Cencora Inc
For the period ended Dec 31, 2024. Filed Feb 5, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 31, 2024 · Filed Feb 5, 2025
COR$333.56-1.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-07-31.
0001140859-24-000119
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-12-31; filed 2025-02-05.
0001140859-25-000034
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 98 previous paragraphs and 101 current paragraphs.
27 unchanged; 52 reworded; 19 added; 16 removed; 3 previous and 3 current paragraphs rearranged.
Tables are not compared: 10 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
In reviewing this Management’s Discussion and Analysis of Financial Condition and Results of Operations, please note that we face many uncertainties and risks related to various economic, political and regulatory environments in which we operate, both within the U.S. and internationally. Refer to the headings “Item 1A. Risk Factors” in Part I of our Annual Report on Form 10-K for the year ended September 30, 2024, as well as the heading “Cautionary Note Regarding Forward-Looking Statements” above for additional information related to our present business environment.
Current report
Recent Development
Current report
As previously disclosed, we entered into a definitive agreement to acquire Retina Consultants of America ("RCA"), a leading management services organization of retina specialists. On January 2, 2025, we acquired an interest in RCA of approximately 85%, with certain RCA physicians and members of the management team retaining a minority interest in RCA. Our cash outlay at closing was $4.4 billion, which included a cash capitalization from us to RCA of $350 million and the payment of certain transaction costs. The purchase price is subject to a customary post-closing adjustment. The agreement also provides for the potential payment of up to $500 million in aggregate contingent consideration in fiscal 2027 and fiscal 2028, subject to the successful completion of certain predefined business objectives. RCA's future operating results will be consolidated as a component of the U.S. Healthcare Solutions reportable segment.
Current report
•Gross profit increased by $89.2 million, or 3.6%, from the prior year quarter primarily due to the increases in gross profit in both reportable segments, offset in part by a decrease in the last-in, first-out ("LIFO") credit and lower gains from antitrust litigation settlements compared to the prior year quarter. U.S. Healthcare Solutions' gross profit increased by $113.8 million, or 7.2%, from the prior year quarter primarily due to increased sales. Gross profit in International Healthcare Solutions increased by $33.0 million, or 4.0%, from the prior year quarter primarily due to our European distribution business, offset in part by a decline in gross profit at our global specialty logistics business.
Current report
•Total operating expenses increased by $205.8 million, or 12.5%, from the prior year quarter primarily due to litigation and opioid-related expenses, which was a credit in the prior year quarter due to a net $92.2 million opioid litigation settlement accrual reduction, and an increase in distribution, selling, and administrative expenses to support the growth in our business.
Current report
Revenue increased by $9.2 billion, or 12.8%, from the prior year quarter primarily due to growth in the U.S. Healthcare Solutions segment.
Current report
Gross profit increased by $89.2 million, or 3.6%, from the prior year quarter primarily due to the increases in gross profit in both reportable segments, offset in part by a decrease in the LIFO credit and lower gains from antitrust litigation settlements compared to the prior year quarter.
Current report
Gross profit in International Healthcare Solutions increased by $33.0 million, or 4.0%, from the prior year quarter primarily due our European distribution business, offset in part by a decline in gross profit at our global specialty logistics business.
Current report
Depreciation expense increased 8.2% and amortization expense decreased 0.4% from the prior year quarter.
Current report
International Healthcare Solutions' operating income decreased $5.5 million, or 2.9%, from the prior year quarter primarily due to lower operating income at our global specialty logistics business, which was offset in part by the increase at our European distribution business.
Current report
We recorded a $35.5 million loss on the divestiture of non-core businesses in the three months ended December 31, 2024.
Current report
We used $2.7 billion of cash in our operations during the three months ended December 31, 2024 compared to $0.9 billion of cash provided by operations during the three months ended December 31, 2023, a decrease of $3.6 billion. The timing of cash receipts and disbursements can significantly impact our working capital. In the three months ended December 31, 2024, the growth of our accounts receivable and inventories and the decrease in accounts payable balances resulted in a $3.3 billion use of cash from operations compared to cash provided by operations of $0.2 billion in the three months ended December 31, 2023. The use of cash in the three months ended December 31, 2024 was negatively impacted by the timing of scheduled payments to our suppliers at the end of the current period.
Current report
•A decrease in accounts payable of $654.2 million primarily due to the timing of scheduled payments to our suppliers.
Current report
•Net income of $493.7 million; and
Current report
•Net income of $603.0 million; and
Current report
•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 report
Net cash provided by financing activities in the three months ended December 31, 2024 principally resulted from the $2.0 billion of net borrowings under our revolving credit facilities to cover seasonal short-term working capital needs and the $1.8 billion issuance of senior notes to finance a portion of the acquisition of RCA, offset in part by $385.5 million in purchases of our common stock and $110.9 million in cash dividends paid on our common stock.
Current report
In November 2024, we entered into an agreement pursuant to which we obtained a $1.5 billion senior unsecured term facility (“Term Loan Facility”). The Term Loan Facility became available to us and was drawn on January 2, 2025 to finance a portion of the acquisition of RCA. The Term Loan Facility matures in three years. The Term Loan Facility bears interest at a rate equal to either an adjusted SOFR plus an applicable margin or an alternate base rate plus an applicable margin. The margins are based on our public debt ratings. The Term Loan Facility contains similar covenants to the Multi-Currency Revolving Credit Facility. We have the right to prepay the borrowings under the Term Loan Facility at any time, in whole or in part and without premium or penalty.
Current report
In November 2024, we entered into an agreement pursuant to which we obtained a $1.0 billion senior unsecured revolving credit facility (the "364-Day Revolving Credit Facility") with a syndicate of lenders, which is scheduled to expire 364 days after the January 2, 2025 closing of the RCA acquisition, the date on which borrowings under this facility became available to us. Interest on borrowings under the 364-Day Revolving Credit Facility will accrue at a rate equal to either an adjusted SOFR plus an applicable margin or an alternate base rate plus an applicable margin, in each case based on our public debt ratings. We may choose to reduce our commitment under the 364-Revolving Credit Facility at any time. We also have the right to prepay borrowings under the 364-Revolving Credit Facility at any time, in whole or in part and without premium or penalty, provided that the amount of any such prepayment meets certain minimum thresholds.
Removed paragraphs (16)
Previous report
•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 report
•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 report
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.
Previous report
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.
Previous report
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 report
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 report
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 report
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 report
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 report
We recorded losses on the remeasurement of an equity investment of $13.3 million and $24.8 million in the three and nine months ended June 30, 2024, respectively.
Previous report
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 report
Our net cash provided by operating activities increased by $399.8 million in the nine months ended June 30, 2024 compared to the nine months ended June 30, 2023 largely due to our growth and the timing of cash receipts and disbursements. More specifically, the drivers of this increase related to the following:
Previous report
•Our growth led to an increase in our net income plus non-cash items to $2.4 billion in the nine months ended June 30, 2024 from $2.3 billion in the nine months ended June 30, 2023.
Previous report
•The timing of cash receipts and disbursements can significantly impact our working capital. We are able to maintain a negative working capital balance, as our days payable outstanding is greater than the sum of our days sales outstanding and days inventory on hand. Therefore, as we grow, absent timing or a specifically identifiable event or transaction, accounts receivable, inventory, and accounts payable will correspondingly increase, with the increase in accounts payable outpacing the increase in accounts receivable and inventory. In the nine months ended June 30, 2024, the growth of our accounts receivable, inventories, and accounts payable balances provided $191.3 million of cash from operations compared to a use of cash from operations of $106.2 million in the nine months ended June 30, 2023.
Previous report
•Net income of $1,511.8 million; and
Previous report
•Net income of $1,383.6 million; and
Reworded paragraphs (52)
Previous 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.
Current wording
•Revenue increased by $9.2 billion, or 12.8%, from the prior year quarter primarily due to growth in the U.S. Healthcare Solutions segment. The U.S. Healthcare Solutions segment grew its revenue by $8.8 billion, or 13.6%, from the prior year quarter primarily due to overall market growth that was largely driven by unit volume growth, including increased sales of $3.2 billion, or 53.0%, of products labeled for diabetes and/or weight loss in the GLP-1 class and increased sales of specialty products to physician practices and health systems. International Healthcare Solutions' revenue increased by $0.4 billion, or 5.5%, from the prior year quarter primarily due to increased sales at our European distribution business and increased sales at our Canadian business.
Previous 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.
Current wording
•Total segment operating income increased $63.6 million, or 7.2%, from the prior year quarter. U.S. Healthcare Solutions' operating income increased by $69.2 million, or 9.9%, from the prior year quarter, and International Healthcare Solutions' operating income decreased $5.5 million, or 2.9%, from the prior year quarter
Previous 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.
Current wording
•Our effective tax rates were 20.4% and 23.0% for the three months ended December 31, 2024 and 2023, respectively. The effective tax rate for the three months ended December 31, 2024 was lower than the U.S. statutory rate primarily due to the benefit of income taxed at rates lower than the U.S. statutory rate and benefits associated with equity compensation, offset in part by U.S. state income taxes. 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 discrete tax expense, offset in part by the benefit of income taxed at rates lower than the U.S. statutory rate and tax benefits associated with equity compensation.
Previous 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.
Current wording
The U.S. Healthcare Solutions segment grew its revenue by $8.8 billion, or 13.6%, from the prior year quarter primarily due to overall market growth primarily driven by unit volume growth, including increased sales of $3.2 billion, or 53.0%, of products labeled for diabetes and/or weight loss in the GLP-1 class and increased sales of specialty products to physician practices and health systems. Sales, including GLP-1 products, to our two largest customers increased by $3.3 billion from the prior year quarter.
Previous wording
International Healthcare Solutions' revenue was flat compared to the prior year quarter and increased $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 of $0.4 billion at our European distribution business and increased sales of $0.3 billion in our Canadian business.
Current wording
International Healthcare Solutions' revenue increased by $0.4 billion, or 5.5%, from the prior year quarter primarily due to increased sales of $0.3 billion at our European distribution business and increased sales of $0.1 billion at our Canadian business.
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 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.
Current wording
A number of our contracts with customers, including group purchasing organizations, are typically subject to expiration each year. We may lose a key customer if an existing contract with such customer expires without being extended, renewed, or replaced. During the three months ended December 31, 2024, no key contracts expired. Additionally, from time to time, key 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. As previously disclosed, we anticipate a potential June 2025 loss of an oncology customer following its pending acquisition.
Previous 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.
Current wording
U.S. Healthcare Solutions' gross profit increased by $113.8 million, or 7.2%, from the prior year quarter primarily due to increased sales. As a percentage of revenue, U.S. Healthcare Solutions' gross profit margin was 2.28% in the current year quarter, a decline of 13 basis points from the prior year quarter primarily due to higher sales of GLP-1 products, which have lower gross profit margins, and lower sales of COVID vaccines, which have higher gross profit margins.
Previous 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).
Current wording
We recognized gains from antitrust litigation settlements with pharmaceutical manufacturers of $22.9 million and $48.2 million in the three months ended December 31, 2024 and 2023, respectively. The gains were recorded as reductions to Cost of Goods Sold (see Note 10 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 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.
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 decrease in the LIFO credit in the current year quarter is primarily due to higher brand pharmaceutical inflation.
Previous 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.
Current wording
We recognized expense in Cost of Goods Sold of $7.2 million and $17.2 million in the three months ended December 31, 2024 and 2023, respectively, related to the impact of Turkey highly inflationary accounting driven by the continued weakening of the Turkish Lira.
Previous 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.
Current wording
Distribution, selling, and administrative expenses increased by $73.3 million, or 5.2%, compared to prior year quarter primarily to support our revenue growth. As a percentage of revenue, distribution, selling, and administrative expenses were 1.81% in the current year quarter, a decline of 13 basis points compared to the prior year quarter primarily due to our improved operating leverage from our 12.8% revenue growth.
Previous 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.
Current wording
Litigation and opioid-related expenses in the three months ended December 31, 2024 included legal fees in connection with opioid lawsuits and investigations. 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.
Previous 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.
Current wording
Acquisition-related deal and integration expenses in the three months ended December 31, 2024 primarily included costs related to the acquisition of RCA and the continued integration of PharmaLex. Acquisition-related deal and integration expenses in the three months ended December 31, 2023 primarily related to the integration of Alliance Healthcare and PharmaLex.
Previous wording
Restructuring and other expenses are comprised of the following for the periods indicated:
Current wording
Restructuring and other expenses are comprised of the following:
Previous 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.
Current wording
Restructuring and employee severance costs in the three months ended December 31, 2024 primarily included workforce reductions in both of our reportable segments. 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.
Previous 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.
Current wording
Business transformation efforts in the three months ended December 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 $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.
Current wording
U.S. Healthcare Solutions' operating income increased by $69.2 million, or 9.9%, from the 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 1.04% in the current year quarter, a decline of 3 basis points from the prior year quarter due to a decline in the gross profit margin, as described above in the Gross Profit section, and was offset in part by a decline in the operating expense margin.
Previous wording
Interest expense, net and the respective weighted average interest rates for the three months ended June 30, 2024 and 2023 are as follows:
Current wording
Interest expense, net and the respective weighted average interest rates are as follows:
Previous 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.
Current wording
Interest expense, net decreased by $12.6 million, or 31.1%, from the prior year quarter due to the increase in interest income, offset in part by an increase in interest expense. The increase in interest income was driven by higher average investment cash balances and higher investment interest rates outside the United States in the current year quarter in comparison to the prior year quarter. The increase in interest expense was primarily due to the issuance of our $1.8 billion of senior notes in December 2024 to finance a portion of the RCA acquisition and increased revolving credit facility borrowings to cover seasonal short-term working capital needs, offset in part by a decrease in foreign subsidiary borrowings. We expect interest expense, net to increase through the remainder of fiscal 2025 primarily as a result of the incremental debt incurred to finance a portion of the RCA acquisition.
Previous 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.
Current wording
Our effective tax rates were 20.4% and 23.0% for the three months ended December 31, 2024 and 2023, respectively. The effective tax rate for the three months ended December 31, 2024 was lower than the U.S. statutory rate primarily due to the benefit of income taxed at rates lower than the U.S. statutory rate and benefits associated with equity compensation, offset in part by U.S. state income taxes. 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 discrete tax expense, offset in part by the benefit of income taxed at rates lower than the U.S. statutory rate, as well as tax benefits associated with equity compensation.
Previous 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.
Current wording
As of December 31, 2024 and September 30, 2024, our cash and cash equivalents held by foreign subsidiaries were $967.0 million and $851.3 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 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.
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 three months ended December 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 three months ended December 31, 2024 and 2023 was $2.1 billion and
Previous 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:
Current wording
During the three months ended December 31, 2024, our operating activities used cash of $2.7 billion and was principally the result of the following:
Previous wording
•An increase in inventories of $835.6 million to support the increase in business volume.
Current wording
•An increase in inventories of $1.7 billion to support the increase in business volume and due to seasonal needs;
Previous 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
Current wording
•An increase in accounts receivable of $974.3 million primarily due to an increase in sales and the timing of scheduled payments from our customers; and
Previous wording
The cash provided by the above items was offset in part by the following:
Current wording
The cash used from the above items was offset in part by the following:
Previous 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.
Current wording
•Positive non-cash items of $390.1 million, which is primarily comprised of amortization expense of $167.8 million and depreciation expense of $113.6 million.
Previous 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:
Current 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:
Previous 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;
Current wording
•An increase in accounts payable of $1.8 billion 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 $899.8 million, which is primarily comprised of amortization expense of $389.8 million and depreciation expense of $307.3 million.
Current 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.
Previous wording
•An increase in inventories of $1,370.0 million to support the increase in business volume.
Current wording
•An increase in inventories of $1.1 billion to support the increase in business volume and due to seasonal needs;
Previous 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
Current 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
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 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.
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. Any changes to payment terms with a key customer or manufacturer supplier could have a material impact to our cash flows from operations. The addition of any new customer or the loss of an existing customer could have a material impact on our cash flows from operations.
Previous 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.
Current wording
Capital expenditures in the three months ended December 31, 2024 and 2023 were $105.9 million and $74.2 million, respectively. Significant capital expenditures in the three months ended December 31, 2024 included investments relating to the expansion and enhancement of our distribution network and various technology initiatives. Significant capital expenditures in the three months ended December 31, 2023 included investments in various technology initiatives, including technology investments at Alliance Healthcare.
Previous wording
We currently expect to invest approximately $500 million for capital expenditures during fiscal 2024. Larger 2024 capital expenditures will include investments relating to various technology initiatives, including technology investments at Alliance Healthcare.
Current wording
We currently expect to invest approximately $600 million for capital expenditures during fiscal 2025. Larger 2025 capital expenditures will include investments relating to the expansion and enhancement of our distribution network and various technology initiatives.
Previous wording
In addition to capital expenditures, net cash used in investing activities in the nine months ended June 30, 2023 included $1,406.3 million for the acquisition of PharmaLex and $718.4 million for our investment in OneOncology.
Current wording
In addition to capital expenditures, net cash used in investing activities in the three months ended December 31, 2024 included $182.0 million for equity investments.
Previous wording
Net cash used in financing activities in the nine months ended June 30, 2024 principally resulted from $986.4 million purchases of our common stock, the repayment of our $500 million of 3.400% senior notes that matured in May 2024, and $315.2 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 nine months ended June 30, 2023 principally resulted from $907.2 million purchases of our common stock, a $675 million repayment of our 0.737% senior notes that matured in March 2023, and $300.4 million in cash dividends paid on our common stock.
Current wording
Net cash used in financing activities in the three months ended December 31, 2023 principally resulted from $385.5 million in purchases of our common stock and $105.7 million in cash dividends paid on our common stock.
Previous wording
The following table illustrates our debt structure as of June 30, 2024, including availability under the multi-currency revolving credit facility, the receivables securitization facility, the money market facility, and the Alliance Healthcare debt:
Current wording
The following table illustrates our debt structure as of December 31, 2024, including availability under the multi-currency revolving credit facility; the receivables securitization facility; the term loan facility; the 364-day revolving credit facility; the money market facility; and the Alliance Healthcare debt:
Previous wording
We have a $2.4 billion multi-currency senior unsecured revolving credit facility ("Multi-Currency Revolving Credit Facility") with a syndicate of lenders, which is scheduled to expire in October 2028. Interest on borrowings under the Multi-Currency Revolving Credit Facility accrues at specified rates based on our debt rating. We also pay facility fees to maintain the availability under the Multi-Currency Revolving Credit Facility at specified rates based on our debt rating. We may choose to repay or reduce our commitments under the Multi-Currency Revolving Credit Facility at any time. The Multi-Currency Revolving Credit Facility contains covenants, including compliance with a financial leverage ratio test, as well as others that impose limitations on, among other things, indebtedness of subsidiaries and asset sales, with which we were compliant as of June 30, 2024.
Current wording
We have a $2.4 billion multi-currency senior unsecured revolving credit facility ("Multi-Currency Revolving Credit Facility") with a syndicate of lenders, which is scheduled to expire in October 2029. Interest on borrowings under the Multi-Currency Revolving Credit Facility accrues at specified rates based upon our debt rating. We pay facility fees to maintain the availability under the Multi-Currency Revolving Credit Facility at specified rates based on our debt rating. We may choose to repay or reduce our commitments under the Multi-Currency Revolving Credit Facility at any time. The Multi-Currency Revolving Credit Facility contains covenants, including compliance with a financial leverage ratio test, as well as others that impose limitations on, among other things, indebtedness of subsidiaries and asset sales, with which we were compliant as of December 31, 2024.
Previous wording
We have a commercial paper program whereby we may from time to time issue short-term promissory notes in an aggregate amount of up to $2.4 billion at any one time. Amounts available under the program may be borrowed, repaid, and re-borrowed from time to time. The maturities on the notes will vary, but may not exceed 365 days from the date of issuance. The notes will bear interest, if interest bearing, or will be sold at a discount from their face amounts. The commercial paper program does not increase our borrowing capacity as it is fully backed by our Multi-Currency Revolving Credit Facility. There were no borrowings outstanding under our commercial paper program as of June 30, 2024.
Current wording
We have a commercial paper program whereby we may, from time to time, issue short-term promissory notes in an aggregate amount of up to $2.4 billion at any one time. Amounts available under the program may be borrowed, repaid, and re-borrowed from time to time. The maturities on the notes will vary but may not exceed 365 days from the date of issuance. The notes will bear interest, if interest bearing, or will be sold at a discount from their face amounts. The commercial paper program does not increase our borrowing capacity as it is fully backed by our Multi-Currency Revolving Credit Facility. There were $1,665.9 million of borrowings outstanding under the commercial paper program as of December 31, 2024 and none outstanding as of September 30, 2024.
Showing the first 40 of 52 pairs. Open the source sections for the rest.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
$0.6 billion, respectively. We had $13.4 billion and $11.1 billion of cumulative intra-period borrowings that were repaid under our credit facilities during the three months ended December 31, 2024 and 2023, respectively.
Current report — wording carried from elsewhere
Operating cash flows during the three months ended December 31, 2024 included $48.8 million of interest payments and $29.5 million of income tax payments, net of refunds. 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.
Current report — wording carried from elsewhere
ability to obtain credit to finance their businesses on acceptable terms. Reduced purchases by our customers or changes in the ability of our customers to remit payments to us could adversely affect our revenue growth, our profitability, and our cash flow from operations.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Interest expense, net and the respective weighted average interest rates for the nine months ended June 30, 2024 and 2023 are as follows:
Previous report — wording carried elsewhere
•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 report — wording carried elsewhere
In March 2023, our Board of Directors authorized a share repurchase program allowing us to purchase up to $1.0 billion of our outstanding shares of common stock, subject to market conditions. In the nine months ended June 30, 2024, we purchased $809.0 million of our common stock, including $522.6 million from Walgreens Boots Alliance, Inc. ("WBA"), to complete our authorization under this program.