Cencora Reports 12.8% Revenue Growth to $81.5 Billion, Net Income Declines

Cencora, Inc. reported a revenue increase of 12.8% for the three months ended December 31, 2024, reaching $81.5 billion compared to $72.3 billion in the same period last year. The growth was primarily driven by the U.S. Healthcare Solutions segment, which saw a revenue rise of 13.6%, largely due to increased sales of diabetes and weight loss products. The company's gross profit also increased by 3.6% to $2.56 billion, although operating income fell by 14.2% to $706.3 million, reflecting higher operating expenses, including litigation costs and acquisition-related expenses.

In terms of profitability, net income attributable to Cencora, Inc. decreased to $488.6 million, down from $601.5 million in the prior year, resulting in diluted earnings per share of $2.50 compared to $2.98. The decline in net income was attributed to increased operating expenses, which rose by 12.5% to $1.85 billion, driven by litigation and opioid-related expenses, as well as costs associated with the acquisition of Retina Consultants of America (RCA). The effective tax rate for the quarter was 20.4%, down from 23.0% in the previous year.

Cencora's strategic developments included the acquisition of RCA, which was finalized on January 2, 2025, for approximately $4.4 billion. This acquisition is expected to enhance the company's U.S. Healthcare Solutions segment. The company also reported a significant increase in its debt levels, with total debt rising to $8.15 billion as of December 31, 2024, compared to $4.39 billion at the end of the previous quarter. This increase was primarily due to new borrowings to finance the RCA acquisition.

Operationally, Cencora's customer base and engagement metrics showed positive trends, with revenue from its largest customers increasing significantly. The company reported a cash outflow from operations of $2.7 billion during the quarter, primarily due to increases in accounts receivable and inventory levels. The company’s cash and cash equivalents stood at $3.39 billion at the end of the quarter, reflecting a slight increase from the previous quarter.

Looking ahead, Cencora anticipates continued revenue growth driven by market trends, including the introduction of new therapies and an increase in generic drug availability. However, the company also faces challenges from macroeconomic conditions, regulatory changes, and ongoing litigation related to opioid distribution. The management remains focused on integrating RCA and optimizing operational efficiencies to enhance profitability in the coming quarters.