10-QPeriod: Q1 FY2024

Cencora, Inc. Quarterly Report for Q1 Ended Dec 31, 2023

Filed January 31, 2024For Securities:COR

Summary

Cencora, Inc. (COR) reported strong revenue growth in the fourth quarter of fiscal year 2023, driven by a significant 15.9% increase in its U.S. Healthcare Solutions segment, bolstered by higher unit volumes, particularly in GLP-1 class drugs for diabetes and weight loss, specialty products, and COVID-19 vaccines. International Healthcare Solutions also saw a respectable 6.9% revenue increase, benefiting from growth in its European, Canadian, and Brazilian businesses, as well as the recent PharmaLex acquisition. Profitability saw a substantial improvement, with gross profit up 15.0% year-over-year, aided by increased sales and a favorable LIFO credit compared to an expense in the prior year. Operating income also saw a significant 30.0% increase, reflecting disciplined expense management and operating leverage from revenue growth. While the company continues to navigate significant opioid litigation accruals, a notable reduction in the opioid litigation settlement accrual due to a prepay significantly benefited current quarter results. The company also repurchased $385.5 million in common stock and increased its quarterly dividend, signaling confidence in its financial position and commitment to returning value to shareholders.

Financial Highlights

55 data points
Beta

Revenue

$72.25B

3.4% Gross Margin

Net Income

$601.50M

0.8% Net Margin

EPS (Diluted)

$2.98

Total Assets

$64.69B

Cash & Equivalents

$2.87B

Free Cash Flow

$810.94M

Financial Statements
Beta
Revenue$72.25B
Cost of Revenue$69.78B
Gross Profit$2.47B
SG&A Expenses$1.40B
Operating Income$822.88M
Net Income$601.50M
EPS (Basic)$3.01
EPS (Diluted)$2.98
Shares Outstanding (Basic)200.08M
Shares Outstanding (Diluted)201.84M

Key Highlights

  • 1Revenue increased by 15.0% to $72.3 billion year-over-year, primarily driven by the U.S. Healthcare Solutions segment's 15.9% growth.
  • 2GLP-1 class drug sales contributed significantly to revenue growth, with an increase of $2.1 billion.
  • 3Gross profit rose by 15.0% to $2.47 billion, supported by increased sales and a favorable LIFO credit.
  • 4Operating income saw a robust increase of 30.0% to $822.9 million, driven by both segment growth and improved operating leverage.
  • 5The company recorded a $92.2 million reduction in its opioid litigation settlement accrual due to a prepayment, positively impacting net income.
  • 6Cencora repurchased $385.5 million of its common stock during the quarter, with $423.5 million remaining under its repurchase program.
  • 7The quarterly dividend was increased by 5% to $0.51 per share.

Frequently Asked Questions

The primary driver of Cencora's revenue growth was the U.S. Healthcare Solutions segment, which experienced a 15.9% increase year-over-year. This growth was fueled by strong unit volume growth, particularly in GLP-1 class drugs for diabetes and weight loss, increased sales of specialty products, and higher sales of COVID-19 vaccines.

Cencora has a substantial opioid litigation accrual of $5.4 billion. In the current quarter, the company benefited from a $92.2 million reduction in this accrual due to a prepayment of a future obligation as permitted under its settlement agreements. This prepayment was made in January 2024 and reduced the accrued litigation liability.

Cencora demonstrates a commitment to returning capital to shareholders. During the quarter, the company repurchased $385.5 million of its common stock and has $423.5 million remaining under its authorized share repurchase program. Furthermore, the company increased its quarterly dividend by 5% to $0.51 per share, indicating confidence in its ongoing financial performance.

The acquisition of PharmaLex, which closed in January 2023, contributed incremental revenue to the International Healthcare Solutions segment. It is recognized as a component of the International Healthcare Solutions reportable segment and has positively impacted gross profit and operating income for that segment.