Cencora Inc

Previous wording

•Revenue increased by $9.4 billion, or 15.0%, from the prior year quarter primarily due to growth in our U.S. Healthcare Solutions segment. The U.S. Healthcare Solutions segment grew its revenue by $8.9 billion, or 15.9%, from the prior year quarter 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 glucagon-like peptide-1, or "GLP-1," class, increased sales of specialty products to physician practices and health systems, and increased sales of COVID-19 vaccines. Revenue in International Healthcare Solutions increased by $458.9 million, or 6.9%, from the prior quarter primarily due to increased sales in our European distribution business, increased sales in our Canadian business, incremental revenue from our January 2023 acquisition of PharmaLex, and increased sales at our less-than-wholly-owned Brazil full-line distribution business. Our European distribution business' revenue in the current year quarter was negatively impacted by unfavorable foreign currency rates in comparison to the prior year quarter;

Current wording

•Revenue increased by $5.0 billion, or 7.8%, and $14.4 billion, or 11.4%, from the prior year quarter and six-month period, respectively, primarily due to growth in the U.S. Healthcare Solutions segment. The U.S. Healthcare Solutions segment grew its revenue by $4.6 billion, or 8.1%, and $13.5 billion, or 12.0%, from the prior year quarter and six-month period, respectively, 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 glucagon-like peptide-1, or "GLP-1," class, increased sales of specialty products to physician practices and health systems, and increased sales of COVID-19 vaccines. International Healthcare Solutions' revenue increased by $0.4 billion, or 5.3%, and $0.8 billion, or 6.1%, from the prior year quarter and six-month period, respectively. The increases from the prior year quarter and six-month period are primarily due to increased sales at Alliance Healthcare, our European distribution business;

Previous wording

•Gross profit increased by $322.9 million, or 15.0%, from the prior year quarter primarily due to increases in gross profit in both reportable segments and a last-in, first-out ("LIFO") credit in the current year quarter in comparison to LIFO expense in the prior year quarter. U.S. Healthcare Solutions gross profit increased by $185.8 million, or 13.4%, from the prior year quarter due to increased sales. Gross profit in International Healthcare Solutions increased by $78.9 million, or 10.7%, from the prior year quarter due to the January 2023 acquisition of PharmaLex and increases in our global specialty logistics business, our less-than-wholly-owned Brazil full-line distribution business, our European distribution business, and our Canadian business;

Current wording

•Gross profit increased by $242.6 million, or 10.6%, and $565.4 million, or 12.7%, from the prior year quarter and six-month period, respectively, primarily due to the increases in gross profit in both reportable segments and last-in, first-out ("LIFO") credits in the current year periods in comparison to LIFO expense in the prior year periods. U.S. Healthcare Solutions' gross profit increased by $127.9 million, or 8.2%, and $313.7 million, or 10.7%, from the prior year quarter and six-month period, respectively, primarily due to increased sales. Gross profit in International Healthcare Solutions increased by $47.6 million, or 5.9%, and $126.4 million, or 8.2%, from the prior year quarter and six-month period, respectively, due to growth at most of its businesses;

Previous wording

•Our effective tax rates were 23.0% and 19.8% for the three months ended December 31, 2023 and 2022, respectively. The effective tax rate for the three months ended December 31, 2023 was higher than the U.S. statutory rate primarily due to U.S. state income taxes and a discrete tax expense, offset in part by the benefit of non-U.S. income taxed at rates lower than the U.S. statutory rate, as well as tax benefits associated with the vesting of restricted stock units and stock option exercises. The effective tax rate for the three months ended December 31, 2022 was lower than the U.S. statutory rate primarily due to the benefit of non-U.S. income taxed at rates lower than the U.S. statutory rate, as well as tax benefits associated with the vesting of restricted stock units and stock option exercises, offset in part by U.S. state income taxes.

Current wording

•Our effective tax rates were 9.8% and 18.1% for the three and six months ended March 31, 2024, respectively. Our effective tax rates were 16.4% and 18.2% for the three and six months ended March 31, 2023, respectively. The effective tax rates in the current year periods were lower than those in the prior year periods primarily due to the discrete tax benefits associated with foreign valuation allowance adjustments. Additionally, the effective tax rates for all periods presented were lower than the U.S. statutory rate primarily due to the benefit of non-U.S. income taxed at rates lower than the U.S. statutory rate and tax benefits associated with equity compensation, offset in part by U.S. state income taxes.

Previous wording

Revenue increased by $9.4 billion, or 15.0%, from the prior year quarter primarily due to growth in the U.S. Healthcare Solutions segment.

Current wording

Revenue increased by $5.0 billion, or 7.8%, and $14.4 billion, or 11.4%, from the prior year quarter and six-month period, respectively, primarily due to growth in the U.S. Healthcare Solutions segment.

Previous wording

The U.S. Healthcare Solutions segment grew its revenue by $8.9 billion, or 15.9%, from the prior year quarter due to overall market growth primarily driven by unit volume growth, including increased sales of $2.1 billion of products labeled for diabetes and/or weight loss in the GLP-1 class, increased sales of specialty products to physician practices and health systems, and increased sales of COVID-19 vaccines. Sales, including GLP-1 products and COVID-19 vaccines, to our two largest customers increased by $3.2 billion in comparison to the prior year period.

Current wording

The U.S. Healthcare Solutions segment grew its revenue by $4.6 billion, or 8.1%, and $13.5 billion, or 12.0%, from the prior year quarter and six-month period, respectively, due to overall market growth primarily driven by unit volume growth, including increased sales of $1.3 billion and $3.4 billion of products labeled for diabetes and/or weight loss in the GLP-1 class from the prior year quarter and six-month period, respectively, increased sales of specialty products to physician practices and health systems, and increased sales of COVID-19 vaccines. Sales, including GLP-1 products and COVID-19 vaccines, to our two largest customers increased by $2.5 billion and $5.8 billion in comparison to the prior year quarter and six-month period, respectively.

Previous wording

A number of our contracts with customers, including group purchasing organizations, are typically subject to expiration each year. We may lose a significant customer if an existing contract with such customer expires without being extended, renewed, or replaced. During the three months ended December 31, 2023, no significant contracts expired. Over the next twelve months, there are no significant contracts scheduled to expire. Additionally, from time to time, significant contracts may be terminated in accordance with their terms or extended, renewed, or replaced prior to their expiration dates. If those contracts are extended, renewed, or replaced at less favorable terms, they may also negatively impact our revenue, results of operations, and cash flows.

Current wording

A number of our contracts with customers, including group purchasing organizations, are typically subject to expiration each year. We may lose a significant customer if an existing contract with such customer expires without being extended, renewed, or replaced. During the six months ended March 31, 2024, no significant contracts expired. Over the next twelve months, there are no significant contracts scheduled to expire. Additionally, from time to time, significant contracts may be terminated in accordance with their terms or extended, renewed, or replaced prior to their expiration dates. If those contracts are extended, renewed, or replaced at less favorable terms, they may also negatively impact our revenue, results of operations, and cash flows.

Previous wording

Gross profit increased by $322.9 million, or 15.0%, from the prior year quarter primarily due to increases in gross profit in both reportable segments and a LIFO credit in the current year quarter in comparison to LIFO expense in the prior year quarter.

Current wording

Gross profit increased by $242.6 million, or 10.6%, and $565.4 million, or 12.7%, from the prior year quarter and six-month period, respectively, primarily due to the increase in gross profit in both reportable segments and LIFO credits in the current year periods in comparison to LIFO expense in the prior year periods.

Previous wording

U.S. Healthcare Solutions gross profit increased by $185.8 million, or 13.4%, from the prior year quarter primarily due to increased sales. As a percentage of revenue, U.S. Healthcare Solutions' gross profit margin was 2.41% in the current year quarter and represented a 5-basis point decline from the prior year quarter primarily due to higher sales of GLP-1 products, which have lower gross profit margins, offset in part by higher sales of COVID-19 vaccines, which have higher gross profit margins.

Current wording

U.S. Healthcare Solutions' gross profit increased by $127.9 million, or 8.2%, and $313.7 million, or 10.7%, from the prior year quarter and six-month period, respectively, primarily due to increased sales. As a percentage of revenue, U.S. Healthcare Solutions' gross profit margins were 2.74% and 2.57% in the current year quarter and six-month period, respectively, and was flat compared to the prior year quarter and represented a 3-basis point decline from the prior year six-month period primarily due to higher sales of GLP-1 products, which have lower gross profit margins, offset in part by higher sales of COVID-19 vaccines, which have higher gross profit margins.

Previous wording

We recognized gains from antitrust litigation settlements with pharmaceutical manufacturers of $48.2 million and $49.9 million in the three months ended December 31, 2023 and 2022, respectively. The gains were recorded as reductions to Cost of Goods Sold (see Note 11 of the Notes to Consolidated Financial Statements).

Current wording

We recognized gains from antitrust litigation settlements with pharmaceutical manufacturers of $8.7 million in the three months ended March 31, 2024 and $57.0 million and $49.9 million in the six months ended March 31, 2024 and 2023, respectively. The gains were recorded as reductions to Cost of Goods Sold (see Note 11 of the Notes to Consolidated Financial Statements).

Previous wording

Our cost of goods sold for interim periods includes a LIFO provision that is recorded ratably on a quarterly basis and is based on our estimated annual LIFO provision. The annual LIFO provision, which we estimate on a quarterly basis, is affected by manufacturer pricing practices, which may be impacted by market and other external influences, expected changes in inventory quantities, and product mix, many of which are difficult to predict. Changes to any of the above factors may have a material impact on our annual LIFO provision. Based on estimates in our current fiscal year LIFO provision, the LIFO credit in the current year quarter in comparison to the LIFO expense in the prior year quarter was primarily driven by lower brand pharmaceutical inflation.

Current wording

Our cost of goods sold for interim periods includes a LIFO provision that is recorded ratably on a quarterly basis and is based on our estimated annual LIFO provision. The annual LIFO provision, which we estimate on a quarterly basis, is affected by manufacturer pricing practices, which may be impacted by market and other external influences, expected changes in inventory quantities, and product mix, many of which are difficult to predict. Changes to any of the above factors may have a material impact on our annual LIFO provision. Based on estimates in our current fiscal year LIFO provision, the LIFO credits in the current year periods in comparison to the LIFO expense in the prior year periods were primarily driven by lower brand pharmaceutical inflation largely due to price decreases by manufacturers of wholesale acquisition costs of certain products.

Previous wording

We recognized an expense in Cost of Goods Sold of $17.2 million and $3.6 million in the three months ended December 31, 2023 and 2022, respectively, related to the impact of Turkey highly inflationary accounting. These expenses were driven by the weakening of the Turkish Lira.

Current wording

We recognized expenses in Cost of Goods Sold of $23.1 million and $4.9 million in the three months ended March 31, 2024 and 2023, respectively, and $40.3 million and $8.4 million in the six months ended March 31, 2024 and 2023, respectively, related to the impact of Turkey highly inflationary accounting. These expenses were driven by the weakening of the Turkish Lira.

Previous wording

Distribution, selling, and administrative expenses increased by $107.8 million, or 8.4%, compared to prior year quarter primarily to support revenue growth and due to an increase in bad debt expense of $17.3 million. As a percentage of revenue, distribution, selling, and administrative expenses was 1.94% in the current year quarter, which represented an 11-basis point decline compared to the prior year quarter as initiatives taken in fiscal 2023 improved operating efficiency across many of our businesses and administrative functions and the 15.0% revenue growth in the current fiscal quarter improved our operating leverage.

Current wording

Distribution, selling, and administrative expenses increased by $67.7 million, or 5.1%, and $175.5 million, or 6.7%, compared to prior year quarter and six-month period, respectively, primarily to support revenue growth. As a percentage of revenue, distribution, selling, and administrative expenses were 2.03% and 1.98% in the current year quarter and six-month period, respectively, which represented declines of 5 basis points and 9 basis points compared to the prior year quarter and six month period, respectively, as initiatives taken in fiscal 2023 improved operating efficiency across many of our businesses and administrative functions and the 7.8% and 11.4% revenue growth in the current fiscal quarter and six-month period, respectively, improved our operating leverage at the reportable segment level.

Previous wording

Depreciation expense increased 4.7% from the prior year quarter. Amortization expense increased 129.9% from the prior year quarter primarily due to accelerated amortization expense recorded in connection with the shortened useful lives of certain trade names resulting from our company name change and gradual transition away from other tradenames used, which were acquired through prior acquisitions.

Current wording

Depreciation expense increased 5.5% and 5.1% from the prior year quarter and six-month period, respectively. Amortization expense increased 17.6% and 55.7% from the prior year quarter and six-month period, respectively, primarily due to accelerated amortization expense, which we began recording in February 2023, in connection with the shortened useful lives of certain trade names resulting from our company name change and gradual transition away from other tradenames used, which were acquired through prior acquisitions.

Previous wording

Litigation and opioid-related credit in the three months ended December 31, 2023 included a net $92.2 million opioid litigation settlement accrual reduction primarily as a result of our commitment, which we made in December 2023, to prepay the net present value of a future obligation as permitted under our opioid settlement agreements and $13.3 million of legal fees in connection with opioid lawsuits and investigations. Litigation and opioid-related expenses in the three months ended December 31, 2022 included legal fees in connection with opioid lawsuits and investigations.

Current wording

Litigation and opioid-related expenses, net in the three months ended March 31, 2024 included a $214.0 million litigation accrual for ongoing litigation related to the distribution of prescription opioid medications and $12.0 million of legal fees in connection with opioid lawsuits and investigations (see Note 10 of the Notes to Consolidated Financial Statements). Litigation and opioid-related expenses, net in the six months ended March 31, 2024 included a $214.0 million litigation accrual for ongoing litigation related to the distribution of prescription opioid medications and $25.2 million of legal fees in connection with opioid lawsuits and investigations, offset in part by a net $92.2 million opioid litigation settlement accrual reduction primarily as a result of our prepayment of the net present value of a future obligation as permitted under our opioid settlement agreements. Litigation and opioid-related expenses, net in the three and six months ended March 31, 2023 included legal fees in connection with opioid lawsuits and investigations.

Previous wording

Acquisition-related deal and integration expenses in the three months ended December 31, 2023 primarily related to the continued integration of Alliance Healthcare and PharmaLex. Acquisition-related deal and integration expenses in the three months ended December 31, 2022 primarily related to the integration of Alliance Healthcare.

Current wording

Acquisition-related deal and integration expenses in the three and six months ended March 31, 2024 and 2023 primarily related to the continued integration of Alliance Healthcare and PharmaLex.

Previous wording

Restructuring and employee severance costs in the three months ended December 31, 2023 primarily included expenses incurred related to facility closures in connection with our office optimization plan and workforce reductions in both of our reportable segments.

Current wording

Restructuring and employee severance costs in the three and six months ended March 31, 2024 primarily included expenses incurred related to facility closures in connection with our office optimization plan and workforce reductions in both of our reportable segments. Restructuring and employee severance costs in the three and six months ended March 31, 2023 primarily included expenses incurred in connection with a workforce reduction in our U.S. Healthcare Solutions reportable segment.

Previous wording

Business transformation efforts in the three months ended December 31, 2023 and 2022 included rebranding costs associated with our name change to Cencora and non-recurring expenses related to significant strategic initiatives to improve operational efficiency, including certain technology initiatives. The majority of these costs related to services provided by third-party consultants.

Current wording

Business transformation efforts in the three and six months ended March 31, 2024 and 2023 included rebranding costs associated with our name change to Cencora and non-recurring expenses related to significant strategic initiatives to improve operational efficiency, including certain technology initiatives. The majority of these costs related to services provided by third-party consultants.

Previous wording

U.S. Healthcare Solutions' operating income increased by $125.7 million, or 22.0%, from prior year quarter primarily due to the increase in gross profit, as noted above, and was offset in part by the increase in operating expenses. As a percentage of revenue, U.S. Healthcare Solutions' operating income margin was 1.07% in the current year quarter and represented a 5-basis point increase compared to the prior year quarter primarily due a decline in operating expense margin, as described above in the Operating Expenses section, offset in part by a decline in gross profit margin, as described above in the Gross Profit section.

Current wording

U.S. Healthcare Solutions' operating income increased by $84.9 million, or 11.2%, and $210.6 million, or 15.9%, from prior year quarter and six-month period, respectively, primarily due to the increases in gross profit, as noted above, and was offset in part by the increases in operating expenses. As a percentage of revenue, U.S. Healthcare Solutions' operating income margin was 1.37% and 1.22% in the current year quarter and six-month period, respectively, and represented 4-basis point increases compared to the prior year periods primarily due a decline in operating expense margin, as described above in the Operating Expenses section. The increase in the six-month period ended March 31, 2024 was offset in part by a decline in gross profit margin, as described above in the Gross Profit section.

Previous wording

International Healthcare Solutions' operating income increased by $26.3 million, or 16.3%, from the prior year quarter primarily due to our global specialty logistics business, the January 2023 acquisition of PharmaLex, and our Canadian business, offset in part by foreign currency pressure and higher information technology operating expenses in our European distribution business and the September 2023 divestiture of its less-than-wholly-owned subsidiary in Egypt, which was profitable in the prior year quarter.

Current wording

International Healthcare Solutions' operating income increased by $16.7 million, or 9.5%, and $43.0 million, or 12.8%, from the prior year quarter and six-month period, respectively. The increase in the current year quarter was primarily due to our less-than-wholly-owned Brazil full-line distribution business and our Canadian business. The increase in the current year six-month period was primarily due to our global specialty logistics business, our Canadian business, our less-than-wholly-owned Brazil full-line distribution business, and the January 2023 acquisition of PharmaLex, offset in part by foreign currency pressure and higher information technology operating expenses in our European distribution business and the September 2023 divestiture of its less-than-wholly-owned subsidiary in Egypt, which was profitable in the prior year six-month period.

Previous wording

Interest expense, net decreased by $5.5 million, or 11.8%, from prior year quarter due to the increase in interest income and a decrease in interest expense. The increase in interest income was primarily driven by higher investment interest rates in the current year quarter in comparison to the prior year quarter. The higher investment interest rates were offset in part by lower average investment cash balance in the current year quarter in comparison to the prior year quarter. Interest expense decreased primarily due to the September 2023 divestiture of our less-than-wholly-owned subsidiary in Egypt.

Current wording

Interest expense, net was flat compared to the prior year quarter as the increase in interest expense was offset by the increase in interest income. The increase in interest expense was primarily driven by increased variable-rate borrowings and was offset in part due to the September 2023 divestiture of our less-than-wholly-owned subsidiary in Egypt. The increase in interest income was primarily driven by higher investment interest rates in the current year quarter in comparison to the prior year quarter. The higher investment interest rates were offset in part by lower average investment cash balances in the current year quarter in comparison to the prior year quarter.

Previous wording

Our effective tax rates were 23.0% and 19.8% for the three months ended December 31, 2023 and 2022, respectively. The effective tax rate for the three months ended December 31, 2023 was higher than the U.S. statutory rate primarily due to U.S. state income taxes and a discrete tax expense, offset in part by the benefit of non-U.S. income taxed at rates lower than the U.S. statutory rate, as well as tax benefits associated with the vesting of restricted stock units and stock option exercises. The effective tax rate for the three months ended December 31, 2022 was lower than the U.S. statutory rate primarily due to the benefit of non-U.S. income taxed at rates lower than the U.S. statutory rate, as well as tax benefits associated with the vesting of restricted stock units and stock option exercises, offset in part by U.S. state income taxes.

Current wording

Our effective tax rates were 9.8% and 18.1% for the three and six months ended March 31, 2024, respectively. Our effective tax rates were 16.4% and 18.2% for the three and six months ended March 31, 2023, respectively. The effective tax rates in the current year periods were lower than those in the prior year periods primarily due to the discrete tax benefits associated with foreign valuation allowance adjustments. Additionally, the effective tax rates for all periods presented were lower than the U.S. statutory rate primarily due to the benefit of non-U.S. income taxed at rates lower than the U.S. statutory rate and tax benefits associated with equity compensation, offset in part by U.S. state income taxes.

Previous wording

Our primary ongoing cash requirements will be to finance working capital, fund the repayment of debt, fund the payment of interest on debt, fund the payment of dividends, fund purchases of our common stock, finance acquisitions, and fund capital expenditures and routine growth and expansion through new business opportunities. Future cash flows from operations and borrowings are expected to be sufficient to fund our ongoing cash requirements, including the opioid litigation payments that will be made over the next 15 years (see below).

Current wording

Our primary ongoing cash requirements will be to finance working capital, fund the repayment of debt, fund the payment of interest on debt, fund the payment of dividends, fund purchases of our common stock, finance acquisitions, and fund capital expenditures and routine growth and expansion through new business opportunities. Future cash flows from operations and borrowings are expected to be sufficient to fund our ongoing cash requirements, including the opioid litigation payments that will be made over the next 14 years (see below).

Previous wording

As of December 31, 2023 and September 30, 2023, our cash and cash equivalents held by foreign subsidiaries were $907.9 million and $640.5 million, respectively. We have the ability to repatriate the majority of our cash and cash equivalents held by our foreign subsidiaries without incurring significant additional taxes upon repatriation.

Current wording

As of March 31, 2024 and September 30, 2023, our cash and cash equivalents held by foreign subsidiaries were $666.6 million and $640.5 million, respectively. We have the ability to repatriate the majority of our cash and cash equivalents held by our foreign subsidiaries without incurring significant additional taxes upon repatriation.

Previous wording

We have increased seasonal needs related to our inventory build during the December and March quarters that, depending on our cash balance, may require the use of our credit facilities to fund short-term capital needs. Our cash balances in the three months ended December 31, 2023 and 2022 were supplemented by intra-period credit facility borrowings to cover short-term working capital needs. The largest amount of intra-period borrowings under our revolving and securitization credit facilities that was outstanding at any one time during the three months ended December 31, 2023 and 2022 was $575.0 million and $1,315.0 million, respectively. We had $11,120.6 million and $1,558.1 million of cumulative intra-period borrowings that were repaid under our credit facilities during the three months ended December 31, 2023 and 2022, respectively.

Current wording

We have increased seasonal needs related to our inventory build during the December and March quarters that, depending on our cash balance, may require the use of our credit facilities to fund short-term capital needs. Our cash balances in the six months ended March 31, 2024 and 2023 were supplemented by intra-period credit facility borrowings to cover short-term working capital needs. The largest amount of intra-period borrowings under our revolving and securitization credit facilities that was outstanding at any one time during the six months ended March 31, 2024 and 2023 was $3.2 billion and $2.1 billion, respectively. We had $47.9 billion and $35.4 billion of cumulative intra-period borrowings that were repaid under our credit facilities during the six months ended March 31, 2024 and 2023, respectively.

Previous wording

During the three months ended December 31, 2023, our operating activities provided cash of $885.2 million and was principally the result of the following:

Current wording

During the six months ended March 31, 2024, our operating activities provided cash of $6.7 million and was principally the result of the following:

Previous wording

•An increase in accounts payable of $1,381.1 million primarily due to the increase in our inventory balances and the timing of scheduled payments to our suppliers;

Current wording

•An increase in accounts payable of $497.7 million primarily due to the increase in our inventory balances and the timing of scheduled payments to our suppliers; and

Previous wording

•Positive non-cash items of $336.5 million, which is primarily comprised of amortization expense of $168.3 million and depreciation expense of $110.1 million.

Current wording

•Positive non-cash items of $635.3 million, which is primarily comprised of amortization expense of $335.5 million and depreciation expense of $222.7 million.

Previous wording

The cash provided by the above items was offset in part by the following:

Current wording

The cash provided by the above items was largely offset by the following:

Previous wording

•A decrease in accrued expenses of $239.0 million primarily due to the payment of accrual liabilities that were on our Consolidated Balance Sheet as of September 30, 2023.

Current wording

•A decrease in accrued expenses of $234.5 million primarily due to the payment of accrual liabilities that were on our Consolidated Balance Sheet as of September 30, 2023, including $250.1 million of opioid litigation settlement payments.

Previous wording

During the three months ended December 31, 2022, our operating activities provided cash of $710.1 million and was principally the result of the following:

Current wording

During the six months ended March 31, 2023, our operating activities provided cash of $1,339.6 million and was principally the result of the following:

Previous wording

•An increase in accounts payable of $1,765.1 million primarily due to the increase in our inventory balances and the timing of scheduled payments to our suppliers;

Current wording

•An increase in accounts payable of $2,391.2 million primarily due to the increase in our inventory balances and the timing of scheduled payments to our suppliers;

Previous wording

•Positive non-cash items of $242.9 million, which is primarily comprised of depreciation expense of $100.3 million and amortization expense of $75.1 million.

Current wording

•Positive non-cash items of $527.8 million, which is primarily comprised of amortization expense of $218.5 million and depreciation expense of $201.7 million.

Previous wording

•An increase in inventories of $1,095.5 million to support the increase in business volume and due to seasonal needs;

Current wording

•An increase in inventories of $1,413.5 million to support the increase in business volume and due to seasonal needs;

Previous wording

•An increase in accounts receivable of $504.1 million primarily due to an increase in sales and the timing of scheduled payments from our customers; and

Current wording

•An increase in accounts receivable of $861.2 million primarily due to an increase in sales and the timing of scheduled payments from our customers; and

Previous wording

•A decrease in accrued expenses of $233.6 million primarily due to the payment of accrual liabilities that were on our Consolidated Balance Sheet as of September 30, 2022.

Current wording

•A decrease in accrued expenses of $260.3 million primarily due to the payment of accrual liabilities that were on our Consolidated Balance Sheet as of September 30, 2022, including $108.2 million of opioid litigation settlement payments.

Previous wording

We use days sales outstanding, days inventory on hand, and days payable outstanding to evaluate our working capital performance. The below financial metrics are calculated based upon a quarterly average and can be impacted by the timing of cash receipts and disbursements, which can vary significantly depending upon the day of the week on which the month ends.

Current wording

We use days sales outstanding, days inventory on hand, and days payable outstanding to evaluate our working capital performance. The below financial metrics are calculated based upon a quarterly average and can be impacted by the timing of cash receipts and disbursements, which can vary significantly depending upon the day of the week on which the period ends.

Previous wording

Our cash flows from operating activities can vary significantly from period to period based upon fluctuations in our period-end working capital account balances. Additionally, any changes to payment terms with a significant customer or manufacturer supplier could have a material impact to our cash flows from operations. Operating cash flows during the three months ended December 31, 2023 included $65.6 million of interest payments and $62.4 million of income tax payments, net of refunds. Operating cash flows during the three months ended December 31, 2022 included $63.1 million of interest payments and $30.3 million of income tax payments, net of refunds.

Current wording

Our cash flows from operating activities can vary significantly from period to period based upon fluctuations in our period-end working capital account balances. Additionally, any changes to payment terms with a significant customer or manufacturer supplier could have a material impact to our cash flows from operations. Operating cash flows during the six months ended March 31, 2024 included $129.1 million of interest payments and $291.7 million of income tax payments, net of refunds. Operating cash flows during the six months ended March 31, 2023 included $127.1 million of interest payments and $190.4 million of income tax payments, net of refunds.

Previous wording

Capital expenditures in the three months ended December 31, 2023 and 2022 were $74.2 million and $75.7 million, respectively. Significant capital expenditures in the three months ended December 31, 2023 and 2022 included investments in various technology initiatives, including technology investments at Alliance Healthcare.

Current wording

Capital expenditures in the six months ended March 31, 2024 and 2023 were $187.0 million and $178.6 million, respectively. Significant capital expenditures in the six months ended March 31, 2024 and 2023 included investments in various technology initiatives, including technology investments at Alliance Healthcare.

Previous wording

In addition to capital expenditures, net cash used in investing activity in the three months ended December 31, 2022 included $1,438.1 million for the prefunding of our acquisition of PharmaLex.

Current wording

In addition to capital expenditures, net cash used in investing activities in the six months ended March 31, 2023 included $1,438.1 million for the acquisition of PharmaLex.

Previous wording

Net cash used in financing activities in the three months ended December 31, 2023 principally resulted from $385.5 million purchases of our common stock and $105.7 million in cash dividends paid on our common stock. Net cash used in financing activities in the three months ended December 31, 2022 principally resulted from $807.2 million in purchases of common stock and $99.7 million in cash dividends paid on our common stock.

Current wording

Net cash used in financing activities in the six months ended March 31, 2024 principally resulted from $436.4 million purchases of our common stock and $212.7 million in cash dividends paid on our common stock, offset in part by the issuance of our $500 million of 5.125% senior notes in February 2024. Net cash used in financing activities in the six months ended March 31, 2023 principally resulted from the $675 million repayment of our 0.737% senior notes that matured in March 2023, $807.2 million purchases of our common stock and $201.5 million in cash dividends paid on our common stock.