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Cencora, Inc. (COR - Free Report) reported fourth-quarter fiscal 2024 adjusted earnings per share (EPS) of $3.34, which beat the Zacks Consensus Estimate of $3.21 by 4%. The bottom line also improved 16.8% year over year.
GAAP EPS was 2 cents, down 98.8% from the year-ago period.
The significant decline in the fiscal fourth-quarter GAAP EPS has likely resulted from increased operating expenses. This was led by $418 million of goodwill impairment charges related to PharmaLex, along with increased litigation and opioid-related expenses.
Revenues were $79.1 billion, up 14.7% year over year. The top line beat the Zacks Consensus Estimate by 1.8%.
FY24 Results
Cencora reported revenues of $294 billion for fiscal 2024, up 12.1% year over year. The adjusted EPS for the period improved 14.8% to $13.76.
Segmental Analysis
U.S. Healthcare Solutions
Revenues in this segment totaled $71.7 billion, up 15.7% on a year-over-year basis. This improvement was driven by overall market growth on hiked unit volume, including increased sales of GLP-1 drugs and specialty products.
Segmental operating income totaled $697.4 million, up 10.2% year over year. Higher gross profit (including fees earned from distributing government-owned COVID-19 treatments and gross profit on sales to specialty physician practices) contributed to the upside, partly offset by increased operating expenses.
International Healthcare Solutions
This segment includes Alliance Healthcare, World Courier, Innomar and Profarma Specialty.
Revenues totaled $7.4 billion, up 5.5% year over year. The top line increased 7.9% at constant currency (cc).
Operating income totaled $153.7 million, down 8.6% on a reported basis and 8% at cc. The decline was due to higher information technology expenses in the European distribution business and lower operating income of the Canada business, partially offset by the higher operating income of the global specialty logistics business.
Cencora reported an adjusted gross profit of $2.5 billion, up 6.6% on a year-over-year basis. As a percentage of revenues, the adjusted gross margin was 3.1%, down 24 basis points (bps) year over year.
The company recorded an adjusted operating income of $851.1 million, up 6.3% year over year. As a percentage of revenues, the adjusted operating margin was 1.1%, which contracted 8 bps from the year-ago quarter.
Financial Update
COR exited the fiscal fourth quarter with cash and cash equivalents worth $3.13 billion compared with $3.31 billion in the prior quarter.
Cumulative net cash from operating activities totaled $3.48 billion compared with $3.91 billion a year ago.
Dividend Update
On Nov. 5, 2024, Cencora's board of directors declared a quarterly dividend of 55 cents per share, a 7.8% increase in its quarterly dividend rate from 51 cents. The new dividend is payable Nov. 29, 2024, to shareholders of record at the close of business on Nov. 15, 2024.
FY25 Guidance
The company issued its outlook for fiscal 2025 earnings and revenues.
Adjusted EPS is estimated to be $14.80-$15.10, indicating growth of 8-10% from the prior-year reported level. The Zacks Consensus Estimate for the same is pegged at $14.75.
Revenues are projected to rise 7-9% for fiscal 2025. The top line at the U.S. Healthcare Solutions segment and the International Healthcare solutions business are both estimated to increase 7-9%.
Adjusted operating income is expected to improve 5-6.5% for fiscal 2025.
Operating income for the U.S. Healthcare Solutions segment and the International Healthcare solutions business are both estimated to increase 5-6.5%.
Our Take
Cencora exited the fiscal fourth quarter on a strong note, wherein its earnings and revenues beat the Zacks Consensus Estimate.
The company continues to witness a robust segmental performance due to growth in all markets, and strong demand for specialty products and GLP-1 drugs. Per management, Cencora delivered a solid performance by playing a crucial role in the healthcare system while maintaining efficiency throughout its business. The company has been focused on its priorities and thoughtful capital deployments to deliver long-term growth.
On its fourth-quarter fiscal 2024 earnings release, COR announced that it entered a definitive agreement to acquire Retina Consultants of America, a leading management services organization of retina specialists.
However, COR’s gross margin continues to be hurt by lower-margin GLP-1 drugs and lack of exclusive COVID-19 therapy sales, which had higher gross profit margins. The company’s rising expenses to support business activities amid inflationary challenges put pressure on the operating margin. Cut-throat competition in the MedTech space is another headwind.
ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.
AngioDynamics’ shares have lost 19.2% year to date against the industry’s6.1% growth.
Quest Diagnostics has an estimated long-term growth rate of 6.8%. DGX's earnings surpassed estimates in each of the trailing four quarters, with the average being 3.3%.
Quest Diagnostics has gained 42% year to date compared with the industry's 14.9% rise.
RadNet’s earnings surpassed estimates in the trailing four quarters, the average surprise being 98.2%.
RDNT shares have surged 93.7% year to date compared with the industry’s 14.8% rally.
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Cencora Q4 Earnings & Revenues Beat Estimates, Margins Decline Y/Y
Cencora, Inc. (COR - Free Report) reported fourth-quarter fiscal 2024 adjusted earnings per share (EPS) of $3.34, which beat the Zacks Consensus Estimate of $3.21 by 4%. The bottom line also improved 16.8% year over year.
GAAP EPS was 2 cents, down 98.8% from the year-ago period.
The significant decline in the fiscal fourth-quarter GAAP EPS has likely resulted from increased operating expenses. This was led by $418 million of goodwill impairment charges related to PharmaLex, along with increased litigation and opioid-related expenses.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Revenue Details
Revenues were $79.1 billion, up 14.7% year over year. The top line beat the Zacks Consensus Estimate by 1.8%.
FY24 Results
Cencora reported revenues of $294 billion for fiscal 2024, up 12.1% year over year. The adjusted EPS for the period improved 14.8% to $13.76.
Segmental Analysis
U.S. Healthcare Solutions
Revenues in this segment totaled $71.7 billion, up 15.7% on a year-over-year basis. This improvement was driven by overall market growth on hiked unit volume, including increased sales of GLP-1 drugs and specialty products.
Segmental operating income totaled $697.4 million, up 10.2% year over year. Higher gross profit (including fees earned from distributing government-owned COVID-19 treatments and gross profit on sales to specialty physician practices) contributed to the upside, partly offset by increased operating expenses.
International Healthcare Solutions
This segment includes Alliance Healthcare, World Courier, Innomar and Profarma Specialty.
Revenues totaled $7.4 billion, up 5.5% year over year. The top line increased 7.9% at constant currency (cc).
Operating income totaled $153.7 million, down 8.6% on a reported basis and 8% at cc. The decline was due to higher information technology expenses in the European distribution business and lower operating income of the Canada business, partially offset by the higher operating income of the global specialty logistics business.
Cencora, Inc. Price, Consensus and EPS Surprise
Cencora, Inc. price-consensus-eps-surprise-chart | Cencora, Inc. Quote
Margin Analysis
Cencora reported an adjusted gross profit of $2.5 billion, up 6.6% on a year-over-year basis. As a percentage of revenues, the adjusted gross margin was 3.1%, down 24 basis points (bps) year over year.
The company recorded an adjusted operating income of $851.1 million, up 6.3% year over year. As a percentage of revenues, the adjusted operating margin was 1.1%, which contracted 8 bps from the year-ago quarter.
Financial Update
COR exited the fiscal fourth quarter with cash and cash equivalents worth $3.13 billion compared with $3.31 billion in the prior quarter.
Cumulative net cash from operating activities totaled $3.48 billion compared with $3.91 billion a year ago.
Dividend Update
On Nov. 5, 2024, Cencora's board of directors declared a quarterly dividend of 55 cents per share, a 7.8% increase in its quarterly dividend rate from 51 cents. The new dividend is payable Nov. 29, 2024, to shareholders of record at the close of business on Nov. 15, 2024.
FY25 Guidance
The company issued its outlook for fiscal 2025 earnings and revenues.
Adjusted EPS is estimated to be $14.80-$15.10, indicating growth of 8-10% from the prior-year reported level. The Zacks Consensus Estimate for the same is pegged at $14.75.
Revenues are projected to rise 7-9% for fiscal 2025. The top line at the U.S. Healthcare Solutions segment and the International Healthcare solutions business are both estimated to increase 7-9%.
Adjusted operating income is expected to improve 5-6.5% for fiscal 2025.
Operating income for the U.S. Healthcare Solutions segment and the International Healthcare solutions business are both estimated to increase 5-6.5%.
Our Take
Cencora exited the fiscal fourth quarter on a strong note, wherein its earnings and revenues beat the Zacks Consensus Estimate.
The company continues to witness a robust segmental performance due to growth in all markets, and strong demand for specialty products and GLP-1 drugs. Per management, Cencora delivered a solid performance by playing a crucial role in the healthcare system while maintaining efficiency throughout its business. The company has been focused on its priorities and thoughtful capital deployments to deliver long-term growth.
On its fourth-quarter fiscal 2024 earnings release, COR announced that it entered a definitive agreement to acquire Retina Consultants of America, a leading management services organization of retina specialists.
However, COR’s gross margin continues to be hurt by lower-margin GLP-1 drugs and lack of exclusive COVID-19 therapy sales, which had higher gross profit margins. The company’s rising expenses to support business activities amid inflationary challenges put pressure on the operating margin. Cut-throat competition in the MedTech space is another headwind.
COR’s Zacks Rank & Stocks to Consider
COR carries a Zacks Rank #3 (Hold) at present.
Some better-ranked stocks in the broader medical space are AngioDynamics (ANGO - Free Report) , Quest Diagnostics (DGX - Free Report) and RadNet (RDNT - Free Report) . These three companies currently carry a Zacks Rank of #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.
AngioDynamics’ shares have lost 19.2% year to date against the industry’s6.1% growth.
Quest Diagnostics has an estimated long-term growth rate of 6.8%. DGX's earnings surpassed estimates in each of the trailing four quarters, with the average being 3.3%.
Quest Diagnostics has gained 42% year to date compared with the industry's 14.9% rise.
RadNet’s earnings surpassed estimates in the trailing four quarters, the average surprise being 98.2%.
RDNT shares have surged 93.7% year to date compared with the industry’s 14.8% rally.