cor-20240331

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ___________ TO___________

Commission file number 1-16671

CENCORA, INC.

(Exact name of registrant as specified in its charter)

Delaware

23-3079390

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

1 West First Avenue

Conshohocken,

19428-1800

(Address of principal executive offices)

(Zip Code)

(610) 727-7000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common stock, par value $0.01 per share	COR	New York Stock Exchange	(NYSE)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).

Large accelerated filer ý Accelerated filer o Non-accelerated filer o Smaller reporting company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

The number of shares of common stock of Cencora, Inc. outstanding as of April 26, 2024 was 199,451,791.

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CENCORA, INC.

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			Page No.

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Consolidated Balance Sheets as of March 31, 2024 and September 30, 2023			4

Consolidated Statements of Operations for the three and six months ended March 31, 2024 and 2023			5

Consolidated Statements of Comprehensive Income for the three and six months ended March 31, 2024 and 2023			6

Consolidated Statements of Changes in Stockholders' Equity for the three and six months ended March 31, 2024 and 2023			8

Consolidated Statements of Cash Flows for the six months ended March 31, 2024 and 2023			9

Notes to Consolidated Financial Statements			10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			22

Item 3. Quantitative and Qualitative Disclosures About Market Risk			33

Item 4. Controls and Procedures			33

Part II. OTHER INFORMATION

Item 1. Legal Proceedings			34

Item 1A. Risk Factors			34

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			34

Item 3. Defaults Upon Senior Securities			34

Item 4. Mine Safety Disclosures			34

Item 5. Other Information			34

Item 6. Exhibits			35

SIGNATURES			36

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “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"). These forward-looking statements include, without limitation, statements regarding our financial position, business strategy and the plans and objectives of management for our future operations; anticipated trends and prospects in the industries in which our business operates; and new products, services and related strategies. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Annual Report on Form 10-K, 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 beliefs and are subject to uncertainty and changes in circumstances and speak only as of the date hereof. Although we believe that the assumptions underlying the forward-looking statements are reasonable, we can give no assurance that our expectations will be attained. Factors that could have a material adverse effect on our financial condition, liquidity, results of operations or future prospects or which could cause actual results to differ materially from our expectations include, but are not limited to:

•our ability to achieve and maintain profitability in the future;

•the disruption of our cash flow and ability to return value to our stockholders in accordance with our past practices;

•our ability to respond to general economic conditions, including financial market volatility and disruption, elevated levels of inflation, and declining economic conditions in the United States and abroad;

•our ability to manage our growth and related expectations effectively;

•the retention of key customer or supplier relationships under less favorable economics or the adverse resolution of any contract or other dispute with customers or suppliers;

•changes to customer or supplier mix and payment terms;

•risks associated with our strategic, long-term relationship with WBA, including with respect to the pharmaceutical distribution agreement and/or the global generic purchasing services arrangement, and WBA sales or pledges of, or related activity for, our common stock;

•the acquisitions of or investments in businesses, including the acquisitions of the Alliance Healthcare and PharmaLex, and the investment in OneOncology, that do not perform as expected, fail to achieve expected or targeted future financial and operating performance and results, or that are difficult to integrate, or the inability to capture all of the anticipated synergies related thereto or to capture the anticipated synergies within the expected time period;

•our ability to manage and complete divestitures;

•managing foreign expansion, including non-compliance with the U.S. Foreign Corrupt Practices Act, anti-bribery laws, economic sanctions and import laws and regulations;

•risks associated with our international operations, including financial and other impacts of macroeconomic and geopolitical trends and events, including the conflicts in Ukraine and between Israel and Hamas and related regional and global ramifications;

•interest rate and foreign currency exchange rate fluctuations;

•risks and costs associated with maintaining adequate insurance coverages;

•our ability to attract, recruit and maintain qualified and experienced employees;

•the impact on our business of the regulatory environment and complexities with compliance;

•unfavorable trends in brand and generic pharmaceutical pricing, including in rate or frequency of price inflation or deflation;

•changes in the United States healthcare and regulatory environment, including changes that could impact prescription drug reimbursement under Medicare and Medicaid and declining reimbursement rates for pharmaceuticals;

•competition and industry consolidation of both customers and suppliers resulting in increasing pressure to reduce prices for our products and services;

•the loss, bankruptcy or insolvency of a major supplier, or substantial defaults in payment, material reduction in purchases by or the loss, bankruptcy or insolvency of a major customer;

•our stock price and our ability to access capital markets;

•increasing governmental regulations regarding the pharmaceutical supply chain;

•continued federal and state government enforcement initiatives to detect and prevent suspicious orders of controlled substances and the diversion of controlled substances;

•continued prosecution or suit by federal and state governmental entities and other parties (including third-party payors, hospitals, hospital groups and individuals) of alleged violations of laws and regulations regarding controlled substances, and any related disputes, including shareholder derivative lawsuits;

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•increased federal scrutiny and litigation, including qui tam litigation, for alleged violations of laws and regulations governing the marketing, sale, purchase and/or dispensing of pharmaceutical products or services, and associated reserves and costs;

•the outcome of any legal or governmental proceedings that may be instituted against us, including material adverse resolution of pending legal proceedings;

•changes in tax laws or legislative initiatives that could adversely affect the Company's tax positions and/or the Company's tax liabilities or adverse resolution of challenges to the Company's tax positions;

•malfunction, failure, or breach of sophisticated information systems to operate as designed, and risks generally associated with cybersecurity;

•risks generally associated with data privacy regulation and the protection and international transfer of personal data;

•our ability to protect our reputation and intellectual property rights;

•natural disasters or other unexpected events, such as pandemics, that affect the Company’s operations;

•the impairment of goodwill or other intangible assets (including any additional impairments with respect to foreign operations), resulting in a charge to earnings; and

•other economic, business, competitive, legal, tax, regulatory and/or operational factors affecting the Company’s business generally.

These forward-looking statements are based on information available as of the date of this Quarterly Report on Form 10-Q and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements.

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PART I. FINANCIAL INFORMATION

ITEM I. Financial Statements (Unaudited)

CENCORA, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


(in thousands, except share and per share data)	March 31, 2024		September 30, 2023
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	2,068,858	$	2,592,051
Accounts receivable, less allowances for returns and credit losses: $1,330,778 as of March 31, 2024 and $1,433,396 as of September 30, 2023	22,642,880		20,911,081
Inventories	17,630,985		17,454,768
Right to recover assets	1,194,915		1,314,857
Income tax receivable	111,375		77,120
Prepaid expenses and other	512,039		448,949
Total current assets	44,161,052		42,798,826

Property and equipment, net	2,089,497		2,135,171
Goodwill	9,619,024		9,574,117
Other intangible assets	4,175,587		4,431,783
Deferred income taxes	256,890		200,667
Other assets	3,565,996		3,418,182

TOTAL ASSETS	$	63,868,046	$	62,558,746

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	46,320,774	$	45,836,037
Accrued expenses and other	2,371,885		2,353,817
Short-term debt	1,069,152		641,344
Total current liabilities	49,761,811		48,831,198

Long-term debt	4,180,306		4,146,113
Accrued income taxes	315,559		310,676
Deferred income taxes	1,701,735		1,657,944
Accrued litigation liability	4,719,545		5,061,795
Other liabilities	1,962,068		1,884,733
Commitments and contingencies (Note 10)

Stockholders’ equity:
Common stock, $0.01 par value - authorized, issued, and outstanding: 600,000,000 shares, 295,905,875 shares, and 199,388,633 shares as of March 31, 2024, respectively, and 600,000,000 shares, 294,822,962 shares, and 200,814,804 shares as of September 30, 2023, respectively	2,959		2,948
Additional paid-in capital	5,953,642		5,844,578
Retained earnings	5,133,770		4,324,187
Accumulated other comprehensive loss	(1,260,288)		(1,402,607)
Treasury stock, at cost: 96,517,242 shares as of March 31, 2024 and 94,008,158 shares as of September 30, 2023	(8,746,941)		(8,247,103)
Total Cencora, Inc. stockholders' equity	1,083,142		522,003
Noncontrolling interest	143,880		144,284
Total stockholders' equity	1,227,022		666,287

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	63,868,046	$	62,558,746

See notes to consolidated financial statements.

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CENCORA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three months ended March 31,				Six months ended March 31,
(in thousands, except per share data)	2024		2023		2024		2023
Revenue	$	68,414,307	$	63,457,205	$	140,667,140	$	126,304,037
Cost of goods sold	65,876,284		61,161,763		135,660,305		121,862,642
Gross profit	2,538,023		2,295,442		5,006,835		4,441,395
Operating expenses:
Distribution, selling, and administrative	1,388,810		1,321,087		2,787,557		2,612,015
Depreciation	106,230		100,681		210,408		200,223
Amortization	165,502		140,785		331,927		213,183
Litigation and opioid-related expenses, net	225,985		15,813		147,068		28,519
Acquisition-related deal and integration expenses	22,610		59,113		43,673		80,109
Restructuring and other expenses	75,627		97,444		110,068		113,684
Operating income	553,259		560,519		1,376,134		1,193,662
Other loss (income), net	22,063		(15,720)		20,976		(22,048)
Interest expense, net	64,130		64,109		104,694		110,125
Income before income taxes	467,066		512,130		1,250,464		1,105,585
Income tax expense	45,861		83,917		226,251		201,202
Net income	421,205		428,213		1,024,213		904,383
Net (income) loss attributable to noncontrolling interests	(430)		7,189		(1,938)		10,764
Net income attributable to Cencora, Inc.	$	420,775	$	435,402	$	1,022,275	$	915,147

Earnings per share:
Basic	$	2.11	$	2.15	$	5.12	$	4.50
Diluted	$	2.09	$	2.13	$	5.07	$	4.46

Weighted average common shares outstanding:
Basic	199,406		202,316		199,747		203,188
Diluted	201,177		204,256		201,510		205,306

Cash dividends declared per share of common stock	$	0.510	$	0.485	$	1.020	$	0.970

See notes to consolidated financial statements.

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CENCORA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three months ended March 31,				Six months ended March 31,
(in thousands)	2024		2023		2024		2023
Net income	$	421,205	$	428,213	$	1,024,213	$	904,383
Other comprehensive (loss) income
Foreign currency translation adjustments	(128,675)		79,144		142,847		475,218
Other, net	15		1,586		(73)		(1,123)
Total other comprehensive (loss) income	(128,660)		80,730		142,774		474,095
Total comprehensive income	292,545		508,943		1,166,987		1,378,478
Comprehensive loss (income) attributable to noncontrolling interests	4,427		22,239		(2,393)		51,501
Comprehensive income attributable to Cencora, Inc.	$	296,972	$	531,182	$	1,164,594	$	1,429,979

See notes to consolidated financial statements.

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CENCORA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)


(in thousands, except per share data)	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Noncontrolling Interest		Total
December 31, 2023	$	2,957	$	5,917,058	$	4,819,997	$	(1,136,485)	$	(8,691,824)	$	149,553	$	1,061,256
Net income	—		—		420,775		—		—		430		421,205
Other comprehensive loss	—		—		—		(123,803)		—		(4,857)		(128,660)
Cash dividends, $0.510 per share	—		—		(107,002)		—		—		—		(107,002)
Exercises of stock options	1		7,702		—		—		—		—		7,703
Share-based compensation expense	—		28,156		—		—		—		—		28,156
Purchases of common stock	—		—		—		—		(51,279)		—		(51,279)
Employee tax withholdings related to restricted share vesting	—		—		—		—		(3,838)		—		(3,838)
Other, net	1		726		—		—		—		(1,246)		(519)
March 31, 2024	$	2,959	$	5,953,642	$	5,133,770	$	(1,260,288)	$	(8,746,941)	$	143,880	$	1,227,022


(in thousands, except per share data)	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Noncontrolling Interests		Total
December 31, 2022	$	2,942	$	5,737,106	$	3,357,678	$	(1,411,918)	$	(7,863,939)	$	251,690	$	73,559
Net income (loss)	—		—		435,402		—		—		(7,189)		428,213
Other comprehensive income (loss)	—		—		—		95,780		—		(15,050)		80,730
Cash dividends, $0.485 per share	—		—		(101,766)		—		—		—		(101,766)
Exercises of stock options	1		9,848		—		—		—		—		9,849
Share-based compensation expense	—		23,499		—		—		—		—		23,499

Employee tax withholdings related to restricted share vesting	—		—		—		—		(2,737)		—		(2,737)
Other, net	1		(211)		—		—		—		—		(210)
March 31, 2023	$	2,944	$	5,770,242	$	3,691,314	$	(1,316,138)	$	(7,866,676)	$	229,451	$	511,137

See notes to consolidated financial statements.

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CENCORA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)


(in thousands, except per share data)	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Noncontrolling Interest		Total
September 30, 2023	$	2,948	$	5,844,578	$	4,324,187	$	(1,402,607)	$	(8,247,103)	$	144,284	$	666,287
Net income	—		—		1,022,275		—		—		1,938		1,024,213
Other comprehensive income	—		—		—		142,319		—		455		142,774
Cash dividends, $1.02 per share	—		—		(212,692)		—		—		—		(212,692)
Exercises of stock options	2		18,627		—		—		—		—		18,629
Share-based compensation expense	—		91,232		—		—		—		—		91,232
Purchases of common stock	—		—		—		—		(439,752)		—		(439,752)
Employee tax withholdings related to restricted share vesting	—		—		—		—		(60,086)		—		(60,086)
Other, net	9		(795)		—		—		—		(2,797)		(3,583)
March 31, 2024	$	2,959	$	5,953,642	$	5,133,770	$	(1,260,288)	$	(8,746,941)	$	143,880	$	1,227,022


(in thousands, except per share data)	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Noncontrolling Interests		Total
September 30, 2022	$	2,927	$	5,658,733	$	2,977,646	$	(1,830,970)	$	(7,019,895)	$	282,832	$	71,273
Net income (loss)	—		—		915,147		—		—		(10,764)		904,383
Other comprehensive income (loss)	—		—		—		514,832		—		(40,737)		474,095
Cash dividends, $0.970 per share	—		—		(201,479)		—		—		—		(201,479)
Exercises of stock options	4		31,708		—		—		—		—		31,712
Share-based compensation expense	—		79,132		—		—		—		—		79,132
Purchases of common stock	—		—		—		—		(778,827)		—		(778,827)
Employee tax withholdings related to restricted share vesting	—		—		—		—		(67,954)		—		(67,954)
Other, net	13		669		—		—		—		(1,880)		(1,198)
March 31, 2023	$	2,944	$	5,770,242	$	3,691,314	$	(1,316,138)	$	(7,866,676)	$	229,451	$	511,137

See notes to consolidated financial statements.

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CENCORA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six months ended March 31,
(in thousands)	2024		2023
OPERATING ACTIVITIES
Net income	$	1,024,213	$	904,383
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, including amounts charged to cost of goods sold	222,678		201,674
Amortization, including amounts charged to interest expense	335,523		218,508
Provision for credit losses	27,597		9,462
Benefit for deferred income taxes	(36,144)		(61,725)
Share-based compensation expense	91,232		79,132
LIFO (credit) expense	(71,280)		79,320
Turkey highly inflationary impact	40,129		8,441
Loss on remeasurement of equity investment	11,431		—
Other, net	14,158		(6,972)
Changes in operating assets and liabilities, excluding the effects of acquisitions:
Accounts receivable	(1,682,145)		(861,202)
Inventories	(119,023)		(1,413,515)
Income taxes receivable	(34,255)		142,441
Prepaid expenses and other assets	54,651		56,787
Accounts payable	497,670		2,391,172
Accrued expenses	(234,547)		(260,297)
Income taxes payable and other liabilities	(43,000)		(134,338)
Long-term accrued litigation liability	(92,174)		(13,683)
NET CASH PROVIDED BY OPERATING ACTIVITIES	6,714		1,339,588
INVESTING ACTIVITIES
Capital expenditures	(186,970)		(178,581)
Cost of acquired companies, net of cash acquired	(2,310)		(1,409,681)
Non-customer note receivable	(50,000)		—
Cost of equity investments	(8,021)		(18,414)
Other, net	15,014		6,781
NET CASH USED IN INVESTING ACTIVITIES	(232,287)		(1,599,895)
FINANCING ACTIVITIES
Senior notes and loan borrowings	634,946		68,133
Senior notes and loan repayments	(119,857)		(757,695)
Borrowings under revolving and securitization credit facilities	47,936,041		35,784,977
Repayments under revolving and securitization credit facilities	(47,978,721)		(35,780,516)
Purchases of common stock	(436,378)		(807,214)
Exercises of stock options	18,629		31,712
Cash dividends on common stock	(212,692)		(201,479)
Employee tax withholdings related to restricted share vesting	(60,086)		(67,954)
Other, net	(10,381)		(3,355)
NET CASH USED IN FINANCING ACTIVITIES	(228,499)		(1,733,391)
EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(13,671)		88,822
DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(467,743)		(1,904,876)
Cash, cash equivalents, and restricted cash at beginning of period	2,752,889		3,593,539
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	$	2,285,146	$	1,688,663

See notes to consolidated financial statements.

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CENCORA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements present the consolidated financial position, results of operations, and cash flows of Cencora, Inc. and its subsidiaries, including less-than-wholly-owned subsidiaries in which Cencora, Inc. has a controlling financial interest (the "Company"), as of the dates and for the periods indicated. All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles ("GAAP") for interim financial information and in accordance with the instructions to Form 10-Q, and Rule 10-01 of Regulation S-X. In the opinion of management, all adjustments (consisting only of normal recurring accruals, except as otherwise disclosed herein) considered necessary to present fairly the financial position as of March 31, 2024 and the results of operations and cash flows for the interim periods ended March 31, 2024 and 2023 have been included. Certain information and disclosures normally included in financial statements presented in accordance with U.S. GAAP, but which are not required for interim reporting purposes, have been omitted. The accompanying unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual amounts could differ from these estimated amounts. Certain reclassifications have been made to prior-period amounts in order to conform to the current year presentation.

Restricted Cash

The Company is required to maintain certain cash deposits with banks mainly consisting of deposits restricted under contractual agency agreements and cash restricted by law and other obligations.

The following represents a reconciliation of cash and cash equivalents in the Consolidated Balance Sheets to cash, cash equivalents, and restricted cash used in the Consolidated Statements of Cash Flows:


(amounts in thousands)	March 31, 2024		September 30, 2023		March 31, 2023		September 30, 2022
	(unaudited)				(unaudited)
Cash and cash equivalents	$	2,068,858	$	2,592,051	$	1,539,406	$	3,388,189
Restricted cash (included in Prepaid Expenses and Other)	151,446		97,722		87,740		144,980
Restricted cash (included in Other Assets)	64,842		63,116		61,517		60,370
Cash, cash equivalents, and restricted cash	$	2,285,146	$	2,752,889	$	1,688,663	$	3,593,539

Recently Adopted Accounting Pronouncements

As of March 31, 2024, there were no recently-adopted accounting standards that had a material impact on the Company’s financial position, results of operations, cash flows, or notes to the financial statements upon their adoption.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07")." ASU 2023-07 requires public entities to disclose significant segment expenses on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment's profit or loss that are currently required annually. ASU 2023-07 is effective for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024. Early adoption is permitted. The guidance should be applied retrospectively to all periods presented in the financial statements. The Company is currently evaluating the impact of adopting this new accounting guidance.

In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09")." ASU 2023-09 requires entities to provide additional information in their tax rate reconciliation and additional disclosures about income taxes paid by jurisdiction. ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted. The guidance should be applied prospectively, but entities have the option to apply it retrospectively for each period presented. The Company is currently evaluating the impact of adopting this new accounting guidance.

Note 2. Acquisition

PharmaLex Acquisition

The Company acquired and assumed control of PharmaLex Holding GmbH ("PharmaLex") effective January 1, 2023 for $1.473 billion, subject to customary adjustments, including a $29.3 million cash holdback. PharmaLex is a leading provider of specialized services for the life sciences industry. PharmaLex's services include regulatory affairs, development consulting and scientific affairs, pharmacovigilance, and quality management and compliance. PharmaLex is headquartered in Germany and operates in over 30 countries. The acquisition advances the Company's role as a partner of choice for biopharmaceutical partners across the pharmaceutical development and commercialization journey. PharmaLex is a component of the Company's International Healthcare Solutions reportable segment.

The Company completed the purchase price allocations as of December 31, 2023. The purchase price was allocated to the underlying assets acquired, including $37.4 million of cash and cash equivalents, and liabilities assumed based upon their estimated fair values as of the date of the acquisition.

The purchase price exceeded the estimated fair value of the net tangible and intangible assets acquired by $1,010.2 million, which was allocated to goodwill. Goodwill resulting from this acquisition is not deductible for income tax purposes.

The estimated fair value of the intangible assets acquired of $558.9 million, and the estimated useful lives are as follows:


(in thousands, except useful lives)	Fair Value		Useful Lives
Customer relationships	$	522,634	12
Trade names	30,931		5
Software technology	5,333		6
Total	$	558,898

The Company established an estimated deferred tax liability of $146.0 million primarily in connection with the intangible assets acquired.

Note 3. Variable Interest Entity

The Company has substantial governance rights over Profarma Distribuidora de Produtos Farmacêuticos S.A. ("Profarma"), which allow it to direct the activities that significantly impact Profarma’s economic performance. As such, the Company consolidates the operating results of Profarma in its consolidated financial statements. The Company is not obligated to provide future financial support to Profarma.

The following assets and liabilities of Profarma are included in the Company's Consolidated Balance Sheets:


(in thousands)	March 31, 2024		September 30, 2023
Cash and cash equivalents	$	23,152	$	33,256
Accounts receivables, net	253,249		253,419
Inventories	252,970		255,801
Prepaid expenses and other	72,782		63,327
Property and equipment, net	49,237		42,759
Other intangible assets	60,243		62,384
Other long-term assets	81,367		77,889
Total assets	$	793,000	$	788,835

Accounts payable	$	294,511	$	300,875
Accrued expenses and other	57,604		56,280
Short-term debt	51,010		73,650
Long-term debt	111,598		74,132
Deferred income taxes	20,692		22,701
Other long-term liabilities	57,989		54,691
Total liabilities	$	593,404	$	582,329

Profarma's assets can only be used to settle its obligations, and its creditors do not have recourse to the general credit of the Company.

Note 4. Income Taxes

The Company files income tax returns in U.S. federal, state, and various foreign jurisdictions. As of March 31, 2024, the Company had unrecognized tax benefits, defined as the aggregate tax effect of differences between tax return positions and the benefits recognized in the Company’s financial statements, of $574.2 million ($496.9 million, net of federal benefit). If recognized, $483.2 million of these tax benefits would have reduced income tax expense and the effective tax rate. Included in this amount is $31.6 million of interest and penalties, which the Company records in Income Tax Expense in the Company's Consolidated Statements of Operations. In the six months ended March 31, 2024, unrecognized tax benefits increased by $22.4 million. Over the next 12 months, tax authority audit resolutions and the expiration of statutes of limitations are not expected to materially impact unrecognized tax benefits.

The Company's effective tax rates were 9.8% and 18.1% for the three and six months ended March 31, 2024, respectively. The Company's effective tax rates were 16.4% and 18.2% for the three and six months ended March 31, 2023, respectively. The effective tax rates for the three and six months ended March 31, 2024 were lower than the U.S. statutory rate primarily due to discrete tax benefits associated with foreign valuation allowance adjustments, the benefit of non-U.S. income taxed at rates lower than the U.S. statutory rate, and tax benefits associated with equity compensation, offset in part by U.S. state incomes taxes. The effective tax rates for the three and six months ended March 31, 2023 were lower than the U.S. statutory rate primarily due to the benefit of non-U.S. income taxed at rates lower than the U.S. statutory rate, benefits from tax authority audit resolutions, and tax benefits associated with equity compensation, offset in part by U.S. state income taxes.

Note 5. Goodwill and Other Intangible Assets

The following is a summary of the changes in the carrying value of goodwill, by reportable segment, for the six months ended March 31, 2024:


(in thousands)	U. S. Healthcare Solutions		International Healthcare Solutions		Total
Goodwill as of September 30, 2023	$	6,282,417	$	3,291,700	$	9,574,117
Purchase accounting adjustments	—		(12,904)		(12,904)
Goodwill recognized in connection with acquisition	—		2,201		2,201


Foreign currency translation	972		54,638		55,610
Goodwill as of March 31, 2024	$	6,283,389	$	3,335,635	$	9,619,024

The following is a summary of other intangible assets:


	March 31, 2024							September 30, 2023
(in thousands)	Weighted Average Remaining Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Indefinite-lived trade names		$	17,000	$	—	$	17,000	$	17,000	$	—	$	17,000
Finite-lived:
Customer relationships	14 years	4,920,685		(1,366,653)		3,554,032		4,845,091		(1,213,200)		3,631,891
Trade names and other	4 years	1,237,744		(633,189)		604,555		1,224,795		(441,903)		782,892
Total other intangible assets		$	6,175,429	$	(1,999,842)	$	4,175,587	$	6,086,886	$	(1,655,103)	$	4,431,783

Amortization expense for finite-lived intangible assets was $165.5 million and $140.8 million in the three months ended March 31, 2024 and 2023, respectively. Amortization expense for finite-lived intangible assets was $331.9 million and $213.2 million in the six months ended March 31, 2024 and 2023, respectively. Amortization expense for finite-lived intangible assets is estimated to be $669.1 million in fiscal 2024, $518.8 million in fiscal 2025, $354.2 million in fiscal 2026, $296.7 million in fiscal 2027, $285.9 million in fiscal 2028, and $2,365.8 million thereafter.

Note 6. Debt

Debt consisted of the following:


(in thousands)	March 31, 2024		September 30, 2023
Multi-currency revolving credit facility due 2028	$	—	$	—
Receivables securitization facility due 2026	350,000		350,000
Revolving credit note	—		—

Money market facility	—		—
$500,000, 3.400% senior notes due 2024	499,917		499,677
$500,000, 3.250% senior notes due 2025	499,366		499,026
$750,000, 3.450% senior notes due 2027	746,885		746,464
$500,000, 2.800% senior notes due 2030	496,264		495,959
$1,000,000, 2.700% senior notes due 2031	992,160		991,600
$500,000, 5.125% senior notes due 2034	494,226		—
$500,000, 4.250% senior notes due 2045	495,486		495,378
$500,000, 4.300% senior notes due 2047	493,687		493,554
Alliance Healthcare debt	18,859		68,017
Nonrecourse debt	162,608		147,782
Total debt	5,249,458		4,787,457
Less Cencora, Inc. current portion	999,283		499,677
Less Alliance Healthcare current portion	18,859		68,017
Less nonrecourse current portion	51,010		73,650
Total, net of current portion	$	4,180,306	$	4,146,113

Multi-Currency Revolving Credit Facility

The Company has a $2.4 billion multi-currency senior unsecured revolving credit facility ("Multi-Currency Revolving Credit Facility") with a syndicate of lenders, which is scheduled to expire in October 2028. Interest on borrowings under the Multi-Currency Revolving Credit Facility accrues at specified rates based upon the Company’s debt rating. The Company also pays facility fees to maintain the availability under the Multi-Currency Revolving Credit Facility at specified rates based on its debt rating. The Company may choose to repay or reduce its commitments under the Multi-Currency Revolving Credit Facility at any time. The Multi-Currency Revolving Credit Facility contains covenants, including compliance with a financial leverage ratio test, as well as others that impose limitations on, among other things, indebtedness of subsidiaries and asset sales, with which the Company was compliant as of March 31, 2024.

Commercial Paper Program

The Company has a commercial paper program whereby it may from time to time issue short-term promissory notes in an aggregate amount of up to $2.4 billion at any one time. Amounts available under the program may be borrowed, repaid, and re-borrowed from time to time. The maturities on the notes will vary, but may not exceed 365 days from the date of issuance. The notes will bear interest, if interest bearing, or will be sold at a discount from their face amounts. The commercial paper program does not increase the Company’s borrowing capacity as it is fully backed by the Company’s Multi-Currency Revolving Credit Facility. There were no borrowings outstanding under the commercial paper program as of March 31, 2024.

Receivables Securitization Facility

The Company has a $1,450 million receivables securitization facility ("Receivables Securitization Facility"), which was scheduled to expire in October 2025. In April 2024, the Company amended the Receivables Securitization Facility to extend the expiration to October 2026. The Company has available to it an accordion feature whereby the commitment on the Receivables Securitization Facility may be increased by up to $250 million, subject to lender approval, for seasonal needs during the December and March quarters. Interest rates are based on prevailing market rates for short-term commercial paper or 30-day Term SOFR, plus a program fee. The Company pays a customary unused fee at prevailing market rates, annually, to maintain the availability under the Receivables Securitization Facility. The Receivables Securitization Facility contains similar covenants to the Multi-Currency Revolving Credit Facility, with which the Company was compliant as of March 31, 2024.

Revolving Credit Note, Overdraft Facility, and Money Market Facility

The Company had a $75 million uncommitted, unsecured line of credit available to it pursuant to a revolving credit note that was terminated in April 2024. The Company also had a £10 million uncommitted U.K. overdraft facility, which expired in February 2024, to fund short-term normal trading cycle fluctuations related to its MWI Animal Health business. The Company has an uncommitted, unsecured line of credit available to it pursuant to a money market credit agreement ("Money Market Facility"). The Money Market Facility provides the Company with the ability to request short-term, unsecured revolving credit loans from time to time in a principal amount not to exceed $100 million. The Money Market Facility may be decreased or terminated by the bank or the Company at any time without prior notice.

Senior Notes

In February 2024, the Company issued $500 million of 5.125% senior notes due in February 2034 (the "2034 Notes"). The 2034 Notes were sold at 99.867% of the principal amount with an effective yield of 5.132%. Interest on the 2034 Notes is payable semi-annually in arrears on February 15 and August 15 beginning on August 15, 2024. The 2034 Notes rank pari passu to the Company's other senior notes, the Multi-Currency Revolving Credit Facility, the Revolving Credit Note, and the Money Market Facility. The Company will use the proceeds from the 2034 Notes to repay the $500 million of 3.400% senior notes that is due in May 2024.

Alliance Healthcare Debt

Alliance Healthcare debt is comprised of uncommitted revolving credit facilities in various currencies with various rates. All of the outstanding borrowings as of March 31, 2024 were held in Turkey. These facilities are used to fund its working capital needs.

Nonrecourse Debt

Nonrecourse debt is comprised of short-term and long-term debt belonging to the Brazil subsidiary and is repaid solely from the Brazil subsidiary's cash flows and such debt agreements provide that the repayment of the loans (and interest thereon) is secured solely by the capital stock, physical assets, contracts, and cash flows of the Brazil subsidiary.

Note 7. Stockholders’ Equity and Earnings per Share

In March 2023, the Company's Board of Directors authorized a share repurchase program allowing the Company to purchase up to $1.0 billion of its outstanding shares of common stock, subject to market conditions. In the six months ended March 31, 2024, the Company purchased 2.2 million shares of its common stock for a total of $436.4 million, including 1.5 million shares from Walgreens Boots Alliance, Inc. ("WBA") for $300.0 million. As of March 31, 2024, the Company had $2,372.6 million of availability under this 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 shares of common stock, subject to market conditions. No shares of common stock were purchased under this program as of March 31, 2024.

Basic earnings per share is computed by dividing net income attributable to Cencora, Inc. by the weighted average number of shares of common stock outstanding during the periods presented. Diluted earnings per share is computed by dividing net income attributable to Cencora, Inc. by the weighted average number of shares of common stock outstanding, plus the dilutive effect of restricted stock units and stock options during the periods presented.

The following illustrates the components of diluted weighted average shares outstanding for the periods indicated:


	Three months ended March 31,		Six months ended March 31,
(in thousands)	2024	2023	2024	2023
Weighted average common shares outstanding - basic	199,406	202,316	199,747	203,188
Dilutive effect of restricted stock units and stock options	1,771	1,940	1,763	2,118
Weighted average common shares outstanding - diluted	201,177	204,256	201,510	205,306

The potentially dilutive restricted stock units that were antidilutive for the three months ended March 31, 2024 and 2023 were 10 thousand and 3 thousand, respectively. The potentially dilutive restricted stock units that were antidilutive for the six months ended March 31, 2024 and 2023 were 165 thousand and 187 thousand, respectively.

Note 8. Related Party Transactions

WBA owns more than 10% of the Company’s outstanding common stock and is, therefore, considered a related party. The Company operates under various agreements and arrangements with WBA, including a pharmaceutical distribution agreement pursuant to which the Company distributes pharmaceutical products to WBA and an agreement that provides the Company the ability to access favorable economic pricing and generic products through a generic purchasing services arrangement with Walgreens Boots Alliance Development GmbH (both through 2029), as well as a distribution agreement pursuant to which it will supply branded and generic pharmaceutical products to WBA’s Boots UK Ltd. subsidiary (through 2031).

Revenue from the various agreements and arrangements with WBA was $18.8 billion and $36.9 billion in the three and six months ended March 31, 2024, respectively. Revenue from the various agreements and arrangements with WBA was $16.8 billion and $33.0 billion in the three and six months ended March 31, 2023, respectively. The Company’s receivable from WBA, net of incentives, was $7.8 billion and $8.1 billion as of March 31, 2024 and September 30, 2023, respectively.

Note 9. Restructuring and Other Expenses

The following illustrates the expenses incurred by the Company for Restructuring and Other Expenses for the periods indicated:


	Three months ended March 31,				Six months ended March 31,
(in thousands)	2024		2023		2024		2023
Restructuring and employee severance costs	$	11,731	$	43,531	$	23,025	$	46,851
Business transformation efforts	33,728		15,703		58,450		28,623
Other, net	30,168		38,210		28,593		38,210
Total restructuring and other expenses	$	75,627	$	97,444	$	110,068	$	113,684

Restructuring and employee severance costs in the three and six months ended March 31, 2024 primarily included expenses incurred related to facility closures in connection with the Company's office optimization plan and workforce reductions in both of its reportable segments. Restructuring and employee severance costs in the three and six months ended March 31, 2023 primarily included expenses incurred in connection with a workforce reduction in the Company's U.S. Healthcare Solutions reportable segment.

Business transformation efforts in the three and six months ended March 31, 2024 and 2023 included rebranding costs associated with the Company's name change to Cencora and non-recurring expenses related to significant strategic initiatives to improve operational efficiency, including certain technology initiatives. The majority of these costs related to services provided by third-party consultants.

As previously disclosed in a Current Report on Form 8-K on February 21, 2024, the Company experienced a cybersecurity event where data from its information systems was exfiltrated. In connection with this event, the Company incurred costs that were recorded in Other, net in the above table. The majority of Other, net in the three and six months ended March 31, 2024 related to this cybersecurity event.

In the three months ended March 31, 2023, one of the Company's foreign business units experienced a cybersecurity event that impacted a standalone legacy information technology platform in one country and the foreign business unit's ability to operate in that country for approximately two weeks. In connection with this event, the Company incurred costs to restore the foreign business unit's operations in that country, which were recorded in Other, net in the above table. The majority of Other, net in the three and six months ended March 31, 2023 related to this cybersecurity event.

Note 10. Legal Matters and Contingencies

In the ordinary course of its business, the Company becomes involved in lawsuits, administrative proceedings, government subpoenas, government investigations, stockholder demands, and other disputes, including antitrust, commercial, product liability, intellectual property, regulatory, employment discrimination, and other matters. Significant damages or penalties may be sought from the Company in some matters, and some matters may require years for the Company to resolve. The Company records a reserve for these matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

For those matters for which the Company has not recognized a liability, the Company cannot predict the outcome of their impact on the Company as uncertainty remains with regard to whether such matters will proceed to trial, whether settlements will be reached, and the amount and terms of any such settlements. Outcomes may include settlements in significant

amounts that are not currently estimable, limitations on the Company's conduct, the imposition of corporate integrity agreement obligations, consent decrees, and/or other civil and criminal penalties. From time to time, the Company is also involved in disputes with its customers, which the Company generally seeks to resolve through commercial negotiations. If negotiations are unsuccessful, the parties may litigate the dispute or otherwise attempt to settle the matter.

With respect to the specific legal proceedings and claims described below, unless otherwise noted, the amount or range of possible losses is not reasonably estimable. There can be no assurance that the settlement, resolution, or other outcome of one or more matters, including the matters set forth below, during any subsequent reporting period will not have a material adverse effect on the Company’s results of operations or cash flows for that period or on the Company's financial condition.

Opioid Lawsuits and Investigations

A significant number of counties, municipalities, and other governmental entities in a majority of U.S. states and Puerto Rico, as well as numerous states and tribes, filed lawsuits in various federal, state and other courts against pharmaceutical wholesale distributors (including the Company and certain subsidiaries, such as AmerisourceBergen Drug Corporation ("ABDC") and H.D. Smith, LLC ("H.D. Smith")), pharmaceutical manufacturers, retail pharmacy chains, medical practices, and physicians relating to the distribution of prescription opioid pain medications.

Starting in December 2017, more than 2,000 cases were transferred to Multidistrict Litigation ("MDL") proceedings before the United States District Court for the Northern District of Ohio (the "MDL Court"). Since then, several cases filed by government and tribal plaintiffs that were selected as bellwether cases in the MDL have been resolved through trial or settlement. Following trial in two consolidated cases in West Virginia federal court, the court entered judgment in favor of the defendants, including the Company. The plaintiffs filed an appeal of the court’s decision on August 2, 2022, which remains pending. The MDL Court recently selected four cases filed by third-party payors to serve as additional litigation bellwethers. Those four cases will now commence discovery in the MDL and later will be remanded to their original jurisdictions for trial.

On July 21, 2021, the Company announced that it and the two other national pharmaceutical distributors had negotiated a Distributor Settlement Agreement that, if all conditions were satisfied, would result in the resolution of a substantial majority of opioid lawsuits filed by state and local governmental entities. The Distributor Settlement Agreement became effective on April 2, 2022, and as of September 30, 2023, it included 48 of 49 eligible states (the "Settling States"), as well as 99% by population of the eligible political subdivisions in the Settling States. Pursuant to the Distributor Settlement Agreement and related agreements with Settling States, the Company will pay up to approximately $6.4 billion over 18 years and comply with other requirements, including establishment of a clearinghouse that will consolidate data from all three national distributors. The exact payment amount will depend on several factors, including the extent to which states take action to foreclose opioid lawsuits by subdivisions (e.g., laws barring opioid lawsuits by subdivisions). West Virginia and its subdivisions and Native American tribes are not a part of the Distributor Settlement Agreement, and the Company has reached separate agreements with those groups. The State of Alabama did not participate in the Distributor Settlement Agreement and has a case pending against the Company (and another national distributor) in Alabama state court, which was scheduled to begin trial on February 26, 2024. On February 28, 2024, the Company and another national distributor executed an agreement with the State of Alabama and all its participating subdivisions to resolve opioid-related claims. Pursuant to the agreement, the two distributors will pay approximately $245 million, including attorneys’ fees and costs, to the State of Alabama and its participating subdivisions. The Company’s 50% share of the $245 million settlement amount is a component of its overall $5.1 billion total liability accrual as of March 31, 2024. The agreement is subject to certain contingencies, including subdivision participation. Subject to those contingencies, claims brought by Alabama and its participating subdivisions will be dismissed with prejudice as to the Company and the other distributor defendant. The Court has temporarily suspended certain deadlines in the case, including the trial. In Maryland, a trial is scheduled for September 16, 2024 in a case filed by the Mayor and City Council of Baltimore.

The Company’s accrued litigation liability related to the Distributor Settlement Agreement, the State of Alabama, and non-participating government subdivisions (with whom the Company has not reached a settlement agreement), as well as other opioid-related litigation for which it has reached settlement agreements, as described above, was $5.1 billion as of March 31, 2024 and $5.5 billion as of September 30, 2023. The Company currently estimates that $407.5 million will be paid prior to March 31, 2025, which is recorded in Accrued Expenses and Other on the Company’s Consolidated Balance Sheet. In January 2024, the Company prepaid the net present value of a future obligation as permitted under its settlement agreements. The discount on the future obligation resulted in a $0.1 billion reduction of its accrued litigation liability. The remaining long-term liability of $4.7 billion is recorded in Accrued Litigation Liability on the Company's Consolidated Balance Sheet. While the Company has accrued its estimated liability for opioid litigation, it is unable to estimate the range of possible loss associated with the matters that are not included in the accrual. Because loss contingencies are inherently unpredictable and unfavorable developments or resolutions can occur, the assessment is highly subjective and requires judgments about future events. The Company regularly reviews opioid litigation matters to determine whether its accrual is adequate. The amount of ultimate loss may differ materially from the amount accrued to date. Until such time as otherwise resolved, the Company will continue to

litigate and prepare for trial and to vigorously defend itself in all such matters. Since these matters are still developing, the Company is unable to predict the outcome, but the result of these lawsuits could include excessive monetary verdicts and/or injunctive relief that may affect the Company’s operations.

Additional lawsuits regarding the distribution of prescription opioid pain medications have been filed and may continue to be filed by a variety of types of plaintiffs, including lawsuits filed by non-governmental or non-political entities and individuals, among others. The Company is vigorously defending itself in the pending lawsuits and intends to vigorously defend itself against any threatened lawsuits or enforcement proceedings.

In Alabama, a jury trial is scheduled to begin on July 8, 2024 in a case that involves up to eight plaintiff hospitals. During the March 31, 2024 quarter and in the month of April 2024, the Company and two other national pharmaceutical distributors engaged in settlement discussions to resolve litigation filed by classes of hospitals and third-party payors, and as a result, the Company recorded a liability of $214 million, representing the Company's expected share of those potential settlements. This amount is incremental to the $5.1 billion liability accrual noted above and is recorded in Accrued Expenses and Other on the Company's Consolidated Balance Sheet.

Since July 2017, the Company has received subpoenas from several U.S. Attorney’s Offices, including grand jury subpoenas from the U.S. Attorney's Office for the District of New Jersey ("USAO-NJ") and the U.S. Attorney's Office for the Eastern District of New York ("USAO-EDNY"). Those subpoenas requested the production of a broad range of documents pertaining to the Company’s distribution of controlled substances through its various subsidiaries, including ABDC, and its diversion control programs. The Company produced documents in response to the subpoenas and engaged in discussions with the various U.S. Attorney’s Offices, including the Health Care and Government Fraud Unit of the Criminal Division of the USAO-NJ, the U.S. Department of Justice Consumer Protection Branch and the U.S. Drug Enforcement Administration, in an attempt to resolve these matters. On December 29, 2022, the Department of Justice filed a civil Complaint against the Company, ABDC, and Integrated Commercialization Services, LLC ("ICS"), a subsidiary of the Company, alleging violations of the Controlled Substances Act. Specifically, the Complaint alleges that the Company negligently failed to report suspicious orders to the Drug Enforcement Administration. In the Complaint, the Department of Justice seeks civil penalties and injunctive relief. This Complaint relates to the aforementioned and previously-disclosed investigations. On March 30, 2023, the Company filed a motion to dismiss the Complaint in its entirety on behalf of itself, ABDC, and ICS. On November 6, 2023, the United States District Court for the Eastern District of Pennsylvania granted in part and denied in part the motion, dismissing with prejudice all claims for civil penalties for Defendants’ alleged violations of the suspicious order reporting requirement prior to October 24, 2018, but otherwise denying the motion. On December 18, 2023, the Company, ABDC and ICS filed an Answer and Affirmative Defenses to the Complaint. On January 23, 2024, the Court entered a Scheduling Order setting the fact discovery deadline as January 9, 2026 and the expert discovery deadline as September 18, 2026. The Company denies the allegations in the Complaint and intends to defend itself vigorously in the litigation.

Shareholder Securities Litigation

On October 11, 2019, Teamsters Local 443 Health Services & Insurance Plan, St. Paul Electrical Construction Pension Plan, St. Paul Electrical Construction Workers Supplemental Pension Plan (2014 Restatement), Retirement Medical Funding Plan for the St. Paul Electrical Workers, and San Antonio Fire & Police Pension Fund filed a complaint for a purported derivative action in the Delaware Court of Chancery against the Company and certain of its current and former officers and directors (collectively, “Defendants”). The complaint alleges that the Defendants breached their fiduciary duties by failing to oversee the compliance by certain of the Company’s subsidiaries (including the Company’s former subsidiary Medical Initiatives, Inc. ("MII")) with federal regulations, allegedly resulting in the payment of fines and penalties in connection with the settlements with the USAO-EDNY in fiscal 2017 and 2018 that resolved claims arising from MII's pre-filled syringe program. In December 2019, Defendants filed a motion to dismiss the complaint. After briefing and oral argument, on August 24, 2020 the Delaware Court of Chancery denied Defendants' motion to dismiss. On September 24, 2020, the Company's Board of Directors established a Special Litigation Committee to conduct an investigation concerning the plaintiffs’ allegations, and on November 10, 2020, the Delaware Court of Chancery granted the Special Litigation Committee’s motion to stay the litigation pending its investigation. On September 22, 2021, the Special Litigation Committee filed its report under seal and moved to dismiss the case. The Delaware Court of Chancery granted the Special Litigation Committee's motion to dismiss on November 17, 2023, and entered an Order and Final Judgement on December 8, 2023. On January 5, 2024, the plaintiffs filed a notice of appeal to the Delaware Supreme Court from the Delaware Court of Chancery's November 17, 2023 decision granting the motion to dismiss and December 8, 2023 Order and Final Judgement. The appeal has been fully briefed and the schedule for oral argument is pending.

On December 30, 2021, Lebanon County Employees' Retirement Fund and Teamsters Local 443 Health Services & Insurance Plan filed a complaint for a purported derivative action in the Delaware Court of Chancery against the Company and certain of its current officers and directors. The complaint alleges claims for breach of fiduciary duty allegedly arising from the Board’s and certain officers' oversight of the Company’s controlled substance diversion control programs. The defendants moved to dismiss the complaint on March 29, 2022. On December 22, 2022, the Delaware Court of Chancery granted the

motion to dismiss. On January 9, 2023, the Plaintiffs filed a Motion for Relief from Judgment and Order Pursuant to Rule 60(b) from the Delaware Chancery Court’s judgment. On January 20, 2023, the Plaintiffs also appealed the ruling to the Delaware Supreme Court. On March 21, 2023 the Delaware Court of Chancery denied the Plaintiffs' Motion for Relief from Judgement and Order Pursuant to Rule 60(b). On December 18, 2023, the Delaware Supreme Court reversed the dismissal and remanded the case to the Delaware Court of Chancery for further proceedings. On January 12, 2024, the Company's Board of Directors established a Special Litigation Committee ("SLC") and delegated to the SLC the Board's full authority with respect to the litigation. On March 4, 2024, the Delaware Court of Chancery granted the SLC’s consented-to motion to stay the action pending its investigation of the allegations of the complaint.

Subpoenas, Ongoing Investigations, and Other Contingencies

From time to time, the Company receives subpoenas or requests for information from various government agencies relating to the Company’s business or to the business of a customer, supplier, or other industry participant. The Company’s responses often require time and effort and can result in considerable costs being incurred. Most of these matters are resolved without incident; however, such subpoenas or requests can lead to the assertion of claims or the commencement of civil or criminal legal proceedings against the Company and other members of the healthcare industry, as well as to substantial settlements.

In January 2017, U.S. Bioservices Corporation, a former subsidiary of the Company, received a subpoena for information from the USAO-EDNY relating to its activities in connection with billing for products and making returns of potential overpayments to government payers. A filed qui tam complaint related to the investigation was unsealed in April 2019 and the relator filed an amended complaint under seal in the U.S. District Court for the Eastern District of New York. In December 2019, the government filed a notice that it was declining to intervene. The court ordered that the relator's complaint against the Company and other defendants, including AmerisourceBergen Specialty Group, LLC, be unsealed. The relator's complaint alleged violations of the federal False Claims Act and the false claims acts of various states. The relator filed a second amended complaint, removing one state false claims act count. The Company filed a motion to dismiss the second amended complaint and all briefs on the motion were filed with the court on October 9, 2020. The motion to dismiss was granted on December 22, 2022. The False Claims Act claims were dismissed with prejudice, and the state claims were dismissed without prejudice. On January 24, 2023, the relator filed Motions to Reconsider Dismissal and For Leave to Amend the Complaint. Response briefs on those motions were filed by the Company and all briefing was completed on February 15, 2023.

In December 2019, Reliable Pharmacy, together with other retail pharmacies and North Sunflower Medical Center, filed a civil antitrust complaint against multiple generic drug manufacturers, and also included claims against ABDC and H.D. Smith, and other drug distributors and industry participants. The case is filed as a putative class action and plaintiffs purport to represent a class of drug purchasers including other retail pharmacies and healthcare providers. The case has been consolidated for multidistrict litigation proceedings before the United States District Court for the Eastern District of Pennsylvania. The complaint alleges that ABDC, H.D. Smith, and others in the industry participated in a conspiracy to fix prices, allocate markets and rig bids regarding generic drugs. In March 2020, the plaintiffs filed a further amended complaint. On July 15, 2020, the defendants filed a motion to dismiss the complaint. On May 25, 2022, the Court granted the motion to dismiss without prejudice. On July 1, 2022, the plaintiffs filed an amended complaint, again including claims against ABDC, H.D. Smith, and other drug distributors and industry participants. On August 21, 2022, the Company and other industry participants filed a motion to dismiss the amended complaint. All briefs on the motion were filed with the court on November 22, 2022.

On March 3, 2022, the United States Attorney’s Office for the Western District of Virginia notified the Company of the existence of a criminal investigation into MWI Veterinary Supply Co., the Company’s animal health subsidiary, in connection with grand jury subpoenas relating to compliance with state and federal regulatory requirements governing wholesale shipments of animal health products to customers. The Company is cooperating with the investigation.

Note 11. Antitrust Settlements

Numerous lawsuits have been filed against certain brand pharmaceutical manufacturers alleging that the manufacturer, by itself or in concert with others, took improper actions to delay or prevent generic drugs from entering the market. These lawsuits are generally brought as class actions. The Company has not been named as a plaintiff in these lawsuits, but has been a member of the direct purchasers' class (i.e., those purchasers who purchase directly from these pharmaceutical manufacturers). None of the lawsuits has gone to trial, but some have settled in the past with the Company receiving proceeds from the settlement funds. The Company recognized gains related to these lawsuits of $8.7 million in the three months ended March 31, 2024. The Company recognized gains related to these lawsuits of $57.0 million and $49.9 million in the six months ended March 31, 2024 and 2023, respectively. These gains, which are net of attorney fees and estimated payments due to other parties, were recorded as reductions to cost of goods sold in the Company’s Consolidated Statements of Operations.

Note 12. Fair Value of Financial Instruments

The recorded amounts of the Company's cash and cash equivalents, accounts receivable, and accounts payable as of March 31, 2024 and September 30, 2023 approximate fair value based upon the relatively short-term nature of these financial instruments. Within Cash and Cash Equivalents, the Company had $304.0 million investments in money market accounts as of March 31, 2024 and had $1,489.0 million of investments in money market accounts as of September 30, 2023. The fair value of the money market accounts was determined based upon unadjusted quoted prices in active markets for identical assets, otherwise known as Level 1 inputs.

The recorded amount of long-term debt (see Note 6) and the corresponding fair value as of March 31, 2024 were $4,180.3 million and $3,810.7 million, respectively. The recorded amount of long-term debt and the corresponding fair value as of September 30, 2023 were $4,146.1 million and $3,572.6 million, respectively. The fair value of long-term debt was determined based upon inputs other than quoted prices, otherwise known as Level 2 inputs.

Note 13. Business Segment Information

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

The following illustrates reportable and operating segment disaggregated revenue as required by Accounting Standards Codification 606, "Revenue from Contracts with Customer," for the periods indicated:


	Three months ended March 31,				Six months ended March 31,
(in thousands)	2024		2023		2024		2023
U.S. Healthcare Solutions:
Human Health	$	59,984,359	$	55,453,964	$	123,882,524	$	110,530,577
Animal Health	1,308,538		1,239,492		2,594,175		2,399,458
Total U.S. Healthcare Solutions	61,292,897		56,693,456		126,476,699		112,930,035
International Healthcare Solutions:
Alliance Healthcare	5,754,980		5,560,936		11,480,544		11,021,627
Other Healthcare Solutions	1,368,405		1,203,999		2,713,068		2,354,586
Total International Healthcare Solutions	7,123,385		6,764,935		14,193,612		13,376,213
Intersegment eliminations	(1,975)		(1,186)		(3,171)		(2,211)
Revenue	$	68,414,307	$	63,457,205	$	140,667,140	$	126,304,037

The following illustrates reportable segment operating income information for the periods indicated:


	Three months ended March 31,				Six months ended March 31,
(in thousands)	2024		2023		2024		2023
U.S. Healthcare Solutions	$	841,064	$	756,137	$	1,539,188	$	1,328,553
International Healthcare Solutions	192,720		175,991		380,315		337,273
Total segment operating income	$	1,033,784	$	932,128	$	1,919,503	$	1,665,826

The following reconciles total segment operating income to income before income taxes for the periods indicated:


	Three months ended March 31,				Six months ended March 31,
(in thousands)	2024		2023		2024		2023
Total segment operating income	$	1,033,784	$	932,128	$	1,919,503	$	1,665,826
Gains from antitrust litigation settlements	8,714		—		56,962		49,899
LIFO credit (expense)	22,835		(54,270)		71,280		(79,320)
Turkey highly inflationary impact	(23,053)		(4,855)		(40,279)		(8,439)
Acquisition-related intangibles amortization	(164,799)		(140,114)		(330,523)		(211,992)
Litigation and opioid-related expenses, net	(225,985)		(15,813)		(147,068)		(28,519)
Acquisition-related deal and integration expenses	(22,610)		(59,113)		(43,673)		(80,109)
Restructuring and other expenses	(75,627)		(97,444)		(110,068)		(113,684)
Operating income	553,259		560,519		1,376,134		1,193,662
Other loss (income), net	22,063		(15,720)		20,976		(22,048)
Interest expense, net	64,130		64,109		104,694		110,125
Income before income taxes	$	467,066	$	512,130	$	1,250,464	$	1,105,585

Segment operating income is evaluated by the Chief Operating Decision Maker of the Company before gains from antitrust litigation settlements; LIFO credit (expense); Turkey highly inflationary impact; acquisition-related intangibles amortization; litigation and opioid-related expenses, net; acquisition-related deal and integration expenses; and restructuring and other expenses. All corporate office expenses are allocated to the operating segment level.

Litigation and opioid-related expenses, net in the three and six months ended March 31, 2024 includes a $214.0 million litigation accrual for ongoing litigation related to the distribution of prescription opioid medications (see Note 10). The six-month period ended March 31, 2024 also includes a net $92.2 million opioid litigation settlement accrual reduction primarily as a result of the Company's prepayment of the net present value of a future obligation as permitted under its settlement agreements.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Summary

This executive summary provides highlights from the results of operations that follow:

•Revenue increased by $5.0 billion, or 7.8%, and $14.4 billion, or 11.4%, from the prior year quarter and six-month period, respectively, primarily due to growth in the U.S. Healthcare Solutions segment. The U.S. Healthcare Solutions segment grew its revenue by $4.6 billion, or 8.1%, and $13.5 billion, or 12.0%, from the prior year quarter and six-month period, respectively, 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 glucagon-like peptide-1, or "GLP-1," class, increased sales of specialty products to physician practices and health systems, and increased sales of COVID-19 vaccines. International Healthcare Solutions' revenue increased by $0.4 billion, or 5.3%, and $0.8 billion, or 6.1%, from the prior year quarter and six-month period, respectively. The increases from the prior year quarter and six-month period are primarily due to increased sales at Alliance Healthcare, our European distribution business;

•Gross profit increased by $242.6 million, or 10.6%, and $565.4 million, or 12.7%, from the prior year quarter and six-month period, respectively, primarily due to the increases in gross profit in both reportable segments and last-in, first-out ("LIFO") credits in the current year periods in comparison to LIFO expense in the prior year periods. U.S. Healthcare Solutions' gross profit increased by $127.9 million, or 8.2%, and $313.7 million, or 10.7%, from the prior year quarter and six-month period, respectively, primarily due to increased sales. Gross profit in International Healthcare Solutions increased by $47.6 million, or 5.9%, and $126.4 million, or 8.2%, from the prior year quarter and six-month period, respectively, due to growth at most of its businesses;

•Total operating expenses increased by $249.8 million, or 14.4%, and $383.0 million, or 11.8%, from the prior year quarter and six-month period, respectively. The increase from the prior year quarter was largely due to higher litigation and opioid-related expenses. The increase from the prior year six-month period is primarily a result of increases in distribution, selling, and administrative expenses, amortization expense, and litigation and opioid-related expenses;

•Total segment operating income increased by $101.7 million, or 10.9%, and $253.7 million, or 15.2%, from the prior year quarter and six-month period, respectively. U.S. Healthcare Solutions' operating income increased by $84.9 million and $210.6 million from prior year quarter and six-month period, respectively, and International Healthcare Solutions' operating income increased by $16.7 million and $43.0 million from the prior year quarter and six-month period, respectively; and

•Our effective tax rates were 9.8% and 18.1% for the three and six months ended March 31, 2024, respectively. Our effective tax rates were 16.4% and 18.2% for the three and six months ended March 31, 2023, respectively. The effective tax rates in the current year periods were lower than those in the prior year periods primarily due to the discrete tax benefits associated with foreign valuation allowance adjustments. Additionally, the effective tax rates for all periods presented were lower than the U.S. statutory rate primarily due to the benefit of non-U.S. income taxed at rates lower than the U.S. statutory rate and tax benefits associated with equity compensation, offset in part by U.S. state income taxes.

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Results of Operations

Revenue


	Three months ended March 31,					Six months ended March 31,
(dollars in thousands)	2024		2023		Change	2024		2023		Change
U.S. Healthcare Solutions:
Human Health	$	59,984,359	$	55,453,964	8.2%	$	123,882,524	$	110,530,577	12.1%
Animal Health	1,308,538		1,239,492		5.6%	2,594,175		2,399,458		8.1%
Total U.S. Healthcare Solutions	61,292,897		56,693,456		8.1%	126,476,699		112,930,035		12.0%
International Healthcare Solutions:
Alliance Healthcare	5,754,980		5,560,936		3.5%	11,480,544		11,021,627		4.2%
Other Healthcare Solutions	1,368,405		1,203,999		13.7%	2,713,068		2,354,586		15.2%
Total International Healthcare Solutions	7,123,385		6,764,935		5.3%	14,193,612		13,376,213		6.1%
Intersegment eliminations	(1,975)		(1,186)			(3,171)		(2,211)
Revenue	$	68,414,307	$	63,457,205	7.8%	$	140,667,140	$	126,304,037	11.4%

Our future revenue growth will continue to be affected by various factors, such as industry growth trends, including drug utilization (e.g., products labeled for diabetes and/or weight loss in the GLP-1 class), the introduction of new, innovative brand therapies and vaccines, the likely increase in the number of generic drugs and biosimilars that will be available over the next few years as a result of the expiration of certain drug patents held by brand-name pharmaceutical manufacturers and the rate of conversion from brand products to those generic drugs and biosimilars, price inflation and price deflation, general economic conditions in the United States and Europe, currency exchange rates, competition within the industry, customer consolidation, changes in pharmaceutical manufacturer pricing and distribution policies and practices, increased downward pressure on government and other third-party reimbursement rates to our customers, and changes in government rules and regulations.

Revenue increased by $5.0 billion, or 7.8%, and $14.4 billion, or 11.4%, from the prior year quarter and six-month period, respectively, primarily due to growth in the U.S. Healthcare Solutions segment.

The U.S. Healthcare Solutions segment grew its revenue by $4.6 billion, or 8.1%, and $13.5 billion, or 12.0%, from the prior year quarter and six-month period, respectively, due to overall market growth primarily driven by unit volume growth, including increased sales of $1.3 billion and $3.4 billion of products labeled for diabetes and/or weight loss in the GLP-1 class from the prior year quarter and six-month period, respectively, increased sales of specialty products to physician practices and health systems, and increased sales of COVID-19 vaccines. Sales, including GLP-1 products and COVID-19 vaccines, to our two largest customers increased by $2.5 billion and $5.8 billion in comparison to the prior year quarter and six-month period, respectively.

International Healthcare Solutions' revenue increased by $0.4 billion, or 5.3%, and $0.8 billion, or 6.1%, from the prior year quarter and six-month period, respectively. The increase from the prior year quarter is primarily due to (i) increased sales of $0.2 billion, net of a negative impact of $0.3 billion from unfavorable foreign currency exchange rates in comparison to the prior year quarter, at Alliance Healthcare, our European distribution business, (ii) increased sales of $0.1 billion in our Canadian business, and (iii) increased sales of $0.1 billion at our less-than-wholly-owned Brazil full-line distribution business. The increase from the prior year six-month period is primarily due to (i) increased sales of $0.5 billion, net of a negative impact of $0.5 billion from unfavorable foreign currency exchange rates in comparison to the prior six-month period, at our European distribution business, (ii) increased sales of $0.2 billion in our Canadian business, (iii) increased sales of $0.1 billion at our less-than-wholly-owned Brazil full-line distribution business, and (iv) incremental revenue of $0.1 billion from our January 2023 acquisition of PharmaLex.

A number of our contracts with customers, including group purchasing organizations, are typically subject to expiration each year. We may lose a significant customer if an existing contract with such customer expires without being extended, renewed, or replaced. During the six months ended March 31, 2024, no significant contracts expired. Over the next twelve months, there are no significant contracts scheduled to expire. Additionally, from time to time, significant contracts may be terminated in accordance with their terms or extended, renewed, or replaced prior to their expiration dates. If those contracts are extended, renewed, or replaced at less favorable terms, they may also negatively impact our revenue, results of operations, and cash flows.

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Gross Profit


	Three months ended March 31,					Six months ended March 31,
(dollars in thousands)	2024		2023		Change	2024		2023		Change
U.S. Healthcare Solutions	$	1,678,814	$	1,550,871	8.2%	$	3,250,764	$	2,937,019	10.7%
International Healthcare Solutions	851,259		803,696		5.9%	1,668,654		1,542,236		8.2%
Intersegment eliminations	(546)		—			(546)		—
Gains from antitrust litigation settlements	8,714		—			56,962		49,899
LIFO credit (expense)	22,835		(54,270)			71,280		(79,320)
Turkey highly inflationary impact	(23,053)		(4,855)			(40,279)		(8,439)
Gross profit	$	2,538,023	$	2,295,442	10.6%	$	5,006,835	$	4,441,395	12.7%

Gross profit increased by $242.6 million, or 10.6%, and $565.4 million, or 12.7%, from the prior year quarter and six-month period, respectively, primarily due to the increase in gross profit in both reportable segments and LIFO credits in the current year periods in comparison to LIFO expense in the prior year periods.

U.S. Healthcare Solutions' gross profit increased by $127.9 million, or 8.2%, and $313.7 million, or 10.7%, from the prior year quarter and six-month period, respectively, primarily due to increased sales. As a percentage of revenue, U.S. Healthcare Solutions' gross profit margins were 2.74% and 2.57% in the current year quarter and six-month period, respectively, and was flat compared to the prior year quarter and represented a 3-basis point decline from the prior year six-month period primarily due to higher sales of GLP-1 products, which have lower gross profit margins, offset in part by higher sales of COVID-19 vaccines, which have higher gross profit margins.

Gross profit in International Healthcare Solutions increased by $47.6 million, or 5.9%, and $126.4 million, or 8.2%, from the prior year quarter and six-month period, respectively, due to growth at most of its businesses.

We recognized gains from antitrust litigation settlements with pharmaceutical manufacturers of $8.7 million in the three months ended March 31, 2024 and $57.0 million and $49.9 million in the six months ended March 31, 2024 and 2023, respectively. The gains were recorded as reductions to Cost of Goods Sold (see Note 11 of the Notes to Consolidated Financial Statements).

Our cost of goods sold for interim periods includes a LIFO provision that is recorded ratably on a quarterly basis and is based on our estimated annual LIFO provision. The annual LIFO provision, which we estimate on a quarterly basis, is affected by manufacturer pricing practices, which may be impacted by market and other external influences, expected changes in inventory quantities, and product mix, many of which are difficult to predict. Changes to any of the above factors may have a material impact on our annual LIFO provision. Based on estimates in our current fiscal year LIFO provision, the LIFO credits in the current year periods in comparison to the LIFO expense in the prior year periods were primarily driven by lower brand pharmaceutical inflation largely due to price decreases by manufacturers of wholesale acquisition costs of certain products.

We recognized expenses in Cost of Goods Sold of $23.1 million and $4.9 million in the three months ended March 31, 2024 and 2023, respectively, and $40.3 million and $8.4 million in the six months ended March 31, 2024 and 2023, respectively, related to the impact of Turkey highly inflationary accounting. These expenses were driven by the weakening of the Turkish Lira.

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Operating Expenses


	Three months ended March 31,					Six months ended March 31,
(dollars in thousands)	2024		2023		Change	2024		2023		Change
Distribution, selling, and administrative	$	1,388,810	$	1,321,087	5.1%	$	2,787,557	$	2,612,015	6.7%
Depreciation and amortization	271,732		241,466		12.5%	542,335		413,406		31.2%
Litigation and opioid-related expenses, net	225,985		15,813			147,068		28,519
Acquisition-related deal and integration expenses	22,610		59,113			43,673		80,109
Restructuring and other expenses	75,627		97,444			110,068		113,684


Total operating expenses	$	1,984,764	$	1,734,923	14.4%	$	3,630,701	$	3,247,733	11.8%

Distribution, selling, and administrative expenses increased by $67.7 million, or 5.1%, and $175.5 million, or 6.7%, compared to prior year quarter and six-month period, respectively, primarily to support revenue growth. As a percentage of revenue, distribution, selling, and administrative expenses were 2.03% and 1.98% in the current year quarter and six-month period, respectively, which represented declines of 5 basis points and 9 basis points compared to the prior year quarter and six month period, respectively, as initiatives taken in fiscal 2023 improved operating efficiency across many of our businesses and administrative functions and the 7.8% and 11.4% revenue growth in the current fiscal quarter and six-month period, respectively, improved our operating leverage at the reportable segment level.

Depreciation expense increased 5.5% and 5.1% from the prior year quarter and six-month period, respectively. Amortization expense increased 17.6% and 55.7% from the prior year quarter and six-month period, respectively, primarily due to accelerated amortization expense, which we began recording in February 2023, in connection with the shortened useful lives of certain trade names resulting from our company name change and gradual transition away from other tradenames used, which were acquired through prior acquisitions.

Litigation and opioid-related expenses, net in the three months ended March 31, 2024 included a $214.0 million litigation accrual for ongoing litigation related to the distribution of prescription opioid medications and $12.0 million of legal fees in connection with opioid lawsuits and investigations (see Note 10 of the Notes to Consolidated Financial Statements). Litigation and opioid-related expenses, net in the six months ended March 31, 2024 included a $214.0 million litigation accrual for ongoing litigation related to the distribution of prescription opioid medications and $25.2 million of legal fees in connection with opioid lawsuits and investigations, offset in part by a net $92.2 million opioid litigation settlement accrual reduction primarily as a result of our prepayment of the net present value of a future obligation as permitted under our opioid settlement agreements. Litigation and opioid-related expenses, net in the three and six months ended March 31, 2023 included legal fees in connection with opioid lawsuits and investigations.

Acquisition-related deal and integration expenses in the three and six months ended March 31, 2024 and 2023 primarily related to the continued integration of Alliance Healthcare and PharmaLex.

Restructuring and other expenses are comprised of the following for the periods indicated:


	Three months ended March 31,				Six months ended March 31,
(in thousands)	2024		2023		2023		2022
Restructuring and employee severance costs	$	11,731	$	43,531	$	23,025	$	46,851
Business transformation efforts	33,728		15,703		58,450		28,623
Other, net	30,168		38,210		28,593		38,210
Total restructuring and other expenses	$	75,627	$	97,444	$	110,068	$	113,684

Restructuring and employee severance costs in the three and six months ended March 31, 2024 primarily included expenses incurred related to facility closures in connection with our office optimization plan and workforce reductions in both of our reportable segments. Restructuring and employee severance costs in the three and six months ended March 31, 2023 primarily included expenses incurred in connection with a workforce reduction in our U.S. Healthcare Solutions reportable segment.

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Business transformation efforts in the three and six months ended March 31, 2024 and 2023 included rebranding costs associated with our name change to Cencora and non-recurring expenses related to significant strategic initiatives to improve operational efficiency, including certain technology initiatives. The majority of these costs related to services provided by third-party consultants.

As previously disclosed in a Current Report on Form 8-K on February 21, 2024, we experienced a cybersecurity event where data from our information systems was exfiltrated. In connection with this event, we incurred costs that were recorded in Other expenses in the above table. The majority of Other, net in the three and six months ended March 31, 2024 related to this cybersecurity event.

In the three months ended March 31, 2023, one of our foreign business units experienced a cybersecurity event that impacted a standalone legacy information technology platform in one country and the foreign business unit's ability to operate in that country for approximately two weeks. In connection with this event, we incurred costs to restore the foreign business unit's operations in that country, which were recorded in Other expenses in the above table. The majority of Other, net in the three and six months ended March 31, 2023 related to this cybersecurity event.

Operating Income


	Three months ended March 31,					Six months ended March 31,
(dollars in thousands)	2024		2023		Change	2024		2023		Change
U.S. Healthcare Solutions	$	841,064	$	756,137	11.2%	$	1,539,188	$	1,328,553	15.9%
International Healthcare Solutions	192,720		175,991		9.5%	380,315		337,273		12.8%
Total segment operating income	1,033,784		932,128		10.9%	1,919,503		1,665,826		15.2%

Gains from antitrust litigation settlements	8,714		—			56,962		49,899
LIFO credit (expense)	22,835		(54,270)			71,280		(79,320)
Turkey highly inflationary impact	(23,053)		(4,855)			(40,279)		(8,439)
Acquisition-related intangibles amortization	(164,799)		(140,114)			(330,523)		(211,992)
Litigation and opioid-related expenses	(225,985)		(15,813)			(147,068)		(28,519)
Acquisition-related deal and integration expenses	(22,610)		(59,113)			(43,673)		(80,109)
Restructuring and other expenses	(75,627)		(97,444)			(110,068)		(113,684)
Operating income	$	553,259	$	560,519	(1.3)%	$	1,376,134	$	1,193,662	15.3%

U.S. Healthcare Solutions' operating income increased by $84.9 million, or 11.2%, and $210.6 million, or 15.9%, from prior year quarter and six-month period, respectively, primarily due to the increases in gross profit, as noted above, and was offset in part by the increases in operating expenses. As a percentage of revenue, U.S. Healthcare Solutions' operating income margin was 1.37% and 1.22% in the current year quarter and six-month period, respectively, and represented 4-basis point increases compared to the prior year periods primarily due a decline in operating expense margin, as described above in the Operating Expenses section. The increase in the six-month period ended March 31, 2024 was offset in part by a decline in gross profit margin, as described above in the Gross Profit section.

International Healthcare Solutions' operating income increased by $16.7 million, or 9.5%, and $43.0 million, or 12.8%, from the prior year quarter and six-month period, respectively. The increase in the current year quarter was primarily due to our less-than-wholly-owned Brazil full-line distribution business and our Canadian business. The increase in the current year six-month period was primarily due to our global specialty logistics business, our Canadian business, our less-than-wholly-owned Brazil full-line distribution business, and the January 2023 acquisition of PharmaLex, offset in part by foreign currency pressure and higher information technology operating expenses in our European distribution business and the September 2023 divestiture of its less-than-wholly-owned subsidiary in Egypt, which was profitable in the prior year six-month period.

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Interest Expense, Net

Interest expense, net and the respective weighted average interest rates for the three months ended March 31, 2024 and 2023 are as follows:


	2024			2023
(dollars in thousands)	Amount		Weighted Average Interest Rate	Amount		Weighted Average Interest Rate
Interest expense	$	76,810	4.18%	$	72,272	3.55%
Interest income	(12,680)		4.77%	(8,163)		3.34%
Interest expense, net	$	64,130		$	64,109

Interest expense, net was flat compared to the prior year quarter as the increase in interest expense was offset by the increase in interest income. The increase in interest expense was primarily driven by increased variable-rate borrowings and was offset in part due to the September 2023 divestiture of our less-than-wholly-owned subsidiary in Egypt. The increase in interest income was primarily driven by higher investment interest rates in the current year quarter in comparison to the prior year quarter. The higher investment interest rates were offset in part by lower average investment cash balances in the current year quarter in comparison to the prior year quarter.

Interest expense, net and the respective weighted average interest rates for the six months ended March 31, 2024 and 2023 are as follows:


	2024			2023
(dollars in thousands)	Amount		Weighted Average Interest Rate	Amount		Weighted Average Interest Rate
Interest expense	$	135,426	3.98%	$	133,078	3.39%
Interest income	(30,732)		4.98%	(22,953)		3.03%
Interest expense, net	$	104,694		$	110,125

Interest expense, net decreased by $5.4 million, or 4.9%, from prior year six-month period due to the increase in interest income, offset in part by an increase in interest expense. The increase in interest income was primarily driven by higher investment interest rates in the current year six-month period in comparison to the prior year six-month period. The higher investment interest rates were offset in part by lower average investment cash balances in the current year six-month period in comparison to the prior year six-month period. Interest expense increased primarily driven by increased variable-rate borrowings and was offset in part by the September 2023 divestiture of our less-than-wholly-owned subsidiary in Egypt.

Income Tax Expense

Our effective tax rates were 9.8% and 18.1% for the three and six months ended March 31, 2024, respectively. Our effective tax rates were 16.4% and 18.2% for the three and six months ended March 31, 2023, respectively. The effective tax rates in the current year periods were lower than those in the prior year periods primarily due to the discrete tax benefits associated with foreign valuation allowance adjustments. Additionally, the effective tax rates for all periods presented were lower than the U.S. statutory rate primarily due to the benefit of non-U.S. income taxed at rates lower than the U.S. statutory rate and tax benefits associated with equity compensation, offset in part by U.S. state income taxes.

Liquidity and Capital Resources

Our operating results have generated cash flows, which, together with availability under our debt agreements and credit terms from suppliers, have provided sufficient capital resources to finance working capital and cash operating requirements, and to fund capital expenditures, acquisitions, repayment of debt, the payment of interest on outstanding debt, dividends, and purchases of shares of our common stock.

Our primary ongoing cash requirements will be to finance working capital, fund the repayment of debt, fund the payment of interest on debt, fund the payment of dividends, fund purchases of our common stock, finance acquisitions, and fund capital expenditures and routine growth and expansion through new business opportunities. Future cash flows from operations and borrowings are expected to be sufficient to fund our ongoing cash requirements, including the opioid litigation payments that will be made over the next 14 years (see below).

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Cash Flows

As of March 31, 2024 and September 30, 2023, our cash and cash equivalents held by foreign subsidiaries were $666.6 million and $640.5 million, respectively. We have the ability to repatriate the majority of our cash and cash equivalents held by our foreign subsidiaries without incurring significant additional taxes upon repatriation.

We have increased seasonal needs related to our inventory build during the December and March quarters that, depending on our cash balance, may require the use of our credit facilities to fund short-term capital needs. Our cash balances in the six months ended March 31, 2024 and 2023 were supplemented by intra-period credit facility borrowings to cover short-term working capital needs. The largest amount of intra-period borrowings under our revolving and securitization credit facilities that was outstanding at any one time during the six months ended March 31, 2024 and 2023 was $3.2 billion and $2.1 billion, respectively. We had $47.9 billion and $35.4 billion of cumulative intra-period borrowings that were repaid under our credit facilities during the six months ended March 31, 2024 and 2023, respectively.

Our net cash provided by operating activities decreased by $1.3 billion in six months ended March 31, 2024 compared to the six months ended March 31, 2023. This decrease was primarily due to the $1.4 billion increase in our net working capital account balances, in part due to delayed collections of approximately $600 million from certain customers as a result of the February 2024 Change Healthcare cyberattack and the timing of cash receipts from customers and the timing of disbursements to suppliers. Additionally, our net cash provided by operating activities in the six months ended March 31, 2024 was adversely impacted by opioid litigation settlement payments of $250.1 million in comparison to payments of $108.2 million made in the six months ended March 31, 2023.

During the six months ended March 31, 2024, our operating activities provided cash of $6.7 million and was principally the result of the following:

•Net income of $1,024.2 million;

•An increase in accounts payable of $497.7 million primarily due to the increase in our inventory balances and the timing of scheduled payments to our suppliers; and

•Positive non-cash items of $635.3 million, which is primarily comprised of amortization expense of $335.5 million and depreciation expense of $222.7 million.

The cash provided by the above items was largely offset by the following:

•An increase in accounts receivable of $1,682.1 million primarily due to an increase in sales and the timing of scheduled payments from our customers, including delayed collections of approximately $600 million from certain customers as a result of the February 2024 Change Healthcare cyberattack; and

•A decrease in accrued expenses of $234.5 million primarily due to the payment of accrual liabilities that were on our Consolidated Balance Sheet as of September 30, 2023, including $250.1 million of opioid litigation settlement payments.

During the six months ended March 31, 2023, our operating activities provided cash of $1,339.6 million and was principally the result of the following:

•An increase in accounts payable of $2,391.2 million primarily due to the increase in our inventory balances and the timing of scheduled payments to our suppliers;

•Net income of $904.4 million; and

•Positive non-cash items of $527.8 million, which is primarily comprised of amortization expense of $218.5 million and depreciation expense of $201.7 million.

The cash provided by the above items was offset in part by the following:

•An increase in inventories of $1,413.5 million to support the increase in business volume and due to seasonal needs;

•An increase in accounts receivable of $861.2 million primarily due to an increase in sales and the timing of scheduled payments from our customers; and

•A decrease in accrued expenses of $260.3 million primarily due to the payment of accrual liabilities that were on our Consolidated Balance Sheet as of September 30, 2022, including $108.2 million of opioid litigation settlement payments.

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We use days sales outstanding, days inventory on hand, and days payable outstanding to evaluate our working capital performance. The below financial metrics are calculated based upon a quarterly average and can be impacted by the timing of cash receipts and disbursements, which can vary significantly depending upon the day of the week on which the period ends.


	Three months ended March 31,		Six months ended March 31,
	2024	2023	2024	2023
Days sales outstanding	29.6	27.4	28.8	27.5
Days inventory on hand	28.0	29.1	27.3	28.3
Days payable outstanding	62.4	60.5	61.0	60.0

Our cash flows from operating activities can vary significantly from period to period based upon fluctuations in our period-end working capital account balances. Additionally, any changes to payment terms with a significant customer or manufacturer supplier could have a material impact to our cash flows from operations. Operating cash flows during the six months ended March 31, 2024 included $129.1 million of interest payments and $291.7 million of income tax payments, net of refunds. Operating cash flows during the six months ended March 31, 2023 included $127.1 million of interest payments and $190.4 million of income tax payments, net of refunds.

Capital expenditures in the six months ended March 31, 2024 and 2023 were $187.0 million and $178.6 million, respectively. Significant capital expenditures in the six months ended March 31, 2024 and 2023 included investments in various technology initiatives, including technology investments at Alliance Healthcare.

We currently expect to invest approximately $500 million for capital expenditures during fiscal 2024. Larger 2024 capital expenditures will include investments relating to various technology initiatives, including technology investments at Alliance Healthcare.

In addition to capital expenditures, net cash used in investing activities in the six months ended March 31, 2023 included $1,438.1 million for the acquisition of PharmaLex.

Net cash used in financing activities in the six months ended March 31, 2024 principally resulted from $436.4 million purchases of our common stock and $212.7 million in cash dividends paid on our common stock, offset in part by the issuance of our $500 million of 5.125% senior notes in February 2024. Net cash used in financing activities in the six months ended March 31, 2023 principally resulted from the $675 million repayment of our 0.737% senior notes that matured in March 2023, $807.2 million purchases of our common stock and $201.5 million in cash dividends paid on our common stock.

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Debt and Credit Facility Availability

The following table illustrates our debt structure as of March 31, 2024, including availability under the multi-currency revolving credit facility, the receivables securitization facility, the revolving credit note, the money market facility, and the Alliance Healthcare debt:


(in thousands)	Outstanding Balance		Additional Availability
Fixed-Rate Debt:
$500,000, 3.400% senior notes due 2024	$	499,917	$	—
$500,000, 3.250% senior notes due 2025	499,366		—
$750,000, 3.450% senior notes due 2027	746,885		—
$500,000, 2.800% senior notes due 2030	496,264		—
$1,000,000, 2.700% senior notes due 2031	992,160		—
$500,000, 5.125% senior notes due 2034	494,226		—
$500,000, 4.250% senior notes due 2045	495,486		—
$500,000, 4.300% senior notes due 2047	493,687		—
Nonrecourse debt	63,987		—
Total fixed-rate debt	4,781,978		—

Variable-Rate Debt:
Multi-currency revolving credit facility due 2028	—		2,400,000
Receivables securitization facility due 2026	350,000		1,100,000
Revolving credit note	—		75,000
Money market facility	—		100,000
Alliance Healthcare debt	18,859		334,685
Nonrecourse debt	98,621		—
Total variable-rate debt	467,480		4,009,685
Total debt	$	5,249,458	$	4,009,685

We have a $2.4 billion multi-currency senior unsecured revolving credit facility ("Multi-Currency Revolving Credit Facility") with a syndicate of lenders, which is scheduled to expire in October 2028. Interest on borrowings under the Multi-Currency Revolving Credit Facility accrues at specified rates based on our debt rating. We also pay facility fees to maintain the availability under the Multi-Currency Revolving Credit Facility at specified rates based on our debt rating. We may choose to repay or reduce our commitments under the Multi-Currency Revolving Credit Facility at any time. The Multi-Currency Revolving Credit Facility contains covenants, including compliance with a financial leverage ratio test, as well as others that impose limitations on, among other things, indebtedness of subsidiaries and asset sales, with which we were compliant as of March 31, 2024.

We have a commercial paper program whereby we may from time to time issue short-term promissory notes in an aggregate amount of up to $2.4 billion at any one time. Amounts available under the program may be borrowed, repaid, and re-borrowed from time to time. The maturities on the notes will vary, but may not exceed 365 days from the date of issuance. The notes will bear interest, if interest bearing, or will be sold at a discount from their face amounts. The commercial paper program does not increase our borrowing capacity as it is fully backed by our Multi-Currency Revolving Credit Facility. There were no borrowings outstanding under our commercial paper program as of March 31, 2024.

We have a $1,450 million receivables securitization facility ("Receivables Securitization Facility"), which was scheduled to expire in October 2025. In April 2024, we amended the Receivables Securitization Facility to extend the expiration to October 2026. We have available to us an accordion feature whereby the commitment on the Receivables Securitization Facility may be increased by up to $250 million, subject to lender approval, for seasonal needs during the December and March quarters. Interest rates are based on prevailing market rates for short-term commercial paper or 30-day Term SOFR plus a program fee. We pay a customary unused fee at prevailing market rates, annually, to maintain the availability under the Receivables Securitization Facility. The Receivables Securitization Facility contains similar covenants to the Multi-Currency Revolving Credit Facility, with which we were compliant as of March 31, 2024.

We had an uncommitted, unsecured line of credit available to us pursuant to a revolving credit note that was terminated in April 2024. We also had a £10 million uncommitted U.K. overdraft facility, which expired in February 2024, to fund short-term normal trading cycle fluctuations related to our MWI Animal Health business. We have an uncommitted, unsecured line of credit available to us pursuant to a money market credit agreement ("Money Market Facility"). The Money Market Facility provides us with the ability to request short-term unsecured revolving credit loans from time to time in a

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principal amount not to exceed $100 million. The Money Market Facility may be decreased or terminated by the bank or us at any time without prior notice.

In February 2024, we issued $500 million of 5.125% senior notes due in February 2034 (the "2034 Notes"). The 2034 Notes were sold at 99.867% of the principal amount with an effective yield of 5.132%. Interest on the 2034 Notes is payable semi-annually in arrears on February 15 and August 15 beginning on August 15, 2024. We will use the proceeds from the 2034 Notes to repay the $500 million of 3.400% senior notes that is due in May 2024.

Alliance Healthcare debt is comprised of uncommitted revolving credit facilities in various currencies with various rates. All of the outstanding borrowings were held in Turkey as of March 31, 2024. These facilities are used to fund its working capital needs.

Nonrecourse debt is comprised of short-term and long-term debt belonging to the Brazil subsidiary and is repaid solely from the Brazil subsidiary' cash flows and such debt agreements provide that the repayment of the loans (and interest thereon) is secured solely by the capital stock, physical assets, contracts, and cash flows of the Brazil subsidiary.

Share Purchase Programs and Dividends

In March 2023, our Board of Directors authorized a share repurchase program allowing us to purchase up to $1.0 billion of our outstanding shares of common stock, subject to market conditions. During the six months ended March 31, 2024, we purchased $436.4 million of our common stock, including $300.0 million from Walgreens Boots Alliance, Inc. As of March 31, 2024, we had $2,372.6 million of availability under this program.

In March 2024, our Board of Directors authorized a new share repurchase program allowing us to purchase up to $2.0 billion of our outstanding shares of common stock, subject to market conditions. No shares of common stock were purchased under this program as of March 31, 2024.

In November 2023, our Board of Directors increased the quarterly dividend paid on common stock by 5% from $0.485 per share to $0.51 per share. We anticipate that we will continue to pay quarterly cash dividends in the future. However, the payment and amount of future dividends remains within the discretion of our Board of Directors and will depend upon future earnings, financial condition, capital requirements, and other factors.

Commitments and Obligations

As discussed and defined in Note 10 of the Notes to Consolidated Financial Statements, on July 21, 2021, it was announced that we and the two other national pharmaceutical distributors had negotiated a Distributor Settlement Agreement. The Distributor Settlement Agreement became effective on April 2, 2022, and as of March 31, 2024, it included 48 of 49 eligible states (the “Settling States”) as well as 99% by population of the eligible political subdivisions in the Settling States. Our remaining estimated liability related to the Distributor Settlement Agreement, the State of Alabama (pursuant to an agreement) and other opioid-related litigation for which we have reached settlement agreements is approximately $5.1 billion on our Consolidated Balance Sheet as of March 31, 2024 and is expected to be paid over the next 14 years. The payment of the aforementioned litigation liability has not and is not expected to have an impact on our ability to pay dividends.

The following is a summary of our contractual obligations for future principal and interest payments on our debt, minimum rental payments on our noncancellable operating leases, and minimum payments on our other commitments as of March 31, 2024:


Payments Due by Period (in thousands)	Debt, Including Interest Payments		Operating Leases		Other Commitments		Total
Within 1 year	$	1,268,261	$	229,613	$	143,767	$	1,641,641
1-3 years	734,043		405,771		169,964		1,309,778
4-5 years	1,035,136		311,614		67,598		1,414,348
After 5 years	3,951,625		474,828		—		4,426,453
Total	$	6,989,065	$	1,421,826	$	381,329	$	8,792,220

The 2017 Tax Act requires a one-time transition tax to be recognized on historical foreign earnings and profits. As of March 31, 2024, we expect to pay a remaining $104.2 million, net of overpayments and tax credits, related to the transition tax over the next two years. The transition tax commitment is included in "Other Commitments" in the above table.

Our liability for uncertain tax positions was $574.2 million (including interest and penalties) as of March 31, 2024. This liability represents an estimate of tax positions that we have taken in our tax returns which may ultimately not be sustained upon examination by taxing authorities. Since the amount and timing of any future cash settlements cannot be predicted with reasonable certainty, the estimated liability has been excluded from the above contractual obligations table. Our liability for

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uncertain tax positions as of March 31, 2024 primarily includes an uncertain tax benefit related to the legal accrual for litigation in connection with the distribution of prescription opioid pain medications, as disclosed in Note 10 of the Notes to Consolidated Financial Statements.

Market Risks

We have exposure to foreign currency and exchange rate risk from our non-U.S. operations. Our largest exposure to foreign exchange rates exists primarily with the U.K. Pound Sterling, the Euro, the Turkish Lira, the Brazilian Real, and the Canadian Dollar. We use forward contracts to hedge against the foreign currency exchange rate impact on certain intercompany receivable and payable balances. We may use derivative instruments to hedge our foreign currency exposure, but not for speculative or trading purposes. Revenue from our foreign operations during the six months ended March 31, 2024 was approximately 10% of our consolidated revenue.

We have market risk exposure to interest rate fluctuations relating to our debt. We manage interest rate risk by using a combination of fixed-rate and variable-rate debt. The amount of variable-rate debt fluctuates during the year based on our working capital requirements. We had $467.5 million of variable-rate debt outstanding as of March 31, 2024. We periodically evaluate financial instruments to manage our exposure to fixed and variable interest rates. However, there are no assurances that such instruments will be available in the combinations we want and/or on terms acceptable to us. There were no such financial instruments in effect as of March 31, 2024.

We also have market risk exposure to interest rate fluctuations relating to our cash and cash equivalents. We had $2,068.9 million in cash and cash equivalents as of March 31, 2024. The unfavorable impact of a hypothetical decrease in interest rates on cash and cash equivalents would be partially offset by the favorable impact of such a decrease on variable-rate debt. For every $100 million of cash invested that is in excess of variable-rate debt, a 10-basis point decrease in interest rates would increase our annual net interest expense by $0.1 million.

Deterioration of general economic conditions, among other factors, could adversely affect the number of prescriptions that are filled and the amount of pharmaceutical products purchased by consumers and, therefore, could reduce purchases by our customers. In addition, volatility in financial markets may also negatively impact our customers' ability to obtain credit to finance their businesses on acceptable terms. Reduced purchases by our customers or changes in the ability of our customers to remit payments to us could adversely affect our revenue growth, our profitability, and our cash flow from operations.

Recent elevated levels of inflation in the global and U.S. economies have impacted certain operating expenses. If elevated levels of inflation persist or increase, our operations and financial results could be adversely affected, particularly in certain global markets.

We have risks from other geopolitical trends and events, such as the ongoing conflicts in Ukraine and between Israel and Hamas. Although the long-term implications of these conflicts are difficult to predict at this time, the financial impact of these conflicts has not been material.

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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

The Company’s most significant market risks are the effects of foreign currency risk, changing interest rates, and changes in the price and volatility of the Company’s common stock. See the discussion under the heading "Market Risks," which is incorporated by reference herein.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are intended to ensure that information required to be disclosed in the Company’s reports submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. These controls and procedures also are intended to ensure that information required to be disclosed in such reports is accumulated and communicated to management to allow timely decisions regarding required disclosures.

The Company’s Chief Executive Officer and Chief Financial Officer, with the participation of other members of the Company’s management, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a — 15(e) and 15d — 15(e) under the Exchange Act) and have concluded that the Company’s disclosure controls and procedures were effective for their intended purposes as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

During the second quarter of fiscal 2024, there was no change in Cencora, Inc.'s internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended March 31, 2024 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

See Note 10 (Legal Matters and Contingencies) of the Notes to Consolidated Financial Statements set forth under Item 1 of Part I of this report for the Company’s current description of legal proceedings.

ITEM 1A. Risk Factors

Our significant business risks are described in Item 1A to our Form 10-K for the fiscal year ended September 30, 2023 to which reference is made herein.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth the number of shares purchased, the average price paid per share, the total number of shares purchased as part of publicly announced programs, and the approximate dollar value of shares that may yet be purchased under the programs during each month in the second fiscal quarter ended March 31, 2024. See Note 7, "Stockholders' Equity and Earnings per Share," contained in "Notes to Condensed Consolidated Financial Statements" in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs
January 1 to January 31	86	$	210.33	—	$	423,491,280
February 1 to February 29	231,042	$	235.49	216,008	$	372,646,048
March 1 to March 31	1,087	$	237.25	—	$	2,372,646,048	1
Total	232,215			216,008

1 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 shares of common stock, subject to market conditions. However, this share repurchase program was not available to the Company until May 2024.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

During the quarter ended March 31, 2024, no director or officer adopted, modified or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule10b5-1 trading arrangement" as each term is defined in Section 408(a) of Regulation S-K under the Exchange Act.

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ITEM 6. Exhibits

(a) Exhibits:


Exhibit Number			Description

3.1			Amended and Restated Certificate of Incorporation of Cencora, Inc., effective March 14, 2024 (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed on March 15, 2024).
4.1			Twelfth Supplemental Indenture, dated February 7, 2024, by and between Cencora, Inc. and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association) (including Form of 5.125% Senior Notes due 2034) (incorporated by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed on February 7, 2024).
10.1			Share Repurchase Agreement, dated as of February 7, 2024, by and between Cencora, Inc. and Walgreens Boots Alliance Holdings LLC (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on February 9, 2024).
‡10.2			Amended and Restated Employment Agreement, dated as of March 12, 2024, between the Company and Robert P. Mauch (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K/A filed on March 15, 2024).
‡10.3			Employment, Transition, and Release Agreement, dated as of March 12, 2024, between the Company and Steven H. Collis (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K/A filed on March 15, 2024).
‡10.4			Form of Restricted Stock Unit Award to Executive (2024) under the Registrant's 2022 Omnibus Incentive Plan.

31.1			Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.

31.2			Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.

32			Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer.

101			Financial statements from the Quarterly Report on Form 10-Q of Cencora, Inc. for the quarter ended March 31, 2024, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Stockholders' Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements.

104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
‡			Each marked exhibit is a management contract or a compensatory plan, contract or arrangement in which a director or executive officer of the Registrant participates or has participated.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			CENCORA, INC.

May 1, 2024			/s/ Steven H. Collis
			Steven H. Collis
			Chairman, President & Chief Executive Officer

May 1, 2024			/s/ James F. Cleary
			James F. Cleary
			Executive Vice President & Chief Financial Officer