Cencora(US:COR)2026-02-04 19:43Revenue Growth - Revenue increased by $4.4 billion, or 5.5%, from the prior year quarter, driven by growth in both U.S. and International Healthcare Solutions segments [94]. - U.S. Healthcare Solutions revenue rose by $3.7 billion, or 5.0%, primarily due to unit volume growth, including a $1.0 billion increase in sales of GLP-1 products, offset by losses from a grocery and oncology customer [97]. - International Healthcare Solutions revenue increased by $0.7 billion, or 9.6%, mainly due to a $0.5 billion rise in sales at the European distribution business [98]. Profit and Operating Income - Gross profit increased by $514.0 million, or 20.1%, from the prior year quarter, with U.S. Healthcare Solutions gross profit up by $428.8 million, or 29.5% [100]. - Total segment operating income increased by $113.4 million, or 11.9%, with U.S. Healthcare Solutions operating income up by $144.4 million, or 21.0% [94]. - U.S. Healthcare Solutions' operating income increased by $144.4 million, or 21.0%, to $831.3 million, while International Healthcare Solutions' operating income decreased by $23.0 million, or 13.9%, to $142.2 million [114][115]. - Total segment operating income rose by 11.9% to $1.06 billion, driven by gains from antitrust litigation settlements and a LIFO credit [114]. Expenses and Impairments - Total operating expenses rose by $459.8 million, or 24.8%, primarily due to the acquisition of RCA and asset impairment in U.S. Consulting Services [94]. - Distribution, selling, and administrative expenses increased by $323.2 million, or 22.0%, compared to the prior year quarter, primarily due to the acquisition of RCA [106]. - An impairment of assets, including goodwill, of $249.5 million was recorded related to the U.S. Consulting Services business classified as held for sale [113]. Tax and Interest - The effective tax rates were 20.1% for the three months ended December 31, 2025, lower than the U.S. statutory rate due to benefits from lower taxed income and equity compensation [94]. - Interest expense, net increased by $44.5 million, or 159.2%, to $72.4 million, primarily due to the issuance of $1.8 billion in senior notes and a $0.8 billion variable-rate term loan [118]. - Effective tax rates were 20.1% for the three months ended December 31, 2025, compared to 20.4% in the prior year, benefiting from lower tax rates on certain income [119]. Cash Flow and Debt - Cash used in operations decreased by $0.4 billion to $2.3 billion, with significant cash outflows attributed to a $3.5 billion increase in inventories [124][125]. - Total debt as of December 31, 2025, was $7.92 billion, with $7.69 billion in additional credit facility availability [135]. - The company expects future cash flows from operations to be sufficient to meet ongoing cash requirements, including opioid litigation payments over the next 13 years [121]. - Cash and cash equivalents totaled $1.8 billion as of December 31, 2025, with a potential increase in net interest expense due to interest rate changes [154]. Capital Expenditures and Financing - Capital expenditures for the three months ended December 31, 2025, were $119.4 million, up from $105.9 million in the prior year, with plans to invest approximately $900 million in fiscal 2026 [129][130]. - Net cash provided by financing activities was $43.2 million, resulting from $0.3 billion in net borrowings under revolving credit facilities [132]. - A $1.5 billion delayed draw senior unsecured term loan facility was obtained in January 2026 to finance part of the acquisition of OneOncology [141]. - A $3.0 billion delayed draw senior unsecured term loan facility was also secured in January 2026 for the same acquisition [143]. Shareholder Returns and Obligations - The company authorized a share repurchase program of up to $2.0 billion, with $882.2 million available as of December 31, 2025 [147]. - The quarterly dividend was increased by 9% from $0.55 to $0.60 per share, with future dividends dependent on earnings and financial condition [148]. - The accrued litigation liability related to the Distributor Settlement Agreement is $4.3 billion, expected to be paid over the next 13 years [149]. - Total contractual obligations for future principal and interest payments amount to $13.7 billion as of December 31, 2025 [150]. - The company had $1.2 billion of variable-rate debt outstanding as of December 31, 2025 [153].