On July 31, 2024, Cencora Inc (COR, Financial) released its 8-K filing for the fiscal third quarter of 2024, showcasing a robust performance that exceeded analyst expectations. The company reported a revenue of $74.2 billion, marking a 10.9% increase year-over-year, and an adjusted diluted EPS of $3.34, surpassing the estimated $2.61.
Company Overview
Cencora Inc (COR, Financial) is a leading pharmaceutical wholesaler in the United States, alongside McKesson and Cardinal Health. The company sources and distributes branded, generic, and specialty pharmaceutical products to various healthcare providers. Additionally, Cencora offers commercialization services for pharmaceutical and medical device manufacturers, global specialty drug logistics through World Courier, and animal health product distribution via MWI Animal Health. In 2021, Cencora expanded its international footprint by acquiring Alliance Healthcare, a prominent European drug wholesaler.
Performance Highlights
For the third quarter of fiscal 2024, Cencora reported:
| Metric | GAAP | Adjusted (Non-GAAP) |
|---|---|---|
| Revenue | $74.2B | $74.2B |
| Gross Profit | $2.4B | $2.4B |
| Operating Expenses | $1.7B | $1.5B |
| Operating Income | $672M | $878M |
| Net Income Attributable to Cencora, Inc. | $483M | $668M |
| Diluted Earnings Per Share | $2.42 | $3.34 |
Key Financial Metrics
Cencora's revenue growth was primarily driven by a 12.2% increase in the U.S. Healthcare Solutions segment. Gross profit rose by 6.5% to $2.4 billion, although the gross profit margin slightly declined to 3.25% due to increased sales of lower-margin products in the GLP-1 class for diabetes and weight loss.
Operating expenses increased by 9.0% to $1.7 billion, mainly due to litigation and opioid-related expenses and higher distribution, selling, and administrative costs. Despite these challenges, operating income remained stable at $672.5 million.
Net interest expense decreased significantly by 45.9% to $31.3 million, attributed to higher investment interest rates and reduced variable-rate borrowings. The effective tax rate for the quarter was 22.4%, slightly higher than the previous year's 21.3%.
Segment Performance
The U.S. Healthcare Solutions segment reported a revenue of $67.2 billion, up 12.2% year-over-year, driven by market growth and increased sales of specialty products. Segment operating income increased by 9.9% to $698.3 million.
International Healthcare Solutions revenue remained flat at $7.1 billion, while operating income decreased by 4.1% to $179.4 million due to higher IT expenses and lower income from global specialty logistics, partially offset by positive results in Canada.
Recent Highlights and Future Outlook
Cencora hosted its inaugural ThinkLive Cell and Gene Therapy Summit and received high customer satisfaction rankings for its Good Neighbor Pharmacy franchise. The company was also recognized as a “Best Place to Work for Disability Inclusion” for the second consecutive year.
Looking ahead, Cencora has raised its adjusted diluted EPS guidance for fiscal 2024 to a range of $13.55 to $13.65, reflecting continued strong performance in the U.S. Healthcare Solutions segment.
"We are pleased to raise our fiscal 2024 guidance following Cencora’s strong third quarter results, as our purpose-driven team members exhibited another quarter of solid execution against our pharmaceutical-centric strategy," said Steven H. Collis, Chairman, President & Chief Executive Officer of Cencora.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Cencora Inc for further details.
