Cencora(US:COR)2025-05-07 17:48Revenue Growth - Revenue increased by $7.0 billion, or 10.3%, and $16.3 billion, or 11.6%, from the prior year quarter and six-month period, primarily due to growth in the U.S. Healthcare Solutions segment[95] - The U.S. Healthcare Solutions segment grew its revenue by $7.0 billion, or 11.4%, and $15.8 billion, or 12.5%, from the prior year quarter and six-month period, driven by increased sales of GLP-1 products of $2.2 billion, or 36.1%, and $5.4 billion, or 44.5%[96] - International Healthcare Solutions' revenue increased by $0.1 billion, or 0.7%, and $0.4 billion, or 3.1%, from the prior year quarter and six-month period, primarily due to increased sales in Europe and Canada[97] Profit and Operating Income - Gross profit increased by $521.8 million, or 20.6%, and $611.0 million, or 12.2%, from the prior year quarter and six-month period, primarily due to increases in the U.S. Healthcare Solutions segment[99] - U.S. Healthcare Solutions' gross profit increased by $441.7 million, or 26.3%, and $555.5 million, or 17.1%, from the prior year quarter and six-month period, with gross profit margins of 3.11% and 2.67%[100] - U.S. Healthcare Solutions operating income rose by 22.8% to $1,033,150 for the three months ended March 31, 2025, and by 17.0% to $1,800,494 for the six months ended March 31, 2025[112] - International Healthcare Solutions operating income decreased by 17.3% to $159,301 for the three months ended March 31, 2025, and by 10.2% to $341,394 for the six months ended March 31, 2025[113] Expenses and Acquisitions - Total operating expenses increased by $38.9 million, or 2.0%, and $244.7 million, or 6.7%, from the prior year quarter and six-month period, primarily due to the January 2025 acquisition of Retina Consultants of America (RCA)[93] - Total operating expenses increased by 2.0% to $2,023,619 for the three months ended March 31, 2025, and by 6.7% to $3,875,403 for the six months ended March 31, 2025, primarily due to the acquisition of RCA[105] - Acquisition-related deal and integration expenses were $99,380 for the three months ended March 31, 2025, primarily related to the RCA acquisition[108] - The acquisition of RCA for $4,036.1 million in cash is expected to broaden relationships with community providers and enhance leadership in specialty pharmaceuticals[92] Cash Flow and Financing - Cash generated from operations for the six months ended March 31, 2025, was $632.5 million, a significant increase of $625.7 million compared to $6.7 million for the same period in 2024[122] - The company generated sufficient capital resources to finance working capital, acquisitions, and debt repayment through operating cash flows and credit availability[118] - Net cash provided by financing activities for the six months ended March 31, 2025, included $1.8 billion from senior notes issuance and $1.5 billion from term loan borrowings for the RCA acquisition[129] Tax and Interest - The effective tax rates were 22.7% and 21.8% for the three and six months ended March 31, 2025, respectively, higher than the U.S. statutory rate primarily due to U.S. state income taxes[93] - Effective tax rates were 22.7% and 21.8% for the three and six months ended March 31, 2025, respectively, compared to 9.8% and 18.1% for the same periods in 2024[117] - Interest expense, net increased by 62.2% to $103,988 for the three months ended March 31, 2025, primarily due to the issuance of $1.8 billion in senior notes and a $1.5 billion variable-rate term loan[115] Shareholder Returns - In March 2024, the Board of Directors authorized a share repurchase program allowing the company to purchase up to $2.0 billion of outstanding shares, with $435.4 million repurchased in the six months ended March 31, 2025, leaving $882.2 million available under the program[141] - The quarterly dividend was increased by 8% from $0.51 to $0.55 per share in November 2024, with future dividends dependent on earnings and financial conditions[142] Debt and Obligations - The total debt as of March 31, 2025, was $7.86 billion, with $5.35 billion available under various credit facilities[132] - Total contractual obligations for future principal and interest payments on debt, operating leases, and other commitments amount to $12.42 billion as of March 31, 2025[144] - The company had cumulative intra-period borrowings of $42.9 billion during the six months ended March 31, 2025, compared to $47.9 billion in the same period of 2024[121] Foreign Operations and Risks - Revenue from foreign operations accounted for approximately 9% of consolidated revenue during the six months ended March 31, 2025[146] - The company has exposure to foreign currency risk, primarily with the U.K. Pound Sterling, Euro, Turkish Lira, Brazilian Real, and Canadian Dollar[146] - The financial impact of geopolitical conflicts, such as those in Ukraine and Israel, has not been material to the company's operations[151] Inflation and Economic Conditions - Elevated inflation levels have impacted operating expenses, with potential adverse effects on operations and financial results if inflation persists[150] - Cash and cash equivalents stood at $2.0 billion as of March 31, 2025, with a potential increase in annual net interest expense of $0.1 million for every 10-basis point decrease in interest rates on excess cash[148]