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Cencora, Inc. 8-K Report, Financial Results (May 1, 2024)

Reports
Earnings & Results·Regulation FD·Exhibits & Filings
Filing Date
Filed May 1, 2024
Period End
May 1, 2024
Security
COR
In the record · 2016–202610-K1010-Q338-K184

COR filed 10 annual reports (10-K), 33 quarterly reports (10-Q) and 184 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Nov ’18Nov ’18
  2. Material agreement8-K · Oct ’20Oct ’20
  3. Material agreement8-K · Dec ’22Dec ’22
  4. Leadership change8-K · Sep ’26Sep ’26

01—Abstract

Summary

Summary of the 8-K filed May 1, 2024. Cited figures are marked; the original filing is the authoritative source.

Cencora (COR) reported fiscal Q2 2024 (quarter ended March 31, 2024) with revenue up 7.8% year-over-year to $68.4 billiona, driven by an 8.1% increase in U.S. Healthcare Solutions (GLP-1 volume and specialty products) and a 5.3% increase in International Healthcare Solutions.

GAAP diluted EPS was $2.09b, down 1.9% from $2.13, while adjusted diluted EPS rose 8.6% to $3.80. The gap between GAAP and adjusted results was driven mainly by a $214.0 million opioid litigation accrual, acquisition-related intangibles amortization of $164.8 million, and restructuring charges of $75.6 million. GAAP operating income fell 1.3% to $553.3 million, while adjusted operating income grew 10.9% to $1.03 billion, indicating underlying profitability improved even as legal and restructuring costs weighed on reported results.

Management raised the low end of its fiscal 2024 adjusted EPS guidance to $13.30c–$13.50 from $13.25–$13.50, and raised adjusted operating income growth guidance to 9–11% from 8–10%. The company now expects no further exclusive COVID-19 therapy contributions for the balance of fiscal 2024, having recognized only $0.06 of EPS from them in Q1, versus $0.38 in fiscal 2023. The adjusted tax rate guidance is about 21%, up slightly, and share count is expected at 201–202 million.

The Board declared a $0.51d quarterly dividend and authorized a new $2.0 billion share repurchase program. Leadership succession was also announced, with CEO Steven Collis moving to Executive Chair and COO Robert Mauch becoming CEO effective October 1, 2024.

For investors, the key takeaways are steady top-line growth, improving adjusted margins, and continued capital return, offset by recurring opioid-related litigation costs and a GAAP earnings decline. The filing also shows a balance sheet with rising short-term debt to $1.07 billion and operating cash flow of only $6.7 million for the six months, reflecting working capital build in receivables and inventories and the prepayment of an opioid settlement obligation.

02—Key points

Key Highlights

  1. Revenue rose 7.8% year-over-year to $68.4 billion, with U.S. Healthcare Solutions up 8.1% to $61.3 billion, supported by GLP-1 unit volume growth and specialty product sales.
  2. GAAP diluted EPS fell 1.9% to $2.09, while adjusted diluted EPS rose 8.6% to $3.80, reflecting a $214.0 million opioid litigation accrual and other excluded items.
  3. Adjusted operating income grew 10.9% to $1.03 billion, with U.S. segment operating income up 11.2% and International up 9.5%; GAAP operating income declined 1.3% to $553.3 million.
  4. Fiscal 2024 adjusted EPS guidance was narrowed upward to $13.30–$13.50 from $13.25–$13.50, and adjusted operating income growth guidance was raised to 9–11% from 8–10%.
  5. No further exclusive COVID-19 therapy contribution is expected for the rest of fiscal 2024, after only $0.06 of EPS in Q1 versus $0.38 in fiscal 2023; the company stopped guiding to ex-COVID growth rates.
  6. Board declared a $0.51 quarterly dividend and authorized a new $2.0 billion share repurchase program, while diluted share count fell 1.5% year-over-year.
  7. CEO Steven Collis will become Executive Chair and COO Robert Mauch will succeed him as President and CEO effective October 1, 2024.

03—Questions

Frequently Asked Questions

  1. Why did GAAP EPS decline while adjusted EPS grew strongly?

    GAAP diluted EPS fell 1.9% to $2.09 because of excluded items, chiefly a $214.0 million opioid litigation accrual, $164.8 million of acquisition-related intangibles amortization, and $75.6 million of restructuring and other expenses. Adjusted diluted EPS of $3.80 excludes these and other items management views as non-core, and rose 8.6%. Investors should weigh the recurring nature of opioid and restructuring costs when assessing the adjusted figure.

  2. What changed in the fiscal 2024 outlook?

    Adjusted diluted EPS guidance was narrowed to $13.30–$13.50 from $13.25–$13.50, and adjusted operating income growth was raised to 9–11% from 8–10%. U.S. segment operating income growth guidance moved to 10–12%. The company expects a slightly higher adjusted tax rate of about 21% and 201–202 million diluted shares. International revenue growth guidance was narrowed to 4–7%. Guidance excludes COVID-19 therapy contributions for the rest of the year.

  3. How much cash did Cencora generate and return to shareholders?

    Operating cash flow was only $6.7 million for the six months ended March 31, 2024, down sharply from $1.34 billion a year earlier, largely due to receivables growth of $1.68 billion and a $237.7 million opioid settlement prepayment. Shareholders received $212.7 million in dividends and $436.4 million in buybacks during the period. The new $2.0 billion repurchase authorization and $0.51 quarterly dividend signal continued capital return, though cash generation will be a focus for investors.

  4. What leadership changes were announced?

    Steven Collis will step down as President and CEO and become Executive Chair of the Board effective October 1, 2024. Robert Mauch, the current COO, will succeed him as President and CEO and join the Board on the same date. EVP and Chief Communications & Administration Officer Gina Clark also plans to retire effective September 30, 2024.

04—Continue

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