What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-11-21 compared with 2022-11-22 · 284 added, 365 removed, 946 unchanged (41% of the section changed)

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of AmerisourceBergen Corporation

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

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of AmerisourceBergen Corporation and subsidiaries (the Company) as of September 30, 2022 and 2021, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended September 30, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of Cencora, Inc.

and subsidiaries (the Company) as of September 30, 2023 and 2022, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended September 30, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2023, in conformity with U.S.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Legal Matters and Contingencies - Opioid Lawsuits

Description of the Matter As discussed in Note 13 of the consolidated financial statements, the Company is involved in a significant number of lawsuits with counties, municipalities, and other governmental entities in a majority of U.S.

states and Puerto Rico, as well as numerous states and tribes relating to the distribution of prescription opioid pain medications (“opioid litigation”).

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosure to which it relates.

Legal Matters and Contingencies - Opioid Lawsuits and Investigations

Description of the Matter As discussed in Note 13 of the consolidated financial statements, the Company is involved in a significant number of lawsuits and government investigations relating to the distribution of prescription opioid pain medications and other controlled substances (“opioid litigation and investigations”).

The Company recognizes a liability for those legal contingencies for which it is probable that a liability has been incurred at the date of the consolidated financial statements and the amount is reasonably estimable.

The Company has recognized a $6.0 billion liability related to the opioid litigation as of September 30, 2022 and has disclosed that it is unable to estimate the range of possible loss in excess of the amount accrued.

In connection with this liability, the Company recognized a related income tax benefit, which reflects an unrecognized tax benefit resulting from uncertainty in the amount that is more likely than not to be deductible for U.S.

In connection with these liabilities, the Company recognizes a related income tax benefit, which reflects an unrecognized tax benefit resulting from uncertainty in the amount that is more likely than not to be deductible for U.S.

federal and state income tax purposes.

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federal and state purposes.

Auditing management’s determination of the measurement of the opioid litigation liability and disclosures is highly subjective and requires significant judgment.

For instance, auditing management’s judgments related to the opioid litigation is challenging due to the significant judgment applied in determining the magnitude of the liability and whether a range of possible loss in excess of the amount accrued is reasonably estimable, based upon the proposed or final settlement agreements.

In addition, auditing management's estimate of the amount of income tax benefit related to the Company's uncertain tax position is challenging because the evaluation of the technical merits of income tax benefits that qualify for a deduction related to the opioid litigation requires significant judgment.

Auditing management’s determination of whether the risk of loss related to opioid litigation and investigations is probable and reasonably estimable, and the related disclosures is highly subjective and requires significant judgment.

Auditing management’s judgments related to unsettled cases was challenging due to the significant judgment applied in determining the likelihood of resolution of matters through settlement or litigation and the magnitude of the liability.

In addition, auditing management's estimate of the amount of income tax benefit related to the Company's uncertain tax positions is challenging because the evaluation of the technical merits of income tax benefits that qualify for a deduction related to the opioid litigation and investigations requires significant judgment.

How We Addressed the Matter in Our Audit

We tested the Company’s internal controls that address the risks of material misstatement related to the completeness, presentation and disclosure of the opioid litigation liability and related uncertain tax position.

We tested the Company’s internal controls that address the risks of material misstatement related to the completeness and presentation and disclosure of the opioid litigation and investigations liability and related uncertain tax position.

This included testing controls related to the Company’s process for identification, recognition, completeness, and disclosure of the opioid litigation and testing controls related to the Company’s process to assess the technical merits of its tax position, including the Company’s assessment as to the amount of benefit that is more likely than not to be realized upon ultimate settlement with taxing authorities.

For example, we tested controls over management’s review of the assessment of the completeness of the opioid litigation liability and whether a range of possible loss in excess of the amount accrued is reasonably estimable to determine the accuracy of the opioid litigation liability and the related financial statement footnote disclosures.

To test the Company’s opioid litigation liability, our substantive audit procedures included, among others, testing the measurement of the opioid litigation contingencies by inspecting the proposed or final settlement agreements and agreeing key terms to management’s reserve calculation and assumptions, as well as vouching payments made during the year.

We inspected responses to inquiry letters sent to both internal and external legal counsel, held discussions with internal general counsel and external legal counsel to confirm our understanding of any settlement discussions, and obtained written representations from executives of the Company.

For example, we tested controls over management’s review of the assessment of the completeness of the opioid litigation and investigations liability and whether a range of possible loss in excess of the amount accrued is reasonably estimable to determine the accuracy of the opioid litigation and investigations liability and the related financial statement footnote disclosures.

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

We also compared the Company’s assessment with its relevant history of similar legal contingencies that have been settled or otherwise resolved to evaluate the consistency of the Company’s assessment for unsettled opioid litigation and investigations.

For those legal contingencies for which the Company has determined that a loss is probable and reasonably estimable and is therefore required to be recognized, and for those legal contingencies for which the Company has determined that a loss is either probable or reasonably possible, but the Company is unable to estimate the range of loss, and is therefore required to be disclosed, we evaluated the method of measuring the amounts of the recorded and disclosed contingencies.

We assessed the Company’s estimate of the amount of the loss, for both contingencies that are probable and reasonably possible, through inspection of responses to inquiry letters sent to both internal and external legal counsel, direct discussions with internal legal counsel, inspection of any proposed settlement agreements and obtaining written representations from executives of the Company.

In addition, we evaluated the adequacy of the Company’s financial statement disclosures.

We involved our tax subject matter professionals in assessing the technical merits and measurement of the Company’s tax position related to the opioid litigation liability.

We examined the Company’s analysis and evaluated the underlying facts upon which the tax position was based.

We used our knowledge of historical settlement activity to evaluate the Company’s measurement of the uncertain tax position associated with the opioid litigation.

This included evaluating third-party evidence obtained from the Company’s external income tax advisors.

We involved our tax subject matter professionals in assessing the technical merits and measurement of the Company’s tax positions related to the opioid litigation and investigation liability.

We examined the Company’s analyses and evaluated the underlying facts upon which the tax positions were based.

We used our knowledge of historical settlement activity in similar matters involving legal settlements to evaluate the Company’s measurement of the uncertain tax position associated with the opioid litigation and investigations.

We also evaluated the adequacy of the Company’s financial statement disclosures and obtained written representations from executives of the Company related to this income tax matter.

Other Legal Matters and Contingencies

Description of the Matter As discussed in Note 13 of the consolidated financial statements, in addition to the opioid litigation addressed above, the Company is involved in government subpoenas, derivative actions, and other disputes.

The Company also performs an assessment of the materiality of legal contingencies where a loss is either reasonably possible or it is reasonably possible that an exposure to loss exists in excess of the amount accrued.

If it is reasonably possible that such a loss or an additional loss may have been incurred and the effect on the consolidated financial statements is material, the Company discloses the nature of the loss contingency and an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made within the notes to the consolidated financial statements.

Auditing management’s determination of whether a loss for a legal contingency is probable and reasonably estimable, reasonably possible or remote, and the related measurement and disclosures, is highly subjective and requires significant judgment.

For instance, auditing management’s judgments was challenging due to the significant judgment applied in determining the likelihood of resolution of the matters through settlement or litigation.

How We Addressed the Matter in Our Audit We tested the Company’s internal controls that address the risks of material misstatement related to the completeness, valuation, presentation and disclosure of legal contingencies.

This included testing controls related to the Company’s process for identification, recognition, measurement and disclosure of legal contingencies.

For example, we tested controls over management’s review of the assessment of the probability of occurrence of a loss and whether the loss was reasonably estimable to determine the completeness and accuracy of legal contingencies and the related financial statement footnote disclosures.

We also tested controls over management’s assessment of the likelihood of the resolution of the matters through settlement or litigation.

To test the Company’s legal contingencies, our substantive audit procedures included, among others, testing the completeness of the legal contingencies subject to evaluation by the Company and evaluating the Company’s analysis of its assessment of the probability of outcome for each material legal contingency, including the Company’s assessment as to whether a loss is reasonably estimable or if the Company is unable to estimate the range of loss, through inspection of responses to inquiry letters sent to both internal and external legal counsel, discussions with internal general counsel and external legal counsel to confirm our understanding of the allegations, and obtaining written representations from executives of the Company.

In addition, we evaluated the adequacy of the Company’s financial statement disclosures.

/s/ Ernst & Young LLP

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November 21, 2023

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

CENCORA, INC.

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

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Prepaid expenses and other 448,949 487,871

Assets held for sale — 372,908

Total current assets 42,798,826 39,589,758

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Short-term debt 641,344 1,070,473

Liabilities held for sale — 192,069

Total current liabilities 48,831,198 43,477,955

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Deferred income taxes 1,657,944 1,620,413

Other liabilities 976,583 1,082,723

Accrued litigation liability 5,061,795 5,461,758

Other liabilities

1,884,733 976,583

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( 8,247,103 ) ( 7,019,895 )

Total AmerisourceBergen Corporation stockholders' (deficit) equity ( 211,559 ) 223,354

Total Cencora, Inc.

stockholders' equity (deficit) 522,003 ( 211,559 )

Noncontrolling interests 144,284 282,832

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See notes to consolidated financial statements.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

CENCORA, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

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Amortization 553,563 307,300 178,348

Litigation and opioid-related expenses 123,191 272,623 6,722,346

Acquisition, integration, and restructuring expenses 183,059 199,288 84,961

Litigation and opioid-related (credit) expenses ( 24,693 ) 123,191 272,623

Acquisition-related deal and integration expenses 139,683 119,561 116,969

Restructuring and other expenses 229,884 63,498 82,319

Goodwill impairment — 75,936 6,373

Impairment of assets — 4,946 11,324

Operating income (loss) 2,366,378 2,354,197 ( 5,135,354 )

Operating income 2,340,731 2,366,378 2,354,197

Other income, net ( 49,036 ) ( 27,352 ) ( 41,736 )

Interest expense, net 228,931 210,673 174,074

Loss on early retirement of debt — — 22,175

Income (loss) before income taxes 2,183,057 2,221,859 ( 5,293,831 )

Income tax expense (benefit) 516,517 677,251 ( 1,894,273 )

Net income (loss) 1,666,540 1,544,608 ( 3,399,558 )

Income before income taxes 2,160,836 2,183,057 2,221,859

Income tax expense 428,260 516,517 677,251

Net income 1,732,576 1,666,540 1,544,608

Net loss (income) attributable to noncontrolling interests 12,717 32,280 ( 4,676 )

Net income (loss) attributable to AmerisourceBergen Corporation $ 1,698,820 $ 1,539,932 $ ( 3,408,716 )

Net income attributable to Cencora, Inc.

$ 1,745,293 $ 1,698,820 $ 1,539,932

Earnings per share:

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See notes to consolidated financial statements.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

CENCORA, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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(in thousands) 2023 2022 2021

Net income (loss) $ 1,666,540 $ 1,544,608 $ ( 3,399,558 )

Other comprehensive loss:

Net income $ 1,732,576 $ 1,666,540 $ 1,544,608

Other comprehensive income (loss):

Foreign currency translation adjustments 353,439 ( 1,426,741 ) ( 334,522 )

Other, net 33,395 4,910 10

Total other comprehensive loss ( 1,421,831 ) ( 334,512 ) ( 8,946 )

Total comprehensive income (loss) 244,709 1,210,096 ( 3,408,504 )

Total other comprehensive income (loss) 386,834 ( 1,421,831 ) ( 334,512 )

Total comprehensive income 2,119,410 244,709 1,210,096

Comprehensive loss (income) attributable to noncontrolling interests 54,246 68,583 ( 6,776 )

Comprehensive income (loss) income attributable to AmerisourceBergen Corporation $ 313,292 $ 1,203,320 $ ( 3,405,581 )

Comprehensive income attributable to Cencora, Inc.

$ 2,173,656 $ 313,292 $ 1,203,320

See notes to consolidated financial statements.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

CENCORA, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

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September 30, 2020 $ 2,878 $ 5,081,776 $ 518,335 $ ( 108,830 ) $ ( 6,513,083 ) $ 179,288 $ ( 839,636 )

Adoption of lease accounting standard

Adoption of ASC 326 , net of tax (Note 1)

— — ( 21,106 ) — — ( 2,988 ) ( 24,094 )

Net (loss) income — — ( 3,408,716 ) — — 9,158 ( 3,399,558 )

Other comprehensive income (loss) — — — 3,135 — ( 12,081 ) ( 8,946 )

Net income — — 1,539,932 — — 4,676 1,544,608

Other comprehensive (loss) income — — — ( 336,612 ) — 2,100 ( 334,512 )

Cash dividends, $ 1.76 per share

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Purchases of common stock — — — — ( 82,150 ) — ( 82,150 )

Profarma retail equity offering — ( 1,567 ) — — — 67,922 66,355

Employee tax withholdings related to restricted share vesting

— — — — ( 23,547 ) — ( 23,547 )

Equity consideration issued for acquisition of Alliance Healthcare (Note 2) — 86,089 — — 149,052 — 235,141

Acquisition of Alliance Healthcare (Note 2) — — — — — 178,264 178,264

Other, net 6 ( 1,082 ) — — — ( 283 ) ( 1,359 )

September 30, 2021 2,907 5,465,104 1,670,513 ( 445,442 ) ( 6,469,728 ) 361,057 584,411

Adoption of ASC 326 , net of tax (Note 1)

— — ( 21,106 ) — — ( 2,988 ) ( 24,094 )

Net income — — 1,539,932 — — 4,676 1,544,608

Other comprehensive (loss) income — — — ( 336,612 ) — 2,100 ( 334,512 )

Net income (loss) — — 1,698,820 — — ( 32,280 ) 1,666,540

Other comprehensive loss — — — ( 1,385,528 ) — ( 36,303 ) ( 1,421,831 )

Cash dividends, $ 1.84 per share

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— — — — ( 38,076 ) — ( 38,076 )

Equity consideration issued for acquisition of Alliance Healthcare (Note 2) — 86,089 — — 149,052 — 235,141

Acquisition of Alliance Healthcare (Note 2) — — — — — 178,264 178,264

Divestiture of business — — — — — ( 3,544 ) ( 3,544 )

Other, net 10 6,327 — — — ( 6,098 ) 239

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Net income (loss) — — 1,745,293 — — ( 12,717 ) 1,732,576

Other comprehensive loss — — — ( 1,385,528 ) — ( 36,303 ) ( 1,421,831 )

Other comprehensive income (loss) — — — 428,363 — ( 41,529 ) 386,834

Cash dividends, $ 1.94 per share

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— — — — ( 71,279 ) — ( 71,279 )

Sale of business — — — — — ( 3,544 ) ( 3,544 )

Divestiture of business — — — — — ( 76,957 ) ( 76,957 )

Other, net 13 77 — — — ( 7,345 ) ( 7,255 )

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See notes to consolidated financial statements.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

CENCORA, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOW

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OPERATING ACTIVITIES

Net income (loss) $ 1,666,540 $ 1,544,608 $ ( 3,399,558 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net income $ 1,732,576 $ 1,666,540 $ 1,544,608

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, including amounts charged to cost of goods sold 418,830 390,643 326,713

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Provision for credit losses 54,389 26,053 12,101

Provision (benefit) for deferred income taxes 196,184 334,866 ( 1,544,971 )

(Benefit) provision for deferred income taxes ( 118,864 ) 196,184 334,866

Share-based compensation expense 124,624 93,400 99,594

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Impairment of assets, including goodwill — 80,882 31,697

Gain on sale of businesses ( 56,228 ) — —

Gain on divestiture of businesses ( 40,665 ) ( 56,228 ) —

Turkey highly inflationary impact 95,938 51,966 —

Gain on remeasurement of equity investment ( 242 ) ( 4,834 ) ( 64,721 )

Loss on early retirement of debt — — 22,175

Other, net 3,593 11,781 29,361

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Cost of equity investments ( 743,275 ) ( 18,491 ) ( 162,620 )

Proceeds from sale of property and equipment 6,302 14,439 36,364

Proceeds from sale of businesses 272,586 — —

Proceeds from divestiture of businesses — 272,586 —

Other, net 9,004 7,600 22,300

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Repayments under revolving and securitization credit facilities ( 78,187,891 ) ( 4,671,943 ) ( 5,083,930 )

Payment of premium on early retirement of debt — — ( 21,448 )

Purchases of common stock ( 1,180,728 ) ( 483,704 ) ( 82,150 )

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Cash dividends on common stock ( 398,752 ) ( 391,687 ) ( 366,648 )

Profarma retail equity offering — — 66,355

Tax withholdings related to restricted share vesting ( 38,076 ) ( 23,547 ) ( 9,787 )

Employee tax withholdings related to restricted share vesting ( 71,279 ) ( 38,076 ) ( 23,547 )

Other, net ( 9,413 ) ( 10,122 ) 9,892

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EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 72,759 ( 57,850 ) ( 3,725 )

INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, INCLUDING CASH CLASSIFIED WITHIN ASSETS HELD FOR SALE 524,021 ( 1,525,867 ) 1,223,552

(DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, INCLUDING CASH CLASSIFIED WITHIN ASSETS HELD FOR SALE ( 840,650 ) 524,021 ( 1,525,867 )

INCREASE IN CASH CLASSIFIED WITHIN ASSETS HELD FOR SALE — ( 610 ) ( 1,751 )

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 523,411 ( 1,527,618 ) 1,223,552

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 840,650 ) 523,411 ( 1,527,618 )

Cash, cash equivalents, and restricted cash at beginning of year 3,593,539 3,070,128 4,597,746

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See notes to consolidated financial statements.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

CENCORA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Summary of Significant Accounting Policies

AmerisourceBergen Corporation and its subsidiaries, including less-than-wholly-owned subsidiaries in which AmerisourceBergen Corporation has a controlling financial interest (the "Company"), is one of the largest global pharmaceutical sourcing and distribution services companies, helping both healthcare providers and pharmaceutical and biotech manufacturers improve patient access to products and enhance patient care.

On August 30, 2023, AmerisourceBergen Corporation changed its name to Cencora, Inc.

Cencora, Inc.

and its subsidiaries, including less-than-wholly-owned subsidiaries in which Cencora, Inc.

has a controlling financial interest (the "Company"), is one of the largest global pharmaceutical sourcing and distribution services companies, helping both healthcare providers and pharmaceutical and biotech manufacturers improve patient access to products and enhance patient care.

The Company delivers innovative programs and services designed to improve the effectiveness and efficiency of the pharmaceutical supply chain in both human and animal health.

The Company undertook a strategic evaluation of its reporting structure to reflect its expanded international presence as a result of the June 2021 acquisition of Alliance Healthcare.

As a result, at the beginning of fiscal 2022, the Company re-aligned its reporting structure under two reportable segments:

Healthcare Solutions and International Healthcare Solutions.

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 in June 2022).

Profarma had previously been included in the Pharmaceutical Distribution Services reportable segment.

The Company’s prior period segment disclosures have been revised to reflect this change in reportable segments.

Basis of Presentation

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For the Company's credit loss policy, refer to the "Concentrations of Credit Risk and Allowance for Credit Losses" section of Note 1.

In December 2019, the FASB issued ASU No.

2019-12, "Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes" ("ASU 2019-12").

ASU 2019-12 removes certain exceptions to the general principles in Accounting Standards Codification ("ASC") 740 in order to reduce the cost and complexity of its application.

ASU 2019-12 was effective for annual reporting periods beginning after December 15, 2020, including interim periods within those fiscal years, with certain amendments applied on a modified retrospective basis, with a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption, and others prospectively.

The Company adopted ASU No.

2019-12 as of October 1, 2021.

The adoption of ASU No.

2019-12 had no impact on the Company's financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

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Business Combinations

The assets acquired and liabilities assumed from an acquired business are recorded at fair value, with the residual of the purchase price recorded as goodwill.

The assets acquired and liabilities assumed from an acquired business are recorded at estimated fair value, with the residual of the purchase price recorded as goodwill.

The results of operations of an acquired businesses are included in the Company's operating results from the date of acquisition.

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Concentrations of Credit Risk and Allowance for Credit Losses

The Company sells its inventories to a large number of customers in the healthcare industry that include institutional and retail healthcare providers.

The Company has sales to a large number of customers in the healthcare industry that include institutional and retail healthcare providers.

Institutional healthcare providers include acute care hospitals, health systems, mail order pharmacies, long-term care and other alternate care pharmacies and providers of pharmacy services to such facilities, and physician offices.

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The calculation of the required allowance requires judgment by Company management as to the impact of those and other factors on the ultimate realization of its trade receivables.

Each of the Company's business units performs ongoing credit evaluations of its customers' financial condition and maintains reserves for expected credit losses for specific credit problems when they arise.

The Company performs ongoing credit evaluations of its customers' financial condition and maintains reserves for expected credit losses for specific credit problems when they arise.

There were no significant changes to this process during the fiscal years ended September 30, 2023, 2022, and 2021, and bad debt expense was computed in a consistent manner during these periods.

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The Company records gain contingencies when they are realized.

Gains from antitrust litigation settlements are realized upon the receipt of cash and recorded as a reduction to cost of goods sold because they represent a recovery of amounts historically paid to manufacturers to originally acquire the pharmaceuticals that were the subject of the antitrust litigation settlements (see Note 14).

Gains from antitrust litigation settlements are realized upon the receipt of cash and recorded as a reduction to cost of goods sold because they represent a

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

Derivative Financial Instruments

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This higher historical basis results in incremental expense being recognized when nonmonetary assets are consumed (i.e., sale of inventory).

During the fiscal year ended September 30, 2022, the Company recorded an incremental expense of $ 40.0 million in Cost of Goods Sold related to the consumption of inventory and an expense of $ 11.9 million within Other Income related to the currency remeasurement of monetary assets and liabilities.

During the fiscal years ended September 30, 2023 and 2022, the Company recorded incremental expenses of $ 87.0 million and $ 40.0 million, respectively, in Cost of Goods Sold related to the consumption of inventory and expenses of $ 9.0 million and $ 11.9 million, respectively, within Other Income, Net related to the currency remeasurement of monetary assets and liabilities.

Goodwill and Other Intangible Assets

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The Company evaluates whether the components within its operating segments have similar economic characteristics, which include the similarity of long-term gross margins, the nature of the components' products, services, and production processes, the types of customers and the methods by which products or services are delivered to customers, and the components' regulatory environment.

The Company announced a strategic reorganization of its business and began reporting externally under the new structure as of October 1, 2021.

As of September 30, 2022, the Company’s reporting units include Pharmaceutical Distribution Services, U.S.

Consulting Services, MWI, Alliance Healthcare, Innomar, World Courier, and Profarma.

As of September 30, 2023, the Company’s reporting units include U.S.

Pharmaceutical Distribution Services, U.S.

Consulting Services, MWI Animal Health, Alliance Healthcare, Innomar, World Courier, PharmaLex, and Profarma.

Goodwill and other intangible assets with indefinite lives, such as certain trademarks and trade names, are not amortized;

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If the Company concludes based on its qualitative assessment that it is more likely than not that the fair value of a reporting unit is less than its carrying value, it performs a quantitative analysis.

The Company elected to perform a quantitative impairment assessment of goodwill and indefinite-lived intangible assets in fiscal 2022.

The Company elected to perform a quantitative impairment assessment of goodwill for its reporting units in fiscal 2023 and 2022 with the exception of its PharmaLex reporting unit, which was recently acquired.

The Company elected to perform a qualitative impairment assessment of indefinite-lived intangible assets in fiscal 2023 and a quantitative impairment assessment of indefinite-lived intangible assets in fiscal 2022.

The Company elected to perform a qualitative impairment assessment of goodwill and indefinite-lived intangible assets in fiscal 2021, with the exception of its testing of goodwill in the AmerisourceBergen Consulting Services (the sum of U.S.

Consulting Service and Innomar reporting units, under the Company’s prior reporting structure) and Profarma reporting units.

The Company elected to perform a qualitative impairment assessment of goodwill and indefinite-lived intangible assets in fiscal 2020, with the exception of its testing of goodwill and indefinite-lived intangibles in the MWI and Profarma reporting units.

The quantitative goodwill impairment test requires the Company to compare the carrying value of the reporting unit's net assets to the fair value of the reporting unit.

If the fair value exceeds the carrying value, no further evaluation is required, and no impairment loss is recognized.

If the carrying amount exceeds the fair value, the difference between the carrying value and the fair value is recorded as an impairment loss, the amount of which may not exceed the total amount of goodwill allocated to the reporting unit.

When performing a quantitative impairment assessment, the Company utilizes an income-based approach to value its reporting units, with the exception of the Profarma reporting unit, the fair value of which is based upon its publicly-traded stock price, plus an estimated control premium.

The income-based approach relies on a discounted cash flow analysis, which considers forecasted cash flows discounted at an appropriate discount rate, to determine the fair value of each reporting unit.

If the carrying amount exceeds the fair value, the difference between the carrying value

and the fair value is recorded as an impairment loss, the amount of which may not exceed the total amount of goodwill allocated to the reporting unit.

When performing a quantitative impairment assessment, the Company utilizes an income approach or a weighted-average of an income and market approach to value its reporting units.

The income approach relies on a discounted cash flow analysis, which considers forecasted cash flows discounted at an appropriate discount rate, to determine the fair value of each reporting unit.

The Company generally believes that market participants would use a discounted cash flow analysis to determine the fair value of the Company's reporting units in a sale transaction.

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The quantitative impairment test for indefinite-lived intangibles other than goodwill (certain trademarks and trade names) consists of a comparison of the fair value of the indefinite-lived intangible asset to the carrying value of the asset as of the impairment testing date.

The Company estimates the fair value of its indefinite-lived intangibles using the relief from royalty method.

The Company believes the relief from royalty method is a widely used valuation technique for such assets.

The Company estimates the fair value of its indefinite-lived intangibles using the relief from royalty method, which is a widely used valuation technique for such assets.

The fair value derived from the relief from royalty method is measured as the discounted cash flow savings realized from owning such indefinite-lived trademarks and trade names and not having to pay a royalty for their use.

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The Company recorded goodwill impairments of $ 75.9 million and $ 6.4 million in its Profarma reporting unit in connection with its fiscal 2022 and 2021 impairment tests (see Note 5), respectively.

No goodwill impairments were recorded in the fiscal years ended September 30, 2020, and no indefinite-lived intangible asset impairments were recorded in the fiscal years ended September 30, 2022, 2021, or 2020.

No goodwill impairments were recorded in the fiscal year ended September 30, 2023, and no indefinite-lived intangible asset impairments were recorded in the fiscal years ended September 30, 2023, 2022, or 2021.

Finite-lived intangible assets are amortized using the straight-line method over the estimated useful lives of the assets.

The Company performs a recoverability assessment of its long-lived assets when impairment indicators are present.

The Company recorded impairments of intangible and tangible assets totaling $ 361.7 million in the fiscal year ended September 30, 2020 in connection with the permanent shutdown of its compounding business.

Held for Sale

Assets and liabilities to be disposed of by sale ("disposal groups") are reclassified into assets and liabilities held for sale on the Company's Consolidated Balance Sheet.

The reclassification occurs when an agreement to sell exists, or management has committed to a plan to sell the assets within one year.

Disposal groups are measured at the lower of carrying value or fair value less costs to sell and are not depreciated or amortized.

When the net realizable value of a disposal group increases during a period, a gain can be recognized to the extent that it does not increase the value of the disposal group beyond its original carrying value when the disposal group was reclassified as held for sale.

The fair value of a disposal group, less any costs to sell, is assessed each reporting period it remains classified as held for sale and any remeasurement to the lower of carrying value or fair value less costs to sell is reported as an adjustment to the carrying value of the disposal group.

The Company accounts for income taxes using a method that requires recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between tax bases and financial reporting bases of the Company's assets and liabilities (commonly known as the asset and liability method).

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If it is determined that an investment is not a VIE, the Company then evaluates its investments under the voting interest model and generally consolidates investments in which it holds an ownership interest of greater than 50%.

When the Company consolidates less-than-wholly-owned subsidiaries, it presents its noncontrolling interest in its consolidated financial statements.

When the Company consolidates less-than-wholly-owned subsidiaries, it records its noncontrolling interest in its consolidated financial statements.

For equity securities without a readily determinable fair value, the Company uses the fair value measurement alternative and measures the securities at cost less impairment, if any, including adjustments for observable price changes in orderly transactions for an identical or similar investment of the same issuer.

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Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement.

At the lease commencement date, operating and finance lease liabilities and their corresponding ROU assets are recorded based on the present value of lease payments over the expected lease term.

At the lease commencement date, operating and finance lease liabilities and their corresponding right-of-use ("ROU") assets are recorded based on the present value of lease payments over the expected lease term.

The interest rate implicit in lease contracts is typically not readily determinable and, as such, the Company uses its incremental borrowing rate to discount the lease liabilities, which is the rate incurred to borrow on a collateralized basis over a similar term in a similar economic environment.

Certain adjustments to the right-of-use ("ROU") asset may be required for items such as incentives received.

Certain adjustments to the ROU asset may be required for items such as incentives received.

The Company does not recognize on the balance sheet leases with terms of one year or less.

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The fair value of restricted stock units and performance stock units is based upon the grant date market price of the Company’s common stock.

The Company estimated the fair value of options granted in fiscal 2020 using a binomial option pricing model.

Share-based compensation expense is recognized over the requisite service period within Distribution, Selling, and Administrative in the Consolidated Statements of Operations to correspond with the same line item as the cash compensation paid to employees.

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The ultimate outcome of any outstanding claim may be different than the Company's estimate.

Acquisition and Assets and Liabilities Held for Sale

Acquisitions and Equity Method Investment

PharmaLex Acquisition

The Company acquired and assumed control of PharmaLex Holding GmbH ("PharmaLex") effective January 1, 2023 for $ 1.473 billion, subject to customary adjustments, including a $ 29.3 million cash holdback.

PharmaLex is a leading provider of specialized services for the life sciences industry.

PharmaLex's services include regulatory affairs, development consulting and scientific affairs, pharmacovigilance, and quality management and compliance.

PharmaLex is headquartered in Germany and operates in over 30 countries.

The acquisition advances the Company's role as a partner of choice for biopharmaceutical partners across the pharmaceutical development and commercialization journey.

PharmaLex is a component of the Company's International Healthcare Solutions reportable segment.

The purchase price has been preliminarily allocated to the underlying assets acquired, including $ 37.4 million of cash and cash equivalents, and liabilities assumed based upon their estimated fair values as of the date of the acquisition.

The preliminary allocation is pending the finalization of the working capital account balances and goodwill.

The purchase price exceeded the current estimated fair value of the net tangible and intangible assets acquired by $ 1,023.1 million, which was allocated to goodwill.

Goodwill resulting from this acquisition is not deductible for income tax purposes.

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

(in thousands, except useful lives) Fair Value Useful Lives

Customer relationships $ 522,634 12

Trade names 30,931 5

Software technology 5,333 6

Total $ 558,898

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

Investment in OneOncology

In June 2023, the Company and TPG, a global alternative asset management firm, acquired OneOncology, LLC ("OneOncology"), a network of leading oncology practices.

Including all direct transaction costs, the Company invested $ 718.4 million (representing 34.9 %) in a joint venture formed to acquire OneOncology for approximately $ 2.1 billion, and TPG acquired the majority interest in the joint venture.

The Company accounts for its interest in the joint venture as an equity method investment, which is included in Other Assets on its Consolidated Balance Sheet.

Beginning on the third anniversary of the closing of the joint venture's acquisition of OneOncology and ending on the day before the fourth anniversary of that closing, TPG will have a put option under which TPG may require the Company to purchase all of the other interests in the joint venture, including TPG's interest, at a price equal to 19 times OneOncology's adjusted earnings before interest, taxes, depreciation and amortization for the most recently ended 12-month period prior to TPG’s exercise of the put option, all of which is subject to various other adjustments and qualifications.

In addition, on the date that is the third anniversary of the closing and again beginning on the fourth anniversary of the closing and ending on the day before the fifth anniversary of the closing, the Company will have a call option to purchase all of the other interests in the joint venture, including TPG's, also at the price set forth above.

The fair value of the net put option, which is a Level 3 measurement, was determined using a Monte Carlo simulation, which relies on assumptions, including cash flow projections, risk-free rates, volatility, and details specific to the put and call options.

In September 2023, the Company adjusted the preliminary estimated net fair value of the net put option from $ 807.2 million to $ 872.9 million, which is recorded within Other Liabilities with a

corresponding offset in Other Assets in the Company's Consolidated Balance Sheet as of September 30, 2023.

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

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

The intangible assets and related deferred tax liability are being amortized over a weighted-average life of 23 years.

Alliance Healthcare Acquisition

On June 1, 2021, the Company acquired a majority of Walgreens Boots Alliance, Inc.'s ("WBA") Alliance Healthcare businesses ("Alliance Healthcare") for $ 6,662.0 million in cash, $ 229.1 million of the Company's common stock ( 2 million shares at the Company's June 1, 2021 opening stock price of $ 114.54 per share), and $ 6.1 million of other equity consideration.

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Cash $ 6,662,020

Equity ( 2 million shares of AmerisourceBergen Corporation common stock)

Equity ( 2 million shares of Cencora, Inc.

common stock)

Other equity consideration 6,061

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Total $ 3,735,000

Goodwill resulting from this acquisition is no t expected to be deductible for income tax purposes.

Goodwill resulting from this acquisition is no t deductible for income tax purposes.

The fair value of the $ 185.2 million noncontrolling interest in Alliance Healthcare Egypt, a 50 %-owned subsidiary, was estimated by applying income and market-based approaches.

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The Company incurred $ 90.9 million of acquisition-related costs in connection with this acquisition.

These costs are included in Acquisition, Integration, and Restructuring Expenses in the Company's Statements of Operations for the twelve months ended September 30, 2021.

These costs are included in Acquisition-Related Deal and Integration Expenses in the Company's Statements of Operations for the fiscal year ended September 30, 2021.

Other Information-Item 1A.

Risk Factors of this Annual Report on Form 10-K for additional risk factors related to our strategic transactions with WBA.

Assets and Liabilities Held for Sale

The Company entered into agreements in the fourth quarter of fiscal 2021 to sell two of its non-core subsidiaries.

In connection with entering into these agreements, the Company concluded that both disposal groups met the held for sale criteria and classified their assets and liabilities as held for sale as of September 30, 2021.

One disposal group was included within the U.S.

Healthcare Solutions reportable segment and the other disposal group was included within International Healthcare Solutions reportable segment.

In connection with the held for sale classification, the Company recorded a total loss of $ 16.3 million on the remeasurement of the disposal group held for sale in the U.S.

Healthcare Solutions reportable segment to fair value less cost to sell, $ 4.9 million of which was recorded in Impairment of Assets on its Consolidated Statement of Operations in the fiscal year ended September 30, 2022.

The Company previously recorded a loss of $ 11.3 million in fiscal year ended September 30, 2021.

The Company completed the sales of the disposal groups in the fiscal year ended September 30, 2022 and received total proceeds of $ 267.6 million, subject to final working capital adjustments.

In connection with the sales of these disposal groups, the Company recorded a gain of $ 52.6 million, which is included in Other Income, Net in the Company's Consolidated Statements of Operations.

Total assets and liabilities of the combined disposal groups held for sale on the September 30, 2021 Consolidated Balance Sheet are comprised of the following:

(in thousands)

Cash and cash equivalents $ 1,751

Accounts receivable, less allowance for credit losses 182,077

Inventories 123,424

Prepaid expenses and other 11,258

Property and equipment 3,084

Goodwill 31,903

Other intangible assets 22,923

Other assets 7,812

Loss on the remeasurement of a disposal group held for sale to fair value less cost to sell ( 11,324 )

Total assets held for sale $ 372,908

Accounts payable $ 173,104

Accrued expenses and other 7,234

Short-term debt 4,225

Long-term debt 50

Deferred income taxes 5,857

Other liabilities 1,599

Total liabilities held for sale $ 192,069

Variable Interest Entity

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The following assets and liabilities of Profarma are included in the Company's Consolidated Balance Sheet for the periods indicated:

(in thousands) September 30,

September 30,

(in thousands) 2023 2022

Cash and cash equivalents $ 33,256 $ 23,144

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Property and equipment, net 42,759 35,554

Goodwill — 75,936

Other intangible assets 62,384 66,568

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

Profarma Retail Equity Offering

In August 2020, Profarma received $ 66.4 million through an equity offering of its retail business.

The equity offering decreased Profarma's voting ownership interest in the retail business from 100 % to 53.5 %.

Profarma continues to consolidate the operating results of the retail business in its consolidated financial statements.

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

Income Before Income Taxes

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

Fiscal Year Ended September 30,

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Total $ 2,160,836 $ 2,183,057 $ 2,221,859

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

Income Tax Expense

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

Fiscal Year Ended September 30,

(in thousands) 2023 2022 2021

Current provision (benefit):

Current provision:

Federal $ 259,126 $ 126,969 $ 184,375

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Foreign 245,065 154,082 127,351

Total current provision (benefit) 320,333 342,385 ( 349,302 )

Deferred provision (benefit):

Total current provision 547,124 320,333 342,385

Deferred (benefit) provision:

Federal ( 15,600 ) 150,328 111,428

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Foreign ( 122,709 ) 14,727 175,922

Total deferred provision (benefit) 196,184 334,866 ( 1,544,971 )

Provision (benefit) for income taxes $ 516,517 $ 677,251 $ ( 1,894,273 )

Total deferred (benefit) provision ( 118,864 ) 196,184 334,866

Provision for income taxes $ 428,260 $ 516,517 $ 677,251

Tax Rate Reconciliation

A reconciliation of the statutory U.S.

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Tax effect of foreign operations ( 2.4 ) ( 1.9 ) ( 0.5 )

Litigation settlements and accruals (see Note 13)

0.4 0.8 ( 6.2 )

Tax law changes 1

PharMEDium worthless stock deduction — ( 1.1 ) 12.4

CARES Act — — 1.2

( 0.5 ) — 7.3

Other, net ( 0.6 ) 2.1 ( 0.1 )

Effective income tax rate 19.8 % 23.7 % 30.5 %

1 Tax law changes include 5.7 % related to UK Tax Reform and 1.6 % related to Swiss Tax Reform in fiscal 2021 and 6.8 % in fiscal 2020 related to Swiss Tax Reform.

1 Tax law changes include 5.7 % related to UK Tax Reform and 1.6 % related to Swiss Tax Reform in fiscal 2021.

United Kingdom Tax Reform

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As a result, the Company recognized a deferred tax expense of $ 127.6 million to increase its deferred tax liabilities for the change in the tax rate in the fiscal year ended September 30, 2021.

The Coronavirus Aid, Relief, and Economic Security Act

The Coronavirus Aid, Relief, and Economic Security ("CARES") Act became law on March 27, 2020.

The CARES Act was a response to the market volatility and instability resulting from the coronavirus pandemic and included provisions to support businesses in the form of loans, grants, and tax changes, among other types of relief that were not previously available under the U.S.

Tax Cuts and Jobs Act of 2017 (the "2017 Tax Act").

The CARES Act provided the Company relief through adjustments to net operating loss rules and the acceleration of available refunds for alternative minimum tax credit carryforwards.

The Company decided in January 2020 to shut down and permanently exit its compounding business.

Following the decision to exit PharMEDium and in connection with the permanent shutdown of this business, PharMEDium underwent a voluntary change in tax status, which resulted in the Company recognizing a worthless stock ordinary income tax deduction of approximately $ 2.4 billion and, in turn, yielded a tax benefit of approximately $ 655 million.

The estimated tax benefit was higher than it would have been prior to the enactment of the CARES Act as the net operating losses resulting from the worthless stock deduction could now be carried back to years with higher statutory tax rates.

In addition to the PharMEDium worthless stock deduction, the Company recognized other discrete tax benefits primarily resulting from the CARES Act.

In the aggregate, the Company recognized discrete tax benefits of $ 720.6 million in the fiscal year ended September 30, 2020.

The Company's September 30, 2022 Consolidated Balance Sheet includes a current income tax receivable balance of $ 172.6 million primarily resulting from the recognition of the above discrete tax benefits.

Swiss Tax Reform

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As a result, the Company recognized a deferred tax expense to reduce its Swiss deferred tax asset for the change in tax rate.

Opioid Legal Accrual

In the fiscal years ended September 30, 2022, 2021, and 2020 the Company recorded accruals related to the opioid litigation settlements of $ 36.6 million, $ 147.7 million, and $ 6.6 billion, respectively (see Note 13).

The Company's September 30, 2022 Consolidated Balance Sheet includes a net deferred tax asset of $ 981.6 million in connection with the total expense accrued.

Deferred Tax Liabilities and Assets

Deferred income taxes reflect the future tax consequences of differences between the tax bases of assets and liabilities and their financial reporting amounts.

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Net deferred tax liabilities $ 1,457,277 $ 1,382,842

As of September 30, 2022, the Company had $ 2.6 million of potential tax benefits from federal net operating loss carryforwards, which expire in 15 years, $ 136.0 million of potential tax benefits from state net operating loss carryforwards and $ 297.2 million of potential tax benefits from foreign net operating loss carryforwards, which have varying expiration dates.

As of September 30, 2023, the Company had $ 114.1 million of potential tax benefits from state net operating loss carryforwards and $ 322.0 million of potential tax benefits from foreign net operating loss carryforwards, which have varying expiration dates.

The Company had $ 6.4 million of state tax credit carryforwards and $ 3.1 million in foreign alternative minimum tax credit carryforwards.

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For the fiscal year ended September 30, 2023 and 2022, the Company increased the valuation allowance on deferred tax assets by $ 20.1 million and $ 78.7 million, respectively.

The increase in the valuation allowance in the fiscal year ended September 30, 2022 was primarily due to the increase in the valuation allowance against foreign net operating loss carryforwards.

The increase in the valuation allowance in the fiscal year ended September 30, 2021 was primarily due to the valuation allowance established in connection with purchase accounting associated with Alliance Healthcare acquisition.

In the fiscal years ended September 30, 2022, 2021, and 2020 tax benefits of $ 13.4 million, $ 8.2 million and $ 3.9 million, respectively, related to the exercise of employee stock options and lapses of restricted stock units were recorded in Income Tax Expense (Benefit) in the Company's Consolidated Statements of Operations.

The increases in the valuation allowance in the fiscal years ended September 30, 2023 and 2022 were primarily due to the increase in the valuation allowance against foreign net operating loss carryforwards.

In the fiscal years ended September 30, 2023, 2022, and 2021 tax benefits of $ 24.6 million, $ 13.4 million and $ 8.2 million, respectively, related to the exercise of employee stock options and lapses of restricted stock units were recorded in Income Tax Expense in the Company's Consolidated Statements of Operations.

The tax benefits recognized in the fiscal years ended September 30, 2023, 2022, and 2021 are not necessarily indicative of amounts that may arise in future periods.

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federal jurisdiction and various states and foreign jurisdictions.

The Company is currently undergoing a U.S.

federal income tax audit for fiscal years 2019 and 2018 and certain state and local income tax audits for various years.

The Company is currently undergoing certain state and local income tax audits for various years.

With few exceptions, the Company is no longer subject to U.S.

examinations for years before 2018, and state and local, or foreign income tax examinations by tax authorities for years before 2019.

federal, state and local, or foreign income tax examinations by tax authorities for years before 2020.

The Company believes it has adequate tax reserves to cover potential federal, state or foreign tax exposures.

Unrecognized Tax Benefits

As of September 30, 2023 and 2022, the Company had unrecognized tax benefits, defined as the aggregate tax effect of differences between tax return positions and the benefits recognized in the Company's financial statements, of $ 551.9 million and $ 553.2 million, respectively ($ 482.7 million and $ 479.6 million, net of federal tax benefit, respectively).

If recognized in the fiscal years ended September 30, 2023 and 2022, $ 464.4 million and $ 461.4 million, respectively, of these benefits would have reduced income tax expense and the effective tax rate.

As of September 30, 2022 and 2021, included in the unrecognized tax benefits are $ 26.7 million and $ 22.4 million of interest and penalties, respectively, which the Company records in Income Tax Expense (Benefit) in the Company's Consolidated Statements of Operations.

As of September 30, 2023 and 2022, included in the unrecognized tax benefits are $ 25.9 million and $ 26.7 million of interest and penalties, respectively, which the Company records in Income Tax Expense in the Company's Consolidated Statements of Operations.

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

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Reductions of tax positions of the prior years ( 31,110 ) — —

Expiration of statutes of limitations ( 24 ) ( 15,489 ) ( 12,222 )

Settlements and expiration of statutes of limitations ( 3,457 ) ( 24 ) ( 15,489 )

Effects of foreign currency translation ( 543 ) — —

Unrecognized tax benefits at end of period $ 525,933 $ 526,522 $ 500,399

Included in the additions of unrecognized tax benefits in the fiscal year ended September 30, 2020 is $ 371.5 million for an unrecognized tax benefit related to the $ 6.6 billion legal accrual for litigation related to the global opioid settlement, as well as other opioid-related litigation, as disclosed in Note 13.

During the next 12 months, it is reasonably possible that tax audit resolutions and the expiration of statutes of limitations could result in a reduction of unrecognized tax benefits by approximately $ 9.0 million.

A significant portion of the Company's unrecognized tax benefits as of September 30, 2023 relates to the legal accrual for litigation related to the global opioid settlement, as well as other opioid-related litigation, as disclosed in Note 13.

The Company has applied significant judgment in estimating the amount of the opioid settlements that will be deductible for U.S.

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tax case law, the amount and character of the damages sought in litigation, and other relevant factors.

Goodwill and Other Intangible Assets

In connection with the change in the Company's reporting structure that is discussed in Note 1, the Company reallocated goodwill among the impacted reporting units using a relative fair value approach and assessed impairment before and after goodwill was reallocated.

The following is a summary of the changes in the carrying value of goodwill, by reportable segment, for the fiscal years ended September 30, 2023 and 2022:

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Healthcare Solutions International Healthcare Solutions Total

Goodwill as of September 30, 2020 (as revised) $ 6,267,502 $ 439,217 $ 6,706,719

Goodwill recognized in connection with acquisitions (Note 2) 19,076 2,469,152 2,488,228

Goodwill impairment — ( 6,373 ) ( 6,373 )

Goodwill reclassified to assets held for sale (Note 2) ( 27,223 ) ( 4,680 ) ( 31,903 )

Foreign currency translation 1,019 ( 127,159 ) ( 126,140 )

Goodwill as of September 30, 2021 (as revised) 6,260,374 2,770,157 9,030,531

Goodwill as of September 30, 2021 $ 6,260,374 $ 2,770,157 $ 9,030,531

Purchase accounting adjustments — 27,186 27,186

Goodwill recognized in connection with acquisition 26,143 — 26,143

Goodwill derecognized in connection with disposal ( 1,224 ) — ( 1,224 )

Goodwill derecognized in connection with divestiture ( 1,224 ) — ( 1,224 )

Goodwill impairment — ( 75,936 ) ( 75,936 )

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Goodwill as of September 30, 2022 6,280,240 2,223,646 8,503,886

In connection with the Company's annual goodwill impairment test as of July 1, 2021, the Company recorded a goodwill impairment of $ 6.4 million in its Profarma reporting unit.

The fair value of the reporting unit was determined based upon Profarma's publicly-traded stock price, plus an estimated control premium.

This represents a level 2 nonrecurring fair value measurement.

Goodwill recognized in connection with acquisitions — 1,026,440 1,026,440

Goodwill derecognized in connection with divestiture — ( 14,424 ) ( 14,424 )

Foreign currency translation 2,177 56,038 58,215

Goodwill as of September 30, 2023 $ 6,282,417 $ 3,291,700 $ 9,574,117

As a result of a prolonged decline in Profarma’s stock price, the Company performed an impairment assessment over the Profarma reporting unit as of June 30, 2022 and recorded a goodwill impairment of $ 75.9 million in the fiscal year ended September 30, 2022.

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This represents a level 2 nonrecurring fair value measurement.

In connection with the Profarma impairment assessment, the Company first performed a recoverability assessment of Profarma’s long-lived assets by comparing the undiscounted cash flows to the carrying value of the Profarma asset group, and it was determined to be recoverable.

However, the forecasted undiscounted cash flows used to perform the recoverability assessment are inherently uncertain and include assumptions that could differ from actual results in future periods.

The following is a summary of other intangible assets:

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Total other intangible assets $ 6,086,886 $ ( 1,655,103 ) $ 4,431,783 $ 5,436,825 $ ( 1,104,088 ) $ 4,332,737

The decreases in the gross amounts of finite-lived intangible assets since September 30, 2021 were primarily due to foreign currency translation.

As described in Note 1, the Company changed its name to Cencora, Inc.

on August 30, 2023.

In connection with the name change and gradual and planned transition away from other tradenames used, the Company reclassified $ 651.0 million of trade names from indefinite-lived to finite-lived.

The shortened useful lives of these trade names, all of which were acquired through prior acquisitions made by the Company, range from less than one year to three years .

The future amortization expense amounts below reflect the impact of the intangible assets' revised useful lives.

Amortization expense for finite-lived intangible assets was $ 553.6 million, $ 307.3 million, and $ 178.3 million in the fiscal years ended September 30, 2023, 2022, and 2021, respectively.

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(in thousands) 2023 2022

Revolving credit note $ — $ —

Money market facility — —

Multi-currency revolving credit facility due 2028 $ — $ —

Receivables securitization facility due 2025 350,000 350,000

Term loan due June 2023 — 249,640

Revolving credit note — —

Overdraft facility due 2024 (£ 10,000 )

Multi-currency revolving credit facility due 2027 — —

Money market facility — —

0.737 % senior notes due 2023

672,736 1,518,223

$ 500,000 , 3.400 % senior notes due 2024

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Total debt 4,787,457 5,702,833

Less AmerisourceBergen Corporation current portion 672,736 —

Less Cencora, Inc.

current portion 499,677 672,736

Less Alliance Healthcare current portion 68,017 336,886

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Multi-Currency Revolving Credit Facility

The Company has a $ 2.4 billion multi-currency senior unsecured revolving credit facility ("Multi-Currency Revolving Credit Facility") with a syndicate of lenders, which was scheduled to expire in November 2026.

In October 2022, the Company amended the Multi-currecy Revolving Credit Facility to extend the expiration to October 2027 and to make certain changes to effect a transition from the LIBOR interest rate benchmark to Term SOFR.

In October 2023, the Company amended the Multi-Currency Revolving Credit Facility to extend the expiration to October 2028.

Interest on borrowings under the Multi-Currency Revolving Credit Facility accrues at specified rates based upon the Company's debt rating and ranges from 80.5 basis points to 122.5 basis points over SOFR/EURIBOR/CDOR/RFR, as applicable ( 102.5 basis points over CDOR/LIBOR/EURIBOR/Bankers Acceptance Stamping Fee as of September 30, 2023) and from 0 basis points to 22.5 basis points over the alternate base rate and Canadian prime rate, as applicable.

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Receivables Securitization Facility

The Company has a $ 1,450 million receivables securitization facility ("Receivables Securitization Facility"), which was scheduled to expire in November 2024.

In October 2022, the Company amended the Receivables Securitization Facility (the “Receivables Amendment”) to extend the expiration for an additional one year to October 2025.

In addition, the Receivables Amendment made certain changes to (i) substitute Term SOFR for LIBOR as a benchmark and establish procedures to choose a new benchmark if Term SOFR becomes unavailable, (ii) provide for the return of erroneous payments, if any, by purchasers, (iii) update provisions regarding compliance with sanctions and anti-money laundering laws, and (iv) implement certain other technical amendments.

The Company has a $ 1,450 million receivables securitization facility ("Receivables Securitization Facility"), which is scheduled to expire in October 2025.

The Company has available to it an accordion feature whereby the commitment on the Receivables Securitization Facility may be increased by up to $ 250 million, subject to lender approval, for seasonal needs during the December and March quarters.

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The Revolving Credit Note may be decreased or terminated by the bank or the Company at any time without prior notice.

The Company also has an uncommitted U.K.

overdraft facility ("Overdraft Facility") to fund short-term normal trading cycle fluctuations related to its MWI Animal Health business.

In February 2021, the Company extended the Overdraft Facility to February 2024 and reduced the borrowing capacity from £ 30 million to £ 10 million.

The Company also has a £ 10 million uncommitted U.K.

overdraft facility ("Overdraft Facility") to fund short-term normal trading cycle fluctuations related to its MWI Animal Health business, which expires in February 2024.

The Company has an uncommitted, unsecured line of credit available to it pursuant to a money market credit agreement ("Money Market Facility").

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The Money Market Facility may be decreased or terminated by the bank or the Company at any time without prior notice.

The Company's $ 400 million October 2018 Term Loan matured and was repaid in October 2020.

In February 2021, the Company entered into a $ 1.0 billion variable-rate term loan (“February 2021 Term Loan”), which was available to be drawn on the closing date of the acquisition of Alliance Healthcare.

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The Company elected to make principal payments of $ 250 million in September 2021 and again in March 2022 to repay the loan that was scheduled to mature in 2023.

In May 2020, the Company issued $ 500 million of 2.80 % senior notes due May 15, 2030 (the "2030 Notes").

The 2030 Notes were sold at 99.71 % of the principal amount and have an effective yield of 2.81 %.

Interest on the 2030 Notes is payable semi-annually in arrears, commencing on November 15, 2020.

The 2030 Notes rank pari passu to the Company's other senior notes, the Multi-Currency Revolving Credit Facility, the Revolving Credit Note, the Overdraft Facility, and the Money Market Facility.

The Company used the proceeds from the 2030 Notes to finance the early retirement of the $ 500 million of 3.50 % senior notes that were due in 2021 and made a $ 21.4 million prepayment premium in connection with this early retirement.

In March 2021, the Company issued $ 1,525 million of 0.737 % senior notes due March 15, 2023 (the "2023 Notes").

The 2023 Notes were sold at 100.00 % of the principal amount.

Interest on the 2023 Notes is payable semi-annually in arrears, commencing on September 15, 2021.

Interest on the 2023 Notes was payable semi-annually in arrears and commenced on September 15, 2021.

In March 2021, the Company issued $ 1,000 million of 2.700 % senior notes due March 15, 2031 (the "2031 Notes").

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In the fiscal year ended September 30, 2022, the Company elected to repay $ 850 million of 2023 Notes due in March 2023.

In March 2023, the remaining balance of $ 675 million on the original $ 1.5 billion of 0.737 % senior notes matured and was repaid.

The senior notes discussed above and also illustrated in the above debt table are collectively referred to as the "Notes." Interest on the Notes is payable semiannually in arrears.

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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 September 30, 2022 and 2021.

A vast majority of the outstanding borrowings as of September 30, 2023 were held in Turkey.

These facilities are used to fund its working capital needs.

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

The opioid litigation accrual discussed in Note 13 has not and is not expected to impact the Company's ability to pay dividends.

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

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Total accumulated other comprehensive loss $ ( 1,402,607 ) $ ( 1,830,970 )

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

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

In October 2018, the Company's Board of Directors authorized a share repurchase program allowing the Company to purchase up to $ 1.0 billion of its outstanding shares of common stock, subject to market conditions.

During the fiscal year ended September 30, 2019, the Company purchased 6.7 million shares of its common stock for a total of $ 538.9 million under this program, which included $ 14.8 million of September 2019 purchases that cash settled in October 2019.

During the fiscal year ended September 30, 2020, the Company purchased 4.9 million shares of its common stock for a total of $ 405.6 million, which excluded $ 14.8 million of September 2019 purchases that cash settled in October 2019.

During the fiscal year ended September 30, 2021, the Company purchased 0.6 million shares of its common stock for a total of $ 55.5 million to complete its authorization under this program.

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During the fiscal year ended September 30, 2022, the Company purchased 3.3 million shares of its common stock for $ 473.4 million to complete its authorization under this program.

In May 2022, the Company's board of directors authorized a new share repurchase program allowing the Company to purchase up to $ 1.0 billion of its outstanding shares of common stock, subject to market conditions.

In May 2022, the Company's Board of Directors authorized a share repurchase program allowing the Company to purchase up to $ 1.0 billion of its outstanding shares of common stock, subject to market conditions.

During the fiscal year ended September 30, 2022, the Company purchased 0.3 million shares of its common stock for a total of $ 38.7 million, which included $ 28.4 million of September 2022 purchases that cash settled in October 2022.

As of September 30, 2022, the Company had $ 961.3 million of availability remaining under this program.

In October 2022, under this program, the Company purchased 0.6 million shares of its common stock for $ 78.8 million.

In November 2022, under this program, the Company purchased 3.2 million shares of its common stock from WBA for $ 500.0 million.

During the fiscal year ended September 30, 2023, the Company purchased 6.0 million shares of its common stock for a total of $ 961.3 million, including 5.5 million shares from WBA for $ 882.5 million, to complete its authorization under this program.

In March 2023, the Company's Board of Directors authorized a new share repurchase program allowing the Company to purchase up to $ 1.0 billion of its outstanding shares of common stock, subject to market conditions.

During the fiscal year ended September 30, 2023, the Company purchased 1.0 million shares of its common stock for a total of $ 191.0 million, including 0.9 million shares from WBA for $ 167.5 million.

As of September 30, 2023, the Company had $ 809.0 million of availability under this program.

From October 1, 2023 through November 20, 2023, the Company purchased 1.7 million shares of its common stock for a total of $ 325.3 million, including 1.3 million shares from WBA for $ 250.0 million.

Common Shares Outstanding

Basic earnings per share is computed by dividing net income attributable to AmerisourceBergen Corporation by the weighted average number of shares of common stock outstanding during the periods presented.

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

Basic earnings per share is computed by dividing net income attributable to Cencora, Inc.

by the weighted average number of shares of common stock outstanding during the periods presented.

Diluted earnings per share is computed by dividing net income attributable to Cencora, Inc.

by the weighted average number of shares of common stock outstanding, plus the dilutive effect of stock options and restricted stock units during the periods presented.

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

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Weighted average common shares outstanding - diluted 204,591 211,210 208,465

The potentially dilutive stock options and restricted stock units that were antidilutive were 0.1 million for the fiscal years ended September 30, 2022 and 2021 and 4.2 million for the fiscal year ended September 30, 2020.

The potentially dilutive stock options and restricted stock units that were antidilutive were 94 thousand, 101 thousand, and 97 thousand for the fiscal years ended September 30, 2023, 2022 and 2021, respectively.

Related Party Transactions

WBA continues to own more than 10 % of the Company's outstanding common stock and is, therefore, considered a related party.

The Company operates under various agreements and arrangements with WBA, including a pharmaceutical distribution agreement pursuant to which the Company distributes pharmaceutical products to WBA and an agreement that provides the Company the ability to access favorable economic pricing and generic products through a generic purchasing services arrangement with Walgreens Boots Alliance Development GmbH (both through 2029) as well as a distribution agreement pursuant to which it will supplies branded and generic pharmaceutical products to WBA’s Boots UK Ltd.

WBA owns more than 10 % of the Company's outstanding common stock and is, therefore, considered a related party.

The Company operates under various agreements and arrangements with WBA, including a pharmaceutical distribution agreement pursuant to which the Company distributes pharmaceutical products to WBA and an agreement that provides the Company the ability to access favorable economic pricing and generic products through a generic purchasing services arrangement with Walgreens Boots Alliance Development GmbH (both through 2029) as well as a distribution agreement pursuant to which it will supply branded and generic pharmaceutical products to WBA’s Boots UK Ltd.

subsidiary (through 2031).

Revenue from the various agreements and arrangements with WBA was $ 68.7 billion, $ 64.1 billion, and $ 65.5 billion in the fiscal years ended September 30, 2023, 2022, and 2021, respectively.

The Company's receivable from WBA, net of incentives, was $ 7.0 billion as of September 30, 2022 and 2021.

The Company's receivable from WBA, net of incentives, was $ 8.1 billion and $ 7.0 billion as of September 30, 2023 and 2022, respectively .

Retirement and Other Benefit Plans

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The Company's non-employee director stock option plans provide for the granting of nonqualified stock options to acquire shares of common stock to non-employee directors at the fair market value of the common stock on the date of the grant.

Non-employee director stock options vest ratably, in equal amounts, over a three-year service period and expire in ten years .

Non-employee director options vest ratably, in equal amounts, over a three-year service period and expire in ten years .

The estimated fair value of options granted is expensed on a straight-line basis over the requisite service periods of the awards and are net of estimated forfeitures.

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Treasury yield curve in effect at the time of grant.

The Company did not grant any stock options to employees in fiscal 2022 and 2021, and it does not expect to grant any stock options in fiscal 2023.

The weighted average fair values of the options granted during the fiscal year ended September 30, 2020 was $ 16.61 .

The following weighted average assumptions were used to estimate the fair values of options granted:

Risk-free interest rate 1.66 %

Expected dividend yield 1.86 %

Volatility of common stock 28.17 %

Expected life of the options 3.79 years

During the fiscal years ended September 30, 2022, 2021, and 2020, the Company recognized stock option expense of $ 2.2 million, $ 4.6 million and $ 13.0 million, respectively.

The Company has not granted any stock options to employees since fiscal 2020, and it does not expect to grant any stock options in fiscal 2024.

During the fiscal years ended September 30, 2022 and 2021, the Company recognized stock option expense of $ 2.2 million and $ 4.6 million, respectively.

A summary of the Company's stock option activity and related information for its option plans for the fiscal year ended September 30, 2023 is presented below:

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Exercised ( 895 ) $ 81

Forfeited ( 17 ) $ 89

Outstanding as of September 30, 2023 1,037 $ 85 2 years $ 98,147

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Vested ( 316 ) $ 18

Forfeited ( 17 ) $ 18

Nonvested as of September 30, 2023 96 $ 17

During the fiscal years ended September 30, 2023, 2022, and 2021, the total fair values of options vested were $ 5.7 million, $ 10.0 million, and $ 15.5 million, respectively.

Expected future compensation expense relating to the 0.4 million nonvested options outstanding as of September 30, 2022 is $ 0.4 million, which will be recognized through November 2023.

Restricted Stock Units

Restricted stock units granted prior to fiscal 2021 vest in full after three years .

Restricted stock units granted prior to fiscal 2021 vested in full after three years .

The majority of the restricted stock units granted beginning in fiscal 2021 and thereafter vest ratably over a three-year period.

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New operating leases $ 271,096 $ 179,214 $ 770,858

Leases recognized upon adoption of ASC 842

$ — $ — $ 526,281

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

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therefore, liabilities and ROU assets related to these leases were not recorded on the Company's Consolidated Balance Sheet as of September 30, 2023.

Acquisition, Integration, and Restructuring Expenses

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

Restructuring and Other Expenses

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

Fiscal Year Ended September 30,

(in thousands) 2023 2022 2021

Acquisition-related deal and integration $ 119,561 $ 116,969 $ 15,958

Employee severance 12,681 13,705 34,401

Restructuring and employee severance costs $ 105,220 $ 35,316 $ 46,064

Business transformation efforts 82,117 27,990 36,255

Other restructuring initiatives 22,827 32,359 ( 3,359 )

Other expenses 42,547 192 —

Total $ 229,884 $ 63,498 $ 82,319

Acquisition-related deal and integration expenses in the fiscal year ended September 30, 2022 primarily related to costs associated with the integration of Alliance Healthcare.

Acquisition-related deal and integration expenses in the fiscal year ended September 30, 2021 primarily related to the June 2021 acquisition of Alliance Healthcare.

Employee severance in the fiscal year ended September 30, 2022 included costs primarily related to restructuring activities within certain businesses in the U.S.

Restructuring and employee severance costs in the fiscal year ended September 30, 2023 primarily included expenses incurred in connection with workforce reductions in both of the Company's reportable segments.

Restructuring and employee severance costs in the fiscal year ended September 30, 2022 included costs primarily related to the write down of assets related to the Company's office optimization plan and restructuring activities within certain businesses in the U.S.

Healthcare Solutions reportable segment.

Employee severance in the fiscal year ended September 30, 2021 included costs primarily related to restructuring activities primarily within one business unit in the International Healthcare Solutions reportable segment.

Employee severance in the fiscal year ended September 30, 2020 included costs primarily related to position eliminations resulting from the Company's decision to permanently exit the PharMEDium compounding business.

Business transformation efforts in the fiscal years ended September 30, 2022, 2021, and 2020 were primarily related to costs associated with reorganizing the Company to further align the organization to its customers' needs.

The majority of these costs were related to services provided by third-party consultants, including certain technology initiatives.

Other restructuring initiatives in the fiscal year ended September 30, 2022 and 2021 primarily related to the write down and disposal of assets, respectively, related to the Company's office optimization plan.

Other restructuring initiatives in the fiscal year ended September 30, 2020 included a $ 19.1 million gain on the sale of property.

Restructuring and employee severance costs in the fiscal year ended September 30, 2021 included costs primarily related to the disposal of assets related to the Company's office optimization plan and restructuring activities primarily within one business unit in the International Healthcare Solutions reportable segment.

Business transformation efforts in the fiscal year ended September 30, 2023 included rebranding costs associated with the Company's name change to Cencora and non-recurring expenses related to significant strategic initiatives to improve operational efficiency, including certain technology initiatives.

The majority of these costs related to services provided by third-party consultants.

Business transformation efforts in the fiscal year ended September 30, 2022 and 2021 primarily related to costs associated with reorganizing the Company to further align the organization to its customers' needs, including certain technology initiatives.

The majority of these costs related to services provided by third-party consultants.

In March 2023, one of the Company’s foreign business units experienced a cybersecurity event that impacted a standalone legacy information technology platform in one country and the foreign business unit's ability to operate in that country for approximately two weeks.

In connection with this isolated event, the Company incurred costs to restore the foreign business unit's operations in that country, which were recorded in Other expenses in the above table.

The majority of Other expenses in the fiscal year ended September 30, 2023 related to the cybersecurity event.

Legal Matters and Contingencies

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Smith), pharmaceutical manufacturers, retail pharmacy chains, medical practices, and physicians relating to the distribution of prescription opioid pain medications.

An initial group of cases was consolidated for Multidistrict Litigation (“MDL”) proceedings before the United States District Court for the Northern District of Ohio (the “Court”) in December 2017.

In April 2018, the Court issued an order creating a litigation track, which included dispositive motion practice, discovery, and trials in certain bellwether jurisdictions.

In November 2019 and January 2020, the Court filed Suggestions of Remand with the Judicial Panel on Multidistrict Litigation that identified four cases filed against the Company for potential transfer from the MDL back to federal courts in California, Oklahoma, and West Virginia for the completion of discovery, motion practice, and trial.

All four cases were remanded to those federal district courts.

Trial in the two consolidated cases in West Virginia commenced in May 2021 and concluded in July 2021.

On July 4, 2022, the court entered judgment in favor of the defendants, including the Company.

The plaintiffs filed an appeal of the court’s decision on August 2, 2022.

The Oklahoma case, in which the plaintiff was the Cherokee Nation, was resolved through a settlement with the Cherokee Nation, as announced on September 28, 2021.

The California case, in which the plaintiff was the City and County of San Francisco, was resolved pursuant to the comprehensive settlement described below, and all claims against the Company have been dismissed in both cases.

On July 21, 2021, the Company announced that it and the two other national pharmaceutical distributors had negotiated a comprehensive settlement agreement that, if all conditions were satisfied, would result in the resolution of a substantial majority of opioid lawsuits filed by state and local governmental entities.

The comprehensive settlement agreement became effective on April 2, 2022 and as of September 30, 2022, it included 48 of 49 eligible states (the “Settling States”) as well as 99 % by population of the eligible political subdivisions in the Settling States.

Pursuant to the comprehensive settlement agreement and related agreements with Settling States, the Company will pay up to approximately $ 6.4 billion o ver 18 years and comply with other requirements, including establishment of a clearinghouse that will consolidate data from all three national distributors.

Starting in December 2017, more than 2,000 cases were transferred to Multidistrict Litigation ("MDL") proceedings before the United States District Court for the Northern District of Ohio (the "Court").

Since then, several cases filed by government and tribal plaintiffs that were selected as bellwether cases in the MDL have been resolved through trial or settlement.

Following trial in two consolidated cases in West Virginia federal court, the court entered judgment in favor of the defendants, including the Company.

The plaintiffs filed an appeal of the court’s decision on August 2, 2022, which remains pending.

The MDL Court is in the process of selecting four cases filed by third-party payors to serve as additional litigation bellwethers.

On July 21, 2021, the Company announced that it and the two other national pharmaceutical distributors had negotiated a Distributor Settlement Agreement that, if all conditions were satisfied, would result in the resolution of a substantial majority of opioid lawsuits filed by state and local governmental entities.

The Distributor Settlement Agreement became effective on April 2, 2022, and as of September 30, 2023, it included 48 of 49 eligible states (the “Settling States”) as well as 99 % by population of the eligible political subdivisions in the Settling States.

Pursuant to the Distributor Settlement Agreement and related agreements with Settling States, the Company will pay up to approximately $ 6.4 billion o ver 18 years and comply with other requirements, including establishment of a clearinghouse that will consolidate data from all three national distributors.

The exact payment amount will depend on several factors, including the extent to which states take action to foreclose opioid lawsuits by subdivisions (e.g., laws barring opioid lawsuits by subdivisions).

West Virginia and its

subdivisions and Native American tribes are not a part of the comprehensive settlement agreement and the Company has reached separate agreements with these groups.

On July 22, 2022, the State of Alabama sought and was subsequently granted leave to amend its complaint in a pending state court action against another distributor in order to add the Company as a party.

The amended Complaint was filed on July 25, 2022.

The Company recorded accruals related to opioid litigation of $ 36.6 million, $ 147.7 million, and $ 6.6 billion in the fiscal years ended September 30, 2022, 2021, and 2020 in Litigation and Opioid-Related Expenses in its Consolidated Statements of Operations.

The Company’s accrued litigation liability related to the comprehensive settlement, including an estimate for the State of Alabama (with whom the Company has not reached a settlement agreement), as well as other opioid-related litigation for which it has reached settlement agreements, as described above, was $ 6.0 billion as of September 30, 2022 and $ 6.7 billion as of September 30, 2021.

The Company currently estimates that $ 528.7 million will be paid prior to September 30, 2023, which is recorded in Accrued Expenses and Other on the Company’s Consolidated Balance Sheet.

West Virginia and its subdivisions and Native American tribes are not a part of the Distributor Settlement Agreement, and the Company has reached separate agreements with those groups.

The State of Alabama is not participating in the Distributor Settlement Agreement and has an active case pending against the Company (and another distributor) in Alabama state court, which is scheduled to begin trial on February 26, 2024.

The Company’s accrued litigation liability related to the Distributor Settlement Agreement, including an estimate for the State of Alabama and non-participating government subdivisions (with whom the Company has not reached a settlement agreement), as well as other opioid-related litigation for which it has reached settlement agreements, as described above, was $ 5.5 billion as of September 30, 2023 and $ 6.0 billion as of September 30, 2022.

The Company currently estimates that

$ 407.5 million will be paid prior to September 30, 2024, which is recorded in Accrued Expenses and Other on the Company’s Consolidated Balance Sheet.

The remaining long-term liability of $ 5.1 billion is recorded in Accrued Litigation Liability on the Company ’ s Consolidated Balance Sheet.

While the Company has accrued its estimated liability for opioid litigation, it is unable to estimate the range of possible loss associated with the matters that are not included in the settlement accrual.

While the Company has accrued its estimated liability for opioid litigation, it is unable to estimate the range of possible loss associated with the matters that are not included in the accrual.

Because loss contingencies are inherently unpredictable and unfavorable developments or resolutions can occur, the assessment is highly subjective and requires judgments about future events.

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Since these matters are still developing, the Company is unable to predict the outcome, but the result of these lawsuits could include excessive monetary verdicts and/or injunctive relief that may affect the Company’s operations.

Other lawsuits regarding the distribution of prescription opioid pain medications have been filed by:

third-party payors and similar entities;

hospital groups;

and individuals, including cases styled as putative class actions.

These lawsuits, which have been and continue to be filed in federal, state, and other courts, generally allege violations of controlled substance laws and various other statutes as well as common law claims, including negligence, public nuisance, and unjust enrichment, and seek equitable relief and monetary damages.

Motion practice and active discovery are ongoing in many of these cases.

Ongoing and additional litigation is anticipated in cases filed by subdivisions that are not participating in the global settlement agreement, as well as in cases filed by non-governmental or non-political entities, including hospitals, third-party payors, and individuals, among others.

Certain cases related to opioids filed in various state courts have trial dates scheduled in January 2023 and later, although all such dates are subject to change.

Additional lawsuits regarding the distribution of prescription opioid pain medications are ongoing in cases filed by a variety of types of plaintiffs.

In Alabama, a jury trial was scheduled to begin on July 24, 2023 in a case that involves up to eight plaintiff hospitals.

That case was stayed by order of the Alabama Supreme Court on July 10, 2023, pending further order of that court, so there currently is no trial date.

In Maryland, a trial is scheduled for September 16, 2024 in a case filed by the Mayor and City Council of Baltimore.

Additional litigation is anticipated in cases filed by subdivisions that are not participating in the Distributor Settlement Agreement, as well as in cases filed by non-governmental or non-political entities, including hospitals, third-party payors, and individuals, among others.

The Company is vigorously defending itself in the pending lawsuits and intends to vigorously defend itself against any threatened lawsuits or enforcement proceedings.

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Attorney's Office for the Eastern District of New York ("USAO-EDNY").

Those subpoenas request the production of a broad range of documents pertaining to the Company ’ s distribution of controlled substances through its various subsidiaries, including ABDC, and its diversion control programs.

The Company has produced documents in response to the subpoenas and continues to engage in discussions with the various U.S.

Those subpoenas requested the production of a broad range of documents pertaining to the Company’s distribution of controlled substances through its various subsidiaries, including ABDC, and its diversion control programs.

The Company produced documents in response to the subpoenas and engaged in discussions with the various U.S.

Attorney’s Offices, including the Health Care and Government Fraud Unit of the Criminal Division of the USAO-NJ, the U.S.

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Drug Enforcement Administration, in an attempt to resolve these matters.

On December 29, 2022, the Department of Justice filed a civil Complaint against the Company, ABDC, and Integrated Commercialization Services, LLC ("ICS"), a subsidiary of the Company, alleging violations of the Controlled Substances Act.

Specifically, the Complaint alleges that the Company negligently failed to report suspicious orders to the Drug Enforcement Administration.

In the Complaint, the Department of Justice seeks civil penalties and injunctive relief.

This Complaint relates to the aforementioned and previously-disclosed investigations.

On March 30, 2023, the Company filed a motion to dismiss the Complaint in its entirety on behalf of itself, ABDC, and ICS.

On November 6, 2023, the United States District Court for the Eastern District of Pennsylvania granted in part and denied in part the motion, dismissing with prejudice all claims for civil penalties for Defendants’ alleged violations of the suspicious order reporting requirement prior to October 24, 2018, but otherwise denying the motion.

The Company denies the allegations in the Complaint and intends to defend itself vigorously in the litigation.

Shareholder Securities Litigation

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On September 22, 2021, the Special Litigation Committee filed its report under seal and moved to dismiss the case.

The Special Litigation Committee’s motion to dismiss the case is pending.

On July 17, 2020, CCAR Investments, Inc.

filed a complaint for a purported derivative action in the United States District Court for the District of Delaware against the Company and certain of its current and former officers and directors (“CCAR Defendants”).

The complaint allegedclaims for breach of fiduciary duty, corporate waste and unjust enrichment allegedly arising from the Board's oversight of the Company’s controlled substance diversion control programs and violation of Section 14(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act").

On August 14, 2020, the CCAR Defendants answered the complaint and filed a motion for judgment on the pleadings.

On October 29, 2020 the parties filed a stipulation permitting CCAR Investments, Inc.

to file an amended complaint on or before November 20, 2020.

On December 4, 2020, the parties filed a stipulation tolling the deadline for CCAR Investments, Inc.

to file an amended complaint pending the Company’s production of certain documents to CCAR Investments, Inc.

The Company’s production was completed on January 29, 2021.

On May 2, 2022, the Court entered a stipulation that the case will be dismissed without prejudice upon the Company providing notice to stockholders through the filing of a Current Report on Form 8-K and subsequent notification to the Court of such filing.

On May 6, 2022, the Company provided notice to stockholders through the filing of a Current Report on Form 8-K that the case would be dismissed and gave notice to the Court of the Form 8-K filing.

On November 17, 2023, the Delaware Court of Chancery granted the Special Litigation Committee's motion to dismiss.

On December 30, 2021, Lebanon County Employees' Retirement Fund and Teamsters Local 443 Health Services & Insurance Plan filed a complaint for a purported derivative action in the Delaware Court of Chancery against the Company and certain of its current officers and directors.

The complaint alleges claims for breach of fiduciary duty allegedly arising from the Board’s and certain officers' oversight of the Company’s controlled substance diversion control programs.

The defendants moved to dismiss the complaint on March 29, 2022.

The motion is pending.

The defendants

moved to dismiss the complaint on March 29, 2022.

On December 22, 2022, the Court of Chancery granted the motion to dismiss.

On January 9, 2023, the Plaintiffs filed a Motion for Relief from Judgment and Order Pursuant to Rule 60(b) from the Chancery Court’s judgment.

On January 20, 2023, the Plaintiffs also appealed the ruling to the Delaware Supreme Court.

On March 21, 2023 the Court of Chancery denied the Plaintiffs' Motion for Relief from Judgement and Order Pursuant to Rule 60(b).

On September 20, 2023, the Delaware Supreme Court heard oral argument on the appeal and took the matter under advisement.

Subpoenas, Ongoing Investigations, and Other Contingencies

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In January 2017, U.S.

Bioservices Corporation (“U.S.

Bio”), a former subsidiary of the Company, received a subpoena for information from the USAO-EDNY relating to its activities in connection with billing for products and making returns of potential overpayments to government payers.

Bioservices Corporation, a former subsidiary of the Company, received a subpoena for information from the USAO-EDNY relating to its activities in connection with billing for products and making returns of potential overpayments to government payers.

A filed qui tam complaint related to the investigation was unsealed in April 2019 and the relator filed an amended complaint under seal in the U.S.

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The relator filed a second amended complaint, removing one state false claims act count.

The Company filed a motion to dismiss the second amended complaint and all briefing on the motion was filed with the court on October 9, 2020.

The Company filed a motion to dismiss the second amended complaint and all briefs on the motion were filed with the court on October 9, 2020.

The motion to dismiss was granted on December 22, 2022.

The False Claims Act claims were dismissed with prejudice, and the state claims were dismissed without prejudice.

On January 24, 2023, the relator filed Motions to Reconsider Dismissal and For Leave to Amend the Complaint.

Response briefs on those motions were filed by the Company and all briefing was completed on February 15, 2023.

In December 2019, Reliable Pharmacy, together with other retail pharmacies and North Sunflower Medical Center, filed a civil antitrust complaint against multiple generic drug manufacturers, and also included claims against ABDC and H.D.

Smith (collectively, the “Company” for this matter description), and other drug distributors and industry participants.

Smith, and other drug distributors and industry participants.

The case is filed as a putative class action and plaintiffs purport to represent a class of drug purchasers including other retail pharmacies and healthcare providers.

The case has been consolidated for multidistrict litigation proceedings before the United States District Court for the Eastern District of Pennsylvania.

The complaint alleges that the Company and others in the industry participated in a conspiracy to fix prices, allocate markets and rig bids regarding generic drugs.

The complaint alleges that ABDC, H.D.

Smith, and others in the industry participated in a conspiracy to fix prices, allocate markets and rig bids regarding generic drugs.

In March 2020, the plaintiffs filed a further amended complaint.

On July 15, 2020, the Company and other industry participants filed a motion to dismiss the complaint.

On July 15, 2020, the defendants filed a motion to dismiss the complaint.

On May 25, 2022, the Court granted the motion to dismiss without prejudice.

On July 1, 2022, the plaintiffs filed an amended complaint, again including claims against the Company and other drug distributors and industry participants.

On July 1, 2022, the plaintiffs filed an amended complaint, again including claims against ABDC, H.D.

Smith, and other drug distributors and industry participants.

On August 21, 2022, the Company and other industry participants filed a motion to dismiss the amended complaint.

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

All briefs on the motion were filed with the court on November 22, 2022.

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

The Company is cooperating with the investigation.

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Business Segment Information

The Company is organized geographically based upon the products and services it provides to its customers.

The Company’s reporting structure is comprised of two reportable segments:

Healthcare Solutions and International Healthcare Solutions.

Healthcare Solutions consists of the legacy Pharmaceutical Distribution Services reportable segment (excluding Profarma), MWI Animal Health, Xcenda, Lash Group, and ICS 3PL.

International Healthcare Solutions consists of Alliance Healthcare, World Courier, Innomar, Profarma, and Profarma Specialty (until it was divested in June 2022).

Profarma had previously been included in the Pharmaceutical Distribution Services reportable segment.

The Company's previously reported segment results have been revised to conform to its realigned reporting structure.

The chief operating decision maker ("CODM") of the Company is the Chairman, President & Chief Executive Officer of the Company, whose function is to allocate resources to, and assess the performance of, the Company's operating segments.

The CODM does not review assets by operating segment for the purpose of assessing performance or allocating resources.

The Company is organized geographically based upon the products and services it provides to its customer and reports its results under two reportable segments:

Healthcare Solutions and International Healthcare Solutions reportable segments.

Effective October 1, 2022, the chief operating decision maker ("CODM") of the Company is the Executive Vice President and Chief Operating Officer of the Company, whose function is to allocate resources to, and assess the performance of, the Company's operating segments.

Prior to October 1, 2022, the CODM of the Company was the Chairman, President & Chief Executive Officer of the Company.

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.

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The International Healthcare Solutions reportable segment distributes pharmaceuticals, other healthcare products, and related services to healthcare providers, including pharmacies, doctors, health centers and hospitals primarily in Europe.

It also is a leading global specialty transportation and logistics provider for the biopharmaceutical industry.

It is a leading global specialty transportation and logistics provider for the biopharmaceutical industry.

It also is a leading provider of specialized services, including regulatory affairs, development consulting and scientific affairs, pharmacovigilance, and quality management and compliance, for the life sciences industry.

In Canada, the business drives innovative partnerships with manufacturers, providers, and pharmacies to improve product access and efficiency throughout the healthcare supply chain.

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Total segment operating income $ 3,289,121 $ 3,163,430 $ 2,648,204

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

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

Fiscal Year Ended September 30,

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Acquisition-related intangibles amortization ( 551,046 ) ( 304,551 ) ( 176,221 )

Litigation and opioid-related expenses ( 123,191 ) ( 272,623 ) ( 6,722,346 )

Acquisition, integration, and restructuring expenses ( 183,059 ) ( 199,288 ) ( 84,961 )

Litigation and opioid-related credit (expenses) 24,693 ( 123,191 ) ( 272,623 )

Acquisition-related deal and integration expenses ( 139,683 ) ( 119,561 ) ( 116,969 )

Restructuring and other expenses ( 229,884 ) ( 63,498 ) ( 82,319 )

Goodwill impairment — ( 75,936 ) ( 6,373 )

Impairment of assets — ( 4,946 ) ( 11,324 )

PharMEDium remediation costs — — ( 16,165 )

PharMEDium shutdown costs — — ( 43,206 )

New York State Opioid Stewardship Act — — ( 14,800 )

Contingent consideration adjustment — — 12,153

Operating income (loss) 2,366,378 2,354,197 ( 5,135,354 )

Other income ( 27,352 ) ( 41,736 ) ( 1,581 )

Operating income 2,340,731 2,366,378 2,354,197

Other income, net ( 49,036 ) ( 27,352 ) ( 41,736 )

Interest expense, net 228,931 210,673 174,074

Loss on early retirement of debt — — 22,175

Income (loss) before income taxes $ 2,183,057 $ 2,221,859 $ ( 5,293,831 )

Income before income taxes $ 2,160,836 $ 2,183,057 $ 2,221,859

Segment operating income is evaluated by the CODM of the Company and excludes gains from antitrust litigation settlements;

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acquisition-related intangibles amortization;

litigation and opioid-related expenses;

acquisition, integration, and restructuring expenses;

litigation and opioid-related credit (expenses);

acquisition-related deal and integration expenses;

restructuring and other expenses;

goodwill impairment;

impairment of assets;

PharMEDium remediation costs;

PharMEDium shutdown costs;

New York State Opioid Stewardship Act;

and contingent consideration adjustment.

and impairment of assets.

All corporate office expenses are allocated to the operating segment level.

The Company recognized a net gain of $ 56.2 million from sale of non-core businesses, an expense related to the impact of Turkey highly inflationary accounting of $ 11.9 million, a foreign currency loss of $ 14.4 million on the remeasurement of deferred tax assets relating to Swiss tax reform, and a $ 4.8 million gain on the remeasurement of an equity investment in Other Income in the Consolidated Statements of Operations in the fiscal year ended September 30, 2022.

The Company recorded a $ 64.7 million gain on the remeasurement of an equity investment, a $ 14.0 million impairment of a non-customer note receivable related to a start-up venture, and a foreign currency loss of $ 3.4 million on the remeasurement of deferred tax assets relating to Swiss tax reform in Other Income in the Consolidated Statements of Operations in the fiscal year ended September 30, 2021.

Litigation and opioid-related credit in the fiscal year ended September 30, 2023 includes the receipt of $ 83.4 million from the H.D.

Smith opioid litigation indemnity escrow.

Included in Other Income, Net, the Company recognized net gains of $ 40.7 million and $ 56.2 million from the divestiture of non-core businesses in the fiscal years ended September 30, 2023 and 2022, respectively.

Included in Other Income, Net, the Company recorded a $ 64.7 million gain on the remeasurement of an equity investment in the fiscal year ended September 30, 2021.

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

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Total depreciation and amortization $ 963,904 $ 693,895 $ 505,172

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

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

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

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data