%, benefiting from higher gross profit in its U.S. operations and a one-time gain from antitrust litigation settlements. While operating expenses rose due to increased distribution, selling, and administrative costs, the company managed to control litigation and opioid-related expenses. Despite a slight decrease in total segment operating income, largely due to international currency headwinds, Cencora's financial performance indicates resilience and continued operational execution.

Financial Highlights

55 data points
Beta

Revenue

$62.85B

3.4% Gross Margin

Net Income

$479.75M

0.8% Net Margin

EPS (Diluted)

$2.33

Total Assets

$57.91B

Cash & Equivalents

$1.69B

Free Cash Flow

$634.35M

Financial Statements
Beta
Revenue$62.85B
Cost of Revenue$60.70B
Gross Profit$2.15B
SG&A Expenses$1.29B
Operating Income$633.14M
Net Income$479.75M
EPS (Basic)$2.35
EPS (Diluted)$2.33
Shares Outstanding (Basic)204.03M
Shares Outstanding (Diluted)206.33M

Key Highlights

  • 1Revenue increased by 5.4% to $62.8 billion compared to the prior year quarter, primarily driven by the U.S. Healthcare Solutions segment's 6.1% growth.
  • 2Gross profit rose by 4.2% to $2.1 billion, supported by increased sales in the U.S. and a $49.9 million gain from antitrust litigation settlements.
  • 3Operating income for U.S. Healthcare Solutions saw a modest 0.6% increase, reaching $572.4 million, while International Healthcare Solutions operating income decreased by 10.4% to $161.3 million.
  • 4The company repurchased $778.8 million of its common stock during the quarter, demonstrating a commitment to returning capital to shareholders.
  • 5Effective tax rate decreased to 19.8% from 24.6% in the prior year quarter, positively impacting net income.
  • 6Significant event post-quarter: Cencora announced its intent to change its name from AmerisourceBergen, effective in the second half of 2023, signaling a strategic shift.
  • 7The company completed the acquisition of PharmaLex Holding Gmbh for €1.381 billion effective January 1, 2023, expanding its international services for the life sciences industry.

Frequently Asked Questions

Cencora's revenue for the quarter ended December 31, 2022, increased by 5.4% to $62.8 billion compared to the same period last year. This growth was primarily driven by its U.S. Healthcare Solutions segment, which saw a 6.1% increase in revenue, largely due to higher unit volumes and increased sales to specialty physician practices. The International Healthcare Solutions segment experienced a slight decrease of 0.6% in revenue.

Gross profit increased by 4.2% to $2.1 billion, benefiting from higher gross profit in the U.S. Healthcare Solutions segment and a $49.9 million gain from antitrust litigation settlements. While operating expenses increased, primarily due to higher distribution, selling, and administrative costs, the company saw a decrease in litigation and opioid-related expenses. The effective tax rate also decreased to 19.8%, positively impacting net income.

Post-quarter, Cencora announced its intention to change its name from AmerisourceBergen to Cencora in the second half of 2023. Additionally, the company successfully acquired PharmaLex Holding Gmbh for €1.381 billion on January 1, 2023, to bolster its international services. Management expects future revenue growth to be influenced by industry trends, new drug introductions, generic competition, economic conditions, and currency exchange rates.

Cencora has a robust liquidity position with significant availability under its credit facilities. The company generated $710.1 million in cash from operating activities during the quarter. It also actively engaged in capital allocation by repurchasing $778.8 million of its common stock and paying $99.7 million in cash dividends. The company has a total debt of approximately $5.6 billion and expects future cash flows to be sufficient to cover its ongoing requirements, including long-term opioid litigation payments.