Cencora Inc

Previous 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;

Current wording

•Revenue increased by $7.3 billion, or 10.9%, and $21.7 billion, or 11.2%, from the prior year quarter and nine-month period, respectively, primarily due to growth in the U.S. Healthcare Solutions segment. The U.S. Healthcare Solutions segment grew its revenue by $7.3 billion, or 12.2%, and $20.8 billion, or 12.1%, from the prior year quarter and nine-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 was flat compared to the prior year quarter and increased by $0.8 billion, or 4.0%, from the prior year nine-month period. The increase from the prior year nine-month period is primarily due to increased sales at Alliance Healthcare, our European distribution business, and increased sales in our Canadian business.

Previous 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;

Current wording

•Gross profit increased by $146.1 million, or 6.5%, and $711.6 million, or 10.6%, from the prior year quarter and nine-month period, respectively. The increase from the prior year quarter was primarily due to the increase in gross profit in the U.S. Healthcare Solutions segment and a lower Turkey highly inflationary impact on inventory, offset in part by lower gains from antitrust litigation settlements. The increase from the prior year nine-month period was primarily due to the increase in gross profit in both reportable segments and a LIFO credit in the current year period in comparison to LIFO expense in the prior year period, offset in part by lower gains from antitrust litigation settlements. U.S. Healthcare Solutions' gross profit increased by $136.2 million, or 9.7%, and $449.9 million, or 10.3%, from the prior year quarter and nine-month period, respectively, primarily due to increased sales. Gross profit in International Healthcare Solutions increased by $3.1 million, or 0.4%, and $129.5 million, or 5.5%, from the prior year quarter and nine-month period, respectively. The increase from the prior year nine-month period was due to growth at all of its businesses.

Previous wording

•Total operating expenses increased by $249.8 million, or 14.4%, and $383.0 million, or 11.8%, from the prior year quarter and six-month period, respectively. The increase from the prior year quarter was largely due to higher litigation and opioid-related expenses. The increase from the prior year six-month period is primarily a result of increases in distribution, selling, and administrative expenses, amortization expense, and litigation and opioid-related expenses;

Current wording

•Total operating expenses increased by $143.8 million, or 9.0%, and $526.8 million, or 10.9%, from the prior year quarter and nine-month period, respectively. The increase from the prior year quarter was largely due to increases in distribution, selling, and administrative expenses, and litigation and opioid-related expenses, which was a credit in the prior year quarter due to the receipt of funds previously held in an opioid indemnity escrow account. The increase from the prior year nine-month period is primarily a result of increases in distribution, selling, and administrative expenses, amortization expense, and litigation and opioid-related expenses, which was a credit in the prior year nine-month period due to the receipt of funds previously held in an opioid indemnity escrow account.

Previous wording

•Total segment operating income increased by $101.7 million, or 10.9%, and $253.7 million, or 15.2%, from the prior year quarter and six-month period, respectively. U.S. Healthcare Solutions' operating income increased by $84.9 million and $210.6 million from prior year quarter and six-month period, respectively, and International Healthcare Solutions' operating income increased by $16.7 million and $43.0 million from the prior year quarter and six-month period, respectively; and

Current wording

•Total segment operating income increased by $55.4 million, or 6.7%, and $309.1 million, or 12.4%, from the prior year quarter and nine-month period, respectively. U.S. Healthcare Solutions' operating income increased by $63.1 million and $273.8 million from prior year quarter and nine-month period, respectively, and International Healthcare Solutions' operating income decreased by $7.7 million and increased by $35.3 million from the prior year quarter and nine-month period, respectively.

Previous 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.

Current wording

•Our effective tax rates were 22.4% and 19.5% for the three and nine months ended June 30, 2024, respectively. Our effective tax rates were 21.3% and 19.3% for the three and nine months ended June 30, 2023, respectively. Our effective tax rates for the three months ended June 30, 2024 and 2023 were higher than the U.S. statutory rate primarily due to U.S. state income taxes, offset in part by the benefit of non-U.S. income taxed at rates lower than the U.S. statutory rate. Our effective tax rate for the nine months ended June 30, 2024 was lower than the U.S. statutory rate primarily due to discrete tax benefits associated with foreign valuation allowance adjustments, 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 incomes taxes. Our effective tax rate for the nine months ended June 30, 2023 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, benefits from tax authority audit resolutions, and tax benefits associated with equity compensation, offset in part by U.S. state income taxes.

Previous 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.

Current wording

The U.S. Healthcare Solutions segment grew its revenue by $7.3 billion, or 12.2%, and $20.8 billion, or 12.1%, from the prior year quarter and nine-month period, respectively, due to overall market growth primarily driven by unit volume growth, including increased sales of $2.1 billion and $5.5 billion of products labeled for diabetes and/or weight loss in the GLP-1 class from the prior year quarter and nine-month period, respectively, increased sales of specialty products to physician practices and health systems, and increased sales of COVID-19 vaccines (primarily in the nine-month period). Sales, including GLP-1 products and COVID-19 vaccines, to our two largest customers increased by $2.0 billion and $7.8 billion in comparison to the prior year quarter and nine-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 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.

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 nine months ended June 30, 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

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.

Current wording

U.S. Healthcare Solutions' gross profit increased by $136.2 million, or 9.7%, and $449.9 million, or 10.3%, from the prior year quarter and nine-month period, respectively, primarily due to increased sales. As a percentage of revenue, U.S. Healthcare Solutions' gross profit margins were 2.30% and 2.48% in the current year quarter and nine-month period, respectively, and represented declines of 6 basis points and 4 basis points from the prior year quarter and nine-month period, respectively, 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 (primarily in the nine-month period), which have higher gross profit margins.

Previous wording

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.

Current wording

Gross profit in International Healthcare Solutions increased by $3.1 million, or 0.4%, and $129.5 million, or 5.5%, from the prior year quarter and nine-month period, respectively. The increase from the prior year nine-month period was due to growth at all of its businesses.

Previous 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).

Current wording

We recognized gains from antitrust litigation settlements with pharmaceutical manufacturers of $51.6 million and $118.6 million in the three months ended June 30, 2024 and 2023, respectively, and $108.6 million and $168.5 million in the nine months ended June 30, 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 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.

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 credit in the current year nine-month period in comparison to the LIFO expense in the prior year nine-month period was 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 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.

Current wording

We recognized expenses in Cost of Goods Sold of $3.6 million and $50.6 million in the three months ended June 30, 2024 and 2023, respectively, and $43.9 million and $59.0 million in the nine months ended June 30, 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 $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.

Current wording

Distribution, selling, and administrative expenses increased by $79.1 million, or 6.1%, and $254.6 million, or 6.5%, compared to prior year quarter and nine-month period, respectively, primarily to support revenue growth. As a percentage of revenue, distribution, selling, and administrative expenses were 1.86% and 1.94% in the current year quarter and nine-month period, respectively, which represented declines of 9 basis points compared to the prior year quarter and nine-month period as initiatives taken in fiscal 2023 improved operating efficiency across many of our businesses and administrative functions and the 10.9% and 11.2% revenue growth in the current fiscal quarter and nine-month period, respectively, improved our operating leverage.

Previous 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.

Current wording

Depreciation expense increased 3.3% and 4.5% from the prior year quarter and nine-month period, respectively. Amortization expense decreased 3.0% from the prior year quarter and increased 29.7% from the prior year nine-month period. The increase from the prior year nine-month period was 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 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.

Current wording

Litigation and opioid-related expenses, net in the three months ended June 30, 2024 included legal fees in connection with opioid lawsuits and investigations. Litigation and opioid-related expenses, net in the nine months ended June 30, 2024 included a $214.0 million litigation accrual for ongoing litigation related to the distribution of prescription opioid medications (see Note 10 of the Notes to Consolidated Financial Statements) and $39.7 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 credit in the three and nine months ended June 30, 2023 included the receipt of $83.4 million from the H.D. Smith opioid indemnity escrow and was offset in part by $16.3 million and $44.8 million of legal fees in connection with opioid lawsuits and investigations in three and nine months ended June 30, 2023, respectively.

Previous 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.

Current wording

Acquisition-related deal and integration expenses in the three and nine months ended June 30, 2024 and 2023 primarily related to the continued integration of Alliance Healthcare and PharmaLex.

Previous 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.

Current wording

Restructuring and employee severance costs in the three and nine months ended June 30, 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 nine months ended June 30, 2023 primarily included expenses incurred in connection with workforce reductions in both of our reportable segments.

Previous 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.

Current wording

Business transformation efforts in the three and nine months ended June 30, 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

As previously disclosed in a Current Report on Form 8-K on February 21, 2024, we experienced a cybersecurity event where data from our information systems was exfiltrated. In connection with this event, we incurred costs that were recorded in Other expenses in the above table. The majority of Other, net in the three and six months ended March 31, 2024 related to this cybersecurity event.

Current wording

As previously disclosed in the March 2024 quarter, we experienced a cybersecurity event where data from our information systems was exfiltrated. In connection with this event, we incurred costs that were recorded in Other, net in the above table. The majority of the costs included in Other, net in the three and nine months ended June 30, 2024 related to this cybersecurity event.

Previous wording

In the three months ended March 31, 2023, one of our foreign business units experienced a cybersecurity event that impacted a standalone legacy information technology platform in one country and the foreign business unit's ability to operate in that country for approximately two weeks. In connection with this event, we incurred costs to restore the foreign business unit's operations in that country, which were recorded in Other expenses in the above table. The majority of Other, net in the three and six months ended March 31, 2023 related to this cybersecurity event.

Current wording

In the nine months ended June 30, 2023, one of our foreign business units experienced a cybersecurity event that impacted a standalone legacy information technology platform in one country and the foreign business unit's ability to operate in that country for approximately two weeks. In connection with this event, we incurred costs to restore the foreign business unit's operations in that country, which were recorded in Other, net in the above table. The majority of the costs included in Other, net in the three and nine months ended June 30, 2023 related to this cybersecurity event.

Previous 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.

Current wording

U.S. Healthcare Solutions' operating income increased by $63.1 million, or 9.9%, and $273.8 million, or 13.9%, from prior year quarter and nine-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 1.04% in the current year quarter and represented a decline of 2 basis points compared to the prior year quarter primarily due to a decline in gross profit margin, as described above in the Gross Profit section. As a percentage of revenue, U.S. Healthcare Solutions' operating income margin was 1.16% in the current year nine-month period and represented an increase of 2 basis points from the prior year nine-month period primarily due to a decline in operating expense margin, as described above in the Operating Expense section.

Previous 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.

Current wording

International Healthcare Solutions' operating income decreased by $7.7 million, or 4.1%, from the prior year quarter and increased $35.3 million, or 6.7%, from the prior year nine-month period. The decrease in the current year quarter was primarily due to higher information technology operating expenses in our European distribution businesses and lower operating income at our global specialty logistics business, which was offset in part by the positive results of our Canadian business. We have also recently experienced a weakening in demand for specialized services in the life sciences industry, which may continue to impact the operating results of PharmaLex. The increase in the current year nine-month period was primarily due to our Canadian business, our global specialty logistics 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 nine-month period.

Previous 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.

Current wording

Interest expense, net decreased by $26.5 million, or 45.9%, from the prior year quarter due to the increase in interest income and the decrease in interest expense. The increase in interest income was driven by higher investment interest rates and higher average investment cash balances in the current year quarter in comparison to the prior year quarter. The decrease in interest expense was driven by decreased variable-rate borrowings and the September 2023 divestiture of our less-than-wholly-owned subsidiary in Egypt.

Previous wording

Interest expense, net and the respective weighted average interest rates for the six months ended March 31, 2024 and 2023 are as follows:

Current wording

Interest expense, net and the respective weighted average interest rates for the nine months ended June 30, 2024 and 2023 are as follows:

Previous wording

Interest expense, net decreased by $5.4 million, or 4.9%, from prior year six-month period due to the increase in interest income, offset in part by an increase in interest expense. The increase in interest income was primarily driven by higher investment interest rates in the current year six-month period in comparison to the prior year six-month period. The higher investment interest rates were offset in part by lower average investment cash balances in the current year six-month period in comparison to the prior year six-month period. Interest expense increased primarily driven by increased variable-rate borrowings and was offset in part by the September 2023 divestiture of our less-than-wholly-owned subsidiary in Egypt.

Current wording

Interest expense, net decreased by $32.0 million, or 19.0%, from the prior year nine-month period due to the increase in interest income, and the decrease in interest expense. The increase in interest income was driven by higher investment interest rates and higher average investment cash balances in the current year period in comparison to the prior year period. The interest expense decrease was primarily driven by September 2023 divestiture of our less-than-wholly-owned subsidiary in Egypt, offset in part by increased variable-rate borrowings.

Previous 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.

Current wording

Our effective tax rates were 22.4% and 19.5% for the three and nine months ended June 30, 2024, respectively. Our effective tax rates were 21.3% and 19.3% for the three and nine months ended June 30, 2023, respectively. Our effective tax rates for the three months ended June 30, 2024 and 2023 were higher than the U.S. statutory rate primarily due to U.S. state income taxes, offset in part by the benefit of non-U.S. income taxed at rates lower than the U.S. statutory rate. Our effective tax rate for the nine months ended June 30, 2024 was lower than the U.S. statutory rate primarily due to discrete tax benefits associated with foreign valuation allowance adjustments, 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 incomes taxes. Our effective tax rate for the nine months ended June 30, 2023 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, benefits from tax authority audit resolutions, and tax benefits associated with equity compensation, offset in part by U.S. state income taxes.

Previous 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.

Current wording

As of June 30, 2024 and September 30, 2023, our cash and cash equivalents held by foreign subsidiaries were $700.4 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 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.

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 nine months ended June 30, 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 nine months ended June 30, 2024 and 2023 was $3.2 billion and $2.1 billion, respectively. We had $56.7 billion and $49.5 billion of cumulative intra-period borrowings that were repaid under our credit facilities during the nine months ended June 30, 2024 and 2023, respectively.

Previous 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:

Current wording

During the nine months ended June 30, 2024, our operating activities provided cash of $2,484.3 million and was principally the result of the following:

Previous 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;

Current wording

•An increase in accounts payable of $4,112.5 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 $635.3 million, which is primarily comprised of amortization expense of $335.5 million and depreciation expense of $222.7 million.

Current wording

•Positive non-cash items of $897.3 million, which is primarily comprised of amortization expense of $502.1 million and depreciation expense of $337.0 million.

Previous 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

Current wording

•An increase in accounts receivable of $3,085.6 million primarily due to an increase in sales and the timing of scheduled payments from our customers; and

Previous wording

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

Current wording

•An increase in inventories of $835.6 million to support the increase in business volume.

Previous 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:

Current wording

During the nine months ended June 30, 2023, our operating activities provided cash of $2,084.5 million and was principally the result of the following:

Previous 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

Current wording

•An increase in accounts payable of $3,513.7 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 $527.8 million, which is primarily comprised of amortization expense of $218.5 million and depreciation expense of $201.7 million.

Current wording

•Positive non-cash items of $899.8 million, which is primarily comprised of amortization expense of $389.8 million and depreciation expense of $307.3 million.

Previous wording

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

Current wording

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

Previous wording

•An increase in accounts receivable of $1,682.1 million primarily due to an increase in sales and the timing of scheduled payments from our customers, including delayed collections of approximately $600 million from certain customers as a result of the February 2024 Change Healthcare cyberattack; and

Current wording

•An increase in accounts receivable of $2,249.9 million primarily due to an increase in sales and the timing of scheduled payments from our customers; and

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 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.

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 nine months ended June 30, 2024 included $197.7 million of interest payments and $408.9 million of income tax payments, net of refunds. Operating cash flows during the nine months ended June 30, 2023 included $200.9 million of interest payments and $342.7 million of income tax payments, net of refunds.

Previous 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.

Current wording

Capital expenditures in the nine months ended June 30, 2024 and 2023 were $304.8 million and $282.9 million, respectively. Significant capital expenditures in the nine months ended June 30, 2024 and 2023 included investments in various technology initiatives, including technology investments at Alliance Healthcare.