Cencora Reports Fiscal 2024 Fourth Quarter and Year End Results

Revenue of $79.1 Billion for the Fourth Quarter, a 14.7 Percent Year-Over-Year Increase

Fourth Quarter GAAP Diluted EPS of $0.02 and Adjusted Diluted EPS of $3.34

Revenue of $294.0 Billion for Fiscal Year 2024, a 12.1 Percent Year-Over-Year Increase

Fiscal Year 2024 GAAP Diluted EPS of $7.53 and Adjusted Diluted EPS of $13.76

Company increases its quarterly dividend by 8 percent

Cencora, Inc. (NYSE:COR) today reported that in its fiscal year 2024 fourth quarter ended September 30, 2024, revenue increased 14.7 percent to $79.1 billion. Revenue increased 12.1 percent to $294.0 billion for the fiscal year. On the basis of U.S. generally accepted accounting principles (GAAP), diluted earnings per share (EPS) was $0.02 for the September quarter of fiscal 2024, compared to $1.72 in the prior year quarter. Adjusted diluted EPS, which is a non-GAAP measure that excludes items described below, increased 16.8 percent to $3.34 in the fiscal fourth quarter. For fiscal year 2024, diluted EPS decreased 11.7 percent to $7.53. For fiscal year 2024, adjusted diluted EPS increased 14.8 percent to $13.76.

"Cencora took important steps forward in fiscal 2024 as we continued to evolve our global enterprise through the advancement of our pharmaceutical distribution capabilities and execute on our strategy," said Bob Mauch, President and Chief Executive Officer of Cencora. "This morning's announcement of our acquisition of Retina Consultants of America furthers our ability to build on our leadership in specialty and deliver on our strategic imperatives. The strength of our business, value of our strategy and unparalleled expertise of our team members continues to drive Cencora's performance and results."

"As we move into fiscal 2025, we are leading with a customer-centric approach, embracing an enterprise-powered mindset and a focus on learning to ensure we remain a differentiated healthcare solutions provider, both now and into the future," Mr. Mauch continued. "Cencora is well positioned for continued growth and committed to long-term value creation for all our stakeholders as we continue to build on the critical role we play at the center of healthcare."

Fourth Quarter Fiscal Year 2024 Summary Results

Below, Cencora presents descriptive summaries of the Company's GAAP and adjusted (non-GAAP) quarterly and fiscal year results. In the tables that follow, GAAP results and GAAP to non-GAAP reconciliations are presented. For more information related to non-GAAP financial measures, including adjustments made in the periods presented, please refer to the Supplemental Information Regarding Non-GAAP Financial Measures following the tables.

Fourth Quarter GAAP Results

• Revenue: In the fourth quarter of fiscal 2024, revenue was $79.1 billion, up 14.7 percent compared to the same quarter in the previous fiscal year, reflecting a 15.7 percent increase in revenue within U.S. Healthcare Solutions and a 5.5 percent increase in revenue within International Healthcare Solutions.

• Gross Profit: Gross profit in the fourth quarter of fiscal 2024 was $2.5 billion, a 10.6 percent increase compared to the same period in the previous fiscal year primarily due to an increase in gross profit in the U.S. Healthcare Solutions segment, a decrease in LIFO expense, and a lower Turkey highly inflationary impact on inventory in the current year quarter. Gross profit as a percentage of revenue was 3.15 percent, a decline of 12 basis points from the prior year quarter due to the decline of U.S. Healthcare Solutions' gross profit margin primarily due to increased sales of products labeled for diabetes and/or weight loss in the GLP-1 class, which have lower profit margins, and a lack of exclusive COVID-19 therapy sales, which had higher gross profit margins.

• Operating Expenses: In the fourth quarter of fiscal 2024, operating expenses were $2.4 billion, up 33.2 percent from the same period last fiscal year, primarily due to: (i) a $418 million goodwill impairment charge related to PharmaLex; (ii) an increase in distribution, selling, and administrative expenses to support our continued business growth; and (iii) an increase in litigation and opioid-related expense. Operating expenses as a percentage of revenue in the fiscal 2024 fourth quarter was 2.99 percent compared to 2.58 percent for the same period in the previous fiscal year.

• Operating Income: In the fourth quarter of fiscal 2024, operating income was $126.6 million, a 73.4 percent decrease compared to the same period in the previous fiscal year primarily due to the increase in operating expenses, offset in part by the increase in gross profit. Operating income as a percentage of revenue was 0.16 percent in the fourth quarter of fiscal 2024 compared to 0.69 percent for the same period in the previous fiscal year.

• Interest Expense, Net: In the fourth quarter of fiscal 2024, net interest expense of $21.0 million decreased 65.6 percent versus the prior year quarter due to an increase in interest income as a result of higher investment interest rates and higher average investment cash balances, and a decrease in interest expense driven by a decrease in interest expense at our European distribution business primarily due to decreased borrowings in Turkey and the September 2023 divestiture of our less-than-wholly-owned subsidiary in Egypt.

• Effective Tax Rate: The effective tax rate was 94.0 percent for the fourth quarter of fiscal 2024 primarily due to the PharmaLex goodwill impairment, which is largely not deductible for income tax purposes. The effective tax rate was 21.8 percent in the prior year quarter.

• Diluted Earnings Per Share: Diluted earnings per share was $0.02 in the fourth quarter of fiscal 2024, a 98.8 percent decrease compared to the previous fiscal year's fourth quarter.

• Diluted Shares Outstanding: Diluted weighted average shares outstanding for the fourth quarter of fiscal 2024 were 198.1 million, a decrease of 2.6 percent versus the prior fiscal year fourth quarter primarily due to share repurchases.

Fourth Quarter Adjusted (non-GAAP) Results

• Revenue: No adjustments were made to the GAAP presentation of revenue. In the fourth quarter of fiscal 2024, revenue was $79.1 billion, up 14.7 percent compared to the same quarter in the previous fiscal year, reflecting a 15.7 percent increase in revenue within U.S. Healthcare Solutions and a 5.5 percent increase in revenue within International Healthcare Solutions.

• Adjusted Gross Profit: Adjusted gross profit in the fourth quarter of fiscal 2024 was $2.5 billion, a 6.6 percent increase compared to the same period in the previous fiscal year primarily due to an increase in gross profit in the U.S. Healthcare Solutions segment. Adjusted gross profit as a percentage of revenue was 3.10 percent in the fiscal 2024 fourth quarter, a decline of 24 basis points when compared to the prior year quarter due to the decline of U.S. Healthcare Solutions' gross profit margin primarily due to increased sales of products labeled for diabetes and/or weight loss in the GLP-1 class, which have lower profit margins, and a lack of exclusive COVID-19 therapy sales, which had higher gross profit margins.

• Adjusted Operating Expenses: In the fourth quarter of fiscal 2024, adjusted operating expenses were $1.6 billion, a 6.8 percent increase compared to the same period in the previous fiscal year primarily due to an increase in distribution, selling, and administrative expenses to support our continued business growth. Adjusted operating expenses as a percentage of revenue in the fiscal 2024 fourth quarter was 2.03 percent, a decline of 15 basis points when compared to the prior year quarter.

• Adjusted Operating Income: In the fourth quarter of fiscal 2024, adjusted operating income was $851.1 million, a 6.3 percent increase compared to the same period in the prior fiscal year, driven by a 10.2 percent increase in U.S. Healthcare Solutions, partially offset by an 8.6 percent decrease in International Healthcare Solutions. Adjusted operating income as a percentage of revenue was 1.08 percent in the fiscal 2024 fourth quarter, a decline of 8 basis points when compared to the prior year quarter.

• Interest Expense, Net: No adjustments were made to the GAAP presentation of net interest expense. In the fourth quarter of fiscal 2024, net interest expense of $21.0 million decreased 65.6 percent versus the prior year quarter due to an increase in interest income as a result of higher investment interest rates and higher average investment cash balances, and a decrease in interest expense driven by a decrease in interest expense at our European distribution business primarily due to decreased borrowings in Turkey and the September 2023 divestiture of our less-than-wholly-owned subsidiary in Egypt.

• Adjusted Effective Tax Rate: The adjusted effective tax rate was 20.3 percent for the fourth quarter of fiscal 2024 compared to 21.6 percent in the prior year quarter.

• Adjusted Diluted Earnings Per Share: Adjusted diluted earnings per share was $3.34 in the fourth quarter of fiscal 2024, a 16.8 percent increase compared to $2.86 in the previous fiscal year fourth quarter.

• Diluted Shares Outstanding: No adjustments were made to the GAAP presentation of diluted shares outstanding. Diluted weighted average shares outstanding for the fourth quarter of fiscal 2024 were 198.1 million, a decrease of 2.6 percent versus the prior fiscal year fourth quarter primarily due to share repurchases.

Segment Discussion

The Company is organized geographically based upon the products and services it provides to its customers under two reportable segments: U.S. Healthcare Solutions and International Healthcare Solutions.

U.S. Healthcare Solutions Segment

U.S. Healthcare Solutions revenue was $71.7 billion in the fourth quarter of fiscal 2024, an increase of 15.7 percent compared to the same quarter in the previous fiscal year primarily 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 GLP-1 class, and increased sales of specialty products to physician practices and health systems. Segment operating income of $697.4 million in the fourth quarter of fiscal 2024 was up 10.2 percent compared to the same period in the previous fiscal year due to an increase in gross profit, offset in part by an increase in operating expenses.

International Healthcare Solutions Segment

International Healthcare Solutions revenue was $7.4 billion in the fourth quarter of fiscal 2024, an increase of 5.5 percent compared to the same period in the prior fiscal year. Segment operating income in the fourth quarter of fiscal 2024 was $153.7 million, a decrease of 8.6 percent, primarily due to higher information technology expenses in our European distribution business and lower operating income at our Canadian business, partially offset by the higher operating income at our global specialty logistics business. On a constant currency basis, International Healthcare Solutions revenue increased by 7.9 percent and operating income decreased by 8.0 percent.

Fiscal Year 2024 Summary Results

Summary Fiscal Year GAAP Results

In fiscal year 2024, GAAP diluted EPS was $7.53 compared to $8.53 in the prior fiscal year. Revenue increased 12.1 percent from the prior fiscal year to $294.0 billion. Gross profit increased 10.6 percent to $9.9 billion due to increases in gross profit in both reportable segments, and a LIFO credit in the current fiscal year in comparison to a LIFO expense in the prior fiscal year, offset in part by lower gains from antitrust litigation settlements. Operating expenses increased 16.9 percent largely due to a $418.0 million goodwill impairment related to PharmaLex and increases in (i) distribution, selling, and administrative expenses, (ii) litigation and opioid-related expenses, which was a credit in the prior year fiscal year due to the receipt of funds previously held in an opioid indemnity escrow account, and (iii) amortization expense. Operating income decreased 7.1 percent due to the increase in operating expenses, offset in part by the increase in gross profit. Diluted weighted average shares outstanding in fiscal 2024 were 200.3 million, down 2.1 percent from the prior fiscal year primarily due to share repurchases.

Summary Fiscal Year Adjusted (non-GAAP) Results

In fiscal year 2024, adjusted diluted EPS was $13.76 compared to $11.99 in the prior fiscal year. Revenue increased 12.1 percent to $294.0 billion. Adjusted gross profit increased 8.1 percent to $9.7 billion due to the increases in gross profit in both reportable segments. Adjusted operating expenses increased 6.5 percent to $6.1 billion primarily due to an increase in distribution, selling, and administrative expenses. Adjusted operating income increased 10.9 percent to $3.6 billion due to the increase in gross profit, offset in part by increased operating expenses. Adjusted operating income margin decreased by 1 basis point to 1.24 percent.

Recent Company Highlights & Milestones

• Cencora today announced that it has entered into a definitive agreement to acquire Retina Consultants of America ("RCA"), a leading management services organization (MSO) of retina specialists.
• Cencora completed its leadership succession plan on October 1, 2024. Robert P. Mauch, PharmD, PhD assumed the role of President and Chief Executive Officer and joined the Company's Board of Directors. Steven H. Collis, who retired from his role as President and Chief Executive Officer of the Company, has transitioned to Executive Chairman of the Cencora Board of Directors.
• Cencora announced the appointment of Francois Mandeville to its executive team as Executive Vice President, Strategy and M&A.
• Cencora announced the appointment of Pawan Verma to its executive team as Executive Vice President and Chief Data and Information Officer.
• Cencora celebrated its third annual Global Inclusion Day and re-committed its promise to disability inclusion with Robert Mauch signing the Disability:IN CEO Letter on Disability Inclusion for the second consecutive year.

Dividend Declaration

On November 5, 2024, the Company's Board of Directors declared a quarterly dividend of $0.55 per common share, an 8 percent increase in its quarterly dividend rate from $0.51 per common share. The quarterly dividend of $0.55 per common share is payable November 29, 2024, to stockholders of record at the close of business on November 15, 2024.

Fiscal Year 2025 Expectations

The Company does not provide forward-looking guidance on a GAAP basis as certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated. Please refer to the Supplemental Information Regarding Non-GAAP Financial Measures following the tables for additional information.

Fiscal Year 2025 Expectations on an Adjusted (non-GAAP) Basis

Cencora has introduced its full fiscal year 2025 financial guidance, which reflects adjusted operating income growth of 5 percent to 6.5 percent and adjusted diluted EPS growth of 8 percent to 10 percent. Since the Company's preliminary fiscal 2025 guidance provided on its Form 8-K filed on September 5, 2024, Cencora has executed on opportunistic share repurchases in September and October and had continued momentum in the business. The Company expects:

• Revenue growth to be in the range of 7 to 9 percent;
  • U.S. Healthcare Solutions segment revenue growth to be in the range of 7 to 9 percent;
  • International Healthcare Solutions segment revenue growth to be in the range of 7 to 9 percent;
• Adjusted diluted earnings per share to be in the range of $14.80 to $15.10.

Additional expectations include:

• Adjusted operating income growth to be in the range of 5 to 6.5 percent;
  • U.S. Healthcare Solutions segment operating income growth to be in the range of 5 to 6.5 percent;
  • International Healthcare Solutions segment operating income growth to be in the range of 5 to 6.5 percent;
• Interest expense to be in the range of $150 million to $170 million;
• Adjusted effective tax rate of approximately 21 percent;
• Adjusted free cash flow to be in the range of $2.0 billion to $3.0 billion;
• Capital expenditures to be approximately $600 million; and
• Weighted average diluted shares outstanding to be approximately 196 million.

Cencora's fiscal 2025 guidance does not currently include the impact of the RCA acquisition, which will be incorporated into expectations following the transaction close.

For additional details regarding guidance expectations on a constant currency basis, please refer to our slide presentation for investors.

Conference Call & Slide Presentation

The Company will host a conference call to discuss the results at 8:30 a.m. ET on November 6, 2024. A slide presentation for investors has also been posted on the Company's website at investor.cencora.com. The dial-in number for the live call will be (833) 470-1428. From outside the United States and Canada, dial +1 (404) 975-4839. The access code for the call will be 272044. The live call will also be webcast via the Company's website at investor.cencora.com. Users are encouraged to log on to the webcast approximately 10 minutes in advance of the scheduled start time of the call.

Replays of the call will be made available via telephone and webcast. A replay of the webcast will be posted on investor.cencora.com approximately one hour after the completion of the call and will remain available for one year. The telephone replay will also be available approximately one hour after the completion of the call and will remain available for seven days. To access the telephone replay from within the U.S. and Canada, dial (866) 813-9403. From outside the U.S. and Canada, dial +1 (929) 458-6194. The access code for the replay is 260569.

Upcoming Investor Events

Cencora management will be attending the following investor events in the coming months:

• Evercore ISI Healthcare Conference, December 3-5, 2024;
• Citi Global Healthcare Conference, December 3-6, 2024; and
• J.P. Morgan Healthcare Conference, January 13-16, 2025.

Please check the website for updates regarding the timing of the live presentation webcasts, if any, and for replay information.

About Cencora

Cencora is a leading global pharmaceutical solutions organization centered on improving the lives of people and animals around the world. We partner with pharmaceutical innovators across the value chain to facilitate and optimize market access to therapies. Care providers depend on us for the secure, reliable delivery of pharmaceuticals, healthcare products, and solutions. Our 46,000+ worldwide team members contribute to positive health outcomes through the power of our purpose: We are united in our responsibility to create healthier futures . Cencora is ranked #10 on the Fortune 500 and #24 on the Global Fortune 500 with more than $290 billion in annual revenue. Learn more at investor.cencora.com.

Cencora's Cautionary Note Regarding Forward-Looking Statements

Certain of the statements contained in this press release are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Securities Exchange Act"). Words such as "aim," "anticipate," "believe," "can," "continue," "could," "estimate," "expect," "intend," "may," "might," "on track," "opportunity," "plan," "possible," "potential," "predict," "project," "seek," "should," "strive," "sustain," "synergy," "target," "will," "would" and similar expressions are intended to identify such forward-looking statements, but the absence of these words does not mean the statement is not forward-looking. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances and speak only as of the date hereof. These statements are not guarantees of future performance and are based on assumptions and estimates that could prove incorrect or could cause actual results to vary materially from those indicated. A more detailed discussion of the risks and uncertainties that could cause our actual results to differ materially from those indicated is included (i) in the "Risk Factors" and "Management's Discussion and Analysis" sections in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2023 and elsewhere in that report and (ii) in other reports filed by the Company pursuant to the Securities Exchange Act. The Company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by the federal securities laws.