Cencora(US:COR)2023-01-31 16:00Acquisitions and Restructuring - The company acquired PharmaLex Holding Gmbh for €1.381 billion, with an additional €101 million paid due to subsequent acquisitions by PharmaLex[71] - Total acquisition, integration, and restructuring expenses for the three months ended December 31, 2022, were $37.236 million, compared to $32.334 million in the same period in 2021[80] - The company plans to change its name to Cencora in the second half of 2023, which will result in additional acquisition-related intangibles amortization expense[108] Financial Performance and Revenue - Revenue increased by 5.4% to $62.85 billion, driven by 6.1% growth in U.S. Healthcare Solutions, reaching $56.24 billion[111][112] - U.S. Healthcare Solutions gross profit rose by 8.4% to $1.39 billion, with a 5-basis point margin improvement to 2.46%[114][137] - International Healthcare Solutions revenue decreased by 0.6% to $6.61 billion, impacted by unfavorable foreign exchange rates and divestiture of Brazil specialty business[111][133] - Gross profit increased by 4.2% to $2.15 billion, supported by $49.9 million in antitrust litigation settlement gains[114][115][136] - Total segment operating income for the three months ended December 31, 2022, was $733.698 million, with gains from antitrust litigation settlements contributing $49.899 million[91] - U.S. Healthcare Solutions' operating income increased by $3.3 million, or 0.6%, to $572.4 million, with an operating income margin of 1.02%, a decline of 5 basis points due to increased operating expenses[142] - International Healthcare Solutions' operating income decreased by 10.4% to $161.3 million[142] - Total segment operating income decreased by 2.1% to $733.7 million[142] Operating Expenses and Costs - Total operating expenses increased by $96.9 million, or 6.8%, compared to the prior year quarter, primarily due to higher distribution, selling, and administrative expenses[109] - Distribution, selling, and administrative expenses increased by 10.3% to $1.29 billion, representing 2.05% of revenue[117][140] - LIFO expense of $25.1 million was recorded, driven by higher brand pharmaceutical inflation and inventory mix[139] Litigation and Liabilities - The company's accrued litigation liability related to the Distributor Settlement Agreement was $5.9 billion as of December 31, 2022, with $471.8 million expected to be paid before December 31, 2023[82] Foreign Exchange and International Operations - The International Healthcare Solutions segment's operating income decreased due to unfavorable foreign currency exchange rates in the current year quarter[109] - Operating income in International Healthcare Solutions decreased by 10.4% due to foreign exchange impacts and Brazil divestiture[122] Interest and Debt - The company has a $2.4 billion multi-currency senior unsecured revolving credit facility expiring in October 2027, with interest rates ranging from 80.5 to 122.5 basis points over SOFR/EURIBOR/CDOR/RFR[74] - Net interest expense decreased by 13.8% due to higher interest income from increased investment rates[123] - Net interest expense increased to $46.0 million, with a weighted average interest rate of 3.21% for interest expense and 2.86% for interest income[143] - Total debt as of December 31, 2022, was $5.64 billion, with $3.80 billion in additional availability under variable-rate debt facilities[155] - The company has a commercial paper program with an aggregate amount of up to $2.4 billion, fully backed by the Multi-Currency Revolving Credit Facility, with no borrowings outstanding as of December 31, 2022[156] Tax and Financial Metrics - Effective tax rate decreased to 19.8% from 24.6% due to non-U.S. income taxed at lower rates and stock-related tax benefits[124][130] - Days sales outstanding improved to 27.5 days, and days inventory on hand decreased to 27.4 days[129] Cash Flow and Investments - Cash and cash equivalents held by foreign subsidiaries increased to $830.6 million as of December 31, 2022, from $688.4 million as of September 30, 2022[147] - Net income for the period was $476.2 million, with positive non-cash items totaling $242.9 million, including $100.3 million in depreciation expense and $75.1 million in amortization expense[148] - The company expects to invest approximately $500 million in capital expenditures during fiscal 2023, focusing on technology initiatives and regulatory compliance[152] - Net cash used in financing activities included $807.2 million in purchases of common stock and $99.7 million in cash dividends paid on common stock[153]