Cencora Reports Fiscal 2023 Fourth Quarter and Year End Results

Revenue of $68.9 Billion for the Fourth Quarter, a 12.7 Percent Year-Over-Year Increase

Fourth Quarter GAAP Diluted EPS of $1.72 and Adjusted Diluted EPS of $2.86

Revenue of $262.2 Billion for Fiscal Year 2023, a 9.9 Percent Year-Over-Year Increase

Fiscal Year 2023 GAAP Diluted EPS of $8.53 and Adjusted Diluted EPS of $11.99

Cencora, Inc. (NYSE: COR), formerly AmerisourceBergen Corporation, today reported that in its fiscal year 2023 fourth quarter ended September 30, 2023, revenue increased 12.7 percent to $68.9 billion. Revenue increased 9.9 percent to $262.2 billion for the fiscal year. On the basis of U.S. generally accepted accounting principles (GAAP), diluted earnings per share (EPS) was $1.72 for the September quarter of fiscal 2023, compared to $1.40 in the prior year quarter. Adjusted diluted EPS, which is a non-GAAP measure that excludes items described below, increased 10.0 percent to $2.86 in the fiscal fourth quarter. For fiscal year 2023, diluted EPS increased 6.1 percent to $8.53. For fiscal year 2023, adjusted diluted EPS increased 8.7 percent to $11.99.

“Cencora delivered strong performance in fiscal 2023, which was a seminal year for our company as our purpose-driven teams took key steps to execute on our strategic imperatives and advance our position at the center of healthcare,” said Steven H. Collis, Chairman, President and Chief Executive Officer of Cencora.

“Coming together as a unified team under our new identity as Cencora, we are showcasing our impact across pharmaceutical care and our global footprint," Mr. Collis continued. "We move into fiscal 2024 with strong momentum and remain focused on continuing to enhance our position as a partner of choice for our customers and pharmaceutical manufacturers as we drive differentiated value-creation for all of our stakeholders."

Fourth Quarter Fiscal Year 2023 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 2023, revenue was $68.9 billion, up 12.7 percent compared to the same quarter in the previous fiscal year, reflecting a 13.0 percent increase in revenue within U.S. Healthcare Solutions and a 9.5 percent increase in revenue within International Healthcare Solutions.

• Gross Profit: Gross profit in the fiscal 2023 fourth quarter was $2.3 billion, a 13.5 percent increase compared to the same period in the previous fiscal year primarily due to increases in gross profit in both reportable segments and gains from antitrust litigation settlements in the current year quarter. Gross profit as a percentage of revenue was 3.27 percent, an increase of 2 basis points from the prior year quarter.

• Operating Expenses: In the fourth quarter of fiscal 2023, operating expenses were $1.8 billion, up 16.0 percent from the same period last fiscal year, primarily driven by increases in distribution, selling, and administrative expenses, and amortization expense compared to the prior year quarter. Operating expenses as a percentage of revenue in the fiscal 2023 fourth quarter were 2.58 percent compared to 2.50 percent for the same period in the previous fiscal year.

• Operating Income: In the fiscal 2023 fourth quarter, operating income was $476.9 million, up 4.9 percent compared to the same period in the previous fiscal year due to the increase in gross profit, offset in part by the increase in operating expenses. Operating income as a percentage of revenue was 0.69 percent in the fourth quarter of fiscal 2023 compared to 0.74 percent for the same period in the previous fiscal year.

• Interest Expense, Net: In the fiscal 2023 fourth quarter, net interest expense of $60.9 million increased 18.3 percent versus the prior year quarter primarily due to increases in intra-period variable-rate borrowings and associated interest rates, offset in part by an increase in interest income as a result of higher investment interest rates.

• Effective Tax Rate: The effective tax rate was 21.8 percent for the fourth quarter of fiscal 2023. This compares to 21.9 percent in the prior year quarter.

• Diluted Earnings Per Share: Diluted earnings per share was $1.72 in the fourth quarter of fiscal 2023, up 22.9 percent compared to the previous fiscal year fourth quarter.

• Diluted Shares Outstanding: Diluted weighted average shares outstanding for the fourth quarter of fiscal 2023 were 203.4 million, a decrease of 3.1 percent versus the prior fiscal year fourth quarter primarily as a result of 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 2023, revenue was $68.9 billion, up 12.7 percent compared to the same quarter in the previous fiscal year, reflecting a 13.0 percent increase in revenue within U.S. Healthcare Solutions and a 9.5 percent increase in revenue within International Healthcare Solutions. On a constant currency basis, International Healthcare Solutions' revenue was up 10.1 percent.

• Adjusted Gross Profit: Adjusted gross profit in the fiscal 2023 fourth quarter was $2.3 billion, a 9.4 percent increase compared to the same period in the previous fiscal year due to an increase in gross profit in both reportable segments. Adjusted gross profit as a percentage of revenue was 3.34 percent in the fiscal 2023 fourth quarter, a decrease of 10 basis points when compared to the prior year quarter. The decrease was due to the decline of U.S. Healthcare Solutions' gross profit margin as a result of increased sales of products labeled for diabetes and/or weight loss in the GLP-1 class, which have lower gross profit margins, and lower sales of government-owned COVID-19 treatments, which have higher gross profit margins.

• Adjusted Operating Expenses: In the fourth quarter of fiscal 2023, adjusted operating expenses were $1.5 billion, an increase of 10.2 percent compared to the same period in the previous fiscal year primarily due to an increase in distribution, selling, and administrative expenses compared to the prior year quarter. Adjusted operating expenses as a percentage of revenue in the fiscal 2023 fourth quarter was 2.18 percent, a decrease of 5 basis points when compared to the prior year quarter.

• Adjusted Operating Income: In the fiscal 2023 fourth quarter, adjusted operating income of $801.0 million increased 8.0 percent from the prior year quarter due to a 9.4 percent increase in U.S. Healthcare Solutions' operating income and a 3.1 percent increase in operating income within International Healthcare Solutions. On a constant currency basis, the Company’s adjusted operating income increased 8.2 percent compared to the prior year quarter. On a constant currency basis, International Healthcare Solutions segment operating income increased 4.0 percent. Adjusted operating income as a percentage of revenue was 1.16 percent in the fiscal 2023 fourth quarter, a decrease of 5 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 fiscal 2023 fourth quarter, net interest expense of $60.9 million increased 18.3 percent versus the prior year quarter primarily due to increases in intra-period variable-rate borrowings and associated interest rates, offset in part by an increase in interest income as a result of higher investment interest rates.

• Adjusted Effective Tax Rate: The adjusted effective tax rate was 21.6 percent for the fourth quarter of fiscal 2023 compared to 19.8 percent in the prior year quarter.

• Adjusted Diluted Earnings Per Share: Adjusted diluted earnings per share was up 10.0 percent to $2.86 in the fourth quarter of fiscal 2023 compared to $2.60 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 2023 were 203.4 million, a decrease of 3.1 percent versus the prior fiscal year fourth 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 Segment

U.S. Healthcare Solutions revenue was $61.9 billion, an increase of 13.0 percent compared to the same quarter in the prior 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 $632.8 million in the fourth quarter of fiscal 2023 was up 9.4 percent compared to the same period in the previous fiscal year as a result of an increase in gross profit of 6.3%, offset in part by an increase in operating expenses of 4.1%.

International Healthcare Solutions

Revenue in International Healthcare Solutions was $7.0 billion in the fourth quarter of fiscal 2023, an increase of 9.5 percent compared to the same period in the prior fiscal year due to increased revenue across its businesses. Operating income within International Healthcare Solutions increased 3.1 percent to $168.2 million in the fourth quarter of fiscal 2023 due to growth at its global specialty logistics business and the January 2023 acquisition of PharmaLex, offset in part by a significant decline at its less-than-wholly-owned Alliance Healthcare subsidiary in Egypt. Cencora recently completed the divestiture of its stake in its subsidiary in Egypt and the results of the business will no longer be consolidated beginning in fiscal 2024. On a constant currency basis, International Healthcare Solutions revenue and operating income increased by 10.1 percent and 4.0 percent, respectively.

Fiscal Year 2023 Summary Results

Summary Fiscal Year GAAP Results

In fiscal year 2023, GAAP diluted EPS was $8.53 compared to $8.04 in the prior fiscal year. Revenue increased 9.9 percent from last fiscal year to $262.2 billion. Gross profit increased 8.0 percent to $9.0 billion due to increases in gross profit in both reportable segments, and an increase in gains from antitrust litigation settlements, partially offset by an increase in LIFO expense in the current fiscal year. Operating expenses increased 11.6 percent primarily due to an increase in distribution, selling, and administrative expenses, amortization expense and restructuring and other expenses, offset in part by a litigation and opioid-related credit in the current fiscal year in comparison to an expense in the prior fiscal year and the prior fiscal year included a goodwill impairment. Operating income decreased 1.1 percent due to higher operating expenses, largely offset by higher gross profit. Diluted weighted average shares outstanding in fiscal 2023 were 204.6 million, down 3.1 percent from the prior fiscal year primarily due to share repurchases.

Summary Fiscal Year Adjusted (non-GAAP) Results

In fiscal year 2023, adjusted diluted EPS was $11.99 compared to $11.03 in the prior fiscal year. Revenue increased 9.9 percent to $262.2 billion. Adjusted gross profit increased 7.3 percent to $9.0 billion due to the increases in gross profit in both reportable segments. Adjusted operating expenses increased 9.2 percent to $5.7 billion primarily due to an increase in distribution, selling, and administrative expenses. Adjusted operating income increased 4.0 percent to $3.3 billion due to increases in gross profit in both reportable segments, offset in part by increased operating expenses. Adjusted operating income margin decreased by 8 basis points to 1.25 percent, primarily due to increased sales of sales of products labeled for diabetes and/or weight loss in the GLP-1 class, which have lower gross profit margins, and lower sales of government-owned COVID-19 treatments, which have higher gross profit margins, and a negative impact of foreign currency rates in comparison to the prior fiscal year. On a constant currency basis, revenue and adjusted operating income grew 10.9 percent and 6.0 percent, respectively.

Recent Company Highlights & Milestones

• Cencora completed its name change from AmerisourceBergen and began trading under the ticker symbol “COR” on the New York Stock Exchange on August 30, 2023. The new name underscores Cencora's experience and vision when it comes to connecting manufacturers, providers, pharmacies and patients, and ensuring the consistent, reliable flow of treatments to those who need them at a time of growing complexity.
• Good Neighbor Pharmacy, Cencora's national independent pharmacy network, convened nearly 5,000 independent pharmacy owners and other partners to celebrate its annual ThoughtSpot tradeshow and conference. The event showcased the extraordinary collaboration, commitment and perseverance of the Good Neighbor Pharmacy network of pharmacists dedicated to improving community health.

Dividend Declaration

On November 1, 2023, the Company's Board of Directors declared a quarterly dividend of $0.51 per common share, an increase in its quarterly dividend rate from $0.485 per common share. The quarterly dividend of $0.51 per common share will be payable November 27, 2023, to stockholders of record at the close of business on November 13, 2023.

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 and 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 has introduced its fiscal year 2024 financial guidance. The Company continues to provide "ex-COVID" growth guidance to normalize for contributions related to exclusive COVID products, which are government-owned treatments. The Company does not expect a material contribution from exclusive COVID products beyond the fiscal 2024 first quarter. Commercial COVID products, including newly commercial COVID vaccines, are not excluded. The Company expects:

• Revenue growth to be in the range of 7 to 10 percent;
  • On a constant currency basis, revenue growth to be in the range of 7 to 10 percent;
  • U.S. Healthcare Solutions revenue growth to be in the range of 7 to 10 percent;
  • International Healthcare Solutions revenue growth to be in the range of 4 to 8 percent;
    • International Healthcare Solutions constant currency revenue growth to be in the range of 7 to 11 percent;
• Adjusted diluted earnings per share to be in the range of $12.70 to $13.00.

Additional expectations include:

• Adjusted operating income growth to be in the range of 4 to 6 percent;
  • On a constant currency basis, adjusted operating income growth to be in the range of 5 to 7 percent;
  • Excluding contributions related to COVID-19, adjusted operating income growth to be in the range of 7 to 9 percent;
    • On a constant currency basis, excluding contributions related to COVID-19, adjusted operating income growth to be in the range of 8 to 10 percent;
  • U.S. Healthcare Solutions segment operating income growth to be in the range of 4 to 7 percent;
    • Excluding contributions related to COVID-19, U.S. Healthcare Solutions segment operating income growth to be in the range of 7 to 10 percent;
  • International Healthcare Solutions segment operating income growth to be in the range of 1 to 4 percent;
    • On a constant currency basis, International Healthcare Solutions segment operating income growth to be in range of 5 to 8 percent;
    • Excluding contributions related to COVID-19, International Healthcare Solutions segment operating income growth to be in the range of 3 to 6 percent;
      • On a constant currency basis, excluding contributions related to COVID-19, International Healthcare Solutions segment operating income growth to be in the range of 7 to 10 percent;
• Interest expense to be in the range of $210 million to $230 million;
• Adjusted effective tax rate to be approximately 20 percent to 21 percent;
• Adjusted free cash flow to be approximately $2.5 billion;
• Capital expenditures in the $500 million range; and
• Weighted average diluted shares outstanding are expected to be approximately 200 to 202 million for the fiscal year.

For additional details on EPS growth rate excluding COVID-19 contributions, 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 2, 2023. 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

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 016298. 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 205780.

Upcoming Investor Events

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

• J.P. Morgan Healthcare Conference, January 8-11, 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 www.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, 2022 and elsewhere in that report as supplemented by the description of business risks described in Item 1A to our form 10-Q for the fiscal quarter ended March 31, 2023, to which mention is made herein 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.