Obesity And Diabetes Drugs Demand Help Distributor Cencora Propel Revenue In Q3

Cencora Inc's COR, formerly AmerisourceBergen Corporation, Q4 FY23 adjusted EPS reached $2.86, up from $2.60 Y/Y, beating the consensus of $2.80.

In the fourth quarter, revenue was $68.9 billion, up 12.7% Y/Y, beating the consensus of $66.02 billion, primarily due to overall market growth primarily driven by unit volume growth, including increased sales of products labeled for diabetes and/or weight loss in the GLP-1 class and increased sales of specialty products to physician practices and health systems.

The increase reflects a 13% increase in revenue within U.S. Healthcare Solutions and a 9.5% increase in revenue within International Healthcare Solutions.

Adjusted gross profit was $2.4 billion, up 6.2% Y/Y, with the margin down 13 basis points to 3.71%.

Adjusted gross profit margin reached 3.34% in Q4, a decrease of 10 basis points from Q4 FY22. 

The decrease was due to the decline of U.S. Healthcare Solutions' gross profit margin as a result of increased sales of products labeled for diabetes and/or weight loss in the GLP-1 class, which have lower gross profit margins, and lower sales of government-owned COVID-19 treatments, which have higher gross profit margins.

Adjusted operating income margin was 1.16%, down 5 basis points compared to the prior year quarter.

Guidance: Cencora expects FY24 revenue growth of 7%-10% on a constant currency basis.

U.S. Healthcare Solutions revenue growth to be 7%-10%, with International Healthcare Solutions revenue growth of around 4%-8%.

The company sees FY24 adjusted EPS of $12.70-$13.00 compared to the consensus of $12.86.

Price Action: COR shares are down 2.73% at $192.35 on the last check Thursday.