Cencora Reports Fiscal 2024 First Quarter Results

Revenue of $72.3 billion for the First Quarter, a 15.0% Percent Increase Year-Over-Year

First Quarter GAAP Diluted EPS of $2.98 and Adjusted Diluted EPS of $3.28

Adjusted Diluted EPS Guidance Range Raised to $13.25 to $13.50 for Fiscal 2024

CONSHOHOCKEN, Pa.–(BUSINESS WIRE)–Cencora, Inc. (NYSE: COR) today reported that in its fiscal year 2024 first quarter ended December 31, 2023, revenue increased 15.0 percent year-over-year to $72.3 billion. On the basis of U.S. generally accepted accounting principles (GAAP), diluted earnings per share (EPS) was $2.98 for the first quarter of fiscal 2024 compared to $2.33 in the prior year first quarter. Adjusted diluted EPS, which is a non-GAAP financial measure that excludes items described below, increased 21.0 percent to $3.28 in the fiscal first quarter from $2.71 in the prior year first quarter.

Cencora is updating its outlook for fiscal year 2024. The Company does not provide forward-looking guidance on a GAAP basis, as discussed below in Fiscal Year 2024 Expectations. Adjusted diluted EPS guidance has been raised from the previous range of $12.70 to $13.00 to a range of $13.25 to $13.50.

“Cencora had an exceptional start to our fiscal 2024 year, delivering strong results as we capitalize on the strength of the trends in our business, continue to prioritize customer centricity and enhance the services we provide, further differentiating the value we bring to our customers and stakeholders,” said Steven H. Collis, Chairman, President, and Chief Executive Officer at Cencora.

“As we look ahead to the rest of our fiscal year, we are focused on executing on our pharmaceutical-centric strategy and capturing opportunities through the robust capabilities our business offers within the ever-changing healthcare landscape,” continued Mr. Collis. “I remain inspired by our team members’ drive to deliver on our purpose by demonstrating passion and adaptability as we work through a complex, global healthcare system to improve lives every day.”

First Quarter Fiscal Year 2024 Summary Results

	GAAP	Adjusted (Non-GAAP)
Revenue	$72.3B	$72.3B
Gross Profit	$2.5B	$2.4B
Operating Expenses	$1.6B	$1.5B
Operating Income	$823M	$886M
Interest Expense, Net	$41M	$41M
Effective Tax Rate	23.0%	21.0%
Net Income Attributable to Cencora, Inc.	$602M	$661M
Diluted Earnings Per Share	$2.98	$3.28
Diluted Shares Outstanding	201.8M	201.8M

Below, Cencora presents descriptive summaries of the Company’s GAAP and adjusted (non-GAAP) quarterly results. In the tables that follow, GAAP results and GAAP to non-GAAP reconciliations are presented. For more information related to non-GAAP financial measures, including adjustments made in the periods presented, please refer to the “Supplemental Information Regarding Non-GAAP Financial Measures” following the tables.

First Quarter GAAP Results

• Revenue: In the first quarter of fiscal 2024, revenue was $72.3 billion, up 15.0 percent compared to the same quarter in the previous fiscal year, reflecting a 15.9 percent increase in revenue within U.S. Healthcare Solutions and a 6.9 percent increase in revenue within International Healthcare Solutions.

• Gross Profit: Gross profit in the first quarter of fiscal 2024 was $2.5 billion, a 15.0 percent increase compared to the same period in the previous fiscal year, primarily due to increases in gross profit in both reportable segments and a LIFO credit in the current year quarter in comparison to LIFO expense in the prior year quarter. Gross profit as a percentage of revenue was 3.42 percent, an increase of 1 basis point from the prior year quarter.

• Operating Expenses: In the first quarter of fiscal 2024, operating expenses were $1.6 billion, an 8.8 percent increase compared to the same period in the previous fiscal year, driven by increases in distribution, selling, and administrative expenses and amortization expense. This increase was partially offset by a $0.1 billion opioid litigation settlement accrual reduction primarily as a result of our commitment, which we made in December 2023, to prepay the net present value of a future obligation as permitted under our opioid settlement agreements. The prepayment was made in January 2024.

• Operating Income: In the first quarter of fiscal 2024, operating income was $822.9 million, a 30.0 percent increase compared to the same period in the previous fiscal year due to the increase in gross profit, offset in part by the increase in operating expenses. Operating income as a percentage of revenue was 1.14 percent in the first quarter of fiscal 2024, an increase of 13 basis points when compared to the prior year quarter.

• Interest Expense, Net: In the first quarter of fiscal 2024, net interest expense of $40.6 million decreased 11.8 percent versus the prior year quarter primarily due to an increase in interest income as a result of higher investment interest rates in the current year quarter in comparison to the prior year quarter and a decrease in interest expense primarily due to the September 30, 2023 divestiture of our less-than-wholly-owned subsidiary in Egypt.

• Effective Tax Rate: The effective tax rate was 23.0 percent for the first quarter of fiscal 2024 and included a discrete tax expense. The effective tax rate was 19.8 percent in the prior year quarter.

• Diluted Earnings Per Share: Diluted earnings per share was $2.98 in the first quarter of fiscal 2024, a 27.9 percent increase compared to $2.33 in the previous fiscal year’s first quarter.

• Diluted Shares Outstanding: Diluted weighted average shares outstanding for the first quarter of fiscal 2024 were 201.8 million, a decrease of 2.2 percent versus the prior fiscal year first quarter primarily as a result of share repurchases.

First Quarter Adjusted (non-GAAP) Results

• Revenue: In the first quarter of fiscal 2024, revenue was $72.3 billion, up 15.0 percent compared to the same quarter in the previous fiscal year, reflecting a 15.9 percent increase in revenue within U.S. Healthcare Solutions and a 6.9 percent increase in revenue within International Healthcare Solutions. On a constant currency basis, revenue was up 15.2 percent, reflecting 8.7 percent constant currency growth in International Healthcare Solutions revenue.

• Adjusted Gross Profit: Adjusted gross profit in the first quarter of fiscal 2024 was $2.4 billion, a 12.5 percent increase compared to the same period in the previous fiscal year due to increases in gross profit in both reportable segments. Adjusted gross profit as a percentage of revenue was 3.31 percent in the fiscal 2024 first quarter, a decrease of 7 basis points from the prior year quarter, due to the decline in the U.S. Healthcare Solutions gross profit margin related to increased sales of products labeled for diabetes and/or weight loss in the GLP-1 class, which have lower gross profit margins, partially offset by increased sales of COVID-19 vaccines, which have higher gross profit margins.

• Adjusted Operating Expenses: In the first quarter of fiscal 2024, adjusted operating expenses were $1.5 billion, an 8.1 percent increase compared to the same period in the previous fiscal year, primarily driven by an increase in distribution, selling, and administrative expenses to support the growth in our businesses.

• Adjusted Operating Income: In the first quarter of fiscal 2024, adjusted operating income was $885.7 million, a 20.7 percent increase compared to the same period in the prior fiscal year, driven by a 22.0 percent increase in U.S. Healthcare Solutions and a 16.3 percent increase in International Healthcare Solutions. On a constant currency basis, the Company’s adjusted operating income increased 21.6 percent compared to the prior year quarter. On a constant currency basis, International Healthcare Solutions segment operating income increased 20.2 percent. Adjusted operating income as a percentage of revenue was 1.23% in the fiscal 2024 first quarter, an increase of 6 basis points when compared to the prior year quarter.

• Interest Expense, Net: No adjustments were made to the GAAP presentation of net interest expense. In the first quarter of fiscal 2024, net interest expense of $40.6 million decreased 11.8 percent versus the prior year quarter primarily due to an increase in interest income as a result of higher investment interest rates in the current year quarter in comparison to the prior year quarter and a decrease in interest expense primarily due to the September 30, 2023 divestiture of our less-than-wholly-owned subsidiary in Egypt.

• Adjusted Effective Tax Rate: The adjusted effective tax rate was 21.0 percent for the first quarter of fiscal 2024 compared to 19.1 percent in the prior year quarter.

• Adjusted Diluted Earnings Per Share: Adjusted diluted earnings per share was $3.28 in the first quarter of fiscal 2024, a 21.0% increase compared to $2.71 in the previous fiscal year’s first quarter. On a constant currency basis, adjusted diluted earnings per share increased 21.8 percent compared to the prior year quarter.

• Diluted Shares Outstanding: No adjustments were made to the GAAP presentation of diluted shares outstanding. Diluted weighted average shares outstanding for the first quarter of fiscal 2024 were 201.8 million, a decrease of 2.2 percent versus the prior fiscal year first quarter primarily as a result of share repurchases.

Segment Discussion

The Company is organized geographically based upon the products and services it provides to its customers under two reportable segments: U.S. Healthcare Solutions and International Healthcare Solutions.

U.S. Healthcare Solutions

U.S. Healthcare Solutions revenue was $65.2 billion in the first quarter of fiscal 2024, an increase of 15.9 percent compared to the same quarter in the previous fiscal year due to overall market growth primarily driven by unit volume growth, including increased sales of products labeled for diabetes and/or weight loss in the GLP-1 class, increased sales of specialty products to physician practices and health systems, and increased sales of COVID-19 vaccines. Segment operating income of $698.1 million in the first quarter of fiscal 2024 was up 22.0 percent compared to the same period in the previous fiscal year reflecting an increase in gross profit, partially offset by an increase in operating expenses.

International Healthcare Solutions

Revenue in International Healthcare Solutions was $7.1 billion in the first quarter of fiscal 2024, an increase of 6.9 percent from the previous fiscal year’s first quarter primarily due to increased sales in our European distribution business and increased sales in our Canadian business. Segment operating income in the first quarter of fiscal 2024 was $187.6 million, an increase of 16.3 percent, primarily due to higher operating income at our global specialty logistics business, the January 2023 acquisition of PharmaLex, and growth at our Canadian business, partially offset by foreign currency pressure and higher information technology expenses in our European distribution business, and the September 2023 divestiture of the Company’s less-than-wholly-owned subsidiary in Egypt, which was profitable in the prior year quarter. On a constant currency basis, International Healthcare Solutions revenue and operating income increased by 8.7 percent and 20.2 percent, respectively.

Recent Company Highlights & Milestones

• Cencora’s premier global specialty logistics business announced expansion of storage capacity and cold chain capabilities with three new transport stations in the United States.
• Cencora earned a top score in Human Rights Campaign Foundation’s 2023-2024 Corporate Equality Index.
• On January 30, 2024, Cencora released its 2023 ESG Reporting Index and microsite, detailing the impact of its environmental, social, and governance programs and progress. For the sixth year in a row, selected information within the 2023 report was assured by ERM Certification and Verification Services.

Fiscal Year 2024 Expectations

The Company does not provide forward-looking guidance on a GAAP basis as certain financial information, the probable significance of which cannot be determined, is not available or cannot be reasonably estimated. Please refer to the Supplemental Information Regarding Non-GAAP Financial Measures following the tables for additional information.

Fiscal Year 2024 Expectations on an Adjusted (non-GAAP) Basis

Cencora is updating its fiscal year 2024 financial guidance to reflect its expected strong business performance for the full fiscal year, including the incremental contributions from commercial COVID-19 vaccine distribution in the first quarter. The Company’s previously communicated expectations for exclusive COVID-19 treatment contributions remain unchanged. The Company now expects:

• Revenue growth to be in the range of 10 to 12 percent, up from the previous range of 7 to 10 percent;
  • U.S. Healthcare Solutions revenue growth to be in the range of 11 to 13 percent, up from the previous range of 7 to 10 percent; and
• Adjusted diluted earnings per share to be in the range of $13.25 to $13.50, up from the previous range of $12.70 to $13.00.

Additional expectations now include:

• Adjusted consolidated operating income growth to be in the range of 8 to 10 percent, up from the previous range of 4 to 6 percent. Excluding certain contributions related to COVID-19, adjusted consolidated operating income growth to be in the range of 11 to 13 percent, up from the previous range of 7 to 9 percent;
  • U.S. Healthcare Solutions segment operating income growth to be in the range of 9 to 11 percent, up from the previous range of 4 to 7 percent. Expectations for segment operating income growth excluding exclusive COVID-19 therapy contributions to be in the range of 12 to 14 percent, up from the previous range of 7 to 10 percent;
  • International Healthcare Solutions segment operating income growth to be in the range of 5 to 8 percent, up from the previous range of 1 to 4 percent;
• Net interest expense to be in the range of $185 to $215 million, down from the previous range of $210 to $230 million; and
• For additional details regarding updated guidance expectations on a constant currency and ex-COVID-19 contribution basis, please refer to our slide presentation for investors.

Dividend Declaration

The Company’s Board of Directors declared a quarterly cash dividend of $0.51 per common share, payable February 26, 2024, to stockholders of record at the close of business on February 9, 2024.

Conference Call & Slide Presentation

The Company will host a conference call to discuss the results at 8:30 a.m. ET on January 31, 2024. A slide presentation for investors has also been posted on the Company’s website at investor.cencora.com. Participating in the conference call will be:

• Steven H. Collis, Chairman, President & Chief Executive Officer
• James F. Cleary, Executive Vice President & Chief Financial Officer

The dial-in number for the live call will be (833) 470-1428. From outside the United States and Canada, dial +1 (404) 975-4839. The access code for the call will be 457478. The live call will also be webcast via the Company’s website at investor.cencora.com. Users are encouraged to log on to the webcast approximately 10 minutes in advance of the scheduled start time of the call.

Replays of the call will be made available via telephone and webcast. A replay of the webcast will be posted on investor.cencora.com approximately one hour after the completion of the call and will remain available for one year. The telephone replay will also be available approximately one hour after the completion of the call and will remain available for seven days. To access the telephone replay from within the U.S. and Canada, dial (866) 813-9403. From outside the United States, dial +1 (929) 458-6194. The access code for the replay is 308642.

Upcoming Investor Event

Cencora management will be attending the following investor event in the coming months:

• Barclays Global Healthcare Conference March 14, 2024.

Please check the website for updates regarding the timing of the live presentation webcasts, if any, and for replay information.

About Cencora

Cencora is a leading global pharmaceutical solutions organization centered on improving the lives of people and animals around the world. We partner with pharmaceutical innovators across the value chain to facilitate and optimize market access to therapies. Care providers depend on us for the secure, reliable delivery of pharmaceuticals, healthcare products, and solutions. Our 46,000+ worldwide team members contribute to positive health outcomes through the power of our purpose: We are united in our responsibility to create healthier futures. Cencora is ranked #11 on the Fortune 500 and #24 on the Global Fortune 500 with more than $250 billion in annual revenue. Learn more at investor.cencora.com

Cencora’s Cautionary Note Regarding Forward-Looking Statements

Certain of the statements contained in this press release are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Securities Exchange Act”). Words such as “aim,” “anticipate,” “believe,” “can,” “continue,” “could,”, “estimate,” “expect,” “intend,” “may,” “might,” “on track,” “opportunity,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “strive,” “sustain,” “synergy,” “target,” “will,” “would” and similar expressions are intended to identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances and speak only as of the date hereof. These statements are not guarantees of future performance and are based on assumptions and estimates that could prove incorrect or could cause actual results to vary materially from those indicated. A more detailed discussion of the risks and uncertainties that could cause our actual results to differ materially from those indicated is included in the “Risk Factors” and “Management’s Discussion and Analysis” sections in the Company’s Annual Report on Form 10-K for the fiscal year ended September, 30, 2023 and elsewhere in that report and (ii) other reports filed by the Company pursuant to the Securities Exchange Act. The Company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by the federal securities laws.

CENCORA, INC.
FINANCIAL SUMMARY
(in thousands, except per share data)
(unaudited)
		Three Months Ended December 31, 2023				% of Revenue			Three Months Ended December 31, 2022				% of Revenue			% Change
Revenue		$	72,252,833						$	62,846,832						15.0	%
Cost of goods sold			69,784,021							60,700,879						15.0	%
Gross profit 1			2,468,812			3.42	%			2,145,953			3.41	%		15.0	%
Operating expenses:
Distribution, selling, and administrative			1,398,747			1.94	%			1,290,928			2.05	%		8.4	%
Depreciation and amortization			270,603			0.37	%			171,940			0.27	%		57.4	%
Litigation and opioid-related (credit) expenses 2			(78,917	)						12,706
Acquisition-related deal and integration expenses			21,063							20,996
Restructuring and other expenses			34,441							16,240
Total operating expenses			1,645,937			2.28	%			1,512,810			2.41	%		8.8	%
Operating income			822,875			1.14	%			633,143			1.01	%		30.0	%
Other income, net			(1,087	)						(6,328	)
Interest expense, net			40,564							46,016						(11.8	)%
Income before income taxes			783,398			1.08	%			593,455			0.94	%		32.0	%
Income tax expense			180,390							117,285
Net income			603,008			0.83	%			476,170			0.76	%		26.6	%
Net (income) loss attributable to noncontrolling interests			(1,508	)						3,575
Net income attributable to Cencora, Inc.		$	601,500			0.83	%		$	479,745			0.76	%		25.4	%
Earnings per share:
Basic		$	3.01						$	2.35						28.1	%
Diluted		$	2.98						$	2.33						27.9	%
Weighted average common shares outstanding:
Basic			200,081							204,032						(1.9	)%
Diluted			201,837							206,327						(2.2	)%

________________________________________
1		Includes a $48.2 million gain from antitrust litigation settlements, a $48.4 million LIFO credit, and Turkey foreign currency remeasurement expense of $17.2 million in the three months ended December 31, 2023. Includes a $49.9 million gain from antitrust litigation settlements, a $25.1 million LIFO expense, and Turkey foreign currency remeasurement expense of $3.6 million in the three months ended December 31, 2022.
2		The three months ended December 31, 2023 includes a net $92.2 million opioid litigation settlement accrual reduction primarily as a result of the Company’s commitment, which it made in December 2023, to prepay the net present value of a future obligation as permitted under its opioid settlement agreements.

CENCORA, INC.
GAAP TO NON-GAAP RECONCILIATIONS
(in thousands, except per share data)
(unaudited)
		Three Months Ended December 31, 2023
		Gross Profit				Operating Expenses				Operating Income				Income Before Income Taxes				Income Tax Expense				Net Income Attributable to Noncontrolling Interests				Net Income Attributable to Cencora				Diluted Earnings Per Share
GAAP		$	2,468,812			$	1,645,937			$	822,875			$	783,398			$	180,390			$	(1,508	)		$	601,500			$	2.98
Gains from antitrust litigation settlements			(48,248	)			—				(48,248	)			(48,248	)			(10,456	)			—				(37,792	)			(0.19	)
LIFO credit			(48,445	)			—				(48,445	)			(48,445	)			(10,498	)			—				(37,947	)			(0.19	)
Turkey highly inflationary impact			17,226				—				17,226				16,919				—				—				16,919				0.08
Acquisition-related intangibles amortization			—				(165,724	)			165,724				165,724				35,913				(435	)			129,376				0.64
Litigation and opioid-related credit, net 1			—				78,917				(78,917	)			(78,917	)			(12,028	)			—				(66,889	)			(0.33	)
Acquisition-related deal and integration expenses			—				(21,063	)			21,063				21,063				4,564				—				16,499				0.08
Restructuring and other expenses			—				(34,441	)			34,441				34,441				7,463				—				26,978				0.13
Loss on remeasurement of equity investment			—				—				—				10,201				—				—				10,201				0.05
Other, net			—				—				—				222				(109	)			—				331				—
Tax reform 2			—				—				—				(16,685	)			(18,916	)			—				2,231				0.01
Adjusted Non-GAAP		$	2,389,345			$	1,503,626			$	885,719			$	839,673			$	176,323			$	(1,943	)		$	661,407			$	3.28		3
Adjusted Non-GAAP % change vs. prior year			12.5	%			8.1	%			20.7	%			21.9	%			34.0	%							18.2	%			21.0	%

Percentages of Revenue:		GAAP			Adjusted Non-GAAP
Gross profit		3.42	%		3.31	%
Operating expenses		2.28	%		2.08	%
Operating income		1.14	%		1.23	%

________________________________________
1		Includes a net $92.2 million opioid litigation settlement accrual reduction primarily as a result of the Company’s commitment, which it made in December 2023, to prepay the net present value of a future obligation as permitted under its opioid settlement agreements.
2		Tax expense relating to 2020 Swiss tax reform and a gain on the currency remeasurement of the related deferred tax assets, the latter of which is recorded within Other Income, Net.
3		The sum of the components does not equal the total due to rounding.
Note: For more information related to non-GAAP financial measures, refer to the section titled “Supplemental Information Regarding Non-GAAP Financial Measures” of this release.

Contacts

Bennett S. Murphy
Senior Vice President, Head of Investor Relations and Treasury
610-727-3693
[email protected]

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