Cencora 10-Q 2022-06-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED June 30, 2022

OR

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

FOR THE TRANSITION PERIOD FROM ___________ TO___________

Commission file number 1-16671

AMERISOURCEBERGEN CORPORATION

(Exact name of registrant as specified in its charter)

(610) 727-7000

(Registrant’s telephone number, including area code)

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

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

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

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

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

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

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

The number of shares of common stock of AmerisourceBergen Corporation outstanding as of July 31, 2022 was 207,258,092.

AMERISOURCEBERGEN CORPORATION

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

ITEM I. Financial Statements (Unaudited)

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

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Overview

The following discussion should be read in conjunction with the Consolidated Financial Statements and notes thereto contained herein and in conjunction with the financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021.

We are 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. We deliver innovative programs and services designed to increase the effectiveness and efficiency of the pharmaceutical supply chain in both human and animal health.

We are organized geographically based upon the products and services we provide to our customers. At the beginning of fiscal 2022, we re-aligned our reporting structure under two reportable segments: U.S. Healthcare Solutions and International Healthcare Solutions. U.S. Healthcare Solutions consists of the legacy Pharmaceutical Distribution Services reportable segment (excluding Profarma Distribuidora de Produtos Farmacêuticos S.A. ("Profarma")), MWI Animal Health ("MWI"), Xcenda, Lash Group, and ICS 3PL. International Healthcare Solutions consists of Alliance Healthcare, World Courier, Innomar, Profarma, and Profarma Specialty (until it was divested June 2022). Profarma had previously been included in the Pharmaceutical Distribution Services reportable segment. Our previously reported segment results have been revised to conform to our re-aligned reporting structure.

U.S. Healthcare Solutions Segment

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 MWI business, a leading animal health distribution company, 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. MWI also offers demand-creating sales force services to manufacturers.

International Healthcare Solutions Segment

The International Healthcare Solutions reportable segment consists of businesses that focus on international pharmaceutical wholesale and related service operations and global commercialization services. Alliance Healthcare supplies pharmaceuticals, other healthcare products, and related services to healthcare providers, including pharmacies, doctors, health centers and hospitals in 10 countries, primarily in Europe. World Courier, which operates in over 50 countries, is a leading global specialty transportation and logistics provider for the biopharmaceutical industry. The segment's Canadian business drives innovative partnerships with manufacturers, providers, and pharmacies to improve product access and efficiency throughout the healthcare supply chain.

Executive Summary

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

• Revenue increased by $6.7 billion, or 12.5%, from the prior year quarter and $22.3 billion, or 14.4%, from the prior year nine-month period primarily due to the June 2021 acquisition of Alliance Healthcare and growth across our businesses. The U.S. Healthcare Solutions segment grew its revenue by $3.0 billion, or 6.0%, from the prior year quarter and $7.2 billion, or 4.8%, from the prior nine-month period primarily due to overall market growth principally driven by unit volume growth and increased sales to specialty physician practices, offset in part by a decline in sales of COVID-19 treatments (primarily commercial treatments). Revenue in International Healthcare Solutions increased by $3.6 billion and $15.1 billion from the prior year quarter and nine-month period, respectively, primarily due to the June 2021 acquisition of Alliance Healthcare;

• Total gross profit increased by $127.2 million, or 6.7%, from the prior year quarter and $1,437.0 million, or 29.5%, from the prior year nine-month period. Gross profit was favorably impacted by increases of gross profit in International Healthcare Solutions of $337.5 million, or 84.4%, from the prior year quarter and $1,445.3 million, or 184.1%, from the prior year nine-month period and increases in U.S. Healthcare Solutions of $101.7 million, or 8.3%, from the prior year quarter and $287.8 million, or 7.6%, from the prior year nine-month period. Gross profit in International Healthcare Solutions increased from the prior year periods primarily due to the June 2021 acquisition of Alliance Healthcare. U.S. Healthcare Solutions' gross profit increased from the prior periods primarily due to overall revenue growth and fees earned relating to the distribution of government-owned COVID-19 treatments. The increases were offset in part by decreases in gains from antitrust litigation settlements, last-in, first-out ("LIFO") expense in comparison to a LIFO credit in the prior year quarter, a decrease in the LIFO credit from the prior year nine-month period, and the Turkey highly inflationary economy's unfavorable impact on the current year periods;

• Total operating expenses increased by $260.6 million, or 20.6%, compared to the prior year quarter and $1,317.4 million, or 42.8%, compared to the prior year nine-month period, primarily as a result of increases in distribution, selling, and administrative expenses and depreciation and amortization expense primarily due to the June 2021 acquisition of Alliance Healthcare, and a $75.9 million goodwill impairment of our Profarma reporting unit, offset in part by lower expense accruals related to opioid litigation settlements in the current year periods;

• Total segment operating income increased by $125.6 million, or 19.9%, from prior year quarter and $467.9 million, or 23.9%, from the prior year nine-month period primarily due to the June 2021 acquisition of Alliance Healthcare and 9.5% and 7.3% operating income growth in the U.S. Healthcare Solutions segment compared to the prior year quarter and nine-month period, respectively; and

• Our effective tax rates were 23.7% and 24.0% for the three and nine months ended June 30, 2022, respectively. Our effective tax rates were 48.5% and 33.6% for the three and nine months ended June 30, 2021, respectively. The effective tax rate for the three and nine months ended June 30, 2022 was higher than the U.S. statutory rate primarily due to U.S. state income taxes as well as discrete tax expense associated with foreign valuation allowance adjustments, offset in part by the benefit of non-U.S. income taxed at rates lower than the U.S. statutory rate.

Results of Operations

Revenue

We expect our revenue growth percentage to be in the high-single to low-double digits in fiscal 2022. Our future revenue growth will continue to be affected by various factors, such as industry growth trends, including drug utilization, the introduction of new, innovative brand therapies, the likely increase in the number of generic drugs and biosimilars that will be available over the next few years as a result of the expiration of certain drug patents held by brand-name pharmaceutical manufacturers and the rate of conversion from brand products to those generic drugs and biosimilars, price inflation and price deflation, general economic conditions in the United States and Europe, competition within the industry, customer consolidation, changes in pharmaceutical manufacturer pricing and distribution policies and practices, increased downward pressure on government and other third-party reimbursement rates to our customers, changes in government rules and regulations, and the impact of the COVID-19 pandemic.

Revenue increased by 12.5% and 14.4% from the prior year quarter and nine-month period, respectively, primarily due to the June 2021 acquisition of Alliance Healthcare and growth across our businesses.

The U.S. Healthcare Solutions segment grew its revenue by $3.0 billion, or 6.0%, from the prior year quarter and $7.2 billion, or 4.8%, from the prior year nine-month period primarily due to overall market growth principally driven by unit volume growth and increased sales to specialty physician practices, offset in part by a decline in sales of COVID-19 treatments (primarily commercial treatments).

More specifically, the increase in the U.S. Healthcare Solutions segment revenue was largely attributable to the following (in billions):

The International Healthcare Solutions segment grew its revenue by $3.6 billion, or 120.3%, from prior year quarter and $15.1 billion, or 305.0%, from the prior nine-month period primarily due to the June 2021 acquisition of Alliance Healthcare.

A number of our contracts with customers, including group purchasing organizations, are typically subject to expiration each year. We may lose a significant customer if an existing contract with such customer expires without being extended, renewed, or replaced. During the nine months ended June 30, 2022, no significant contracts expired. In January 2022, we extended our agreement with Express Scripts through September 2026. Over the next twelve months, there are no significant contracts scheduled to expire. Additionally, from time to time, significant contracts may be terminated in accordance with their terms or extended, renewed, or replaced prior to their expiration dates. If those contracts are extended, renewed, or replaced at less favorable terms, they may also negatively impact our revenue, results of operations, and cash flows.

Gross Profit

Gross profit increased by $127.2 million, or 6.7%, from the prior year quarter and $1,437.0 million, or 29.5%, from the prior year nine-month period. Gross profit in the current year periods was favorably impacted by increases in gross profit in International Healthcare Solutions and U.S. Healthcare Solutions. The increases were offset in part by decreases in gains from antitrust litigation settlements, LIFO expense in comparison to a LIFO credit in the prior year quarter, a decrease in the LIFO credit from the prior year nine-month period, and the Turkey highly inflationary economy's unfavorable impact on the current year periods.

U.S. Healthcare Solutions gross profit increased by $101.7 million, or 8.3%, from the prior year quarter and $287.8 million, or 7.6%, from the prior year nine-month period primarily due to overall revenue growth and fees earned from the distribution of government-owned COVID-19 treatments. As a percentage of revenue, U.S. Healthcare Solutions' gross profit margin was 2.49% and 2.59% in the current year quarter and nine-month period, respectively, a 5-basis point increase from prior year quarter and a 7-basis point increase from the prior year nine-month period primarily due to fees earned from the distribution of government-owned COVID-19 treatments.

Gross profit in International Healthcare Solutions increased by $337.5 million, or 84.4%, from the prior year quarter and $1,445.3 million, or 184.1%, from prior year nine-month period primarily due to the June 2021 acquisition of Alliance Healthcare.

We recognized gains from antitrust litigation settlements with pharmaceutical manufacturers of $1.8 million in the nine months ended June 30, 2022. We recognized gains from antitrust litigation settlements with pharmaceutical manufacturers of $147.4 million in the three and nine months ended June 30, 2021. The gains were recorded as reductions to Cost of Goods Sold (see Note 11 of the Notes to Consolidated Financial Statements).

Our cost of goods sold for interim periods includes a LIFO provision that is recorded ratably on a quarterly basis and is based on our estimated annual LIFO provision. The annual LIFO provision, which we estimate on a quarterly basis, is affected by manufacturer pricing practices, which may be impacted by market and other external influences, expected changes in inventory quantities, and product mix, many of which are difficult to predict. Changes to any of the above factors may have a material impact on our annual LIFO provision. The $122.9 million decrease in the LIFO credit from the prior year nine-month period is primarily due to lower generic pharmaceutical deflation and inventory product mix.

We recognized an expense in Cost of Goods Sold related to the impact of Turkey highly inflationary accounting of $27.6 million in the three and nine months ended June 30, 2022 (see Note 1 of the Notes to Consolidated Financial Statements).

Operating Expenses

Distribution, selling, and administrative expenses increased by $298.7 million, or 32.7%, compared to the prior year quarter and $1,206.9 million, or 50.7%, compared to prior year nine-month period primarily due to the June 2021 acquisition of Alliance Healthcare. As a percentage of revenue, distribution, selling, and administrative expenses were 2.02% in the current year quarter and nine-month period and represent a 31-basis point increase compared to prior year quarter and a 49-basis point increase compared to the prior year nine-month period. The increases were primarily due to the June 2021 acquisition of Alliance Healthcare.

Depreciation expense increased 18.1% and 24.9% from the prior year quarter and nine-month period, respectively, primarily due to depreciation of property and equipment originating from the June 2021 acquisition of Alliance Healthcare. Amortization expense increased 67.3% and increased 144.0% from the prior year quarter nine-month period, respectively, primarily due to amortization of intangible assets originating from the June 2021 acquisition of Alliance Healthcare.

Employee severance, litigation, and other in the three months ended June 30, 2022 included $36.6 million of acquisition-related deal and integration costs primarily related to the integration of Alliance Healthcare, $23.4 million of litigation costs related to legal fees in connection with opioid lawsuits and investigations, $3.9 million of severance costs, $3.2 million related to business transformation efforts, and $0.7 million of other restructuring initiatives. Employee severance, litigation, and other in the three months ended June 30, 2021 included $28.9 million of litigation costs related to legal fees in connection with opioid lawsuits and investigations, a $124.3 million expense accrual related to opioid litigation settlements, $54.7 million of acquisition-related deal and integration costs primarily related to the June 2021 acquisition of Alliance Healthcare, $14.7 million related to business transformation efforts, and $4.4 million of severance and other restructuring initiatives.

Employee severance, litigation, and other in the nine months ended June 30, 2022 included $71.6 million of litigation costs related to legal fees in connection with opioid lawsuits and investigations, a $36.6 million expense accrual related to opioid litigation settlements, $69.7 million of acquisition-related deal and integration costs primarily related to the integration of Alliance Healthcare, $11.5 million related to business transformation efforts, $10.5 million of severance costs, and $9.3 million of other restructuring initiatives. Employee severance, litigation, and other in the nine months ended June 30, 2021 included $85.9 million of litigation costs related to legal fees in connection with opioid lawsuits and investigations, a $141.4 million expense accrual related to opioid litigation settlements, $97.1 million of acquisition-related deal and integration costs primarily related to the June 2021 acquisition of Alliance Healthcare, $37.7 million related to business transformation efforts, $6.7 million of severance costs, and $6.6 million of other restructuring initiatives.

We recorded a $4.9 million loss on the remeasurement of a disposal group held for sale to fair value less cost to sell in Impairment of Assets in the nine months ended June 30, 2022 (see Note 2 of the Notes to Consolidated Financial Statements).

We recorded a $75.9 million goodwill impairment of our Profarma reporting unit in the quarter and nine-month period ended June 30, 2022 (see Note 5 of the Notes to Consolidated Financial Statements).

Operating Income

Segment operating income is evaluated before gains from antitrust litigation settlements; LIFO (expense) credit; Turkey highly inflationary impact; acquisition-related intangibles amortization; employee severance, litigation, and other; impairment of assets; and goodwill impairment.

U.S. Healthcare Solutions' operating income increased by $50.1 million, or 9.5%, from the prior year quarter and $128.1 million, or 7.3%, from prior year nine-month period primarily due to the increase in gross profit, as noted above, and was offset in part by increases in operating expenses. As a percentage of revenue, U.S. Healthcare Solutions' operating income margin was 1.09% and 1.19% in the quarter and nine-month period ended June 30, 2022, respectively, and represented increases of 4 basis points and 2 basis points compared to the prior year quarter and nine-month period, respectively, primarily due to fees earned from the distribution of government-owned COVID-19 treatments.

Operating income in International Healthcare Solutions increased by $75.4 million, or 74.8%, from the prior quarter and $339.7 million, or 166.8%, from the prior year nine-month period primarily due to the June 2021 acquisition of Alliance Healthcare.

Other (Income) Loss, Net

We recognized gains of $60.0 million from the sale of non-core businesses in the three and nine months ended June 30, 2022.

We recognized an expense related to the impact of Turkey highly inflationary accounting of $5.8 million in the three and nine months ended June 30, 2022.

We recorded foreign currency losses on the remeasurement of deferred tax assets relating to Swiss tax reform of $8.9 million and $6.3 million in the three months and nine months ended June 30, 2022, respectively. We recorded foreign currency income on the remeasurement of deferred tax assets relating to Swiss tax reform of $6.2 million in the three months ended June 30, 2021 and a foreign currency loss of $1.1 million in the nine months ended June 30, 2021.

Interest Expense, Net

Interest expense, net and the respective weighted average interest rates in the three months ended June 30, 2022 and 2021 are as follows:

Interest expense, net and the respective weighted average interest rates in the nine months ended June 30, 2022 and 2021 are as follows:

Interest expense, net increased by $1.5 million, or 3.0%, from the prior year quarter and $39.7 million, or 33.2%, from the prior year nine-month period. The increase from the prior year nine-month period was due to the issuance of our $1,525 million of 0.737% senior notes and $1,000 million of 2.700% senior notes in March 2021 and the $500 million variable-rate term loan that was issued in June 2021, all of which were used to finance a portion of the June 2021 acquisition of Alliance Healthcare, and the incremental interest expense associated with Alliance Healthcare's debt in certain countries, offset in part by the increase in interest income. The increase in interest income was primarily due to higher investment interest rates, offset in part by lower average invested cash balances in the current year periods compared to the prior year periods.

Income Tax Expense

Our effective tax rates were 23.7% and 24.0% for the three and nine months ended June 30, 2022, respectively. Our effective tax rates were 48.5% and 33.6% for the three and nine months ended June 30, 2021, respectively. The effective tax rate for the three and nine months ended June 30, 2022 were higher than the U.S. statutory rate primarily due to U.S. state income taxes as well as discrete tax expense associated with foreign valuation allowance adjustments, offset in part by the benefit of non-U.S. income taxed at rates lower than the U.S. statutory rate. The effective tax rate for the three and nine months ended June 30, 2021 were higher than the U.S. statutory rate primarily due to UK Tax Reform.

Liquidity and Capital Resources

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

Our primary ongoing cash requirements will be to finance working capital, fund the repayment of debt, fund the payment of interest on debt, fund the payment of dividends, fund purchases of our common stock, finance acquisitions, and fund capital expenditures and routine growth and expansion through new business opportunities. Future cash flows from operations and borrowings are expected to be sufficient to fund our ongoing cash requirements, including the opioid litigation payments that will be made over 18 years (see below).

Cash Flows

As of June 30, 2022 and September 30, 2021, our cash and cash equivalents held by foreign subsidiaries were $772.6 million and $725.4 million, respectively. We have the ability to repatriate the majority of our cash and cash equivalents held by our foreign subsidiaries without incurring significant additional taxes upon repatriation.

We have increased seasonal needs related to our inventory build during the December and March quarters that, depending on our cash balance, may require the use of our credit facilities to fund short-term capital needs. Our cash balances in the nine months ended June 30, 2022 and 2021 were supplemented by intra-period credit facility borrowings to cover short-term working capital needs. The largest amount of intra-period borrowings under our revolving and securitization credit

facilities that was outstanding at any one time during the nine months ended June 30, 2022 and 2021 was $590.0 million and $637.7 million, respectively. We had $3,991.6 million and $4,612.4 million of cumulative intra-period borrowings that were repaid under our credit facilities during the nine months ended June 30, 2022 and 2021, respectively.

During the nine months ended June 30, 2022, our operating activities provided cash of $1,538.6 million in comparison to $1,656.8 million in the prior year period. Cash provided by operations during the nine months ended June 30, 2022 was principally the result of the following:

• An increase in accounts payable of $2,074.6 million primarily due to the increase in our inventory balances and the timing of scheduled payments to our suppliers;

• Net income of $1,367.9 million;

• Positive non-cash items of $704.6 million, which is primarily comprised of depreciation expense of $292.3 million and amortization expense of $243.2 million, and was offset in part by:

◦An increase in accounts receivable of $1,551.0 million primarily due to an increase in sales and the timing of scheduled payments from our customers;

◦An increase in inventories of $712.8 million to support the increase in business volume; and

◦A decrease in accrued expenses and other liabilities of $445.9 million.

During the nine months ended June 30, 2021, our operating activities provided cash of $1,656.8 million. Cash provided by operations during the nine months ended June 30, 2021 was principally the result of the following:

• Net income of $1,108.2 million;

• Positive non-cash items of $600.0 million, which is primarily comprised of a provision for deferred income taxes of $303.6 million, depreciation expense of $237.9 million, and amortization expense of $102.6 million;

• An increase in accounts payable of $242.4 primarily due to the increase in our inventory balances and the timing of scheduled payments to our suppliers;

• A decrease in income tax receivables of $234.4 million; and was offset in part by:

◦An increase in inventories of $594.7 million to support the increase in business volume;

◦An increase in accounts receivable of $116.8 million as a result of increased sales and the timing of payments from our customers.

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

Our cash flows from operating activities can vary significantly from period to period based upon fluctuations in our period-end working capital account balances. Additionally, any changes to payment terms with a significant customer or manufacturer supplier could have a material impact to our cash flows from operations. The acquisition of Alliance Healthcare increased our days sales outstanding and days payable outstanding as it has longer payments terms with its customers and suppliers. Operating cash flows during the nine months ended June 30, 2022 included $160.8 million of interest payments and $184.1 million of income tax payments, net of refunds. Operating cash flows during the nine months ended June 30, 2021 included $110.1 million of interest payments and $43.2 million of income tax refunds, net of payments.

Capital expenditures in the nine months ended June 30, 2022 and 2021 were $322.7 million and $273.4 million, respectively. Significant capital expenditures in the nine months ended June 30, 2022 included investments in various technology initiatives, including technology investments at Alliance Healthcare. Significant capital expenditures in the nine months ended June 30, 2021 included costs associated with facility expansions, various technology initiatives, including costs related to enhancing and upgrading our primary information technology operating systems.

We currently expect to invest approximately $500 million for capital expenditures during fiscal 2022. Larger 2022 capital expenditures will include investments relating to various technology initiatives, including technology investments at Alliance Healthcare.

In addition to capital expenditures, net cash used in investing activity in the nine months ended June 30, 2022 included $124.2 million of costs to acquire companies, including $60.0 million that was paid to settle accrued consideration related to the

Alliance Healthcare acquisition (see Note 2 of the Notes to Consolidated Financial Statements), and was offset in part by $258.1 million in proceeds from the sale of non-core businesses. In addition to capital expenditures, net cash used in investing activities in the nine months ended June 30, 2021 included $5,536.7 million for the June 2021 acquisition of Alliance Healthcare, net of cash acquired, and $162.6 million of costs for equity investments.

Net cash used in financing activities in the nine months ended June 30, 2022 principally resulted from a $500 million repayment of our 0.737% senior notes that mature in 2023, the repayment of our $250 million term loan, $295.2 million in cash dividends paid on our common stock, and $248.4 million in purchases of our common stock. Net cash provided by financing activities in the nine months ended June 30, 2021 principally resulted from proceeds from the issuance of $2,525 million of senior notes and $164.3 million of exercises of stock options, offset in part by the repayment of the $400 million Term Loan, $274.0 million in cash dividends paid on our common stock, and $82.2 million in purchases of our common stock.

Debt and Credit Facility Availability

The following table illustrates our debt structure as of June 30, 2022, including availability under the multi-currency revolving credit facility, the receivables securitization facility, the revolving credit note, the money market facility, the Alliance Healthcare debt, and the overdraft facility:

We have a $2.4 billion multi-currency senior unsecured revolving credit facility ("Multi-Currency Revolving Credit Facility"), which is scheduled to expire in November 2026, with a syndicate of lenders. Interest on borrowings under the Multi-Currency Revolving Credit Facility accrues at specified rates based on our debt rating and ranges from 70 basis points to 112.5 basis points over CDOR/LIBOR/EURIBOR/Bankers Acceptance Stamping Fee, as applicable (101.5 basis points over CDOR/LIBOR/EURIBOR/Bankers Acceptance Stamping Fee as of June 30, 2022) and from 0 basis points to 12.5 basis points over the alternate base rate and Canadian prime rate, as applicable. We pay facility fees to maintain the availability under the Multi-Currency Revolving Credit Facility at specified rates based on our debt rating, ranging from 5 basis points to 12.5 basis points, annually, of the total commitment (11 basis points as of June 30, 2022). We may choose to repay or reduce our commitments under the Multi-Currency Revolving Credit Facility at any time. The Multi-Currency Revolving Credit Facility contains covenants, including compliance with a financial leverage ratio test, as well as others that impose limitations on, among other things, indebtedness of subsidiaries and asset sales, with which we were compliant as of June 30, 2022.

We have a commercial paper program whereby we may from time to time issue short-term promissory notes in an aggregate amount of up to $2.4 billion at any one time. Amounts available under the program may be borrowed, repaid, and re-borrowed from time to time. The maturities on the notes will vary, but may not exceed 365 days from the date of issuance. The notes will bear interest, if interest bearing, or will be sold at a discount from their face amounts. The commercial paper program

does not increase our borrowing capacity as it is fully backed by our Multi-Currency Revolving Credit Facility. There were no borrowings outstanding under our commercial paper program as of June 30, 2022.

We have a $1,450 million receivables securitization facility ("Receivables Securitization Facility"), which is scheduled to expire in November 2024. We have available to us an accordion feature whereby the commitment on the Receivables Securitization Facility may be increased by up to $250 million, subject to lender approval, for seasonal needs during the December and March quarters. Interest rates are based on prevailing market rates for short-term commercial paper or LIBOR plus a program fee. We pay a customary unused fee at prevailing market rates, annually, to maintain the availability under the Receivables Securitization Facility. The Receivables Securitization Facility contains similar covenants to the Multi-Currency Revolving Credit Facility, with which we were compliant as of June 30, 2022.

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

In March 2022, we elected to repay in full the $250 million term loan that was scheduled to mature in June 2023. In June 2022, we elected to repay $500 million of the originally issued $1.5 billion, 0.737% senior notes that are due in March 2023.

Alliance Healthcare debt is comprised of uncommitted revolving credit facilities in various currencies with various rates. A majority of the outstanding borrowings were held in Egypt (which is 50% owned) as of June 30, 2022. These facilities are used to fund its working capital needs.

Nonrecourse debt is comprised of short-term and long-term debt belonging to the Brazil 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.

Share Purchase Programs and Dividends

In May 2020, our board of directors authorized a share repurchase program allowing us to purchase up to $500 million of our outstanding shares of common stock, subject to market conditions. During the nine months ended June 30, 2022, we purchased $260.1 million of our common stock, which included $11.7 million of June 2022 purchases that cash settled in July 2022. As of June 30, 2022, we had $213.3 million of availability remaining under this program.

In May 2022, our board of directors authorized a new share repurchase program allowing us to purchase up to $1.0 billion of our outstanding shares of common stock, subject to market conditions. As of June 30, 2022, we had $1.0 billion of availability remaining under this program as we did not purchase any shares of our common stock under this program.

In November 2021, our board of directors increased the quarterly dividend paid on common stock by 5% from $0.44 per share to $0.46 per share. We anticipate that we will continue to pay quarterly cash dividends in the future. However, the payment and amount of future dividends remains within the discretion of our board of directors and will depend upon future earnings, financial condition, capital requirements, and other factors.

Commitments and Obligations

As discussed in Note 10 of the Notes to Consolidated Financial Statements, we have a $6.4 billion liability on our Consolidated Balance Sheet as of June 30, 2022 for litigation relating to our comprehensive opioid settlement as well as other opioid-related litigation. On July 21, 2021, it was announced that we and the two other national pharmaceutical distributors have negotiated a comprehensive settlement agreement, and on April 2, 2022, the settlement agreement became effective as to us and 46 Settling States, as well as over 98% by population of subdivision in Settling States. The States of Washington and Oklahoma intend to join the comprehensive settlement after certain conditions have been met in those states. The settlement agreement requires us to pay approximately $5.9 billion over 18 years. Our estimated liability related to States and subdivisions that did not initially join the comprehensive settlement agreement (including West Virginia subdivisions) and the Native American tribes is approximately $0.8 billion. The payment of the aforementioned litigation liability has not and is not expected to have an impact on our ability to pay dividends.

The following is a summary of our contractual obligations for future principal and interest payments on our debt, minimum rental payments on our noncancellable operating leases, and minimum payments on our other commitments as of June 30, 2022:

The 2017 Tax Act requires a one-time transition tax to be recognized on historical foreign earnings and profits. We expect to pay $157.1 million, net of overpayments and tax credits, related to the transition tax as of June 30, 2022, which is payable in installments over a six-year period, and commenced in January 2021. The transition tax commitment is included in "Other Commitments" in the above table.

Our liability for uncertain tax positions was $543.2 million (including interest and penalties) as of June 30, 2022. This liability represents an estimate of tax positions that we have taken in our tax returns which may ultimately not be sustained upon examination by taxing authorities. Since the amount and timing of any future cash settlements cannot be predicted with reasonable certainty, the estimated liability has been excluded from the above contractual obligations table. Our liability for uncertain tax positions as of June 30, 2022 primarily includes an uncertain tax benefit related to the $6.4 billion legal accrual for litigation related to the distribution of prescription opioid pain medications, as disclosed in Note 10 of the Notes to Consolidated Financial Statements.

Market Risks

We have exposure to foreign currency and exchange rate risk from our non-U.S. operations. Our largest exposure to foreign exchange rates exists primarily with the U.K. Pound Sterling, the Euro, the Turkish Lira, the Egyptian Pound, the Brazilian Real, and the Canadian Dollar. During the quarter ended March 31, 2022, Turkey became a highly inflationary economy, as defined under U.S. GAAP (see Note 1 of the Notes to Consolidated Financial Statements). Also, with the June 2021 acquisition of Alliance Healthcare, our foreign currency and exchange rate risk increased; therefore, we now use forward contracts to hedge against the foreign currency exchange rate impact on certain intercompany receivable and payable balances. We may use derivative instruments to hedge our foreign currency exposure, but not for speculative or trading purposes. Revenue from our foreign operations during the nine-month period ended June 30, 2022 was approximately 11% of our consolidated revenue.

We have market risk exposure to interest rate fluctuations relating to our debt. We manage interest rate risk by using a combination of fixed-rate and variable-rate debt. The amount of variable-rate debt fluctuates during the year based on our working capital requirements. We had $706.9 million of variable-rate debt outstanding as of June 30, 2022. We periodically evaluate financial instruments to manage our exposure to fixed and variable interest rates. However, there are no assurances that such instruments will be available in the combinations we want and/or on terms acceptable to us. There were no such financial instruments in effect as of June 30, 2022.

We also have market risk exposure to interest rate fluctuations relating to our cash and cash equivalents. We had $3,034.2 million in cash and cash equivalents as of June 30, 2022. The unfavorable impact of a hypothetical decrease in interest rates on cash and cash equivalents would be partially offset by the favorable impact of such a decrease on variable-rate debt. For every $100 million of cash invested that is in excess of variable-rate debt, a 10-basis point decrease in interest rates would increase our annual net interest expense by $0.1 million.

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

Recent elevated levels of inflation in the global and U.S. economies have not had a significant impact on our results of operations. If elevated levels of inflation persist or increase, our operations and financial results could be adversely affected, particularly in certain global markets.

We have risks from other geopolitical trends and events, such as the Russia-Ukraine war. Although the long-term implications of Russia’s invasion of Ukraine are difficult to predict at this time, the financial impact of the conflict in fiscal 2022 has not been material.

The Company’s most significant market risks are the effects of foreign currency risk, changing interest rates, and changes in the price and volatility of the Company’s common stock. See the discussion on page 34 under the heading "Market Risks," which is incorporated by reference herein.

Evaluation of Disclosure Controls and Procedures

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

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

Changes in Internal Control over Financial Reporting

During the third quarter of fiscal 2022, there was no change in AmerisourceBergen Corporation’s internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended June 30, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

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

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

(c) Issuer Purchases of Equity Securities

The following table sets forth the number of shares purchased, the average price paid per share, the total number of shares purchased as part of publicly announced programs, and the approximate dollar value of shares that may yet be purchased under the programs during each month in the third quarter ended June 30, 2022. See Note 7, "Stockholders' Equity and Earnings per Share," contained in "Notes to Condensed Consolidated Financial Statements" in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

ITEM 3. Defaults Upon Senior Securities

None.

Our significant business risks are described in Item 1A to Form 10-K for the fiscal year ended September 30, 2021 to which reference is made herein.

ITEM 4. Mine Safety Disclosures

Not applicable.

On August 2, 2022, the Company and WBA entered into Amendment No. 1 (the "Amendment") to the Amended and Restated Shareholders Agreement dated as of June 1, 2021 (the "Shareholders Agreement"), by and between the Company and WBA.

Under Section 1.3(a) of the Shareholders Agreement, so long as WBA is entitled to nominate a director to the Company's Board of Directors (the "Board"), except as required by applicable law, neither the Company nor the Board may increase the size of the Board in excess of a maximum size set forth in such subsection (the “Maximum Board Size”) without the prior consent of WBA; provided, that the Maximum Board Size can be increased by a maximum of one (1) additional director for a period of up to one year (or such shorter period ending upon the effectiveness of the retirement described in this proviso) to accommodate the pending retirement of a director that will occur during such one-year period.

Prior to the Amendment, the Maximum Board Size was equal to the sum of nine (9) plus the number of WBA's designated directors. The Amendment increases the Maximum Board Size to the sum of eleven (11) plus the number of WBA's designated directors.

Under the Shareholders Agreement, WBA has the right to designate one director to the Board so long as WBA and its subsidiaries collectively continue to own five percent or more of the Company’s Common Stock. Because WBA has designated one director who serves on the Board, the Maximum Board Size is 12 as a result of the Amendment. The Board has currently fixed by resolution a Board size of 10 in accordance with the Company’s Amended and Restated Bylaws, of which there are no vacancies.

The Amendment is filed as Exhibit 10.2 to this Quarterly Report on Form 10-Q.

(a) Exhibits:

SIGNATURES

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