Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


						Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 0042)						46
Consolidated Financial Statements:
Consolidated Balance Sheets as of September 30, 202 4 and 202 3						49
Consolidated Statements of Operations for the fiscal years ended September 30, 202 4 , 202 3 , and 2022						50
Consolidated Statements of Comprehensive Income for the fiscal years ended September 30, 202 4 , 202 3 , and 20 22						51
Consolidated Statements of Changes in Stockholders' Equity for the fiscal years ended September 30, 202 4 , 202 3 , and 20 22						52
Consolidated Statements of Cash Flows for the fiscal years ended September 30, 202 4 , 202 3 , and 20 22						53
Notes to Consolidated Financial Statements						54

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Cencora, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Cencora, Inc. and subsidiaries (the Company) as of September 30, 2024 and 2023, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity and cash flows for each of the three years in the period ended September 30, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2024, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of September 30, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated November 26, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosure to which they relate.


			Legal Matters and Contingencies - Opioid Lawsuits and Investigations
Description of the Matter			As discussed in Note 13 of the consolidated financial statements, the Company is involved in a significant number of lawsuits and government investigations relating to the distribution of prescription opioid pain medications and other controlled substances ("opioid litigation and investigations"). The Company recognizes a liability for those legal contingencies for which it is probable that a liability has been incurred at the date of the consolidated financial statements and the amount is reasonably estimable. As discussed in Note 4, in connection with the recognized liabilities for settled opioid lawsuits, the Company recognizes a related income tax benefit, which reflects an unrecognized tax benefit resulting from uncertainty in the amount that is more likely than not to be deductible for U.S. federal and state income tax purposes. The Company used significant judgment in measuring the amount of income tax benefit that may ultimately be deductible for U.S. federal and state purposes.


			Auditing management’s determination of whether the risk of loss related to opioid litigation and investigations is probable and reasonably estimable, and the related disclosures is highly subjective and requires significant judgment. Auditing management’s judgments related to unsettled cases was challenging due to the significant judgment applied in determining the likelihood of resolution of matters through settlement or litigation and the magnitude of the liability. In addition, auditing management's estimate of the amount of income tax benefit related to the Company's uncertain tax positions is challenging because the evaluation of the technical merits of income tax benefits that qualify for a deduction related to the opioid litigation and investigations requires significant judgment.

How We Addressed the Matter in Our Audit			We tested the Company’s internal controls that address the risks of material misstatement related to the completeness and presentation and disclosure of the opioid litigation and investigations liability and related uncertain tax position. This included testing controls related to the Company’s process for identification, recognition, completeness, and disclosure of the opioid litigation and testing controls related to the Company’s process to assess the technical merits of its tax position, including the Company’s assessment as to the amount of benefit that is more likely than not to be realized upon ultimate settlement with taxing authorities. For example, we tested controls over management’s review of the assessment of the completeness of the opioid litigation and investigations liability and whether a range of possible loss in excess of the amount accrued is reasonably estimable to determine the accuracy of the opioid litigation and investigations liability and the related financial statement disclosures.

			To test the Company’s opioid litigation and investigations liability, our substantive audit procedures included, among others, testing the completeness of the contingencies subject to evaluation by the Company and evaluating the Company’s analysis of its assessment of the probability of outcome for each material legal contingency through inspection of responses to inquiry letters sent to both internal and external legal counsel, discussions with internal general counsel and external legal counsel to confirm our understanding of the allegations and any settlement discussions, inspection of proposed settlement agreements, and obtaining written representations from executives of the Company. We also compared the Company’s assessment with its relevant history of similar legal contingencies that have been settled or otherwise resolved to evaluate the consistency of the Company’s assessment for unsettled opioid litigation and investigations.

			For those legal contingencies for which the Company has determined that a loss is probable and reasonably estimable and is therefore required to be recognized, we evaluated the method of measuring the amounts of the recorded and disclosed contingencies. For those legal contingencies for which the Company has determined that a loss is reasonably possible, and is therefore required to be disclosed, we evaluated the methods for determining whether a range of loss can be estimated and the related disclosures. We assessed the Company’s estimate of the amount of the loss, for both contingencies that are probable and reasonably possible, through inspection of responses to inquiry letters sent to both internal and external legal counsel, discussions with internal general counsel and external legal counsel, inspection of proposed settlement agreements and obtaining written representations from executives of the Company. In addition, we evaluated the adequacy of the Company’s financial statement disclosures.

			To test the uncertain tax position, we involved our tax subject matter professionals in assessing the technical merits and measurement of the Company’s tax positions related to the opioid litigation and investigation liability. We examined the Company’s analyses and evaluated the underlying facts upon which the tax positions were based. We used our knowledge of historical settlement activity in similar matters involving legal settlements to evaluate the Company’s measurement of the uncertain tax position associated with the opioid litigation and investigations. We also evaluated the adequacy of the Company’s financial statement disclosures and obtained written representations from executives of the Company related to this income tax matter.


			Goodwill Impairment Evaluation of the PharmaLex Reporting Unit
Description of the Matter			At September 30, 2024, the Company’s consolidated goodwill balance was $9,318 million. As discussed in Note 2 to the consolidated financial statements, the Company’s goodwill is tested for impairment at least annually, or whenever events or circumstances indicate that the value of goodwill may be impaired. If goodwill is determined to be impaired, an impairment loss is measured at the amount by which the reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill. The Company performed a quantitative analysis of the PharmaLex reporting unit as of its annual goodwill impairment assessment date of July 1, 2024. Based on the Company’s assessment, the estimated fair value of the reporting unit was determined to be less than its carrying value. As a result, a pre-tax goodwill impairment charge of $418 million was recognized.

			Auditing the Company’s goodwill impairment assessment for the PharmaLex reporting unit was complex and highly judgmental due to the significant judgments and estimation required by management in determining the fair value of the reporting unit, which is based on assumptions about future market or economic conditions and company-specific qualitative factors whose outcome is uncertain and will therefore be subject to change over time. In particular, the fair value estimate of the reporting unit involves the use of significant unobservable inputs and is sensitive to changes in significant assumptions, such as the revenue growth rate, discount rate and earnings before interest, taxes, depreciation and amortization ("EBITDA") margin.

How We Addressed the Matter in Our Audit			We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s annual goodwill impairment assessment process, which included the PharmaLex reporting unit. For example, we tested controls over management’s review of the fair value of the PharmaLex reporting unit including review of the valuation model, the significant assumptions described above, and the completeness and accuracy of the data used in the valuation.

			To test the estimated fair value of the PharmaLex reporting unit, we performed audit procedures that included, among others, assessing the methodologies used to develop the estimated fair value, testing the significant assumptions discussed above, and evaluating the completeness and accuracy of the underlying data used by the Company in its analyses. We compared the significant assumptions used by the Company to forecasted industry and economic trends and peer company information. We performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting unit that would result from changes in the assumptions. We also involved valuation specialists to assist in our evaluation of the overall methodologies and significant assumptions used in the fair value estimate, including performing a comparative calculation of the discount rate.


/s/ Ernst & Young LLP

We have served as the Company's auditor since 1985.

Philadelphia, Pennsylvania

November 26, 2024

CENCORA, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	September 30,
(in thousands, except share and per share data)	2024		2023
ASSETS
Current assets:
Cash and cash equivalents	$	3,132,648	$	2,592,051
Accounts receivable, less allowances for returns and credit losses: 2024 — $1,308,018; 2023 — $1,433,396	23,871,815		20,911,081
Inventories	18,998,833		17,454,768
Right to recover assets	1,175,871		1,314,857
Income tax receivable	88,229		77,120
Prepaid expenses and other	450,417		448,949
Total current assets	47,717,813		42,798,826

Property and equipment, net	2,181,410		2,135,171
Goodwill	9,318,027		9,574,117
Other intangible assets	4,001,046		4,431,783
Deferred income taxes	246,348		200,667
Other assets	3,637,023		3,418,182

TOTAL ASSETS	$	67,101,667	$	62,558,746

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable	$	50,942,162	$	45,836,037
Accrued expenses and other	2,758,560		2,353,817
Short-term debt	576,331		641,344
Total current liabilities	54,277,053		48,831,198

Long-term debt	3,811,745		4,146,113
Accrued income taxes	291,796		310,676
Deferred income taxes	1,643,746		1,657,944
Accrued litigation liability	4,296,902		5,061,795
Other liabilities	1,993,683		1,884,733
Commitments and contingencies (Note 13)

Stockholders' equity:
Common stock, $0.01 par value — authorized, issued, and outstanding: 2024 — 600,000,000 shares, 296,169,781 shares and 194,943,968 shares; 2023 — 600,000,000 shares, 294,822,962 shares and 200,814,804 shares	2,962		2,948
Additional paid-in capital	6,030,790		5,844,578
Retained earnings	5,417,139		4,324,187
Accumulated other comprehensive loss	(989,118)		(1,402,607)
Treasury stock, at cost: 2024 — 101,225,813 shares; 2023 — 94,008,158 shares	(9,815,835)		(8,247,103)
Total Cencora, Inc. stockholders' equity	645,938		522,003
Noncontrolling interest	140,804		144,284
Total stockholders' equity	786,742		666,287

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	67,101,667	$	62,558,746

See notes to consolidated financial statements.

CENCORA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS


	Fiscal Year Ended September 30,
(in thousands, except per share data)	2024		2023		2022
Revenue	$	293,958,599	$	262,173,411	$	238,587,006
Cost of goods sold	284,048,570		253,213,918		230,290,639
Gross profit	9,910,029		8,959,493		8,296,367
Operating expenses:
Distribution, selling, and administrative	5,661,106		5,309,984		4,848,962
Depreciation	428,500		410,341		386,595
Amortization	663,474		553,563		307,300
Litigation and opioid-related expenses (credit), net	227,070		(24,693)		123,191
Acquisition-related deal and integration expenses	103,001		139,683		119,561
Restructuring and other expenses	233,629		229,884		63,498
Goodwill impairment	418,000		—		75,936
Asset impairment	—		—		4,946
Operating income	2,175,249		2,340,731		2,366,378
Other loss (income), net	14,283		(49,036)		(27,352)
Interest expense, net	156,991		228,931		210,673
Income before income taxes	2,003,975		2,160,836		2,183,057
Income tax expense	484,702		428,260		516,517
Net income	1,519,273		1,732,576		1,666,540
Net (income) loss attributable to noncontrolling interests	(10,153)		12,717		32,280
Net income attributable to Cencora, Inc.	$	1,509,120	$	1,745,293	$	1,698,820

Earnings per share:
Basic	$	7.60	$	8.62	$	8.15
Diluted	$	7.53	$	8.53	$	8.04

Weighted average common shares outstanding:
Basic	198,503		202,511		208,472
Diluted	200,284		204,591		211,210

See notes to consolidated financial statements.

CENCORA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Fiscal Year Ended September 30,
(in thousands)	2024		2023		2022
Net income	$	1,519,273	$	1,732,576	$	1,666,540
Other comprehensive income (loss):
Foreign currency translation adjustments	405,099		353,439		(1,426,741)
Other, net	(272)		33,395		4,910
Total other comprehensive income (loss)	404,827		386,834		(1,421,831)
Total comprehensive income	1,924,100		2,119,410		244,709
Comprehensive (income) loss attributable to noncontrolling interests	(1,491)		54,246		68,583
Comprehensive income attributable to Cencora, Inc.	$	1,922,609	$	2,173,656	$	313,292

See notes to consolidated financial statements.

CENCORA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY


(in thousands, except per share data)	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Non-controlling Interests		Total
September 30, 2021	$	2,907	$	5,465,104	$	1,670,513	$	(445,442)	$	(6,469,728)	$	361,057	$	584,411
Net income (loss)	—		—		1,698,820		—		—		(32,280)		1,666,540
Other comprehensive loss	—		—		—		(1,385,528)		—		(36,303)		(1,421,831)
Cash dividends, $1.84 per share	—		—		(391,687)		—		—		—		(391,687)
Exercises of stock options	10		93,902		—		—		—		—		93,912
Share-based compensation expense	—		93,400		—		—		—		—		93,400
Purchases of common stock	—		—		—		—		(512,091)		—		(512,091)
Employee tax withholdings related to restricted share vesting	—		—		—		—		(38,076)		—		(38,076)
Divestiture of business	—		—		—		—		—		(3,544)		(3,544)
Other, net	10		6,327		—		—		—		(6,098)		239
September 30, 2022	2,927		5,658,733		2,977,646		(1,830,970)		(7,019,895)		282,832		71,273
Net income (loss)	—		—		1,745,293		—		—		(12,717)		1,732,576
Other comprehensive income (loss)	—		—		—		428,363		—		(41,529)		386,834
Cash dividends, $1.94 per share	—		—		(398,752)		—		—		—		(398,752)
Exercises of stock options	8		61,144		—		—		—		—		61,152
Share-based compensation expense	—		124,624		—		—		—		—		124,624
Purchases of common stock	—		—		—		—		(1,155,929)		—		(1,155,929)
Employee tax withholdings related to restricted share vesting	—		—		—		—		(71,279)		—		(71,279)
Divestiture of business	—		—		—		—		—		(76,957)		(76,957)
Other, net	13		77		—		—		—		(7,345)		(7,255)
September 30, 2023	2,948		5,844,578		4,324,187		(1,402,607)		(8,247,103)		144,284		666,287
Net income	—		—		1,509,120		—		—		10,153		1,519,273
Other comprehensive income (loss)	—		—		—		413,489		—		(8,662)		404,827
Cash dividends, $2.04 per share	—		—		(416,168)		—		—		—		(416,168)
Exercises of stock options	4		37,836		—		—		—		—		37,840
Share-based compensation expense	—		147,998		—		—		—		—		147,998
Purchases of common stock	—		—		—		—		(1,505,232)		—		(1,505,232)
Employee tax withholdings related to restricted share vesting	—		—		—		—		(63,500)		—		(63,500)
Other, net	10		378		—		—		—		(4,971)		(4,583)
September 30, 2024	$	2,962	$	6,030,790	$	5,417,139	$	(989,118)	$	(9,815,835)	$	140,804	$	786,742

See notes to consolidated financial statements.

CENCORA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOW


	Fiscal Year Ended September 30,
(in thousands)	2024		2023		2022
OPERATING ACTIVITIES
Net income	$	1,519,273	$	1,732,576	$	1,666,540
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, including amounts charged to cost of goods sold	448,200		418,830		390,643
Amortization, including amounts charged to interest expense	670,642		562,018		319,192
Provision for credit losses	40,834		54,389		26,053
(Benefit) provision for deferred income taxes	(102,324)		(118,864)		196,184
Share-based compensation expense	147,998		124,624		93,400
LIFO (credit) expense	(52,168)		204,595		67,171
Impairment of assets, including goodwill	418,000		—		80,882
Gain on divestiture of businesses	—		(40,665)		(56,228)
Turkey highly inflationary impact	55,309		95,938		51,966
Loss (gain) on remeasurement of equity investments	16,201		(242)		(4,834)
Other, net	24,032		3,593		11,781
Changes in operating assets and liabilities, excluding the effects of acquisitions and divestitures:
Accounts receivable	(2,784,339)		(2,711,786)		(1,659,525)
Inventories	(1,479,599)		(2,183,368)		(665,370)
Income tax receivable	(11,109)		102,201		49,307
Prepaid expenses and other assets	167,781		109,041		102,708
Accounts payable	4,968,093		6,103,451		3,320,725
Accrued expenses	148,533		51,112		(457,233)
Income taxes payable and other liabilities	(204,517)		(196,146)		(330,079)
Long-term accrued litigation liability	(506,155)		(399,963)		(500,195)
NET CASH PROVIDED BY OPERATING ACTIVITIES	3,484,685		3,911,334		2,703,088
INVESTING ACTIVITIES
Capital expenditures	(487,173)		(458,359)		(496,318)
Cost of acquired companies, net of cash acquired	(69,771)		(1,409,835)		(133,814)
Cost of equity investments	(30,430)		(743,275)		(18,491)
Non-customer note receivable	(50,000)		—		—
Proceeds from divestiture of businesses	—		—		272,586
Other, net	19,278		9,004		7,600
NET CASH USED IN INVESTING ACTIVITIES	(618,096)		(2,602,465)		(368,437)
FINANCING ACTIVITIES
Senior notes and other loan borrowings	688,321		157,547		155,189
Senior notes and other loan repayments	(662,525)		(811,353)		(1,238,954)
Borrowings under revolving and securitization credit facilities	69,703,045		78,218,439		4,832,605
Repayments under revolving and securitization credit facilities	(70,114,293)		(78,187,891)		(4,671,943)
Purchases of common stock	(1,491,367)		(1,180,728)		(483,704)
Exercises of stock options	37,840		61,152		93,912
Cash dividends on common stock	(416,168)		(398,752)		(391,687)
Employee tax withholdings related to restricted share vesting	(63,500)		(71,279)		(38,076)
Other, net	(12,347)		(9,413)		(10,122)
NET CASH USED IN FINANCING ACTIVITIES	(2,330,994)		(2,222,278)		(1,752,780)
EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	9,396		72,759		(57,850)
INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, INCLUDING CASH CLASSIFIED WITHIN ASSETS HELD FOR SALE	544,991		(840,650)		524,021
LESS: INCREASE IN CASH CLASSIFIED WITHIN ASSETS HELD FOR SALE	—		—		(610)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	544,991		(840,650)		523,411
Cash, cash equivalents, and restricted cash at beginning of year	2,752,889		3,593,539		3,070,128
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF YEAR	$	3,297,880	$	2,752,889	$	3,593,539

See notes to consolidated financial statements.

CENCORA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

Note 1. Summary of Significant Accounting Policies

Cencora, Inc. and its subsidiaries, including a less-than-wholly-owned subsidiary in which Cencora, Inc. has a controlling financial interest (the "Company"), is one of the largest global pharmaceutical sourcing and distribution services companies, helping both healthcare providers and pharmaceutical and biotech manufacturers improve patient access to products and enhance patient care. The Company delivers innovative programs and services designed to improve the effectiveness and efficiency of the pharmaceutical supply chain in both human and animal health.

Basis of Presentation

The accompanying financial statements present the consolidated financial position, results of operations, and cash flows of the Company as of the dates and for the periods indicated. All significant intercompany accounts and transactions have been eliminated in consolidation.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("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 due to uncertainties inherent in such estimates. Management periodically evaluates estimates used in the preparation of the financial statements for continued reasonableness.

Recently Adopted Accounting Pronouncements

As of September 30, 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.

Business Combinations

The assets acquired and liabilities assumed from an acquired business are recorded at estimated fair value, with the residual of the purchase price recorded as goodwill. The results of operations of an acquired businesses are included in the Company's operating results from the date of acquisition.

Cash, Cash Equivalents, and Restricted Cash

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The carrying value of cash equivalents approximates fair value.

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, including opioid-related legal settlements.

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


	September 30,
(amounts in thousands)	2024		2023		2022		2021
Cash and cash equivalents	$	3,132,648	$	2,592,051	$	3,388,189	$	2,547,142
Restricted cash (included in Prepaid Expenses and Other)	98,596		97,722		144,980		462,986
Restricted cash (included in Other Assets)	66,636		63,116		60,370		60,000
Cash, cash equivalents, and restricted cash	$	3,297,880	$	2,752,889	$	3,593,539	$	3,070,128

Concentrations of Credit Risk and Allowance for Credit Losses

The Company has sales to a significant number of customers in the healthcare industry that include institutional and retail healthcare providers. Institutional healthcare providers include acute care hospitals, health systems, mail order pharmacies, long-term care and other alternate care pharmacies and providers of pharmacy services to such facilities, and physician offices. Retail healthcare providers include national and regional retail drugstore chains, independent community pharmacies, pharmacy departments of supermarkets and mass merchandisers, and veterinarians. The financial condition of the Company's customers can be affected by changes in government reimbursement policies as well as by other economic pressures in the healthcare industry.

The Company's trade accounts receivables are exposed to credit risk. Revenue from the various agreements and arrangements with the Company's largest customer in fiscal 2024, Walgreens Boots Alliance, Inc. ("WBA"), accounted for approximately 26% of revenue and represented approximately 37% of accounts receivable, net of incentives, as of September 30, 2024. Evernorth Health Services (formerly Express Scripts, Inc.), the Company's second largest customer in fiscal 2024, accounted for approximately 13% of revenue and represented approximately 5% of accounts receivable as of September 30, 2024. The Company generally does not require collateral for trade receivables. The Company evaluates its receivables for risk of loss by grouping its receivables with similar risk characteristics. Expected losses are determined based on a combination of historical loss trends, current economic conditions, and forward-looking risk factors. Changes in these factors, among others, may lead to adjustments in the Company's allowance for credit losses. The calculation of the required allowance requires judgment by Company management as to the impact of those and other factors on the ultimate realization of its trade receivables. The Company performs ongoing credit evaluations of its customers' financial condition and maintains reserves for expected credit losses for specific credit problems when they arise. There were no significant changes to this process during fiscal 2024, 2023, and 2022, and bad debt expense was computed in a consistent manner during these periods.

The Company maintains cash, cash equivalents, and restricted cash with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. These deposits may be redeemed upon demand and are maintained with financial institutions with reputable credit and, therefore, bear minimal credit risk. The Company seeks to mitigate such risks by monitoring the risk profiles of these counterparties. The Company also seeks to mitigate risk by monitoring the investment strategy of money market accounts in which it is invested, which are classified as cash equivalents.

Contingencies

Loss 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 liability when it is both probable that a loss has been incurred and the amount can be reasonably estimated. The Company also performs an assessment of the materiality of loss contingencies where a loss is either not probable or it is reasonably possible that a loss could be incurred in excess of amounts accrued. If a loss or an additional loss has at least a reasonable possibility of occurring and the impact on the financial statements would be material, the Company provides disclosure of the loss contingency in the notes to its financial statements. The Company reviews all contingencies at least quarterly to determine whether the likelihood of loss has changed and to assess whether a reasonable estimate of the loss or the range of the loss can be made. Among the loss contingencies that the Company considered in accordance with the foregoing in connection with the preparation of the accompanying financial statements were the opioid matters described in Note 13.

Gain Contingencies: The Company records gain contingencies when they are realized. Gains from antitrust litigation settlements are realized upon the receipt of cash and recorded as a reduction to cost of goods sold because they represent a

recovery of amounts historically paid to manufacturers to originally acquire the pharmaceuticals that were the subject of the antitrust litigation settlements (see Note 14).

Derivative Financial Instruments

The Company utilizes derivative financial instruments to manage exposures to foreign currency. The Company records all derivative financial instruments on the balance sheet at fair value and complies with established criteria for designation and effectiveness of hedging relationships. The Company's policy prohibits it from entering into derivative financial instruments for speculative or trading purposes.

Foreign Currency

When the functional currency of the Company's foreign operations is the applicable local currency, assets and liabilities are translated into U.S. dollars using the current exchange rates in effect at the balance sheet date, while revenues and expenses are translated at the weighted average exchange rates for the period. The resulting asset and liability translation adjustments are recorded as a component of Accumulated Other Comprehensive Loss within Stockholders' Equity.

During the quarter ended March 31, 2022, Turkey became a highly inflationary economy, as defined under U.S. GAAP. As a result, effective April 1, 2022, and until such time as the applicable economy is no longer considered highly inflationary, Turkish Lira-denominated assets and liabilities are remeasured using the Company's reporting currency in accordance with ASC 830, "Foreign Currency Matters." Turkish Lira denominated monetary assets and liabilities (primarily cash, accounts receivables, and accounts payables) are remeasured at each balance sheet date using the currency exchange rate then in effect, with currency remeasurement gains and losses recognized in Other Income in the Statement of Operations. Turkish Lira-denominated nonmonetary assets and liabilities (primarily inventories, goodwill, and other intangible assets) are translated at the currency exchange rate in effect prior to highly inflation accounting commencement or at the exchange rate in effect at their date of acquisition if subsequent to April 1, 2022. As such, nonmonetary assets and liabilities retain a higher historical basis when currencies are devalued. This higher historical basis results in incremental expense being recognized when nonmonetary assets are consumed (i.e., sale of inventory). During fiscal 2024, 2023, and 2022, the Company recorded incremental expenses of $54.1 million, $87.0 million, and $40.0 million, respectively, in Cost of Goods Sold related to the consumption of inventory and expenses of $1.2 million, $9.0 million, and $11.9 million, respectively, within Other Loss (Income), Net related to the currency remeasurement of monetary assets and liabilities.

Goodwill and Other Intangible Assets

Goodwill arises from acquisitions or consolidations of specific operating companies and is assigned to the reporting unit in which a particular operating company resides. The Company identifies its reporting units based upon the Company's management reporting structure, beginning with its operating segments. The Company aggregates two or more components within an operating segment that have similar economic characteristics. The Company evaluates whether the components within its operating segments have similar economic characteristics, which include the similarity of long-term gross margins, the nature of the components' products, services, and production processes, the types of customers and the methods by which products or services are delivered to customers, and the components' regulatory environment. As of September 30, 2024, the Company’s reporting units include U.S. Pharmaceutical Distribution Services, U.S. Consulting Services, MWI Animal Health, Alliance Healthcare, Innomar, World Courier, PharmaLex, and Profarma.

Goodwill and other intangible assets with indefinite lives, such as certain trademarks and trade names, are not amortized; rather, they are tested for impairment at least annually. For the purpose of these impairment tests, the Company can elect to perform a qualitative assessment to determine if it is more likely than not that the fair values of its reporting units and indefinite-lived intangible assets are less than the respective carrying values of those reporting units and indefinite-lived intangible assets, respectively. Such qualitative factors can include, among others, industry and market conditions, overall financial performance, and relevant entity-specific events. If the Company concludes based on its qualitative assessment that it is more likely than not that the fair value of a reporting unit is less than its carrying value, it performs a quantitative analysis. The Company elected to perform quantitative impairment assessments of goodwill for all its reporting units in fiscal 2024, 2023, and 2022 with the exception of its PharmaLex reporting unit in fiscal 2023 since it was acquired in fiscal 2023. The Company elected to perform qualitative impairment assessments of indefinite-lived intangible assets in fiscal 2024 and fiscal 2023 and a quantitative impairment assessment of indefinite-lived intangible assets in fiscal 2022.

The quantitative goodwill impairment test requires the Company to compare the carrying value of the reporting unit's net assets to the fair value of the reporting unit. If the fair value exceeds the carrying value, no further evaluation is required, and no impairment loss is recognized. If the carrying amount exceeds the fair value, the difference between the carrying value and the fair value is recorded as an impairment loss, the amount of which may not exceed the total amount of goodwill allocated to the reporting unit.

When performing a quantitative impairment assessment, the Company utilizes an income approach or a weighted average of an income and market approach to value its reporting units. The income approach relies on a discounted cash flow analysis, which considers forecasted cash flows discounted at an appropriate discount rate, to determine the fair value of each reporting unit. The Company generally believes that market participants would use a discounted cash flow analysis to determine the fair value of the Company's reporting units in a sale transaction. The annual goodwill impairment test requires the Company to make several assumptions and estimates concerning future levels of revenue growth, earnings before interest, taxes, depreciation and amortization ("EBITDA"), EBITDA margins, capital expenditures, and working capital requirements, which are based upon the Company's long-range plan. The discount rate is an estimate of the overall after-tax rate of return required by a market participant whose weighted average cost of capital includes both debt and equity, including a risk premium. While the Company uses the best available information to prepare its forecasted cash flows and discount rate assumptions, actual future cash flows and/or market conditions could differ significantly resulting in future impairment charges related to recorded goodwill balances. While there are always changes in assumptions to reflect changing business and market conditions, the Company's overall methodology and the population of assumptions used have remained unchanged.

The quantitative impairment assessment for indefinite-lived intangibles other than goodwill (certain trademarks and trade names) consists of a comparison of the fair value of the indefinite-lived intangible asset to the carrying value of the asset as of the impairment testing date. The Company estimates the fair value of its indefinite-lived intangibles using the relief from royalty method, which is a widely used valuation technique for such assets. The fair value derived from the relief from royalty method is measured as the discounted cash flow savings realized from owning such indefinite-lived trademarks and trade names and not having to pay a royalty for their use.

The Company completed its required annual impairment assessments relating to goodwill and indefinite-lived intangible assets in fiscal 2024, 2023, and 2022 and, as a result, recorded a $418.0 million goodwill impairment in its PharmaLex reporting unit in fiscal 2024 (see Note 5) and a $75.9 million goodwill impairment in its Profarma reporting unit in fiscal 2022. No goodwill impairments were recorded in fiscal 2023 and no indefinite-lived intangible asset impairments were recorded in fiscal 2024, 2023, or 2022.

Finite-lived intangible assets are amortized using the straight-line method over the estimated useful lives of the assets. The Company performs a recoverability assessment of its long-lived assets when impairment indicators are present. The Company performed a recoverability assessment of PharmaLex’s long-lived asset group as of July 1, 2024, and it was determined to be recoverable.

Income Taxes

The Company accounts for income taxes using a method that requires recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between tax bases and financial reporting bases of the Company's assets and liabilities (commonly known as the asset and liability method). In assessing the need to establish a valuation allowance on deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, including settlements with tax authorities or resolutions of any related appeals or litigation processes, based upon the technical merits of the position. Tax benefits associated with uncertain tax positions that have met the recognition criteria are measured and recorded based upon the highest probable outcome that is more than 50% likely to be realized after full disclosure and resolution of a tax examination.

Inventories

Inventories are stated at the lower of cost or market. Cost for approximately 65% and 66% of the Company's inventories as of September 30, 2024 and 2023, respectively, has been determined using the last-in, first-out ("LIFO") method. If the Company had used the first-in, first-out method of inventory valuation, which approximates current replacement cost, inventories would have been approximately $1,535.8 million and $1,588.0 million higher than the amounts reported as of September 30, 2024 and 2023, respectively. The Company recorded a LIFO credit of $52.2 million in fiscal 2024 and LIFO expense of $204.6 million and $67.2 million in fiscal 2023 and 2022, respectively. The annual LIFO provision is affected by manufacturer pricing practices, which may be impacted by market and other external influences, changes in inventory quantities, and product mix, many of which are difficult to predict. Changes to any of the above factors can have a material impact to the Company's annual LIFO provision. Cost for the Company's inventory that is not determined using the LIFO method is stated at the lower of cost or market using the first-in, first-out method or moving average price method.

Investments

The Company first evaluates its investments in accordance with the variable interest model to determine whether it has a controlling financial interest in an investment. This evaluation is made as of the date on which the Company makes its initial investment, and subsequent evaluations are made if the structure of the investment changes. If it has determined that an investment is a variable interest entity ("VIE"), the Company evaluates whether the VIE is required to be consolidated. When the Company holds rights that give it the power to direct the activities of an entity that most significantly impact the entity's economic performance, combined with the obligation to absorb an entity's losses and the right to receive benefits, the Company consolidates a VIE. If it is determined that an investment is not a VIE, the Company then evaluates its investments under the voting interest model and generally consolidates investments in which it holds an ownership interest of greater than 50%. When the Company consolidates less-than-wholly-owned subsidiaries, it records its noncontrolling interest in its consolidated financial statements.

For equity securities without a readily determinable fair value, the Company uses the fair value measurement alternative and measures the securities at cost less impairment, if any, including adjustments for observable price changes in orderly transactions for an identical or similar investment of the same issuer. For investments in which the Company can exercise significant influence but does not control, it uses the equity method of accounting. The Company's share of earnings and losses of its investments is recorded in Other Income in the Consolidated Statements of Operations. The Company monitors its investments for impairment by considering factors such as the operating performance of the investment and current economic and market conditions.

Leases

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the facts and circumstances present. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. At the lease commencement date, operating and finance lease liabilities and their corresponding right-of-use ("ROU") assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable and, as such, the Company uses its incremental borrowing rate to discount the lease liabilities, which is the rate incurred to borrow on a collateralized basis over a similar term in a similar economic environment. Certain adjustments to the ROU asset may be required for items such as incentives received. The Company does not recognize on the balance sheet leases with terms of one year or less.

The Company has operating leases that are primarily comprised of buildings, office equipment, distribution center equipment, and vehicles. Some of the Company's leases include options to extend or early terminate the lease, which are included in the lease term when it is reasonably certain to exercise and there is a significant economic incentive to exercise that option. Certain lease agreements contain provisions for future rent increases. Lease payments included in the measurement of the lease liability comprise fixed payments. The Company combines lease and non-lease components as a single component. Operating lease cost is recognized over the expected lease term on a straight-line basis and is recorded in Distribution, Selling, and Administrative in the Company's Consolidated Statements of Operations. Variable lease payments, which are primarily comprised of maintenance, taxes, and other payments based on usage, are recognized when the expense is incurred. The Company's leases do not contain residual value guarantees.

Manufacturer Incentives

The Company considers fees and other incentives received from its suppliers relating to the purchase and distribution of inventory to represent product discounts, and, as a result, they are recognized within cost of goods sold upon the sale of the related inventory.

Property and Equipment

Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets, which range from 3 to 40 years for buildings and improvements and from 3 to 10 years for machinery, equipment, and other. The costs of repairs and maintenance are charged to expense as incurred.

The Company capitalizes project costs relating to computer software developed or obtained for internal use when the activities related to the project reach the application development stage. Costs that are associated with preliminary stage activities, training, maintenance, and all other post-implementation stage activities are expensed as they are incurred. Software development costs are depreciated using the straight-line method over the estimated useful lives, which range from 3 to 10 years.

The following table summarizes the Company's property and equipment balances for the periods indicated:


	September 30,
(in thousands)	2024		2023
Property and equipment, at cost:
Land	$	117,128	$	116,465
Buildings and improvements	893,694		836,175
Machinery, equipment, and other	4,204,268		3,786,449
Total property and equipment	5,215,090		4,739,089
Less accumulated depreciation	(3,033,680)		(2,603,918)
Property and equipment, net	$	2,181,410	$	2,135,171

Revenue Recognition

The Company's revenues are primarily generated from the distribution of pharmaceutical products. The Company also generates revenues from global commercialization services, which include clinical trial support, post-approval and commercialization support, and global specialty transportation and logistics for the biopharmaceutical industry. See Note 15 for the Company's disaggregated revenue.

The Company recognizes revenue related to the distribution of products at a point in time when title and control transfers to customers and there is no further obligation to provide services related to such products. Service revenue is recognized over the period that services are provided to the customer. The Company is generally the principal in a transaction; therefore, revenue is primarily recorded on a gross basis. When the Company is the principal in a transaction, it has determined that it controls the ability to direct the use of the product or service prior to the transfer to a customer, it is primarily responsible for fulfilling the promise to provide the product or service to its customer, it has discretion in establishing pricing, and it controls the relationship with the customer. Revenue is recognized at the amount of consideration expected to be received. For the distribution business, revenue is primarily generated from a contract related to a confirmed purchase order with a customer in a distribution arrangement and is net of estimated sales returns and allowances, other customer incentives, and sales tax.

When the Company is the agent in a transaction, the fee received from a manufacturer customer is recognized within revenue as the service is performed.

The Company's customer sales return policy generally allows customers to return products only if the products can be resold at full value or returned to suppliers for full credit. The Company records an accrual for estimated customer sales returns at the time of sale to the customer based upon historical return trends. As of September 30, 2024 and 2023, the Company's accrual for estimated customer sales returns was $1,175.9 million and $1,314.9 million, respectively.

Share-Based Compensation

The Company accounts for the compensation cost of all share-based payments at fair value. The fair value of restricted stock units and performance stock units is based upon the grant date market price of the Company’s common stock.

Share-based compensation expense is recognized over the requisite service period within Distribution, Selling, and Administrative in the Consolidated Statements of Operations to correspond with the same line item as the cash compensation paid to employees. Compensation expense associated with nonvested performance stock units is dependent upon the Company's periodic assessment of the probability of the targets being achieved and its estimate of the number of shares that will ultimately be issued.

The income tax effects of awards are recognized when the awards vest or are settled and are recognized in Income Tax Expense in the Company’s Consolidated Statements of Operations.

Shipping and Handling Costs

Shipping and handling costs include all costs to warehouse, pick, pack, and deliver inventory to customers. These costs, which were $1,265.7 million, $1,200.0 million, and $1,040.8 million for fiscal 2024, 2023, and 2022, respectively, are included in Distribution, Selling, and Administrative in the Company's Consolidated Statements of Operations.

Supplier Reserves

The Company establishes reserves against amounts due from its suppliers relating to various price and rebate incentives, including deductions or billings taken against payments otherwise due to them from the Company. These reserve estimates are established based upon the judgment of Company management after carefully considering the status of current outstanding claims, historical experience with the suppliers, the specific incentive programs, and any other pertinent information available to the Company. The Company evaluates the amounts due from its suppliers on a continual basis and adjusts the reserve estimates when appropriate based upon changes in factual circumstances. The ultimate outcome of any outstanding claim may be different than the Company's estimate.

Note 2. Acquisition and Equity Method Investment

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 current 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.

Investment in OneOncology

In June 2023, the Company and TPG, a global alternative asset management firm, acquired OneOncology, LLC ("OneOncology"), a network of leading oncology practices. Including all direct transaction costs, the Company invested $718.4 million (representing 34.9%) in a joint venture formed to acquire OneOncology for approximately $2.1 billion, and TPG acquired the majority interest in the joint venture. The Company accounts for its interest in the joint venture as an equity method investment, which is included in Other Assets on its Consolidated Balance Sheet.

Beginning on the third anniversary of the closing of the joint venture's acquisition of OneOncology and ending on the day before the fourth anniversary of that closing, TPG will have a put option under which TPG may require the Company to purchase all of the other interests in the joint venture, including TPG's interest, at a price equal to 19 times OneOncology's adjusted earnings before interest, taxes, depreciation and amortization for the most recently ended 12-month period prior to TPG’s exercise of the put option, all of which is subject to various other adjustments and qualifications. In addition, on the date that is the third anniversary of the closing and again beginning on the fourth anniversary of the closing and ending on the day before the fifth anniversary of the closing, the Company will have a call option to purchase all of the other interests in the joint venture, including TPG's, also at the price set forth above. The fair value of the net put option, which is a Level 3 measurement, was determined using a Monte Carlo simulation, which relies on assumptions, including cash flow projections, risk-free rates, volatility, and details specific to the put and call options. The Company recorded the net fair value of the net put option of $872.9 million, which is recorded within Other Liabilities with a corresponding offset in Other Assets in the Company's

Consolidated Balance Sheets. Given the Company has elected to not mark the net put option to market, the fair value of the net put option at the time of the investment will remain on the balance sheet until its final resolution.

Upon the joint venture's acquisition of OneOncology, it was determined that there was a $625.2 million difference between the carrying value of the Company's investment in OneOncology and its underlying equity in net assets, which has been allocated to intangible assets of $305.6 million, a related deferred tax liability of $20.5 million, and goodwill of $340.0 million. The intangible assets and related deferred tax liability are being amortized over a weighted-average life of 23 years.

Note 3. Variable Interest Entity

The Company has substantial governance rights that 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 Sheet for the periods indicated:


	September 30,
(in thousands)	2024		2023
Cash and cash equivalents	$	58,082	$	33,256
Accounts receivables, net	236,930		253,419
Inventories	259,299		255,801
Prepaid expenses and other	68,612		63,327
Property and equipment, net	49,869		42,759
Other intangible assets	58,116		62,384
Other long-term assets	83,765		77,889
Total assets	$	814,673	$	788,835

Accounts payable	$	307,201	$	300,875
Accrued expenses and other	56,597		56,280
Short-term debt	76,308		73,650
Long-term debt	91,246		74,132
Deferred income taxes	19,227		22,701
Other long-term liabilities	61,690		54,691
Total liabilities	$	612,269	$	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

Income Before Income Taxes

The following table summarizes the Company's income before income taxes for the periods indicated:


	Fiscal Year Ended September 30,
(in thousands)	2024		2023		2022
Domestic	$	1,288,983	$	1,418,457	$	1,351,696
Foreign	714,992		742,379		831,361
Total	$	2,003,975	$	2,160,836	$	2,183,057

Income Tax Expense

The components of the Company's consolidated income tax expense are summarized in the following table for the periods indicated:


	Fiscal Year Ended September 30,
(in thousands)	2024		2023		2022
Current provision:
Federal	$	309,380	$	259,126	$	126,969
State and local	80,040		42,933		39,282
Foreign	197,606		245,065		154,082
Total current provision	587,026		547,124		320,333
Deferred (benefit) provision:
Federal	(17,934)		(15,600)		150,328
State and local	1,392		19,445		31,129
Foreign	(85,782)		(122,709)		14,727
Total deferred (benefit) provision	(102,324)		(118,864)		196,184
Income tax expense	$	484,702	$	428,260	$	516,517

Tax Rate Reconciliation

A reconciliation of the statutory U.S. federal income tax rate to the Company's consolidated effective income tax rate is as follows for the periods indicated:


	Fiscal Year Ended September 30,
	2024	2023	2022
Statutory U.S. federal income tax rate	21.0%	21.0%	21.0%
State and local income tax rate, net of federal tax benefit	3.0	2.3	2.5
Tax effect of foreign operations	(2.9)	(2.4)	(1.9)
Goodwill impairment	4.9	—	0.7
Change in valuation allowance	(4.2)	0.1	0.6
Other, net	2.4	(1.2)	0.8
Effective income tax rate	24.2%	19.8%	23.7%

Deferred Tax Liabilities and Assets

Deferred income taxes reflect the future tax consequences of differences between the tax bases of assets and liabilities and their financial reporting amounts. Significant components of the Company's deferred tax liabilities (assets) are as follows:


	September 30,
(in thousands)	2024		2023
Inventories	$	1,537,057	$	1,475,467
Property and equipment	103,959		145,308
Goodwill and other intangible assets	1,143,962		1,242,466
Right-of-use assets	285,434		255,221
Other	31,416		51,490
Gross deferred tax liabilities	3,101,828		3,169,952

Net operating loss and tax credit carryforwards	(530,024)		(532,851)
Allowance for credit losses	(18,949)		(18,221)
Accrued expenses	(9,419)		(18,108)
Accrued litigation liability	(855,962)		(909,256)
Employee and retiree benefits	(26,960)		(22,927)
Goodwill and other intangible assets	(401,822)		(425,898)
Lease liabilities	(312,357)		(280,550)
Share-based compensation	(23,161)		(23,087)
Other	(128,136)		(119,180)
Gross deferred tax assets	(2,306,790)		(2,350,078)
Valuation allowance for deferred tax assets	602,361		637,403
Deferred tax assets, net of valuation allowance	(1,704,429)		(1,712,675)
Net deferred tax liabilities	$	1,397,399	$	1,457,277

As of September 30, 2024, the Company had $106.3 million of potential tax benefits from state net operating loss carryforwards and $443.1 million of potential tax benefits from foreign loss carryforwards, which have varying expiration dates. The Company had $4.7 million of federal tax credit carryforwards, $4.6 million of state tax credit carryforwards, and $3.1 million of foreign alternative minimum tax credit carryforwards.

The Company assesses the available positive and negative evidence to determine whether deferred tax assets are more likely than not to be realized. As a result of this assessment, valuation allowances have been recorded on certain deferred tax assets. For fiscal 2024, the Company decreased the valuation allowance on deferred tax assets by $35.0 million primarily due to the change in the valuation allowance against tax deductible goodwill. For fiscal 2023, the Company increased the valuation allowance on deferred tax assets by $20.1 million primarily due to the increase in the valuation allowance against foreign net operating loss carryforwards.

In fiscal 2024, 2023, and 2022, tax benefits of $15.0 million, $24.6 million, and $13.4 million, respectively, related to the exercise of employee stock options and lapses of restricted stock units were recorded in Income Tax Expense in the Company's Consolidated Statements of Operations. The tax benefits recognized in fiscal 2024, 2023, and 2022 are not necessarily indicative of amounts that may arise in future periods.

Income tax payments, net of refunds, were $603.9 million, $463.1 million, and $244.4 million in fiscal 2024, 2023, and 2022, respectively.

Cumulative undistributed earnings of international subsidiaries were $3.9 billion as of September 30, 2024, $2.1 billion of which is considered permanently reinvested. It is not practicable to estimate the taxes that would be due if such earnings were to be repatriated in the future.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. The Company is currently undergoing certain state and local income tax audits for various years. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or foreign income tax examinations by tax authorities for years before 2020. The Company believes it has adequate tax reserves to cover potential federal, state or foreign tax exposures.

Unrecognized Tax Benefits

As of September 30, 2024 and 2023, 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 $545.0 million and $551.9 million, respectively ($498.0 million and $482.7 million, net of federal tax benefit, respectively). If recognized in fiscal 2024 and 2023, $488.1 million and $464.4 million, respectively, of these benefits would have reduced income tax expense and the effective tax rate. As of September 30, 2024 and 2023, included in the unrecognized tax benefits are $43.9 million and $25.9 million of interest and penalties, respectively, which the Company records in Income Tax Expense in the Company's Consolidated Statements of Operations.

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, for the periods indicated is as follows:


	Fiscal Year Ended September 30,
(in thousands)	2024		2023		2022
Unrecognized tax benefits at beginning of period	$	525,933	$	526,522	$	500,399
Additions of tax positions of the current year	13,636		22,646		21,074
Additions to tax positions of the prior years	—		11,875		5,073
Reductions of tax positions of the prior years	(37,520)		(31,110)		—
Settlements and expiration of statutes of limitations	(2,410)		(3,457)		(24)
Effects of foreign currency translation	1,425		(543)		—
Unrecognized tax benefits at end of period	$	501,064	$	525,933	$	526,522

During the next 12 months, it is reasonably possible that tax audit resolutions and the expiration of statutes of limitations could result in a reduction of unrecognized tax benefits by approximately $13.5 million.

A significant portion of the Company's unrecognized tax benefits as of September 30, 2024 relates to the legal accrual for litigation related to the Distributor Settlement Agreement, as well as other opioid-related litigation, as disclosed in Note 13. The Company has applied significant judgment in estimating the amount of the opioid settlements that will be deductible for U.S. federal and state purposes. In estimating the amount that would be deductible, the Company considered prior U.S. tax case law, the amount and character of the damages sought in litigation, and other relevant factors.

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 fiscal 2024 and 2023:


(in thousands)	U.S. Healthcare Solutions		International Healthcare Solutions		Total
Goodwill as of September 30, 2022	$	6,280,240	$	2,223,646	$	8,503,886
Goodwill recognized in connection with acquisitions	—		1,026,440		1,026,440
Goodwill derecognized in connection with divestiture	—		(14,424)		(14,424)
Foreign currency translation	2,177		56,038		58,215
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 acquisitions	—		18,712		18,712
Goodwill impairment	—		(418,000)		(418,000)
Foreign currency translation	2,748		153,354		156,102
Goodwill as of September 30, 2024	$	6,285,165	$	3,032,862	$	9,318,027

The Company has experienced a weakening in demand for specialized services in the life sciences industry, which has negatively impacted the operating results of PharmaLex. In the fourth quarter of fiscal 2024 and in connection with the Company’s annual budgeting process, the Company revised PharmaLex’s long-range forecast. In connection with the Company's annual goodwill impairment assessment, it recorded a goodwill impairment of $418.0 million in the PharmaLex reporting unit. The fair value of the reporting unit was determined based on a weighted average of income and market approaches. The income approach includes the Company’s forecasted cash flows in its long-range plan as well as discount rate and income tax rate assumptions. This represents a Level 3 nonrecurring fair value measurement. The Company believes that its assumptions are representative of market participant assumptions; however, the forecasted cash flows used to estimate fair value and measure the related impairment are inherently uncertain and include assumptions that could differ from actual results in future periods.

The carrying values of goodwill as of September 30, 2024 and 2023 are net of the following accumulated impairments:


(in thousands)	U.S. Healthcare Solutions		International Healthcare Solutions
Accumulated impairment losses as of September 30, 2024	$	—	$	493,936
Accumulated impairment losses as of September 30, 2023	$	—	$	75,936

The Company performed a recoverability assessment of PharmaLex’s long-lived assets as of July 1, 2024 using its revised long-range forecast. The recoverability assessment compared PharmaLex’s undiscounted cash flows to the carrying value of the PharmaLex asset group, including goodwill, and it was determined to be recoverable.

The following is a summary of other intangible assets:


	September 30, 2024							September 30, 2023
(dollars 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 name		$	17,000	$	—	$	17,000	$	17,000	$	—	$	17,000
Finite-lived:
Customer relationships	13 years	5,090,864		(1,536,081)		3,554,783		4,845,091		(1,213,200)		3,631,891
Trade names and other	5 years	1,259,954		(830,691)		429,263		1,224,795		(441,903)		782,892
Total other intangible assets		$	6,367,818	$	(2,366,772)	$	4,001,046	$	6,086,886	$	(1,655,103)	$	4,431,783

Amortization expense for finite-lived intangible assets was $663.5 million, $553.6 million, and $307.3 million in fiscal 2024, 2023, and 2022, respectively. Amortization expense for finite-lived intangible assets is estimated to be $548.9 million in fiscal 2025, $372.4 million in fiscal 2026, $314.6 million in fiscal 2027, $302.8 million in fiscal 2028, $291.1 million in fiscal 2029, and $2,154.2 million thereafter.

Note 6. Debt

Debt consisted of the following:


	September 30,
(in thousands)	2024		2023
Multi-currency revolving credit facility due 2029	$	—	$	—
Receivables securitization facility due 2027	—		350,000
Money market facility	—		—
$500,000, 3.400% senior notes due 2024	—		499,677
$500,000, 3.250% senior notes due 2025	499,738		499,026
$750,000, 3.450% senior notes due 2027	747,308		746,464
$500,000, 2.800% senior notes due 2030	496,564		495,959
$1,000,000, 2.700% senior notes due 2031	992,718		991,600
$500,000, 5.125% senior notes due 2034	494,514		—
$500,000, 4.250% senior notes due 2045	495,574		495,378
$500,000, 4.300% senior notes due 2047	493,821		493,554
Alliance Healthcare debt	286		68,017
Nonrecourse debt	167,553		147,782
Total debt	4,388,076		4,787,457
Less current portion of senior notes	499,738		499,677
Less Alliance Healthcare current portion	286		68,017
Less nonrecourse current portion	76,307		73,650
Total, net of current portion	$	3,811,745	$	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 was scheduled to expire in October 2028. In October 2024, the Company amended and restated the Multi-Currency Revolving Credit Facility to extend the expiration to October 2029. Interest on borrowings under the Multi-Currency Revolving Credit Facility accrues at specified rates based upon the Company's debt rating. The Company 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 September 30, 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 September 30, 2024 and 2023.

Receivables Securitization Facility

The Company has a $1,450 million receivables securitization facility ("Receivables Securitization Facility"), which was scheduled to expire in October 2026. In October 2024, the Company amended the Receivables Securitization Facility to extend the expiration to October 2027. 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, monthly, 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 September 30, 2024.

In connection with the Receivables Securitization Facility, AmerisourceBergen Drug Corporation and a specialty distribution subsidiary sell on a revolving basis certain accounts receivable to Amerisource Receivables Financial Corporation, a wholly-owned special purpose entity, which in turn sells a percentage ownership interest in the receivables to financial institutions and commercial paper conduits sponsored by financial institutions. AmerisourceBergen Drug Corporation is the servicer of the accounts receivable under the Receivables Securitization Facility. As sold receivables are collected, additional receivables may be sold up to the maximum amount available under the facility. The Company uses the facility as a financing vehicle because it generally offers an attractive interest rate relative to other financing sources. The Company securitizes its trade accounts, which are generally non-interest bearing, in transactions that are accounted for as borrowings. The Receivables Securitization Facility contains similar covenants to the Multi-Currency Revolving Credit Facility, with which the Company was compliant as of September 30, 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 fiscal 2022, the Company elected to repay $850 million of its senior notes that were due in March 2023. In fiscal 2023, the remaining balance of $675 million of these senior notes matured and was repaid.

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 Company used the proceeds from the 2034 Notes to repay the $500 million of 3.400% senior notes that matured in May 2024.

The senior notes discussed above and also illustrated in the above debt table are collectively referred to as the "Notes." Interest on the Notes is payable semiannually in arrears. Most of the Notes were sold at small discounts to the principal amounts and, therefore, have effective yields that are greater than the stated interest rates in the table above. Costs incurred in connection with the issuance of the Notes were deferred and are being amortized over the terms of the Notes. The indentures governing the Notes contain restrictions and covenants, which include limitations on additional indebtedness; distributions to stockholders; the repurchase of stock and the making of other restricted payments; issuance of preferred stock; creation of certain liens; transactions with subsidiaries and other affiliates; and certain corporate acts such as mergers, consolidations, and the sale of substantially all assets. An additional covenant requires compliance with a financial leverage ratio test. The Company was compliant with all covenants as of September 30, 2024.

Alliance Healthcare Debt

Alliance Healthcare debt is comprised of uncommitted revolving credit facilities in various currencies with various rates. 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 subsidiaries and is repaid solely from the Brazil subsidiaries' 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 subsidiaries.

Other Information

Scheduled future principal payments of debt are $566.9 million in fiscal 2025, $34.8 million in fiscal 2026, $24.5 million in fiscal 2027, $767.1 million in fiscal 2028, $7.6 million in fiscal 2029, and $3,007.8 million thereafter.

Interest paid on the above indebtedness during fiscal 2024, 2023, and 2022 was $250.1 million, $271.3 million, and $219.8 million, respectively.

Total amortization of financing fees and the accretion of original issue discounts, which are recorded as components of Interest Expense, Net on the Consolidated Statements of Operations, were $7.2 million, $8.5 million, and $11.9 million, for fiscal 2024, 2023, and 2022, respectively.

Note 7. Stockholders' Equity and Weighted Average Common Shares Outstanding

The authorized capital stock of the Company consists of 600,000,000 shares of common stock, par value $0.01 per share (the "common stock"), and 10,000,000 shares of preferred stock, par value $0.01 per share (the "preferred stock").

The holders of the Company's common stock are entitled to one vote per share and have the exclusive right to vote for the Board of Directors and for all other purposes as provided by law. Subject to the rights of holders of the Company's preferred stock, holders of common stock are entitled to receive ratably on a per share basis such dividends and other distributions in cash, stock, or property of the Company as may be declared by the Board of Directors from time to time out of the legally available assets or funds of the Company.

The following illustrates the components of Accumulated Other Comprehensive Loss, net of income taxes:


	September 30,
(in thousands)	2024		2023
Foreign currency translation	$	(988,484)	$	(1,402,245)
Other, net	(634)		(362)
Total accumulated other comprehensive loss	$	(989,118)	$	(1,402,607)

The decrease in total accumulated other comprehensive loss from foreign currency translation primarily relates to the translation of Alliance Healthcare's goodwill and intangible assets balances.

In May 2020, the Company's Board of Directors authorized a share repurchase program allowing the Company to purchase up to $500 million of its outstanding shares of common stock, subject to market conditions. During fiscal 2022, the Company purchased 3.3 million shares of its common stock for $473.4 million to complete its authorization under this program.

In May 2022, 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. During fiscal 2022, the Company purchased 0.3 million shares of its common stock for $38.7 million, which included $28.4 million of September 2022 purchases that cash settled in October 2022. During fiscal 2023, the Company purchased 6.0 million shares of its common stock for $961.3 million, including 5.5 million shares from WBA for $882.5 million, to complete its authorization under this program.

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. During fiscal 2023, the Company purchased 1.0 million shares of its common stock for $191.0 million, including 0.9 million shares from WBA for $167.5 million. During fiscal 2024, the Company purchased 3.9 million shares of its common stock for $809.0 million, including 2.5 million shares from WBA for $522.6 million, to complete its authorization 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 common stock, subject to market conditions. During fiscal 2024, the Company purchased 3.0 million shares of its common stock for $682.3 million, including 1.9 million shares from WBA for $427.4 million. As of September 30, 2024, the Company had $1,317.7 million availability under this program. From October 1, 2024 through November 22, 2024, the Company purchased 1.7 million shares of its common stock for a total of $385.4 million.

Common Shares Outstanding

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 stock options and restricted stock units during the periods presented.

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


	Fiscal Year Ended September 30,
(in thousands)	2024	2023	2022
Weighted average common shares outstanding - basic	198,503	202,511	208,472
Effect of dilutive securities - stock options and restricted stock units	1,781	2,080	2,738
Weighted average common shares outstanding - diluted	200,284	204,591	211,210

The potentially dilutive stock options and restricted stock units that were antidilutive were 85 thousand, 94 thousand, and 101 thousand for fiscal 2024, 2023 and 2022, 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 $76.5 billion, $68.7 billion, and $64.1 billion in fiscal 2024, 2023, and 2022, respectively. The Company's receivable from WBA, net of incentives, was $9.0 billion and $8.1 billion as of September 30, 2024 and 2023, respectively.

Note 9. Retirement and Other Benefit Plans

The Company sponsors various retirement benefit plans and a deferred compensation plan covering eligible employees.

The Compensation and Succession Planning Committee ("Compensation Committee") of the Company's Board of Directors has delegated the administration of the Company's retirement and other benefit plans to its Benefits Committee, an internal committee, comprised of senior finance, human resources, and legal executives. The Benefits Committee is responsible for the investment options under the Company's savings plans, as well as performance of the investment advisers and plan administrators.

Retirement Benefit Plans

The Company sponsors the Cencora, Inc. Employee Investment Plan (the "Plan"), which is a defined contribution 401(k) plan covering salaried and certain hourly employees. Eligible participants may contribute to the plan from 1% to 50% of their regular compensation before taxes. The Company contributes $1.00 for each $1.00 invested by the participant up to the first 3% of the participant's salary and $0.50 for each additional $1.00 invested by the participant of up to an additional 2% of salary. An additional discretionary contribution, in an amount not to exceed the limits established by the Internal Revenue Code ("IRC"), may also be made depending upon the Company's performance. Based on the Company's performance in fiscal 2024, 2023, and 2022, the Company recognized expenses for discretionary contributions to the Plan in fiscal 2024, 2023, and 2022. All contributions are invested at the direction of the employee in one or more funds. All company matching contributions vest immediately except for the discretionary contributions made by the Company, which vest in full after five years of credited service.

The Company's international businesses sponsor various country-specific retirement plans.

Costs of above retirement benefit plans charged to expense for fiscal 2024, 2023, and 2022 were $99.8 million, $89.4 million, and $90.1 million, respectively.

Deferred Compensation Plan

The Company sponsors the Cencora, Inc. Deferred Compensation Plan. This unfunded plan allows eligible officers, directors and key management employees to defer a portion of their annual compensation and provides for a benefit restoration feature to selected key management. The benefit restoration feature provides certain eligible participants, including the Company’s executive officers, with an annual amount equal to 4% of the participant’s total cash compensation to the extent that an employee’s compensation exceeds the annual compensation limit established by Section 401(a) (17) of the IRC. Prior to fiscal 2024, account balances associated with the benefit restoration feature were included in a separate account at the Company's plan administrator. In fiscal 2024, the benefit restoration account balances were combined with the Cencora, Inc. Deferred Compensation Plan. The Company's liability relating to its deferred compensation plan, including the benefit restoration feature, as of September 30, 2024 and 2023 was $57.9 million and $46.5 million, respectively.

Note 10. Share-Based Compensation

The Company's stockholders approved the AmerisourceBergen Corporation 2022 Omnibus Incentive Plan (the "2022 Plan"). As of September 30, 2024, there were 20.1 million shares available to be granted for employee and non-employee director stock restricted stock units, performance stock units, and stock options under the 2022 Plan.

Restricted Stock Units

The majority of restricted stock units granted vest ratably over a three-year period. The estimated fair value of restricted stock units under the Company's restricted stock unit plans is determined by the product of the number of shares granted and the closing grant date market price of the Company's common stock. The estimated fair value of restricted stock units is expensed on a straight-line basis over the requisite service period, net of estimated forfeitures. During fiscal 2024, 2023, and 2022, the Company recognized restricted stock unit expense of $98.9 million, $84.3 million, and $71.3 million, respectively.

A summary of the status of the Company's nonvested restricted stock units as of September 30, 2024 and changes during fiscal 2024 are presented below:


(in thousands, except grant date fair value)	Restricted Stock Units	Weighted Average Grant Date Fair Value
Nonvested as of September 30, 2023	1,295	$139
Granted	630	$201
Vested	(636)	$131
Forfeited	(81)	$165
Nonvested as of September 30, 2024	1,208	$173

During fiscal 2024, 2023, and 2022, the total fair values of restricted stock units vested were $83.2 million, $103.0 million, and $58.1 million, respectively. Expected future compensation expense relating to the 1.2 million restricted stock units outstanding as of September 30, 2024 is $84.6 million, which will be recognized over a weighted average period of 1.4 years.

Performance Stock Units

Performance stock units are granted to certain executive employees under the Plan and represent common stock potentially issuable in the future. Performance stock units vest at the end of a three-year performance period based upon achievement of specific performance goals. Based upon the extent to which the targets are achieved, vested shares may range from 0% to 230% of the target award amount. The fair value of performance stock units is determined by the grant date market price of the Company's common stock. Compensation expense associated with nonvested performance stock units is recognized over the requisite service period and is dependent on the Company's periodic assessment of the probability of the targets being achieved and its estimate of the number of shares that will ultimately be issued. During fiscal 2024, 2023, and 2022, the Company recognized performance stock expense of $48.7 million, $40.4 million, and $19.7 million, respectively.

A summary of the status of the Company's nonvested performance stock units as of September 30, 2024 and changes during fiscal 2024 is presented below (based upon target award amounts).


(in thousands, except grant date fair value)	Performance Stock Units	Weighted Average Grant Date Fair Value
Nonvested as of September 30, 2023	251	$142
Granted	137	$197
Vested	(126)	$126
Forfeited	(14)	$183
Nonvested as of September 30, 2024	248	$178

Shares that vested over the three-year performance period ended September 30, 2024 were distributed to employees in November 2024.

Stock Options

The Company has not granted any stock options since fiscal 2020, and it does not expect to grant any stock options in fiscal 2025.

In fiscal 2024, employees exercised 503 thousand stock options at a weighted average exercise price of $84 per stock option. There were 533 thousand stock options outstanding as of September 30, 2024, all of which are exercisable, with a weighted average exercise price of $87 per option. The weighted average remaining contractual term for outstanding stock options is 1.6 years as of September 30, 2024.

Note 11. Leases

The Company has long-term leases for facilities and equipment. In the normal course of business, leases are generally renewed or replaced by other leases. Certain leases include escalation clauses.

The following illustrates the components of lease cost for the periods presented:


	Fiscal Year Ended September 30,
(in thousands)	2024		2023		2022
Operating lease cost	$	245,415	$	234,567	$	220,935
Short-term lease cost	18,459		9,799		11,257
Variable lease cost	35,539		25,598		25,108
Total lease cost	$	299,413	$	269,964	$	257,300

The following summarizes balance sheet information related to operating leases:


	September 30,
(in thousands, except for lease term and discount rate)	2024		2023
Right of use assets
Other assets	$	1,141,622	$	1,019,368

Lease liabilities
Accrued expenses and other	$	204,767	$	182,462
Other long-term liabilities	1,029,978		924,247
Total lease liabilities	$	1,234,745	$	1,106,709

Weighted-average remaining lease term	7.34 years		7.85 years
Weighted-average discount rate	4.18%		4.66%

Other cash flow information related to operating leases is as follows:


	Fiscal Year Ended September 30,
(in thousands)	2024		2023		2022
Cash paid for amounts included in the measurement of lease liabilities
Operating lease cash payments	$	247,862	$	229,203	$	214,793

Right-of-use assets obtained in exchange for lease liabilities
New operating leases	$	305,882	$	271,096	$	179,214

Future minimum rental payments under noncancellable operating leases were as follows:


Payments Due by Fiscal Year (in thousands)	As of September 30, 2024
2025	$	248,556
2026	231,499
2027	206,003
2028	176,871
2029	156,543
Thereafter	460,097
Total future undiscounted lease payments	1,479,569
Less: Future payments for leases that have not yet commenced 1	(15,018)
Less: Imputed interest	(229,806)
Total lease liabilities	$	1,234,745

1 The Company has certain leases that it has executed of which it does not control the underlying assets; therefore, liabilities and ROU assets related to these leases were not recorded on the Company's Consolidated Balance Sheet as of September 30, 2024.

Note 12. Restructuring and Other Expenses

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


	Fiscal Year Ended September 30,
(in thousands)	2024		2023		2022
Restructuring and employee severance costs	$	69,968	$	105,220	$	35,316
Business transformation efforts	130,069		82,117		27,990
Other, net	33,592		42,547		192
Total restructuring and other expenses	$	233,629	$	229,884	$	63,498

Restructuring and employee severance costs in fiscal 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 fiscal 2023 primarily included expenses incurred in connection with workforce reductions in both of the Company's reportable segments. Restructuring and employee severance costs in fiscal 2022 included costs primarily related to the write down of assets with respect to the Company's office optimization plan and restructuring activities within certain businesses in the U.S. Healthcare Solutions reportable segment.

Business transformation efforts in fiscal 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. Business transformation efforts in fiscal 2022 primarily related to costs associated with reorganizing the Company to further align the organization to its customers' needs, including certain technology initiatives. The majority of these costs related to services provided by third-party consultants.

In March 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 the costs included in Other, net in fiscal 2024 related to this cybersecurity event.

In fiscal 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 the costs included in Other, net in fiscal 2023 related to this cybersecurity event.

Note 13. 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, data privacy and security, 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.

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, 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. The Distributor Settlement Agreement requires the Company to comply with certain requirements, including the establishment of a clearinghouse that will consolidate data from all three national pharmaceutical distributors. 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 also did not participate in the Distributor Settlement Agreement and was pursuing a case against the Company (and another national pharmaceutical distributor) in Alabama state court. 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, of which the Company's portion is 50%. On July 1, 2024, the Court entered a Final Consent Judgment and Dismissal with Prejudice pursuant to the terms of the settlement agreement. In Maryland, a trial commenced on September 16, 2024 in a case filed by the Mayor and City Council of Baltimore. On November 12, 2024,

the jury returned a verdict finding ABDC (and another national distributor) liable for public nuisance and assessing approximately $274 million total in compensatory damages, approximately $74 million of which was assessed against ABDC. A second phase of the trial is scheduled to commence on December 11, 2024 related to the City of Baltimore's request for an abatement remedy, which will proceed as a bench trial. While the judgment is not yet final, the Company is evaluating next steps, including a possible appeal. The $74 million is a component of the Company's $4.9 billion litigation liability as of September 30, 2024 as described below.

The MDL Court selected four cases filed by third-party payors to serve as additional litigation bellwethers. On May 31, 2024, the MDL Court severed and stayed these four cases against the Company and the two other national pharmaceutical distributors, pursuant to ongoing settlement discussions to resolve litigation filed by a putative class of third-party payors. On August 29, 2024, the Company and two other national pharmaceutical distributors entered into a proposed class action settlement agreement to resolve the opioid-related claims of a proposed settlement class of third-party payors. Pursuant to the agreement, the Company recorded a $93.0 million litigation expense accrual in Litigation and Opioid-Related Expenses (Credit), Net in its fiscal 2024 Consolidated Statement of Operations. On September 3, 2024, the MDL Court granted a motion for preliminary approval of the proposed class action settlement. Federal law imposes additional requirements before the class settlement can become final, including notice to class members, a time period for submission of any objections to the settlement or requests to be excluded from the settlement, and a fairness hearing, among other procedural steps, as described in the MDL Court’s September 3, 2024 order. The MDL Court has scheduled a fairness hearing for January 13, 2025.

On September 26, 2024, the Company and two other national pharmaceutical distributors entered into a proposed class action settlement agreement to resolve the opioid-related claims of a proposed settlement class of hospitals. The Company recorded a $120.9 million litigation expense accrual in Litigation and Opioid-Related Expenses (Credit), Net in its fiscal 2024 Consolidated Statement of Operations, representing the Company's expected share of the potential class action settlement. Pursuant to these settlement discussions, a case in Alabama that involved up to eight plaintiff hospitals, and that was scheduled to begin trial on July 8, 2024, has now been severed and stayed as to the Company. On October 30, 2024, the United States District Court for the District of New Mexico granted a motion for preliminary approval of the proposed class action settlement. Federal law imposes additional requirements before the class settlement can become final, including notice to class members, a time period for submission of any objections to the settlement or requests to be excluded from the settlement, and a fairness hearing, among other procedural steps, as described in the Court’s October 30, 2024 order. The Court has scheduled a fairness hearing for March 4, 2025.

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 Company’s accrued litigation liability related to the Distributor Settlement Agreement, including the State of Alabama and an estimate for 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 $4.9 billion as of September 30, 2024 and $5.5 billion as of September 30, 2023. The $4.9 billion liability will be paid over 14 years. The Company currently estimates that $630.2 million will be paid prior to September 30, 2025, which is recorded in Accrued Expenses and Other on the Company’s Consolidated Balance Sheet. The remaining long-term liability of $4.3 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.

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. On September 20, 2024, the Delaware Supreme Court affirmed the Court of Chancery’s judgment on the basis of and for the reasons stated in the Court of Chancery’s November 17, 2023 Memorandum Opinion and there is no further right of appeal.

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. ("MWI"), the Company’s animal health subsidiary, in connection with grand jury subpoenas to which MWI previously responded relating to compliance with state and federal regulatory requirements governing wholesale shipments of animal health products to customers. In October 2024, the Company reached an agreement in principle to resolve these claims. Pursuant to the agreement in principle, the Company recorded a $49.1 million litigation expense accrual in Litigation and Opioid-Related Expenses (Credit), Net in its fiscal 2024 Consolidated Statement of Operations. This liability was recorded in Accrued Expenses and Other on the Company's Consolidated Balance Sheet as of September 30, 2024.

Note 14. Litigation Settlements

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 a plaintiff in any of 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. During fiscal 2024, 2023, and 2022, the Company recognized gains relating to these lawsuits of $170.9 million, $239.1 million, and $1.8 million, 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 15. Business Segment Information

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

Prior to October 1, 2024, the chief operating decision maker ("CODM") of the Company was the Executive Vice President and Chief Operating Officer ("COO") of the Company, whose function is to allocate resources to, and assess the performance of, the Company's operating segments. Effective October 1, 2024, the COO was promoted to President & Chief Executive Officer of the Company and remains the CODM. The CODM does not review assets by operating segment for the purpose of assessing performance or allocating resources.

The U.S. Healthcare Solutions reportable segment distributes a comprehensive offering of brand-name, specialty brand-name and generic pharmaceuticals, over-the-counter healthcare products, home healthcare supplies and equipment, and related services to a wide variety of healthcare providers, including acute care hospitals and health systems, independent and chain retail pharmacies, mail order pharmacies, medical clinics, long-term care and alternate site pharmacies, and other customers. The U.S. Healthcare Solutions reportable segment also provides pharmaceutical distribution (including plasma and other blood products, injectable pharmaceuticals, vaccines, and other specialty pharmaceutical products) and additional services

to physicians who specialize in a variety of disease states, especially oncology, and to other healthcare providers, including hospitals and dialysis clinics. Additionally, the U.S. Healthcare Solutions reportable segment provides data analytics, outcomes research, and additional services for biotechnology and pharmaceutical manufacturers. The U.S. Healthcare Solutions reportable segment also provides pharmacy management, staffing and additional consulting services, and supply management software to a variety of retail and institutional healthcare providers. It also provides a full suite of integrated manufacturer services that ranges from clinical trial support to product post-approval and commercialization support. Additionally, it delivers packaging solutions to institutional and retail healthcare providers. Through its animal health business, the U.S. Healthcare Solutions reportable segment sells pharmaceuticals, vaccines, parasiticides, diagnostics, micro feed ingredients, and various other products to customers in both the companion animal and production animal markets. It also offers demand-creating sales force services to manufacturers.

The International Healthcare Solutions reportable segment consists of businesses that focus on international pharmaceutical wholesale and related service operations and global commercialization services. The International Healthcare Solutions reportable segment distributes pharmaceuticals, other healthcare products, and related services to healthcare providers, including pharmacies, doctors, health centers and hospitals primarily in Europe. It is a leading global specialty transportation and logistics provider for the biopharmaceutical industry. It also is a provider of specialized services, including regulatory affairs, development consulting and scientific affairs, pharmacovigilance, and quality management and compliance, for the life sciences industry. In Canada, the business drives innovative partnerships with manufacturers, providers, and pharmacies to improve product access and efficiency throughout the healthcare supply chain.

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


	Fiscal Year Ended September 30,
(in thousands)	2024		2023		2022
U.S. Healthcare Solutions
Human Health	$	259,973,909	$	229,716,669	$	207,284,444
Animal Health	5,365,518		5,042,549		4,815,758
Total U.S. Healthcare Solutions	265,339,427		234,759,218		212,100,202
International Healthcare Solutions
Alliance Healthcare	23,061,721		22,349,278		21,890,402
Other Healthcare Solutions	5,565,821		5,069,401		4,601,271
Total International Healthcare Solutions	28,627,542		27,418,679		26,491,673
Intersegment eliminations	(8,370)		(4,486)		(4,869)
Revenue	$	293,958,599	$	262,173,411	$	238,587,006

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


	Fiscal Year Ended September 30,
(in thousands)	2024		2023		2022
U.S. Healthcare Solutions	$	2,934,877	$	2,596,559	$	2,456,972
International Healthcare Solutions	713,379		692,562		706,458
Total segment operating income	$	3,648,256	$	3,289,121	$	3,163,430

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


	Fiscal Year Ended September 30,
(in thousands)	2024		2023		2022
Total segment operating income	$	3,648,256	$	3,289,121	$	3,163,430
Gains from antitrust litigation settlements	170,904		239,092		1,835
LIFO credit (expense)	52,168		(204,595)		(67,171)
Turkey highly inflationary impact	(54,087)		(86,967)		(40,033)
Acquisition-related intangibles amortization	(660,292)		(551,046)		(304,551)
Litigation and opioid-related (expenses) credit, net	(227,070)		24,693		(123,191)
Acquisition-related deal and integration expenses	(103,001)		(139,683)		(119,561)
Restructuring and other expenses	(233,629)		(229,884)		(63,498)
Goodwill impairment	(418,000)		—		(75,936)
Asset impairment	—		—		(4,946)
Operating income	2,175,249		2,340,731		2,366,378
Other loss (income), net	14,283		(49,036)		(27,352)
Interest expense, net	156,991		228,931		210,673
Income before income taxes	$	2,003,975	$	2,160,836	$	2,183,057

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

Litigation and opioid-related (expenses) credit, net in fiscal 2024 includes $263.1 million of litigation expense accruals (see Note 13), offset in part by 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 opioid settlement agreements.

Litigation and opioid-related (expenses) credit, net in fiscal 2023 includes the receipt of $83.4 million from the H.D. Smith opioid litigation indemnity escrow.

Included in other loss (income), net, the Company recognized net gains of $40.7 million and $56.2 million from the divestiture of non-core businesses in fiscal 2023 and 2022, respectively.

The following illustrates depreciation and amortization by reportable segment for the periods indicated:


	Fiscal Year Ended September 30,
(in thousands)	2024		2023		2022
U.S. Healthcare Solutions	$	298,683	$	292,814	$	274,554
International Healthcare Solutions	132,999		120,044		114,790
Acquisition-related intangibles amortization	660,292		551,046		304,551
Total depreciation and amortization	$	1,091,974	$	963,904	$	693,895

Depreciation and amortization related to property and equipment and intangible assets but excludes amortization of deferred financing costs and other debt-related items, which are included in interest expense, net.

The following illustrates capital expenditures by reportable segment for the periods indicated:


	Fiscal Year Ended September 30,
(in thousands)	2024		2023		2022
U.S. Healthcare Solutions	$	273,715	$	268,069	$	295,406
International Healthcare Solutions	213,458		190,290		200,912
Total capital expenditures	$	487,173	$	458,359	$	496,318

Note 16. Fair Value of Financial Instruments

The recorded amounts of the Company's cash and cash equivalents, accounts receivable, and accounts payable as of September 30, 2024 and 2023 approximate fair value based upon the relatively short-term nature of these financial instruments. Within Cash and Cash Equivalents, the Company had $1,190.0 million and $1,489.0 million of investments in money market accounts as of September 30, 2024 and 2023, respectively. 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 September 30, 2024 were $3,811.7 million and $3,588.0 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 17. Subsequent Events

Announced Acquisition

On November 5, 2024, the Company entered into an agreement to acquire Retina Consultants of America ("RCA"). Under the terms of the agreement, the Company will acquire RCA for cash based on an enterprise value of approximately $4.6 billion, subject to a customary working capital and net-debt adjustment. RCA’s affiliated practices, physicians, and management will rollover a portion of their equity in RCA. After giving effect to the rollover, a cash capitalization of RCA that the Company intends to make, and the payment of transaction fees and expenses, the Company’s expected cash outlay at closing would be approximately $4.3 billion. At closing, the Company expects to hold approximately 85% ownership in RCA. The agreement also provides for the potential payment of up to $500 million in aggregate contingent consideration in fiscal 2027 and fiscal 2028, subject to the successful completion of certain predefined business objectives. The Company expects to fund the transaction through a combination of cash on hand and new debt financing and has obtained $3.3 billion in bridge financing commitments in connection with the transaction. The transaction is subject to the satisfaction of closing conditions, including receipt of required regulatory approvals.

Dividend Increase

In November 2024, the Company's Board of Directors increased the quarterly dividend paid on common stock by 8% and declared a regular quarterly cash dividend of $0.55 per share, payable on November 29, 2024 to shareholders of record on November 15, 2024.

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