Revenue of $68.9 Billion for the Fourth
Quarter, a 12.7 Percent Year-Over-Year Increase
Fourth Quarter GAAP Diluted EPS of $1.72 and
Adjusted Diluted EPS of $2.86
Revenue of $262.2 Billion for Fiscal Year 2023,
a 9.9 Percent Year-Over-Year Increase
Fiscal Year 2023 GAAP Diluted EPS of $8.53 and
Adjusted Diluted EPS of $11.99
Cencora, Inc. (NYSE: COR), formerly AmerisourceBergen
Corporation, today reported that in its fiscal year 2023 fourth
quarter ended September 30, 2023, revenue increased 12.7 percent to
$68.9 billion. Revenue increased 9.9 percent to $262.2 billion for
the fiscal year. On the basis of U.S. generally accepted accounting
principles (GAAP), diluted earnings per share (EPS) was $1.72 for
the September quarter of fiscal 2023, compared to $1.40 in the
prior year quarter. Adjusted diluted EPS, which is a non-GAAP
measure that excludes items described below, increased 10.0 percent
to $2.86 in the fiscal fourth quarter. For fiscal year 2023,
diluted EPS increased 6.1 percent to $8.53. For fiscal year 2023,
adjusted diluted EPS increased 8.7 percent to $11.99.
“Cencora delivered strong performance in fiscal 2023, which was
a seminal year for our company as our purpose-driven teams took key
steps to execute on our strategic imperatives and advance our
position at the center of healthcare,” said Steven H. Collis,
Chairman, President and Chief Executive Officer of Cencora.
“Coming together as a unified team under our new identity as
Cencora, we are showcasing our impact across pharmaceutical care
and our global footprint," Mr. Collis continued. "We move into
fiscal 2024 with strong momentum and remain focused on continuing
to enhance our position as a partner of choice for our customers
and pharmaceutical manufacturers as we drive differentiated
value-creation for all of our stakeholders."
Fourth Quarter Fiscal Year 2023 Summary
Results
GAAP
Adjusted (Non-GAAP)
Revenue
$68.9B
$68.9B
Gross Profit
$2.3B
$2.3B
Operating Expenses
$1.8B
$1.5B
Operating Income
$477M
$801M
Interest Expense, Net
$61M
$61M
Effective Tax Rate
21.8%
21.6%
Net Income Attributable to
Cencora
$351M
$581M
Diluted Earnings Per Share
$1.72
$2.86
Diluted Shares Outstanding
203.4M
203.4M
Below, Cencora presents descriptive summaries of the Company’s
GAAP and adjusted (non-GAAP) quarterly and fiscal year 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.
Fourth Quarter GAAP
Results
- Revenue: In the fourth quarter of
fiscal 2023, revenue was $68.9 billion, up 12.7 percent compared to
the same quarter in the previous fiscal year, reflecting a 13.0
percent increase in revenue within U.S. Healthcare Solutions and a
9.5 percent increase in revenue within International Healthcare
Solutions.
- Gross Profit: Gross profit in the
fiscal 2023 fourth quarter was $2.3 billion, a 13.5 percent
increase compared to the same period in the previous fiscal year
primarily due to increases in gross profit in both reportable
segments and gains from antitrust litigation settlements in the
current year quarter. Gross profit as a percentage of revenue was
3.27 percent, an increase of 2 basis points from the prior year
quarter.
- Operating Expenses: In the fourth
quarter of fiscal 2023, operating expenses were $1.8 billion, up
16.0 percent from the same period last fiscal year, primarily
driven by increases in distribution, selling, and administrative
expenses, and amortization expense compared to the prior year
quarter. Operating expenses as a percentage of revenue in the
fiscal 2023 fourth quarter were 2.58 percent compared to 2.50
percent for the same period in the previous fiscal year.
- Operating Income: In the fiscal
2023 fourth quarter, operating income was $476.9 million, up 4.9
percent 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
0.69 percent in the fourth quarter of fiscal 2023 compared to 0.74
percent for the same period in the previous fiscal year.
- Interest Expense, Net: In the
fiscal 2023 fourth quarter, net interest expense of $60.9 million
increased 18.3 percent versus the prior year quarter primarily due
to increases in intra-period variable-rate borrowings and
associated interest rates, offset in part by an increase in
interest income as a result of higher investment interest
rates.
- Effective Tax Rate: The effective
tax rate was 21.8 percent for the fourth quarter of fiscal 2023.
This compares to 21.9 percent in the prior year quarter.
- Diluted Earnings Per Share:
Diluted earnings per share was $1.72 in the fourth quarter of
fiscal 2023, up 22.9 percent compared to the previous fiscal year
fourth quarter.
- Diluted Shares Outstanding:
Diluted weighted average shares outstanding for the fourth quarter
of fiscal 2023 were 203.4 million, a decrease of 3.1 percent versus
the prior fiscal year fourth quarter primarily as a result of share
repurchases.
Fourth Quarter Adjusted (non-GAAP)
Results
- Revenue: No adjustments were made
to the GAAP presentation of revenue. In the fourth quarter of
fiscal 2023, revenue was $68.9 billion, up 12.7 percent compared to
the same quarter in the previous fiscal year, reflecting a 13.0
percent increase in revenue within U.S. Healthcare Solutions and a
9.5 percent increase in revenue within International Healthcare
Solutions. On a constant currency basis, International Healthcare
Solutions' revenue was up 10.1 percent.
- Adjusted Gross Profit: Adjusted
gross profit in the fiscal 2023 fourth quarter was $2.3 billion, a
9.4 percent increase compared to the same period in the previous
fiscal year due to an increase in gross profit in both reportable
segments. Adjusted gross profit as a percentage of revenue was 3.34
percent in the fiscal 2023 fourth quarter, a decrease of 10 basis
points when compared to the prior year quarter. The decrease was
due to the decline of U.S. Healthcare Solutions' gross profit
margin as a result of increased sales of products labeled for
diabetes and/or weight loss in the GLP-1 class, which have lower
gross profit margins, and lower sales of government-owned COVID-19
treatments, which have higher gross profit margins.
- Adjusted Operating Expenses: In
the fourth quarter of fiscal 2023, adjusted operating expenses were
$1.5 billion, an increase of 10.2 percent compared to the same
period in the previous fiscal year primarily due to an increase in
distribution, selling, and administrative expenses compared to the
prior year quarter. Adjusted operating expenses as a percentage of
revenue in the fiscal 2023 fourth quarter was 2.18 percent, a
decrease of 5 basis points when compared to the prior year
quarter.
- Adjusted Operating Income: In the
fiscal 2023 fourth quarter, adjusted operating income of $801.0
million increased 8.0 percent from the prior year quarter due to a
9.4 percent increase in U.S. Healthcare Solutions' operating income
and a 3.1 percent increase in operating income within International
Healthcare Solutions. On a constant currency basis, the Company’s
adjusted operating income increased 8.2 percent compared to the
prior year quarter. On a constant currency basis, International
Healthcare Solutions segment operating income increased 4.0
percent. Adjusted operating income as a percentage of revenue was
1.16 percent in the fiscal 2023 fourth quarter, a decrease of 5
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 fiscal 2023 fourth quarter, net interest expense of
$60.9 million increased 18.3 percent versus the prior year quarter
primarily due to increases in intra-period variable-rate borrowings
and associated interest rates, offset in part by an increase in
interest income as a result of higher investment interest
rates.
- Adjusted Effective Tax Rate: The
adjusted effective tax rate was 21.6 percent for the fourth quarter
of fiscal 2023 compared to 19.8 percent in the prior year
quarter.
- Adjusted Diluted Earnings Per
Share: Adjusted diluted earnings per share was up 10.0
percent to $2.86 in the fourth quarter of fiscal 2023 compared to
$2.60 in the previous fiscal year fourth quarter.
- Diluted Shares Outstanding: No
adjustments were made to the GAAP presentation of diluted shares
outstanding. Diluted weighted average shares outstanding for the
fourth quarter of fiscal 2023 were 203.4 million, a decrease of 3.1
percent versus the prior fiscal year fourth 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
Segment
U.S. Healthcare Solutions revenue was $61.9 billion, an increase
of 13.0 percent compared to the same quarter in the prior fiscal
year primarily 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 and increased
sales of specialty products to physician practices and health
systems. Segment operating income of $632.8 million in the fourth
quarter of fiscal 2023 was up 9.4 percent compared to the same
period in the previous fiscal year as a result of an increase in
gross profit of 6.3%, offset in part by an increase in operating
expenses of 4.1%.
International Healthcare
Solutions
Revenue in International Healthcare Solutions was $7.0 billion
in the fourth quarter of fiscal 2023, an increase of 9.5 percent
compared to the same period in the prior fiscal year due to
increased revenue across its businesses. Operating income within
International Healthcare Solutions increased 3.1 percent to $168.2
million in the fourth quarter of fiscal 2023 due to growth at its
global specialty logistics business and the January 2023
acquisition of PharmaLex, offset in part by a significant decline
at its less-than-wholly-owned Alliance Healthcare subsidiary in
Egypt. Cencora recently completed the divestiture of its stake in
its subsidiary in Egypt and the results of the business will no
longer be consolidated beginning in fiscal 2024. On a constant
currency basis, International Healthcare Solutions revenue and
operating income increased by 10.1 percent and 4.0 percent,
respectively.
Fiscal Year 2023 Summary
Results
GAAP
Adjusted (non-GAAP)
Revenue
$262.2B
$262.2B
Gross Profit
$9.0B
$9.0B
Operating Expenses
$6.6B
$5.7B
Operating Income
$2.3B
$3.3B
Interest Expense, Net
$229M
$229M
Effective Tax Rate
19.8%
20.3%
Net Income Attributable to
Cencora
$1.7B
$2.5B
Diluted Earnings Per Share
$8.53
$11.99
Diluted Shares Outstanding
204.6M
204.6M
Summary Fiscal Year GAAP
Results
In fiscal year 2023, GAAP diluted EPS was $8.53 compared to
$8.04 in the prior fiscal year. Revenue increased 9.9 percent from
last fiscal year to $262.2 billion. Gross profit increased 8.0
percent to $9.0 billion due to increases in gross profit in both
reportable segments, and an increase in gains from antitrust
litigation settlements, partially offset by an increase in LIFO
expense in the current fiscal year. Operating expenses increased
11.6 percent primarily due to an increase in distribution, selling,
and administrative expenses, amortization expense and restructuring
and other expenses, offset in part by a litigation and
opioid-related credit in the current fiscal year in comparison to
an expense in the prior fiscal year and the prior fiscal year
included a goodwill impairment. Operating income decreased 1.1
percent due to higher operating expenses, largely offset by higher
gross profit. Diluted weighted average shares outstanding in fiscal
2023 were 204.6 million, down 3.1 percent from the prior fiscal
year primarily due to share repurchases.
Summary Fiscal Year Adjusted (non-GAAP)
Results
In fiscal year 2023, adjusted diluted EPS was $11.99 compared to
$11.03 in the prior fiscal year. Revenue increased 9.9 percent to
$262.2 billion. Adjusted gross profit increased 7.3 percent to $9.0
billion due to the increases in gross profit in both reportable
segments. Adjusted operating expenses increased 9.2 percent to $5.7
billion primarily due to an increase in distribution, selling, and
administrative expenses. Adjusted operating income increased 4.0
percent to $3.3 billion due to increases in gross profit in both
reportable segments, offset in part by increased operating
expenses. Adjusted operating income margin decreased by 8 basis
points to 1.25 percent, primarily due to increased sales of sales
of products labeled for diabetes and/or weight loss in the GLP-1
class, which have lower gross profit margins, and lower sales of
government-owned COVID-19 treatments, which have higher gross
profit margins, and a negative impact of foreign currency rates in
comparison to the prior fiscal year. On a constant currency basis,
revenue and adjusted operating income grew 10.9 percent and 6.0
percent, respectively.
Recent Company Highlights &
Milestones
- Cencora completed its name change from AmerisourceBergen and
began trading under the ticker symbol “COR” on the New York Stock
Exchange on August 30, 2023. The new name underscores Cencora's
experience and vision when it comes to connecting manufacturers,
providers, pharmacies and patients, and ensuring the consistent,
reliable flow of treatments to those who need them at a time of
growing complexity.
- Good Neighbor Pharmacy, Cencora's national independent pharmacy
network, convened nearly 5,000 independent pharmacy owners and
other partners to celebrate its annual ThoughtSpot tradeshow and
conference. The event showcased the extraordinary collaboration,
commitment and perseverance of the Good Neighbor Pharmacy network
of pharmacists dedicated to improving community health.
Dividend Declaration
On November 1, 2023, the Company's Board of Directors declared a
quarterly dividend of $0.51 per common share, an increase in its
quarterly dividend rate from $0.485 per common share. The quarterly
dividend of $0.51 per common share will be payable November 27,
2023, to stockholders of record at the close of business on
November 13, 2023.
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 and 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 has introduced its fiscal year 2024 financial guidance.
The Company continues to provide "ex-COVID" growth guidance to
normalize for contributions related to exclusive COVID products,
which are government-owned treatments. The Company does not expect
a material contribution from exclusive COVID products beyond the
fiscal 2024 first quarter. Commercial COVID products, including
newly commercial COVID vaccines, are not excluded. The Company
expects:
- Revenue growth to be in the range of 7 to 10 percent;
- On a constant currency basis, revenue growth to be in the range
of 7 to 10 percent;
- U.S. Healthcare Solutions revenue growth to be in the range of
7 to 10 percent;
- International Healthcare Solutions revenue growth to be in the
range of 4 to 8 percent;
- International Healthcare Solutions constant currency revenue
growth to be in the range of 7 to 11 percent;
- Adjusted diluted earnings per share to be in the range of
$12.70 to $13.00.
Additional expectations include:
- Adjusted operating income growth to be in the range of 4 to 6
percent;
- On a constant currency basis, adjusted operating income growth
to be in the range of 5 to 7 percent;
- Excluding contributions related to COVID-19, adjusted operating
income growth to be in the range of 7 to 9 percent;
- On a constant currency basis, excluding contributions related
to COVID-19, adjusted operating income growth to be in the range of
8 to 10 percent;
- U.S. Healthcare Solutions segment operating income growth to be
in the range of 4 to 7 percent;
- Excluding contributions related to COVID-19, U.S. Healthcare
Solutions segment operating income growth to be in the range of 7
to 10 percent;
- International Healthcare Solutions segment operating income
growth to be in the range of 1 to 4 percent;
- On a constant currency basis, International Healthcare
Solutions segment operating income growth to be in range of 5 to 8
percent;
- Excluding contributions related to COVID-19, International
Healthcare Solutions segment operating income growth to be in the
range of 3 to 6 percent;
- On a constant currency basis, excluding contributions related
to COVID-19, International Healthcare Solutions segment operating
income growth to be in the range of 7 to 10 percent;
- Interest expense to be in the range of $210 million to $230
million;
- Adjusted effective tax rate to be approximately 20 percent to
21 percent;
- Adjusted free cash flow to be approximately $2.5 billion;
- Capital expenditures in the $500 million range; and
- Weighted average diluted shares outstanding are expected to be
approximately 200 to 202 million for the fiscal year.
For additional details on EPS growth rate excluding COVID-19
contributions, please refer to our slide presentation for
investors.
Conference Call & Slide
Presentation
The Company will host a conference call to discuss the results
at 8:30 a.m. ET on November 2, 2023. 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 016298. 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 U.S. and Canada, dial +1 (929)
458-6194. The access code for the replay is 205780.
Upcoming Investor Events
Cencora management will be attending the following investor
conference in the coming months:
- J.P. Morgan Healthcare Conference, January 8-11, 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
www.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 such forward-looking
statements, but the absence of these words does not mean the
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 (i) 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, 2022 and
elsewhere in that report as supplemented by the description of
business risks described in Item 1A to our form 10-Q for the fiscal
quarter ended March 31, 2023, to which mention is made herein and
(ii) in 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
September 30, 2023
% of Revenue
Three Months Ended
September 30, 2022
% of Revenue
% Change
Revenue
$
68,922,331
$
61,174,149
12.7
%
Cost of goods sold
66,668,879
59,188,590
12.6
%
Gross profit 1
2,253,452
3.27
%
1,985,559
3.25
%
13.5
%
Operating expenses:
Distribution, selling, and
administrative
1,393,828
2.02
%
1,263,462
2.07
%
10.3
%
Depreciation and amortization
276,226
0.40
%
170,562
0.28
%
62.0
%
Litigation and opioid-related expenses
13,890
15,024
Acquisition-related deal and integration
expenses
40,291
49,851
Restructuring and other expenses
52,276
32,141
Total operating expenses
1,776,511
2.58
%
1,531,040
2.50
%
16.0
%
Operating income
476,941
0.69
%
454,519
0.74
%
4.9
%
Other (income) loss, net 2
(30,424
)
20,656
Interest expense, net
60,942
51,523
18.3
%
Income before income taxes
446,423
0.65
%
382,340
0.63
%
16.8
%
Income tax expense
97,443
83,664
Net income
348,980
0.51
%
298,676
0.49
%
16.8
%
Net loss (income) attributable to
noncontrolling interests
1,585
(3,939
)
Net income attributable to Cencora,
Inc.
$
350,565
0.51
%
$
294,737
0.48
%
18.9
%
Earnings per share:
Basic
$
1.74
$
1.42
22.5
%
Diluted
$
1.72
$
1.40
22.9
%
Weighted average common shares
outstanding:
Basic
201,338
207,222
(2.8
)%
Diluted
203,395
209,961
(3.1
)%
__________________________________________
1
Includes a $70.6 million gain from
antitrust litigation settlements, a $90.3 million LIFO expense, and
Turkey foreign currency remeasurement expense of $27.9 million in
the three months ended September 30, 2023. Includes a $104.8
million LIFO expense and Turkey foreign currency remeasurement
expense of $12.4 million in the three months ended September 30,
2022.
2
Includes a $40.7 million gain on the
divestiture of non-core businesses in the three months September
30, 2023.
CENCORA, INC.
FINANCIAL SUMMARY
(in thousands, except per share
data)
(unaudited)
Fiscal Year Ended
September 30, 2023
% of Revenue
Fiscal Year Ended
September 30, 2022
% of Revenue
% Change
Revenue
$
262,173,411
$
238,587,006
9.9
%
Cost of goods sold
253,213,918
230,290,639
10.0
%
Gross profit 1
8,959,493
3.42
%
8,296,367
3.48
%
8.0
%
Operating expenses:
Distribution, selling, and
administrative
5,309,984
2.03
%
4,848,962
2.03
%
9.5
%
Depreciation and amortization
963,904
0.37
%
693,895
0.29
%
38.9
%
Litigation and opioid-related (credit)
expenses 2
(24,693
)
123,191
Acquisition-related deal and integration
expenses
139,683
119,561
Restructuring and other expenses
229,884
63,498
Impairment of assets
—
4,946
Goodwill impairment 3
—
75,936
Total operating expenses
6,618,762
2.52
%
5,929,989
2.49
%
11.6
%
Operating income
2,340,731
0.89
%
2,366,378
0.99
%
(1.1
)%
Other income, net 4
(49,036
)
(27,352
)
Interest expense, net
228,931
210,673
8.7
%
Income before income taxes
2,160,836
0.82
%
2,183,057
0.91
%
(1.0
)%
Income tax expense
428,260
516,517
Net income
1,732,576
0.66
%
1,666,540
0.70
%
4.0
%
Net loss attributable to noncontrolling
interests
12,717
32,280
Net income attributable to Cencora,
Inc.
$
1,745,293
0.67
%
$
1,698,820
0.71
%
2.7
%
Earnings per share:
Basic
$
8.62
$
8.15
5.8
%
Diluted
$
8.53
$
8.04
6.1
%
Weighted average common shares
outstanding:
Basic
202,511
208,472
(2.9
)%
Diluted
204,591
211,210
(3.1
)%
___________________________________________
1
Includes a $239.1 million gain from
antitrust litigation settlements, a $204.6 million LIFO expense,
and Turkey foreign currency remeasurement expense of $87.0 million
in the fiscal year ended September 30, 2023. Includes a $1.8
million gain from antitrust litigation settlements, a $67.2 million
LIFO expense, and Turkey foreign currency remeasurement expense of
$40.0 million in the fiscal year ended September 30, 2022.
2
Includes the receipt of $83.4 million from
the H.D. Smith opioid litigation indemnity escrow in the fiscal
year ended September 30, 2023.
3
The goodwill impairment is related to the
Company's less-than-wholly-owned subsidiary in Brazil in the fiscal
year ended September 30, 2022.
4
Includes a $40.7 million gain on the
divestiture of non-core businesses in the fiscal year ended
September 30, 2023. Includes a 56.2 million gain on the divestiture
of non-core businesses in the fiscal year ended September 30,
2022.
CENCORA, INC.
GAAP TO NON-GAAP
RECONCILIATIONS
(in thousands, except per share
data)
(unaudited)
Three Months Ended September
30, 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
$
2,253,452
$
1,776,511
$
476,941
$
446,423
$
97,443
$
1,585
$
350,565
$
1.72
Gains from antitrust litigation
settlements
(70,582
)
—
(70,582
)
(70,582
)
(16,719
)
—
(53,863
)
(0.26
)
LIFO expense
90,323
—
90,323
90,323
21,264
—
69,056
0.34
Turkey highly inflationary impact
27,948
—
27,948
29,916
—
—
29,916
0.15
Acquisition-related intangibles
amortization
—
(169,900
)
169,900
169,900
40,214
(968
)
128,718
0.63
Litigation and opioid-related expenses
—
(13,890
)
13,890
13,890
3,305
—
10,585
0.05
Acquisition-related deal and integration
expenses
—
(40,291
)
40,291
40,291
9,548
—
30,743
0.15
Restructuring and other expenses
—
(52,276
)
52,276
52,276
12,452
—
39,824
0.20
Gain on divestiture of non-core
businesses
—
—
—
(40,665
)
1,035
—
(41,700
)
(0.21
)
Other, net
—
—
—
4,310
781
—
3,529
0.02
Tax reform 1
—
—
—
4,824
(8,931
)
—
13,755
0.07
Adjusted Non-GAAP
$
2,301,141
$
1,500,154
$
800,987
$
740,906
$
160,392
$
617
$
581,131
$
2.86
Adjusted Non-GAAP % change vs. prior year
quarter
9.4
%
10.2
%
8.0
%
8.6
%
18.7
%
6.5
%
10.0
%
Percentages of Revenue:
GAAP
Adjusted
Non-GAAP
Gross profit
3.27%
3.34%
Operating expenses
2.58%
2.18%
Operating income
0.69%
1.16%
______________________________________
1
Includes 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) Loss, Net.
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.
CENCORA, INC.
GAAP TO NON-GAAP
RECONCILIATIONS
(in thousands, except per share
data)
(unaudited)
Three Months Ended September
30, 2022
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
$
1,985,559
$
1,531,040
$
454,519
$
382,340
$
83,664
$
(3,939
)
$
294,737
$
1.40
Gains from antitrust litigation
settlements
—
—
—
—
79
—
(79
)
—
LIFO expense
104,839
—
104,839
104,839
24,943
—
79,896
0.38
Turkey highly inflationary impact
12,415
—
12,415
18,543
—
—
18,543
0.09
Acquisition-related intangibles
amortization
—
(72,685
)
72,685
72,685
6,194
(1,127
)
65,364
0.31
Litigation and opioid-related expenses
—
(15,024
)
15,024
15,024
5,106
—
9,918
0.05
Acquisition-related deal and integration
expenses
—
(49,851
)
49,851
49,851
4,894
—
44,957
0.21
Restructuring and other expenses
—
(32,141
)
32,141
32,141
4,104
—
28,037
0.13
Gain on remeasurement of equity
investment
—
—
—
(4,834
)
—
—
(4,834
)
(0.02
)
Loss on divestiture of non-core
businesses
—
—
—
3,745
2,821
3,618
4,542
0.02
Certain discrete tax benefits
—
—
—
—
9,302
—
(9,302
)
(0.04
)
Tax reform 1
—
—
—
8,127
(5,951
)
—
14,078
0.07
Adjusted Non-GAAP
$
2,102,813
$
1,361,339
$
741,474
$
682,461
$
135,156
$
(1,448
)
$
545,857
$
2.60
Percentages of Revenue:
GAAP
Adjusted
Non-GAAP
Gross profit
3.25%
3.44%
Operating expenses
2.50%
2.23%
Operating income
0.74%
1.21%
______________________________________
1
Includes tax expense relating to Swiss tax
reform and a loss on the currency remeasurement of the related
deferred tax assets, the latter of which is recorded within Other
(Income) Loss, Net.
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.
CENCORA, INC.
GAAP TO NON-GAAP
RECONCILIATIONS
(in thousands, except per share
data)
(unaudited)
Fiscal Year Ended September
30, 2023
Gross Profit
Operating Expenses
Operating Income
Income Before Income
Taxes
Income Tax Expense
Net Loss Attributable to
Noncontrolling Interests
Net Income Attributable to
Cencora
Diluted Earnings Per
Share
GAAP
$
8,959,493
$
6,618,762
$
2,340,731
$
2,160,836
$
428,260
$
12,717
$
1,745,293
$
8.53
Gains from antitrust litigation
settlements
(239,092
)
—
(239,092
)
(239,092
)
(55,894
)
—
(183,198
)
(0.90
)
LIFO expense
204,595
—
204,595
204,595
47,830
—
156,765
0.77
Turkey highly inflationary impact
86,967
—
86,967
95,938
—
—
95,938
0.47
Acquisition-related intangibles
amortization
—
(551,046
)
551,046
551,046
128,823
(4,079
)
418,144
2.04
Litigation and opioid-related credit, net
1
—
24,693
(24,693
)
(24,693
)
13,717
—
(38,410
)
(0.19
)
Acquisition-related deal and integration
expenses
—
(139,683
)
139,683
139,683
32,655
—
107,028
0.52
Restructuring and other expenses
—
(229,884
)
229,884
229,884
53,742
—
176,142
0.86
Gain on divestiture of non-core
businesses
—
—
—
(40,665
)
1,035
—
(41,700
)
(0.20
)
Other, net
—
—
—
(5,501
)
781
—
(6,282
)
(0.03
)
Tax reform 2
—
—
—
(6,638
)
(29,287
)
—
22,649
0.11
Adjusted Non-GAAP
$
9,011,963
$
5,722,842
$
3,289,121
$
3,065,393
$
621,662
$
8,638
$
2,452,369
$
11.99
3
Adjusted Non-GAAP % change vs. prior
year
7.3
%
9.2
%
4.0
%
4.1
%
2.5
%
5.3
%
8.7
%
Percentages of Revenue:
GAAP
Adjusted
Non-GAAP
Gross profit
3.42%
3.44%
Operating expenses
2.52%
2.18%
Operating income
0.89%
1.25%
________________________________________
1
Includes the receipt of $83.4 million from
the H.D. Smith opioid litigation indemnity escrow.
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.
CENCORA, INC.
GAAP TO NON-GAAP
RECONCILIATIONS
(in thousands, except per share
data)
(unaudited)
Fiscal Year Ended September
30, 2022
Gross Profit
Operating Expenses
Operating Income
Income Before Income
Taxes
Income Tax Expense
Net Loss (Income) Attributable
to Noncontrolling Interests
Net Income
Attributable
to Cencora
Diluted Earnings Per
Share
GAAP
$
8,296,367
$
5,929,989
$
2,366,378
$
2,183,057
$
516,517
$
32,280
$
1,698,820
$
8.04
Gains from antitrust litigation
settlements
(1,835
)
—
(1,835
)
(1,835
)
(408
)
—
(1,427
)
(0.01
)
LIFO expense
67,171
—
67,171
67,171
14,943
—
52,228
0.25
Turkey highly inflationary impact
40,033
—
40,033
51,966
—
—
51,966
0.25
Acquisition-related intangibles
amortization
—
(304,551
)
304,551
304,551
67,749
(5,219
)
231,583
1.10
Litigation and opioid-related expenses
—
(123,191
)
123,191
123,191
24,111
—
99,080
0.47
Acquisition-related deal and integration
expenses
—
(119,561
)
119,561
119,561
23,401
—
96,160
0.46
Restructuring and other expenses
—
(63,498
)
63,498
63,498
12,428
—
51,070
0.24
Gain on remeasurement of equity
investment
—
—
—
(4,834
)
—
—
(4,834
)
(0.02
)
Goodwill impairment
—
(75,936
)
75,936
75,936
—
(47,004
)
28,932
0.14
Impairment of assets
—
(4,946
)
4,946
4,946
—
—
4,946
0.02
Gain on divestiture of non-core
businesses
—
—
—
(56,228
)
(10,372
)
3,618
(42,238
)
(0.20
)
Certain discrete tax benefits
—
—
—
—
(9,677
)
6,840
16,517
0.08
Tax reform 1
—
—
—
14,443
(32,109
)
—
46,552
0.22
Adjusted Non-GAAP
$
8,401,736
$
5,238,306
$
3,163,430
$
2,945,423
$
606,583
$
(9,485
)
$
2,329,355
$
11.03
2
Percentages of Revenue:
GAAP
Adjusted
Non-GAAP
Gross profit
3.48%
3.52%
Operating expenses
2.49%
2.20%
Operating income
0.99%
1.33%
________________________________________
1
Includes tax expense relating to Swiss tax
reform and a loss on the currency remeasurement of the related
deferred tax assets, the latter of which is recorded within Other
Income, Net.
2
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.
CENCORA, INC.
SUMMARY SEGMENT INFORMATION
(dollars in thousands)
(unaudited)
Three Months Ended September
30,
Revenue
2023
2022
% Change
U.S. Healthcare Solutions
$
61,928,984
$
54,788,447
13.0
%
International Healthcare Solutions
6,994,689
6,387,474
9.5
%
Intersegment eliminations
(1,342
)
(1,772
)
Revenue
$
68,922,331
$
61,174,149
12.7
%
Three Months Ended September
30,
Operating income
2023
2022
% Change
U.S. Healthcare Solutions
$
632,830
$
578,416
9.4
%
International Healthcare Solutions
168,157
163,058
3.1
%
Total segment operating income
800,987
741,474
8.0
%
Gains from antitrust litigation
settlements
70,582
—
LIFO expense
(90,323
)
(104,839
)
Turkey highly inflationary impact
(27,948
)
(12,415
)
Acquisition-related intangibles
amortization
(169,900
)
(72,685
)
Litigation and opioid-related expenses
(13,890
)
(15,024
)
Acquisition-related deal and integration
expenses
(40,291
)
(49,851
)
Restructuring and other expenses
(52,276
)
(32,141
)
Operating income
$
476,941
$
454,519
4.9
%
Percentages of revenue:
U.S. Healthcare Solutions
Gross profit
2.38
%
2.53
%
Operating expenses
1.36
%
1.47
%
Operating income
1.02
%
1.06
%
International Healthcare Solutions
Gross profit
11.84
%
11.22
%
Operating expenses
9.43
%
8.67
%
Operating income
2.40
%
2.55
%
Cencora, Inc. (GAAP)
Gross profit
3.27
%
3.25
%
Operating expenses
2.58
%
2.50
%
Operating income
0.69
%
0.74
%
Cencora, Inc. (Non-GAAP)
Adjusted gross profit
3.34
%
3.44
%
Adjusted operating expenses
2.18
%
2.23
%
Adjusted operating income
1.16
%
1.21
%
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.
CENCORA, INC.
SUMMARY SEGMENT INFORMATION
(dollars in thousands)
(unaudited)
Fiscal Year Ended September
30,
Revenue
2023
2022
% Change
U.S. Healthcare Solutions
$
234,759,218
$
212,100,202
10.7
%
International Healthcare Solutions
27,418,679
26,491,673
3.5
%
Intersegment eliminations
(4,486
)
(4,869
)
Revenue
$
262,173,411
$
238,587,006
9.9
%
Fiscal Year Ended September
30,
Operating income
2023
2022
% Change
U.S. Healthcare Solutions
$
2,596,559
$
2,456,972
5.7
%
International Healthcare Solutions
692,562
706,458
(2.0
)%
Total segment operating income
3,289,121
3,163,430
4.0
%
Gains from antitrust litigation
settlements
239,092
1,835
LIFO expense
(204,595
)
(67,171
)
Turkey highly inflationary impact
(86,967
)
(40,033
)
Acquisition-related intangibles
amortization
(551,046
)
(304,551
)
Litigation and opioid-related credit
(expenses)
24,693
(123,191
)
Acquisition-related deal and integration
expenses
(139,683
)
(119,561
)
Restructuring and other expenses
(229,884
)
(63,498
)
Goodwill impairment
—
(75,936
)
Impairment of assets
—
(4,946
)
Operating income
$
2,340,731
$
2,366,378
(1.1
)%
Percentages of revenue:
U.S. Healthcare Solutions
Gross profit
2.48
%
2.57
%
Operating expenses
1.37
%
1.41
%
Operating income
1.11
%
1.16
%
International Healthcare Solutions
Gross profit
11.64
%
11.12
%
Operating expenses
9.11
%
8.46
%
Operating income
2.53
%
2.67
%
Cencora, Inc. (GAAP)
Gross profit
3.42
%
3.48
%
Operating expenses
2.52
%
2.49
%
Operating income
0.89
%
0.99
%
Cencora, Inc. (Non-GAAP)
Adjusted gross profit
3.44
%
3.52
%
Adjusted operating expenses
2.18
%
2.20
%
Adjusted operating income
1.25
%
1.33
%
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.
CENCORA, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands)
(unaudited)
September 30,
2023
2022
ASSETS
Current assets:
Cash and cash equivalents
$
2,592,051
$
3,388,189
Accounts receivable, net
20,911,081
18,452,675
Inventories
17,454,768
15,556,394
Right to recover asset
1,314,857
1,532,061
Prepaid expenses and other
526,069
660,439
Total current assets
42,798,826
39,589,758
Property and equipment, net
2,135,171
2,135,003
Goodwill and other intangible assets
14,005,900
12,836,623
Deferred income taxes
200,667
237,571
Other long-term assets
3,418,182
1,761,661
Total assets
$
62,558,746
$
56,560,616
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
45,836,037
$
40,192,890
Accrued expenses and other
2,353,817
2,214,592
Short-term debt
641,344
1,070,473
Total current liabilities
48,831,198
43,477,955
Long-term debt
4,146,113
4,632,360
Accrued income taxes
310,676
320,274
Deferred income taxes
1,657,944
1,620,413
Accrued litigation liability
5,061,795
5,461,758
Other long-term liabilities
1,884,733
976,583
Total equity
666,287
71,273
Total liabilities and stockholders'
equity
$
62,558,746
$
56,560,616
CENCORA, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(in thousands)
(unaudited)
Fiscal Year Ended September
30,
2023
2022
Operating Activities:
Net income
$
1,732,576
$
1,666,540
Adjustments to reconcile net income to net
cash provided by operating activities
1,304,216
1,176,210
Changes in operating assets and
liabilities, excluding the effects of acquisitions and
divestitures:
Accounts receivable
(2,711,786
)
(1,659,525
)
Inventories
(2,183,368
)
(665,370
)
Accounts payable
6,103,451
3,320,725
Other, net
(333,755
)
(1,135,492
)
Net cash provided by operating
activities
3,911,334
2,703,088
Investing Activities:
Capital expenditures
(458,359
)
(496,318
)
Cost of acquired companies, net of cash
acquired 1
(1,409,835
)
(133,814
)
Cost of equity investments 2
(743,275
)
(18,491
)
Proceeds from the divestiture of
businesses
—
272,586
Other, net
9,004
7,600
Net cash used in investing activities
(2,602,465
)
(368,437
)
Financing Activities:
Net debt repayments
(623,258
)
(923,103
)
Purchases of common stock 3
(1,180,728
)
(483,704
)
Exercises of stock options
61,152
93,912
Cash dividends on common stock
(398,752
)
(391,687
)
Employee tax withholdings related to
restricted share vesting
(71,279
)
(38,076
)
Other, net
(9,413
)
(10,122
)
Net cash used in financing activities
(2,222,278
)
(1,752,780
)
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
72,759
(57,850
)
(Decrease) increase in cash, cash
equivalents, and restricted cash, including cash classified within
assets held for sale
(840,650
)
524,021
Less: Increase in cash classified within
assets held for sale
—
(610
)
(Decrease) increase in cash, cash
equivalents, and restricted cash
(840,650
)
523,411
Cash, cash equivalents, and restricted
cash at beginning of year 4
3,593,539
3,070,128
Cash, cash equivalents, and restricted
cash at end of year 4
$
2,752,889
$
3,593,539
________________________________________
1
Includes $1,406.5 million for the
acquisition of PharmaLex.
2
Includes a $718.4 million investment in
OneOncology.
3
Includes $28.4 million of purchases in
September 2022 that cash settled in October 2022.
4
The following represents a reconciliation
of cash and cash equivalents in the Condensed Consolidated Balance
Sheets to cash, cash equivalents, and restricted cash used in the
Condensed Consolidated Statements of Cash Flows:
September 30,
(amounts in thousands)
2023
2022
2021
Cash and cash equivalents
$
2,592,051
$
3,388,189
$
2,547,142
Restricted cash (included in Prepaid
Expenses and Other)
97,722
144,980
462,986
Restricted cash (included in Other
Assets)
63,116
60,370
60,000
Cash, cash equivalents, and restricted
cash
$
2,752,889
$
3,593,539
$
3,070,128
SUPPLEMENTAL INFORMATION REGARDING
NON-GAAP FINANCIAL MEASURES
To supplement the financial measures prepared in accordance with
U.S. generally accepted accounting principles (GAAP), the Company
uses the non-GAAP financial measures described below. The non-GAAP
financial measures should be viewed in addition to, and not in lieu
of, financial measures calculated in accordance with GAAP. These
supplemental measures may vary from, and may not be comparable to,
similarly titled measures by other companies.
The non-GAAP financial measures are presented because management
uses non-GAAP financial measures to evaluate the Company’s
operating performance, to perform financial planning, and to
determine incentive compensation. Therefore, the Company believes
that the presentation of non-GAAP financial measures provides
useful supplementary information to, and facilitates additional
analysis by, investors. The presented non-GAAP financial measures
exclude items that management does not believe reflect the
Company’s core operating performance because such items are outside
the control of the Company or are inherently unusual,
non-operating, unpredictable, non-recurring, or non-cash. We have
included the following non-GAAP earnings-related financial measures
in this release:
- Adjusted gross profit and adjusted gross profit margin:
Adjusted gross profit is a non-GAAP financial measure that excludes
gains from antitrust litigation settlements, Turkey highly
inflationary impact and LIFO expense (credit). Adjusted gross
profit margin is the ratio of adjusted gross profit to total
revenue. Management believes that these non-GAAP financial measures
are useful to investors as a supplemental measure of the Company’s
ongoing operating performance. Gains from antitrust litigation
settlements, Turkey highly inflationary impact and LIFO expense
(credit) are excluded because the Company cannot control the
amounts recognized or timing of these items. Gains from antitrust
litigation settlements relate to the settlement of lawsuits that
have been filed against brand pharmaceutical manufacturers alleging
that the manufacturer, by itself or in concert with others, took
improper actions to delay or prevent generic drugs from entering
the market. LIFO expense (credit) is affected by changes in
inventory quantities, product mix, and manufacturer pricing
practices, which may be impacted by market and other external
influences.
- Adjusted operating expenses and adjusted operating expense
margin: Adjusted operating expenses is a non-GAAP financial measure
that excludes acquisition-related intangibles amortization;
litigation and opioid-related expenses (credit);
acquisition-related deal and integration expenses; restructuring
and other expenses; impairment of assets; and goodwill impairment.
Adjusted operating expense margin is the ratio of adjusted
operating expenses to total revenue. Acquisition-related
intangibles amortization is excluded because it is a non-cash item
and does not reflect the operating performance of the acquired
companies. We exclude acquisition-related deal and integration
expenses and restructuring and other expenses that relate to
unpredictable and/or non-recurring business activities. We exclude
the amount of litigation and opioid-related expenses (credit), and
the impairment of assets, including goodwill, that are unusual,
non-operating, unpredictable, non-recurring or non-cash in nature
because we believe these exclusions facilitate the analysis of our
ongoing operational performance.
- Adjusted operating income and adjusted operating income margin:
Adjusted operating income is a non-GAAP financial measure that
excludes the same items that are described above and excluded from
adjusted gross profit and adjusted operating expenses. Adjusted
operating income margin is the ratio of adjusted operating income
to total revenue. Management believes that these non-GAAP financial
measures are useful to investors as a supplemental way to evaluate
the Company’s performance because the adjustments are unusual,
non-operating, unpredictable, non-recurring or non-cash in
nature.
- Adjusted income before income taxes: Adjusted income before
income taxes is a non-GAAP financial measure that excludes the same
items that are described above and excluded from adjusted operating
income. In addition, the gain (loss) on the currency remeasurement
of the deferred tax asset relating to 2020 Swiss tax reform, the
gain on the sale of non-core businesses, and the gain on the
remeasurement of an equity investment are excluded from adjusted
income before income taxes because these amounts are unusual,
non-operating, and/or non-recurring. Management believes that this
non-GAAP financial measure is useful to investors because it
facilitates the calculation of the Company’s adjusted effective tax
rate.
- Adjusted effective tax rate: Adjusted effective tax rate is a
non-GAAP financial measure that is determined by dividing adjusted
income tax expense by adjusted income before income taxes.
Management believes that this non-GAAP financial measure is useful
to investors because it presents an effective tax rate that does
not reflect unusual, non-operating, unpredictable, non-recurring,
or non-cash amounts or items that are outside the control of the
Company.
- Adjusted income tax expense: Adjusted income tax expense is a
non-GAAP financial measure that excludes the income tax expense
associated with the same items that are described above and
excluded from adjusted income before income taxes. Certain discrete
tax benefits primarily attributable to foreign valuation allowance
adjustments are also excluded from adjusted income tax expense.
Further, certain expenses relating 2020 Swiss tax reform are
excluded from adjusted income tax expense. Management believes that
this non-GAAP financial measure is useful to investors as a
supplemental way to evaluate the Company’s performance because the
adjustments are unusual, non-operating, unpredictable,
non-recurring or non-cash in nature.
- Adjusted net income/loss attributable to noncontrolling
interest: Adjusted net income/loss attributable to noncontrolling
interest excludes the non-controlling interest portion of the same
items described above. Management believes that this non-GAAP
financial measure is useful to investors because it facilitates the
calculation of adjusted net income attributable to the
Company.
- Adjusted net income attributable to the Company: Adjusted net
income attributable to the Company is a non-GAAP financial measure
that excludes the same items that are described above. Management
believes that this non-GAAP financial measure is useful to
investors as a supplemental way to evaluate the Company's
performance because the adjustments are unusual, non-operating,
unpredictable, non-recurring or non-cash in nature.
- Adjusted diluted earnings per share: Adjusted diluted earnings
per share excludes the per share impact of adjustments including
gains from antitrust litigation settlements; Turkey highly
inflationary impact; LIFO expense (credit); acquisition-related
intangibles amortization; litigation and opioid expenses (credit);
acquisition-related deal and integration expenses; restructuring
and other expenses; impairment of assets, including goodwill; the
gain on the sale of non-core businesses; the gain (loss) on the
currency remeasurement related to 2020 Swiss tax reform; and the
gain on the remeasurement of an equity investment, in each case net
of the tax effect calculated using the applicable effective tax
rate for those items. In addition, the per share impact of certain
discrete tax expense primarily attributable to foreign valuation
adjustment allowance, and the per share impact of certain expenses
related to 2020 Swiss tax reform are also excluded from adjusted
diluted earnings per share. Management believes that this non-GAAP
financial measure is useful to investors because it eliminates the
per share impact of the items that are outside the control of the
Company or that we consider to not be indicative of our ongoing
operating performance due to their inherent unusual, non-operating,
unpredictable, non-recurring, or non-cash nature.
- Adjusted Free Cash Flow: Adjusted free cash flow is a non-GAAP
financial measure defined as net cash provided by operating
activities, excluding significant unpredictable or non-recurring
cash payments or receipts relating to legal settlements, minus
capital expenditures. Adjusted free cash flow is used internally by
management for measuring operating cash flow generation and setting
performance targets and has historically been used as one of the
means of providing guidance on possible future cash flows. For the
fiscal year ended September 30, 2023, adjusted free cash flow of
$3,130.5 million consisted of net cash provided by operating
activities of $3,911.3 million, minus capital expenditures of
$458.4 million, the gains from antitrust litigation settlements of
$239.1 million, and the receipt of $83.4 million from the H.D.
Smith opioid indemnity escrow. The Company does not provide forward
looking guidance on a GAAP basis for free cash flow because the
timing and amount of favorable and unfavorable settlements excluded
from this metric, the probable significance of which cannot be
determined, are unavailable and cannot be reasonably
estimated.
The Company also presents revenue and operating income on a
“constant currency” basis, which are non-GAAP financial measures.
These amounts are calculated by translating current period GAAP
results at the foreign currency exchange rates used in the
comparable period in the prior year. The Company presents such
constant currency financial information because it has significant
operations outside of the United States reporting in currencies
other than the U.S. dollar and management believes that this
presentation provides a framework to assess how its business
performed excluding the impact of foreign currency exchange rate
fluctuations. For the fourth quarter of fiscal 2023, (i) revenue of
$68.9 billion was negatively impacted by foreign currency
translation of $37.6 million, resulting in revenue on a constant
currency basis of $69.0 billion, and (ii) operating income of
$801.0 million was negatively impacted by foreign currency
translation of $1.5 million, resulting in operating income on a
constant currency basis of $802.5 million. For the fourth quarter
of fiscal 2023 in the International Healthcare Solutions segment,
(i) revenue of $6,994.7 million was negatively impacted by foreign
currency translation of $37.6 million, resulting in revenue on a
constant currency basis of $7,032.3 million, and (ii) operating
income of $168.2 million was negatively impacted by foreign
currency translation of $1.5 million, resulting in operating income
on a constant currency basis of $169.6 million. For fiscal 2023,
(i) revenue of $262.2 billion was negatively impacted by foreign
currency translation of $2.4 billion, resulting in revenue on a
constant currency basis of $264.5 billion, and (ii) operating
income of $3,289.1 million was negatively impacted by foreign
currency translation of $63.0 million, resulting in operating
income on a constant currency basis of $3,352.1 million. For fiscal
2023 in the International Healthcare Solutions segment, (i) revenue
of $27.4 billion was negatively impacted by foreign currency
translation of $2.4 billion, resulting in revenue on a constant
currency basis of $29.8 billion, and (ii) operating income of
$692.6 million was negatively impacted by foreign currency
translation of $63.0 million, resulting in operating income on a
constant currency basis of $755.6 million.
In addition, the Company has provided non-GAAP fiscal year 2024
guidance for diluted earnings per share, operating income,
effective income tax rate and free cash flow that excludes the same
or similar items as those that are excluded from the historical
non-GAAP financial measures, as well as significant items that are
outside the control of the Company or inherently unusual,
non-operating, unpredictable, non-recurring or non-cash in nature.
The Company does not provide forward looking guidance on a GAAP
basis for such metrics because certain financial information, the
probable significance of which cannot be determined, is not
available and cannot be reasonably estimated. For example, LIFO
expense/credit is largely dependent upon the future inflation or
deflation of brand and generic pharmaceuticals, which is out of the
Company’s control, and acquisition-related intangibles amortization
depends on the timing and amount of future acquisitions, which
cannot be reasonably estimated. Similarly, the timing and amount of
favorable and unfavorable settlements, the probable significance of
which cannot be determined, are unavailable and cannot be
reasonably estimated.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231101848874/en/
Bennett S. Murphy Senior Vice President, Head of
Investor Relations and Treasury 610-727-3693
bennett.murphy@cencora.com
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