Cencora 10-Q 2025-03-31

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED March 31, 2025

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

CENCORA, INC.

(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 Cencora, Inc. outstanding as of April 30, 2025 was 193,823,487.

Table of Contents

CENCORA, INC.

TABLE OF CONTENTS

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In reviewing this Management’s Discussion and Analysis of Financial Condition and Results of Operations, please note that we face many uncertainties and risks related to various economic, political and regulatory environments in which we operate, both within the U.S. and internationally. Refer to the headings “Item 1A. Risk Factors” in Part I of our Annual Report on Form 10-K for the year ended September 30, 2024, as well as the heading “Cautionary Note Regarding Forward-Looking Statements” above for additional information related to our present business environment.

Recent Development

On January 2, 2025, we acquired an 85% interest in Retina Consultants of America ("RCA") for $4,036.1 million in cash (subject to customary post-closing adjustments), $694.4 million of contingent consideration related to equity units for certain RCA physicians and members of management that retained the remaining 15% interest in RCA, $556.0 million for the settlement of a receivable resulting from a pre-existing commercial relationship between us and RCA, and $393.1 million for contingent consideration payable to the sellers associated with RCA's achievement of certain predefined business objectives in fiscal 2027 and fiscal 2028 (see Note 2 of the Notes to Consolidated Financial Statements for the preliminary allocation of the purchase price). We funded the cash purchase price through a combination of cash on hand and new debt financing (see Note 6 of the Notes to Consolidated Financial Statements). We believe the acquisition of RCA will allow us to broaden our relationships with community providers and to build on our leadership in specialty pharmaceuticals. RCA's results of operations are included in the U.S. Healthcare Solutions segment within our business segment information.

Executive Summary

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

• Revenue increased by $7.0 billion, or 10.3%, and $16.3 billion, or 11.6%, from the prior year quarter and six-month period, respectively, primarily due to growth in the U.S. Healthcare Solutions segment. The U.S. Healthcare Solutions segment grew its revenue by $7.0 billion, or 11.4%, and $15.8 billion, or 12.5%, from the prior year quarter and six-month period, respectively, primarily due to overall market growth largely driven by unit volume growth, including increased sales of products labeled for diabetes and/or weight loss in the GLP-1 class of $2.2 billion, or 36.1%, and $5.4 billion, or 44.5%, from the prior year quarter and six-month period, respectively, and increased sales of specialty products to physician practices and health systems. International Healthcare Solutions' revenue increased by $0.1 billion, or 0.7%, and $0.4 billion, or 3.1%, from the prior year quarter and six-month period, respectively.

• Gross profit increased by $521.8 million, or 20.6%, and $611.0 million, or 12.2%, from the prior year quarter and six-month period, respectively, primarily due to the increases in gross profit in the U.S. Healthcare Solutions segment and larger gains from antitrust litigation settlements, offset in part by last-in, first-out ("LIFO") expense in the current year periods in comparison to LIFO credits in the prior year periods and decreases in gross profit in the International Healthcare Solutions segment. U.S. Healthcare Solutions' gross profit increased by $441.7 million, or 26.3%, and $555.5 million, or 17.1%, from the prior year quarter and six-month period, respectively. Gross profit in International Healthcare Solutions decreased by $55.1 million, or 6.5%, and $22.1 million, or 1.3%, from the prior year quarter and six-month period, respectively.

• Total operating expenses increased by $38.9 million, or 2.0%, and $244.7 million, or 6.7%, from the prior year quarter and six-month period, respectively, primarily due to the January 2025 acquisition of RCA and the increase in acquisition-related deal and integration expenses, offset in part by a large decrease in litigation and opioid-related expenses in the current year quarter.

• Total segment operating income increased by $158.5 million, or 15.3%, and $222.1 million, or 11.6%, from the prior year quarter and six-month period, respectively. U.S. Healthcare Solutions' operating income increased by $192.1 million, or 22.8%, and $261.3 million, or 17.0%, from the prior year quarter and six-month period, respectively. International Healthcare Solutions' operating income decreased by $33.4 million, or 17.3%, and $38.9 million, or 10.2%, from the prior year quarter and six-month period, respectively.

• Our effective tax rates were 22.7% and 21.8% for the three and six months ended March 31, 2025, respectively. Our effective tax rates were 9.8% and 18.1% for the three and six months ended March 31, 2024, respectively. The effective tax rates for the three and six months ended March 31, 2025 were higher than the U.S. statutory rate primarily due to U.S. state income taxes, offset in part by the benefit of non-U.S. income taxed at rates lower than the U.S. statutory rate and benefits associated with equity compensation. The effective tax rates for the three and six months ended March 31, 2024 were lower than the U.S. statutory rate primarily due to discrete tax benefits associated with foreign valuation allowance adjustments, non-U.S. income taxed at rates lower than the U.S. statutory rate, and tax benefits associated with equity compensation, offset in part by U.S. state income taxes.

Results of Operations

Revenue

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

Revenue increased by $7.0 billion, or 10.3%, and $16.3 billion, or 11.6%, from the prior year quarter and six-month period, respectively, primarily due to growth in the U.S. Healthcare Solutions segment.

The U.S. Healthcare Solutions segment grew its revenue by $7.0 billion, or 11.4%, and $15.8 billion, or 12.5%, from the prior year quarter and six-month period, respectively, primarily due to overall market growth largely driven by unit volume growth, including increased sales of products labeled for diabetes and/or weight loss in the GLP-1 class of $2.2 billion, or 36.1%, and $5.4 billion, or 44.5%, from the prior year quarter and six-month period, respectively, and increased sales of specialty products to physician practices and health systems. Sales, including GLP-1 products, to our two largest customers increased by $0.8 billion and $4.2 billion from the prior year quarter and six-month period, respectively.

International Healthcare Solutions' revenue increased by $0.1 billion, or 0.7%, and $0.4 billion, or 3.1%, from the prior year quarter and six-month period, respectively. The revenue increase in the six months ended March 31, 2025 was primarily due to increased sales of $0.3 billion at our European distribution business and increased sales of $0.1 billion at our Canadian business.

A number of our contracts with customers, including group purchasing organizations, are typically subject to expiration each year. We may lose a key customer if an existing contract with such customer expires without being extended, renewed, or replaced. During the six months ended March 31, 2025, no key contracts expired. Additionally, from time to time, key 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. As previously disclosed, we anticipate the June 2025 loss of an oncology customer in connection with its pending acquisition, and, during the three months ended March 31, 2025, we received a notice of non-renewal.

Gross Profit

Gross profit increased by $521.8 million, or 20.6%, and $611.0 million, or 12.2%, from the prior year quarter and six-month period, respectively, primarily due to the increases in gross profit in the U.S. Healthcare Solutions segment and larger gains from antitrust litigation settlements, offset in part by LIFO expense in the current year periods in comparison to LIFO credits in the prior year periods and decreases in gross profit in the International Healthcare Solutions segment.

U.S. Healthcare Solutions' gross profit increased by $441.7 million, or 26.3%, and $555.5 million, or 17.1%, from the prior year quarter and six-month period, respectively, primarily due to increased sales and the January 2025 acquisition of RCA. As a percentage of revenue, U.S. Healthcare Solutions' gross profit margins were 3.11% and 2.67% in the current year quarter and six-month period, respectively, and represent increases of 37 basis points and 10 basis points from the prior year quarter and six-month period, respectively. The current year quarter increase of 37 basis points was primarily due to the January 2025 acquisition of RCA. The six-month period increase of 10 basis points was primarily due to the January 2025 acquisition of RCA, offset in part by higher sales of GLP-1 products, which have lower gross profit margins, and lower sales of COVID vaccines, which have higher gross profit margins.

Gross profit in International Healthcare Solutions decreased by $55.1 million, or 6.5%, and $22.1 million, or 1.3%, from the prior year quarter and six-month period, respectively. The decrease in the current year quarter is primarily due to declines in gross profit at our European distribution business and our global specialty logistics business. The decrease in the current year six-month period is primarily due to a decline in gross profit at our global specialty logistics business, offset in part by an increase in gross profit at our European distribution business.

We recognized gains from antitrust litigation settlements with pharmaceutical manufacturers of $198.6 million and $8.7 million in the three months ended March 31, 2025 and 2024, respectively, and $221.5 million and $57.0 million in the six months ended March 31, 2025 and 2024, respectively. The gains were recorded as reductions to Cost of Goods Sold (see Note 10 of the Notes to Consolidated Financial Statements).

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

We recognized expense in Cost of Goods Sold of $14.5 million and $23.1 million in the three months ended March 31, 2025 and 2024, respectively, and $21.6 million and $40.3 million in the six months ended March 31, 2025 and 2024, respectively, related to the impact of Turkey highly inflationary accounting driven by the continued weakening of the Turkish Lira.

Operating Expenses

Distribution, selling, and administrative expenses increased by $211.2 million, or 15.2%, and $284.5 million, or 10.2%, compared to the prior year quarter and six-month period, respectively, primarily due to the January 2025 acquisition of RCA and to support our revenue growth. As a percentage of revenue, distribution, selling, and administrative expenses were 2.12% and 1.96% in the current year quarter and six-month period, respectively, and represent an increase of 9 basis points compared to the prior year quarter and a decline of 2 basis points compared to the prior year six-month period. The increase from the prior year quarter was primarily due to the January 2025 acquisition of RCA, offset in part by our improved operating leverage from our 10.3% revenue growth. The decline from the prior year six-month period was primarily due to our improved operating leverage from our 11.6% revenue growth, offset in part by the January 2025 acquisition of RCA.

Depreciation expense increased 14.7% and 11.5% from the prior year quarter and six-month period, respectively, and amortization expense decreased 16.6% and 8.5% from the prior year quarter and six month period, respectively. The decline in amortization expense is due to certain tradenames becoming fully amortized in connection with our company name change to Cencora and the gradual transition away from other tradenames used, which were acquired through prior acquisitions.

Litigation and opioid-related expenses, net in the three and six months ended March 31, 2025 included legal fees in connection with opioid lawsuits and investigations. Litigation and opioid-related expenses, net in the three months ended March 31, 2024 included a $214.0 million litigation accrual for ongoing litigation related to the distribution of prescription opioid medications and $12.0 million of legal fees in connection with opioid lawsuits and investigations. Litigation and opioid-related expenses, net in the six months ended March 31, 2024 included a $214.0 million litigation accrual for ongoing litigation related to the distribution of prescription opioid medications and $25.2 million of legal fees in connection with opioid lawsuits and investigations, offset in part by a net $92.2 million opioid litigation settlement accrual reduction primarily as a result of our prepayment of the net present value of a future obligation as permitted under our opioid settlement agreements.

Acquisition-related deal and integration expenses in the three and six months ended March 31, 2025 primarily included costs related to the acquisition of RCA, including a $37.5 million expense related to equity units retained by RCA physicians and members of management (see Note 2 of the Notes to Consolidated Financial Statements), and the continued integration of PharmaLex. Acquisition-related deal and integration expenses in the three and six months ended March 31, 2024 primarily related to the integration of Alliance Healthcare and PharmaLex.

Restructuring and other expenses are comprised of the following:

Restructuring and employee severance costs in the three and six months ended March 31, 2025 primarily included workforce reductions in both of our reportable segments. Restructuring and employee severance costs in the three and six months ended March 31, 2024 primarily included expenses incurred related to facility closures in connection with our office optimization plan and workforce reductions in both of our reportable segments.

Business transformation efforts in the three and six months ended March 31, 2025 and 2024 included rebranding costs associated with our name change to Cencora and non-recurring expenses related to significant strategic initiatives to improve operational efficiency, including certain technology initiatives. The majority of these costs are related to services provided by third-party consultants.

In February 2024, we experienced a cybersecurity event where data from our information systems was exfiltrated. In connection with this event, we incurred costs that were recorded in Other, net in the above table. The majority of the costs included in Other, net in the three and six months ended March 31, 2024 related to this cybersecurity event.

Operating Income

U.S. Healthcare Solutions' operating income increased by $192.1 million, or 22.8%, and $261.3 million, or 17.0%, from the prior year quarter and six month-period, respectively, primarily due to the increases in gross profit, as noted above, and were offset in part by the increases in operating expenses. As a percentage of revenue, U.S. Healthcare Solutions' operating income margins were 1.51% and 1.27% in the current year quarter and six-month period, respectively, and represent increases of 14 basis points and 5 basis points from the prior year quarter and six-month period, respectively, due to the increases gross profit margin, as described above in the Gross Profit section, offset in part by increases in the operating expense margin.

International Healthcare Solutions' operating income decreased by $33.4 million, or 17.3%, and $38.9 million, or 10.2%, from the prior year quarter and six-month period, respectively. The decrease in the current year quarter was primarily due to lower operating income at our global specialty logistics business and our European distribution business. The decrease in the current year six-month period was primarily due to lower operating income at our global specialty logistics business.

Other Loss, Net

Other loss, net of $61.4 million in the six months ended March 31, 2025 includes a $35.5 million loss on the divestiture of non-core businesses.

Interest Expense, Net

Interest expense, net and the respective weighted average interest rates for the three months ended March 31, 2025 and 2024 are as follows:

Interest expense, net increased by $39.9 million, or 62.2%, from the prior year quarter due to the increase in interest expense, offset in part by an increase in interest income. The increase in interest expense was primarily due to the issuance of our $1.8 billion of senior notes in December 2024 and the $1.5 billion variable-rate term loan, which we borrowed in January 2025 to finance a portion of the RCA acquisition, and increased revolving credit facility borrowings to cover seasonal short-term working capital needs. The increase in interest income was driven by higher average investment cash balances and higher investment interest rates outside the United States in the current year quarter in comparison to the prior year quarter.

Interest expense, net and the respective weighted average interest rates for the six months ended March 31, 2025 and 2024 are as follows:

Interest expense, net increased by $27.2 million, or 26.0%, from the prior year six-month period due to the increase in interest expense, offset in part by an increase in interest income. The increase in interest expense was primarily due to the issuance of our $1.8 billion of senior notes in December 2024 and the $1.5 billion variable-rate term loan, which we borrowed in January 2025 to finance a portion of the RCA acquisition, and increased revolving credit facility borrowings to cover seasonal short-term working capital needs, offset in part by lower foreign subsidiary interest expense. The increase in interest income was driven by higher average investment cash balances and higher investment interest rates outside the United States in the current year six-month period in comparison to the prior year period.

Income Tax Expense

Our effective tax rates were 22.7% and 21.8% for the three and six months ended March 31, 2025, respectively. Our effective tax rates were 9.8% and 18.1% for the three and six months ended March 31, 2024, respectively. The effective tax rates for the three and six months ended March 31, 2025 were higher than the U.S. statutory rate primarily due to U.S. state income taxes, offset in part by the benefit of non-U.S. income taxed at rates lower than the U.S. statutory rate and benefits associated with equity compensation. The effective tax rates for the three and six months ended March 31, 2024 were lower than the U.S. statutory rate primarily due to discrete tax benefits associated with foreign valuation allowance adjustments, non-U.S. income taxed at rates lower than the U.S. statutory rate, and tax benefits associated with equity compensation, offset in part by U.S. state income taxes.

Liquidity and Capital Resources

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

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

As of March 31, 2025 and September 30, 2024, our cash and cash equivalents held by foreign subsidiaries were $837.2 million and $851.3 million, respectively. We have the ability to repatriate the majority of our cash and cash equivalents held by our foreign subsidiaries without incurring significant additional taxes upon repatriation.

We have increased seasonal needs related to our inventory build during the December and March quarters that, depending on our cash balance, may require the use of our credit facilities to fund short-term capital needs. Our cash balances in the six months ended March 31, 2025 and 2024 were supplemented by intra-period credit facility borrowings to cover short-term working capital needs. The largest amount of intra-period borrowings under our revolving and securitization credit facilities that was outstanding at any one time during the six months ended March 31, 2025 and 2024 was $5.1 billion and $3.2 billion, respectively. We had $42.9 billion and $47.9 billion of cumulative intra-period borrowings that were repaid under our credit facilities during the six months ended March 31, 2025 and 2024, respectively.

Cash Flows

We generated $632.5 million of cash from operations during the six months ended March 31, 2025 compared to $6.7 million of cash from operations during the six months ended March 31, 2024, an increase of $625.7 million. The increase in the current year six-month period was in part driven by our growth, which resulted in an increase in net income plus non-cash items of $367.1 million. The timing of cash receipts and disbursements can significantly impact our working capital. The change in working capital accounts provided a year-over-year increase in cash of $450.2 million, in part due to delayed collections of approximately $600 million from certain customers in the six months ended March 31, 2024 as a result of the February 2024 Change Healthcare cyberattack, as well as the timing of cash receipts from customers and the timing of disbursements to suppliers.

During the six months ended March 31, 2025, our operating activities provided cash of $632.5 million and was principally the result of the following:

• Net income of $1,211.1 million; and

• Positive non-cash items of $815.5 million, which is primarily comprised of amortization expense of $308.2 million and depreciation expense of $237.2 million.

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

• A decrease in accounts payable of $669.5 million primarily due to the timing of scheduled payments to our suppliers;

• A decrease in accrued expenses of $489.5 million primarily due to the payment of accrual liabilities that were on our Consolidated Balance Sheet as of September 30, 2024, including $226.0 million of opioid litigation settlement payments; and

• An increase in accounts receivable of $218.0 million primarily due to an increase in sales and the timing of scheduled payments from our customers.

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

• Net income of $1,024.2 million;

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

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

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

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

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

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

Our cash flows from operating activities can vary significantly from period to period based upon fluctuations in our period-end working capital account balances. Any changes to payment terms with a key customer or manufacturer supplier could have a material impact to our cash flows from operations. The addition of any new customer or the loss of an existing customer could have a material impact on our cash flows from operations.

Operating cash flows during the six months ended March 31, 2025 included $153.7 million of interest payments and $294.9 million of income tax payments, net of refunds. Operating cash flows during the six months ended March 31, 2024 included $129.1 million of interest payments and $291.7 million of income tax payments, net of refunds.

Capital expenditures in the six months ended March 31, 2025 and 2024 were $235.0 million and $187.0 million, respectively. Significant capital expenditures in the six months ended March 31, 2025 included investments relating to the expansion and enhancement of our distribution network and various technology initiatives. Significant capital expenditures in the six months ended March 31, 2024 included investments in various technology initiatives, including technology investments at Alliance Healthcare.

We currently expect to invest approximately $600 million for capital expenditures during fiscal 2025. Larger 2025 capital expenditures will include investments relating to the expansion and enhancement of our distribution network and various technology initiatives.

In addition to capital expenditures, net cash used in investing activities in the six months ended March 31, 2025 included $3,892.7 million for the acquisition of RCA and $192.6 million for equity investments.

Net cash provided by financing activities in the six months ended March 31, 2025 principally resulted from the $1.8 billion issuance of senior notes and $1.5 billion of term loan borrowings to finance a portion of the acquisition of RCA, as well as $683.4 million of net borrowings under our revolving credit facilities to cover seasonal short-term working capital needs. All of the above were offset in part by the repayment of our $500 million of senior notes that were due in March 2025, $435.5 million in purchases of our common stock, and $222.1 million in cash dividends paid on our common stock.

Net cash used in financing activities in the six months ended March 31, 2024 principally resulted from $436.4 million purchases of our common stock and $212.7 million in cash dividends paid on our common stock, offset in part by the issuance of our $500 million of senior notes in February 2024.

Debt and Credit Facility Availability

The following table illustrates our debt structure as of March 31, 2025, including availability under the multi-currency revolving credit facility; the receivables securitization facility; the 364-day revolving credit facility; the money market facility; and the Alliance Healthcare debt:

We have a $2.4 billion multi-currency senior unsecured revolving credit facility ("Multi-Currency Revolving Credit Facility") with a syndicate of lenders, which is scheduled to expire in October 2029. Interest on borrowings under the Multi-Currency Revolving Credit Facility accrues at specified rates based upon our debt ratings. We pay facility fees to maintain the availability under the Multi-Currency Revolving Credit Facility at specified rates based on our debt rating. We may choose to repay or reduce our commitments under the Multi-Currency Revolving Credit Facility at any time. The Multi-Currency Revolving Credit Facility contains covenants, including compliance with a financial leverage ratio test, as well as others that impose limitations on, among other things, indebtedness of subsidiaries and asset sales, with which we were compliant as of March 31, 2025.

In November 2024, we entered into an agreement pursuant to which we obtained a $1.0 billion senior unsecured revolving credit facility (the "364-Day Revolving Credit Facility") with a syndicate of lenders, which is scheduled to expire 364 days after the January 2, 2025 closing of the RCA acquisition, the date on which borrowings under this facility became available to us. Interest on borrowings under the 364-Day Revolving Credit Facility will accrue at a rate equal to either an adjusted SOFR plus an applicable margin or an alternate base rate plus an applicable margin, in each case based on our public debt ratings. We may choose to reduce our commitment under the 364-Day Revolving Credit Facility at any time. We also have the right to prepay borrowings under the 364-Day Revolving Credit Facility at any time, in whole or in part and without premium or penalty, provided that the amount of any such prepayment meets certain minimum thresholds.

We have a commercial paper program, which does not increase our borrowing capacity, that is fully backed by our Multi-Currency Revolving Credit Facility and our 364-Day Revolving Credit Facility. We may, from time to time, issue short-term promissory notes in an aggregate amount of up to $3.4 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. There were $708.0 million of borrowings outstanding under the commercial paper program as of March 31, 2025 and none outstanding as of September 30, 2024.

We have a $1,450 million receivables securitization facility ("Receivables Securitization Facility"), which is scheduled to expire in October 2027. We have available to us an accordion feature whereby the commitment on the Receivables Securitization Facility may be increased by up to $250 million, subject to lender approval, for seasonal needs during the December and March quarters. Interest rates are based on prevailing market rates for short-term commercial paper or 30-day Term SOFR, plus a program fee. We pay a customary unused fee at prevailing market rates, 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 we were compliant as of March 31, 2025. There were no borrowings outstanding under the Receivables Securitization Facility as of March 31, 2025 and September 30, 2024.

We have an uncommitted, unsecured line of credit available to us pursuant to a money market credit agreement (the "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. In February 2025, we entered into an amendment to the Money Market Facility pursuant to which we may request short-term unsecured revolving credit loans in a principal amount not to exceed $750 million until June 30, 2025, after which date the facility limit will revert to $100 million. The Money Market Facility may be decreased or terminated by the bank or us at any time without prior notice.

In January 2025, we borrowed $1.5 billion on a variable-rate term loan ("Term Loan") that matures in December 2027. The Term Loan was used to finance a portion of the acquisition of RCA. The Term Loan bears interest at a rate equal to either an adjusted SOFR plus an applicable margin or an alternate base rate plus an applicable margin. The margins are based on our public debt ratings. The Term Loan contains similar covenants to the Multi-Currency Revolving Credit Facility. We have the right to prepay the borrowings under the Term Loan at any time, in whole or in part and without premium or penalty. On May 5, 2025, we elected to make an early principal payment of $100 million on the Term Loan.

In December 2024, we issued $500 million of 4.625% senior notes due in December 2027 (the "2027 Notes"), $600 million of 4.850% senior notes due in December 2029 (the "2029 Notes"), and $700 million of 5.150% senior notes due in February 2035 (the "2035 Notes"). The 2027 Notes were sold at 99.815% of the principal amount with an effective yield of 4.634%. The 2029 Notes were sold at 99.968% of the principal amount with an effective yield of 4.852%. The 2035 Notes were sold at 99.945% of the principal amount with an effective yield of 5.153%. Interest on the 2027 Notes and the 2029 Notes is payable semi-annually in arrears on June 15 and December 15 beginning on June 15, 2025. Interest on the 2035 Notes is payable semi-annually in arrears on February 15 and August 15 beginning on February 15, 2025. We used the proceeds from the 2027 Notes, the 2029 Notes, and the 2035 Notes to finance a portion of the acquisition of RCA.

In March 2025, our $500 million of 3.250% senior notes matured and was repaid.

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 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 March 2024, our Board of Directors authorized a share repurchase program allowing us to purchase up to $2.0 billion of our outstanding shares of common stock, subject to market conditions. In the six months ended March 31, 2025, we purchased $435.4 million of our common stock. As of March 31, 2025, we had $882.2 million of availability under this program.

In November 2024, our Board of Directors increased the quarterly dividend paid on common stock by 8% from $0.51 per share to $0.55 per share. We anticipate that we will continue to pay quarterly cash dividends in the future. However, the payment and amount of future dividends remains within the discretion of our Board of Directors and will depend upon future earnings, financial condition, capital requirements, and other factors.

Commitments and Obligations

As discussed and defined in Note 9 of the Notes to Consolidated Financial Statements, on July 21, 2021, it was announced that we and the two other national pharmaceutical distributors had negotiated a Distributor Settlement Agreement. The Distributor Settlement Agreement became effective on April 2, 2022, and as of March 31, 2025, it included 48 of 49 eligible states (the "Settling States") as well as 99% by population of the eligible political subdivisions in the Settling States. Our accrued litigation liability related to the Distributor Settlement Agreement and an estimate for non-participating government subsidiaries (with whom we have not reached a settlement agreement), as well as other opioid-related litigation for which we have reached settlement agreements on our Consolidated Balance Sheet as of March 31, 2025 is $4.7 billion and is expected to be paid over the next 14 years. We currently estimate that $416.5 million will be paid prior to March 31, 2026. The payment of the aforementioned litigation liability has not and is not expected to have an impact on our ability to pay dividends.

The following is a summary of our contractual obligations for future principal and interest payments on our debt, minimum rental payments on our noncancellable operating leases, and minimum payments on our other commitments as of March 31, 2025:

The 2017 Tax Act requires a one-time transition tax to be recognized on historical foreign earnings and profits. As of March 31, 2025, we expect to pay the remaining $57.9 million related to the transition tax in January 2026. The transition tax commitment is included in "Other Commitments" in the above table.

Our liability for uncertain tax positions was $571.0 million (including interest and penalties) as of March 31, 2025. 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 March 31, 2025 primarily includes an uncertain tax benefit related to the legal accrual for litigation related to the distribution of prescription opioid pain medications, as disclosed in Note 9 of the Notes to Consolidated Financial Statements.

Market and Risks

We have exposure to foreign currency and exchange rate risk from our non-U.S. operations. Our largest exposure to foreign exchange rates exists primarily with the U.K. Pound Sterling, the Euro, the Turkish Lira, the Brazilian Real, and the Canadian Dollar. We use forward contracts to hedge against the foreign currency exchange rate impact on certain intercompany receivable and payable balances. We may use derivative instruments and non-derivative hedges to hedge our foreign currency exposure, but not for speculative or trading purposes. Revenue from our foreign operations during the six months ended March 31, 2025 was approximately 9% 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 $2.3 billion of variable-rate debt outstanding as of March 31, 2025. We periodically evaluate financial instruments to manage our exposure to fixed and variable interest rates. However, there are no assurances that such instruments will be available in the combinations we want and/or on terms acceptable to us. There were no such financial instruments in effect as of March 31, 2025.

We also have market risk exposure to interest rate fluctuations relating to our cash and cash equivalents. We had $2.0 billion in cash and cash equivalents as of March 31, 2025. 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 and higher borrowing costs may also negatively impact our customers' ability to obtain credit to finance their businesses on acceptable terms. Reduced purchases by our customers or changes in the

ability of our customers to remit payments to us could adversely affect our revenue growth, our profitability, and our cash flow from operations.

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

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

We have no material changes to the disclosures on this matter made in our Annual Report on Form 10-K for the year ended September 30, 2024.

Evaluation of Disclosure Controls and Procedures

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

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

Changes in Internal Control over Financial Reporting

During the second quarter of fiscal 2025, there was no change in Cencora, Inc.'s internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended March 31, 2025 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

See Note 9 (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.

Our significant business risks are described in Item 1A to our Form 10-K for the fiscal year ended September 30, 2024 to which reference is made herein.

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 second fiscal quarter ended March 31, 2025. See Note 7, "Stockholders' Equity and Earnings per Share," contained in "Notes to 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.

ITEM 4. Mine Safety Disclosures

Not applicable.

Executive Officer Trading Arrangements

During the three months ended March 31, 2025, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, modified or terminated any contract, instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act or any non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).

(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.