Cencora(US:COR)2021-11-04 15:59Financial Data and Key Metrics Changes - Adjusted diluted EPS for Q4 was $2.39, an increase of 26.5% driven by strong performance in the Pharmaceutical Distribution Services segment and a full quarter contribution from Alliance Healthcare [23][24] - Consolidated revenue for Q4 was $58.9 billion, up approximately 20%, reflecting growth in pharmaceutical distribution and other segments [23][24] - Consolidated gross profit was $2 billion, up 51%, with a gross profit margin of 3.4%, which is 71 basis points higher than the prior year [24][25] - Consolidated operating income was $694 million, up 31%, with an operating income margin of 1.18%, an increase of 10 basis points [25][26] Business Line Data and Key Metrics Changes - Pharmaceutical Distribution Services segment revenue was $51.2 billion, up 8%, driven by increased sales of specialty products and positive prescription utilization trends [26][27] - Operating income for the Pharmaceutical Distribution Services segment increased by 11% to $472 million, with an operating income margin of 0.92% [27] - Other revenue, which includes Alliance Healthcare, was $7.7 billion, up from $2 billion in the prior year, driven by the full quarter's contribution from Alliance Healthcare [27][28] Market Data and Key Metrics Changes - The company distributed over 75 million COVID-19 vaccines to patients in over 30 countries, leveraging its global footprint [8][11] - The animal health business experienced increased demand due to growth in pet ownership, supporting veterinary practices [9][30] Company Strategy and Development Direction - The company aims to capitalize on its strategic priorities and continue executing and innovating in fiscal 2022 [5][21] - Focus on expanding leadership in specialty distribution and enhancing relationships with upstream and downstream customers [10][19] - The company is committed to maintaining strong investment-grade credit ratings and strategic capital deployment [12][42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the evolving healthcare landscape and emphasized the importance of innovation and operational excellence [18][21] - The company anticipates continued strong performance across its businesses, despite potential headwinds from COVID-19 therapy sales [49][72] Other Important Information - The company completed the acquisition of Alliance Healthcare and extended its contract with Walgreens through 2029 [22][36] - A significant technology investment was made to improve efficiency and support continuity in operations [12][43] Q&A Session Summary Question: Insights on U.S. drug distribution and COVID-19 therapies - Management does not expect to repeat the benefits from COVID therapies seen in fiscal 2021, with a projected $0.03 benefit in Q1 of fiscal 2022 [48][49] Question: Guidance on international healthcare segment and Profarma Specialty sale - The sale of Profarma Specialty is expected to create a 2% headwind for the International Healthcare Solutions segment's operating income [54][55] Question: Impact of freight costs on business - Higher expenses related to picking, packing, and shipping are fully reflected in the fiscal year 2022 guidance [57][58] Question: Growth expectations for MWI Animal Health and consulting businesses - MWI Animal Health is expected to grow at a higher rate than the overall segment, benefiting from increased pet ownership [60][61] Question: Implications of Medicare negotiating drug prices - Management is not significantly concerned about the impacts of Medicare negotiations on specialty products, emphasizing the importance of preserving innovation [64] Question: Capital deployment expectations - The majority of free cash flow will be directed towards paying down debt from the Alliance Healthcare acquisition [66][67]