Cencora Reports Fiscal 2024 Second Quarter Results

Revenue of $68.4 billion for the Second Quarter, a 7.8 Percent Increase Year-Over-Year

Second Quarter GAAP Diluted EPS of $2.09 and Adjusted Diluted EPS of $3.80

Adjusted Diluted EPS Guidance Range Raised to $13.30 to $13.50 for Fiscal 2024

Cencora, Inc. (NYSE:COR) today reported that in its fiscal year 2024 second quarter ended March 31, 2024, revenue increased 7.8 percent year-over-year to $68.4 billion. On the basis of U.S. generally accepted accounting principles (GAAP), diluted earnings per share (EPS) was $2.09 for the second quarter of fiscal 2024 compared to $2.13 in the prior year second quarter. Adjusted diluted EPS, which is a non-GAAP financial measure that excludes items described below, increased 8.6 percent to $3.80 in the fiscal second quarter from $3.50 in the prior year second quarter.

Cencora is updating its outlook for fiscal year 2024. The Company does not provide forward-looking guidance on a GAAP basis, as discussed below in Fiscal Year 2024 Expectations. Adjusted diluted EPS guidance has been raised on the lower end from the previous range of $13.25 to $13.50 to a range of $13.30 to $13.50.

"Cencora's critical role at the center of healthcare and the pharmaceutical supply chain was on full display during the quarter as our purpose-driven team members' solutions-oriented mindset helped our customers navigate through complexity and uncertainty," said Steven H. Collis, Chairman, President, and Chief Executive Officer of Cencora.

"Our strong second quarter results and updated full-year guidance, reflect the importance of the value we deliver across our footprint," continued Mr. Collis. "As we move into the second half of our fiscal year, our focus on creating a best-in-class customer experience, embracing innovation and investing in our infrastructure will allow us to continue to further our pharmaceutical-centric strategy and drive differentiated value for our customers, partners and all our stakeholders."

Second Quarter Fiscal Year 2024 Summary Results

Below, Cencora presents descriptive summaries of the Company's GAAP and adjusted (non-GAAP) quarterly 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.

Second Quarter GAAP Results

• Revenue: In the second quarter of fiscal 2024, revenue was $68.4 billion, up 7.8 percent compared to the same quarter in the previous fiscal year, reflecting an 8.1 percent increase in revenue within U.S. Healthcare Solutions and a 5.3 percent increase in revenue within International Healthcare Solutions.
• Gross Profit: Gross profit in the second 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 increases in gross profit in both reportable segments and a LIFO credit in the current year quarter in comparison to LIFO expense in the prior year quarter. Gross profit as a percentage of revenue was 3.71 percent, an increase of 9 basis points from the prior year quarter.
• Operating Expenses: In the second quarter of fiscal 2024, operating expenses were $2.0 billion, a 14.4 percent increase compared to the same period in the previous fiscal year, primarily due to higher litigation and opioid-related expenses and an increase in distribution, selling, and administrative expenses compared to the prior year quarter.
• Operating Income: In the second quarter of fiscal 2024, operating income was $553.3 million, a 1.3 percent decrease compared to the same period in the previous fiscal year as the increases in litigation and opioid-related expenses and distribution, selling, and administrative expenses exceeded the increase in gross profit. Operating income as a percentage of revenue was 0.81 percent in the second quarter of fiscal 2024, a decrease of 7 basis points when compared to the prior year quarter.
• Interest Expense, Net: In the second quarter of fiscal 2024, net interest expense of $64.1 million was flat compared to the prior year quarter. Interest expense increased as a result of increases in borrowings and interest rates associated with variable-rate debt offset, in part, by the September 30, 2023 divestiture of our less-than-wholly-owned subsidiary in Egypt. The increase in interest expense was offset by the increase in interest income due to higher investment interest rates.
• Effective Tax Rate: The effective tax rate was 9.8 percent for the second quarter of fiscal 2024 due to discrete tax benefits associated with a foreign valuation allowance adjustment. The effective tax rate was 16.4 percent in the prior year quarter.
• Diluted Earnings Per Share: Diluted earnings per share was $2.09 in the second quarter of fiscal 2024, a 1.9 percent decrease compared to $2.13 in the previous fiscal year's second quarter.
• Diluted Shares Outstanding: Diluted weighted average shares outstanding for the second quarter of fiscal 2024 were 201.2 million, a decrease of 1.5 percent versus the prior fiscal year second quarter primarily as a result of share repurchases.

Second Quarter Adjusted (non-GAAP) Results

• Revenue: No adjustments were made to the GAAP presentation of revenue. In the second quarter of fiscal 2024, revenue was $68.4 billion, up 7.8 percent compared to the same quarter in the previous fiscal year, reflecting an 8.1 percent increase in revenue within U.S. Healthcare Solutions and a 5.3 percent increase in revenue within International Healthcare Solutions.
• Adjusted Gross Profit: Adjusted gross profit in the second quarter of fiscal 2024 was $2.5 billion, a 7.4 percent increase compared to the same period in the previous fiscal year due to increases in gross profit in both reportable segments. Adjusted gross profit as a percentage of revenue was 3.70 percent in the fiscal 2024 second quarter, a decrease of 1 basis point from the prior year quarter.
• Adjusted Operating Expenses: In the second quarter of fiscal 2024, adjusted operating expenses were $1.5 billion, a 5.2 percent increase compared to the same period in the previous fiscal year, primarily driven by an increase in distribution, selling, and administrative expenses to support the growth in our businesses.
• Adjusted Operating Income: In the second quarter of fiscal 2024, adjusted operating income was $1.0 billion, a 10.9 percent increase compared to the same period in the prior fiscal year, driven by an 11.2 percent increase in U.S. Healthcare Solutions and a 9.5 percent increase in International Healthcare Solutions. Adjusted operating income as a percentage of revenue was 1.51 percent in the fiscal 2024 second quarter, an increase of 4 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 second quarter of fiscal 2024, net interest expense of $64.1 million was flat compared to the prior year quarter. Interest expense increased as a result of increases in borrowings and interest rates associated with variable-rate debt offset, in part, by the September 30, 2023 divestiture of our less-than-wholly-owned subsidiary in Egypt. The increase in interest expense was offset by the increase in interest income due to higher investment interest rates.
• Adjusted Effective Tax Rate: The adjusted effective tax rate was 20.9 percent for the second quarter of fiscal 2024 compared to 19.0 percent in the prior year quarter.
• Adjusted Diluted Earnings Per Share: Adjusted diluted earnings per share was $3.80 in the second quarter of fiscal 2024, an 8.6 percent increase compared to $3.50 in the previous fiscal year's second quarter.
• Diluted Shares Outstanding: No adjustments were made to the GAAP presentation of diluted shares outstanding. Diluted weighted average shares outstanding for the second quarter of fiscal 2024 were 201.2 million, a decrease of 1.5 percent versus the prior fiscal year second quarter primarily as a result of 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

U.S. Healthcare Solutions revenue was $61.3 billion in the second quarter of fiscal 2024, an increase of 8.1 percent compared to the same quarter in the previous fiscal year 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 $841.1 million in the second quarter of fiscal 2024 was up 11.2 percent compared to the same period in the previous fiscal year reflecting an increase in gross profit, partially offset by an increase in operating expenses.

International Healthcare Solutions

Revenue in International Healthcare Solutions was $7.1 billion in the second quarter of fiscal 2024, an increase of 5.3 percent from the previous fiscal year's second quarter due to increased sales in our European distribution business, increased sales in our Canadian business, and increased sales at our less-than-wholly-owned Brazil full-line distribution business. Segment operating income in the second quarter of fiscal 2024 was $192.7 million, an increase of 9.5 percent, primarily due to higher operating income at our less-than-wholly-owned Brazil full-line distribution business and our Canadian business. On a constant currency basis, International Healthcare Solutions revenue and operating income increased by 9.8 percent and 22.1 percent, respectively.

Recent Company Highlights & Milestones

• Cencora announced its leadership succession plan on March 12, 2024. Steven H. Collis will retire as President and Chief Executive Officer and transition to the role of Executive Chair of the Board of Directors, effective October 1, 2024. Robert P. Mauch, PharmD, PhD, current Chief Operating Officer, will succeed Collis as President and CEO, and will also be appointed as a member of the Board effective the same date.
• Gina Clark, EVP and Chief Communications & Administration Officer, informed the Company that she intends to retire from her position, effective September 30, 2024.
• Cencora was recognized by Newsweek on its inaugural list of "America's Greenest Companies," which is a list that recognizes the top 300 companies in the United States who are making progress to positively change their sustainability footprint.
• Cencora released its 2023 DEI Progress Report and microsite, detailing Cencora's commitment to DEI, company progress, and the impact for our people, our culture, and our communities.

Fiscal Year 2024 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 or cannot be reasonably estimated. Please refer to the Supplemental Information Regarding Non-GAAP Financial Measures following the tables for additional information.

Fiscal Year 2024 Expectations on an Adjusted (non-GAAP) Basis

Cencora is updating its fiscal year 2024 financial guidance to reflect expected continued solid business performance for the full year and a higher effective tax rate and expected share count. The Company now expects:

• Adjusted diluted earnings per share to be in the range of $13.30 to $13.50, from the previous range of $13.25 to $13.50.

Additional expectations now include:

• International Healthcare Solutions segment revenue growth to be in the range of 4 to 7 percent, narrowed from the previous range of 4 to 8 percent;
• Adjusted consolidated operating income growth to be in the range of 9 to 11 percent, up from the previous range of 8 to 10 percent;
  • U.S. Healthcare Solutions segment operating income growth to be in the range of 10 to 12 percent, up from the previous range of 9 to 11 percent;
• The Company does not expect exclusive COVID-19 therapy contributions for the balance of fiscal 2024 and no longer expects to guide to ex-COVID growth rates;
  • The fiscal year to date EPS contribution from exclusive COVID-19 therapies in the U.S. Healthcare Solutions segment was $0.06, all of which was recognized in the first quarter. Fiscal 2023 included $0.38 of consolidated exclusive COVID-19 contribution with $0.31 in the U.S. Healthcare Solutions segment;
• Adjusted effective tax rate to be approximately 21 percent, from the previous range of 20 percent to 21 percent; and
• Weighted average diluted shares outstanding are expected to be approximately 201 to 202 million, from the previous range of approximately 200 to 202 million.

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

Dividend Declaration

The Company's Board of Directors declared a quarterly cash dividend of $0.51 per common share, payable May 24, 2024, to stockholders of record at the close of business on May 10, 2024.

New Share Repurchase Program

In March 2024, the Company's Board of Directors authorized a new share repurchase program allowing the Company to purchase up to $2.0 billion of its outstanding common stock, subject to market conditions.

Conference Call & Slide Presentation

The Company will host a conference call to discuss its operating results at 8:30 a.m. ET on May 1, 2024. A slide presentation for investors has also been posted on the Company's website at investor.cencora.com. Participating in the conference call will be:

• Steven H. Collis, Chairman, President & Chief Executive Officer
• James F. Cleary, Executive Vice President & Chief Financial Officer
• Robert P. Mauch, Executive Vice President & Chief Operating Officer

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 161532. 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 United States, dial +1 (929) 458-6194. The access code for the replay is 702498.

Upcoming Investor Event

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

• Leerink Healthcare Crossroads Conference May 30, 2024.

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 #11 on the Fortune 500 and #24 on the Global Fortune 500 with more than $250 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 forward-looking statements, but the absence of these words does not mean that a 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 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) 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.