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Item 7. Management’s Discussion and Analysis

2024-11-26 compared with 2023-11-21 · 178 added, 197 removed, 295 unchanged (56% of the section changed)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Consolidated Financial Statements and notes thereto contained herein.

Our Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") includes the following:

an overview that provides a summary of our segments and highlights from fiscal 2024;

a more detailed analysis of our results of operations;

our capital resources and liquidity, which discusses key aspects of our statements of cash flows, changes in our balance sheets and our financial commitments;

and a summary of our critical accounting estimates that involve a significant level of estimation uncertainty.

Our MD&A should be read in conjunction with the Consolidated Financial Statements and notes thereto contained herein.

Our MD&A focuses on discussion of year-over-year comparisons between fiscal 2024 and fiscal 2023.

Discussion of fiscal 2022 results and year-over-year comparisons between fiscal 2023 and fiscal 2022 that are not included in this Annual Report on Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for fiscal 2023.

The following discussion contains forward-looking statements that are subject to risks and uncertainties.

Actual results may differ from those referred to herein due to a number of factors, including but not limited to risks described in Item 1A, Risk Factors, in this Annual Report on Form 10-K.

We are one of the largest global pharmaceutical sourcing and distribution services companies, helping both healthcare providers and pharmaceutical and biotech manufacturers improve patient access to products and enhance patient care.

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Healthcare Solutions and International Healthcare Solutions.

On August 30, 2023, we changed our name to Cencora, Inc.

Our new name better reflects our bold vision and purpose-driven approach to creating healthier futures.

The new name represents a unified presence that will continue to fuel our ongoing growth strategy and advance our impact across healthcare.

Healthcare Solutions Segment

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

It is also 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.

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

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

Recent Development

On November 5, 2024, we entered into an agreement to acquire Retina Consultants of America ("RCA").

Under the terms of the agreement, we will acquire RCA for cash based on an enterprise value of approximately $4.6 billion, subject to a customary working capital and net-debt adjustment.

RCA’s affiliated practices, physicians, and management will rollover a portion of their equity in RCA.

After giving effect to the rollover, a cash capitalization of RCA that we intend to make, and the payment of transaction fees and expenses, our expected cash outlay at closing would be approximately $4.3 billion.

At closing, we expect to hold approximately 85% ownership in RCA.

The agreement also provides for the potential payment of up to $500 million in aggregate contingent consideration in fiscal 2027 and fiscal 2028, subject to the successful completion of certain predefined business objectives.

We expect to fund the transaction through a combination of cash on hand and new debt financing and have obtained $3.3 billion in bridge financing commitments in connection with the transaction.

The transaction is subject to the satisfaction of closing conditions, including receipt of required regulatory approvals.

Executive Summary

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

• Revenue increased by $23.6 billion, or 9.9%, from the prior fiscal year primarily due to revenue growth in our U.S.

• Revenue increased by $31.8 billion, or 12.1%, from the prior fiscal year primarily due to growth in the U.S.

Healthcare Solutions segment.

Healthcare Solutions segment grew its revenue by $22.7 billion, or 10.7%, from the prior fiscal year due to overall market growth primarily driven by unit volume growth, including increased sales of products labeled for diabetes and/or weight loss in the glucagon-like peptide-1, or "GLP-1," class and increased sales of specialty products to physician practices and health systems, offset in part by a decrease in sales of COVID-19 treatments (primarily commercial treatments).

Revenue in International Healthcare Solutions increased by $0.9 billion, or 3.5%, from the prior fiscal year due to increased sales at Alliance Healthcare, our European distribution business, increased revenue from our less-than-wholly-owned Brazil full-line distribution business, incremental revenue from our January 2023 acquisition of PharmaLex, increased sales at our Canadian business, and was offset in part due to the June 2022 divestiture of our Brazil specialty business.

Our European distribution business' revenue in the current fiscal year was negatively impacted by unfavorable foreign currency exchange rates in comparison to the prior fiscal year;

• Gross profit increased by $663.1 million, or 8.0%, from the prior fiscal year.

Gross profit in the current fiscal year was favorably impacted by increases in gross profit in both reportable segments and an increase in gains from antitrust litigation settlements, offset in part by an increase in last-in, first-out ("LIFO") expense in the current fiscal year.

Healthcare Solutions segment grew its revenue by $30.6 billion, or 13.0%, from the prior fiscal year due to overall market growth primarily driven by unit volume growth, including increased sales of products labeled for diabetes and/or weight loss in the glucagon-like peptide-1, or "GLP-1," class, increased sales of specialty products to physician practices and health systems, and increased sales of COVID-19 therapies and vaccines.

International Healthcare Solutions' revenue increased by $1.2 billion, or 4.4%, from the prior fiscal year primarily due to increased sales at Alliance Healthcare, our European distribution business, and increased sales at our Canadian business.

• Gross profit increased by $950.5 million, or 10.6%, from the prior fiscal year primarily due to the increases in gross profit in both reportable segments and a last-in, first-out ("LIFO") credit in the current fiscal year in comparison to LIFO expense in the prior fiscal year, offset in part by lower gains from antitrust litigation settlements.

Healthcare Solutions' gross profit increased by $602.0 million, or 10.3%, from the prior fiscal year primarily due to increased sales.

Gross profit in International Healthcare Solutions increased $243.7 million, or 8.3%, from the prior fiscal year due to the January 2023 acquisition of PharmaLex and increases in our global specialty logistics business, our European distribution business, and our less-than-wholly-owned Brazil full-line distribution business, offset in part by the June 2022 divestiture of our Brazil specialty business.

Our European distribution business' gross profit in the current fiscal year was negatively impacted by unfavorable foreign currency exchange rates in comparison to the prior fiscal year;

• Total operating expenses increased by $688.8 million, or 11.6%, from the prior fiscal year primarily as a result of increases in distribution, selling, and administrative expenses, amortization expense, and restructuring and other expenses, offset in part by a litigation and opioid-related credit in the current fiscal year in comparison to an expense in the prior fiscal year and a $75.9 million goodwill impairment recorded in the prior fiscal year;

• Total segment operating income increased by $125.7 million, or 4.0%, from the prior fiscal year due to operating income growth in the U.S.

Healthcare Solutions segment, offset in part by a decrease in operating income in the International Healthcare Solutions segment resulting from unfavorable foreign currency exchange rates in comparison to the prior fiscal year;

• Our effective tax rates were 19.8% and 23.7% for the fiscal years ended September 30, 2023 and 2022, respectively.

Our effective tax rate in the fiscal year ended September 30, 2023 was lower than the U.S.

Gross profit in International Healthcare Solutions increased $130.1 million, or 4.1%, from the prior fiscal year due to growth at all of its businesses.

• Total operating expenses increased by $1,116.0 million, or 16.9%, from the prior fiscal year due to a $418.0 million goodwill impairment related to PharmaLex and increases in (i) distribution, selling, and administrative expenses, (ii) litigation and opioid-related expenses, which was a credit in the prior year fiscal year due to the receipt of funds previously held in an opioid indemnity escrow account, and (iii) amortization expense.

• Total segment operating income increased by $359.1 million, or 10.9%, from the prior fiscal year.

Healthcare Solutions' operating income increased by $338.3 million, or 13.0%, from prior fiscal year, and International Healthcare Solutions' operating income increased by $20.8 million, or 3.0%, from the prior fiscal year.

• Our effective tax rates were 24.2% and 19.8% in fiscal 2024 and 2023, respectively.

Our effective tax rate in fiscal 2024 was higher than the U.S.

statutory rate primarily due to the PharmaLex goodwill impairment, which is largely not deductible for income tax purposes, and U.S.

state income taxes, offset in part by the discrete tax benefits associated with foreign valuation allowance adjustments, the benefit of non-U.S.

income taxed at rates lower than the U.S.

statutory rate, and tax benefits associated with equity compensation.

Our effective tax rate in fiscal 2023 was lower than the U.S.

statutory rate primarily due to the benefit of non-U.S.

income taxed at rates lower than the U.S.

statutory rate, benefits from tax authority audit resolutions, and tax benefits associated with the vesting of restricted stock units and stock option exercises, offset in part by U.S.

statutory rate, benefits from tax authority audit resolutions, and tax benefits associated with equity compensation, offset in part by U.S.

state income taxes.

Our effective tax rate in the fiscal year ended September 30, 2022 was higher than the U.S.

statutory rate primarily due to U.S.

state income taxes, offset in part by the benefit of non-U.S.

income taxed at rates lower than the U.S.

statutory rate.

Results of Operations

Fiscal Year Ended September 30, 2023 compared to the Fiscal Year Ended September 30, 2022

Fiscal 2024 compared to Fiscal 2023

Fiscal Year Ended

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Revenue $ 293,958,599 $ 262,173,411 12.1%

Our future revenue growth will continue to be affected by various factors, such as industry growth trends, including drug utilization (e.g.

products labeled for diabetes and/or weight loss in the GLP-1 class), the introduction of new, innovative brand therapies, the likely increase in the number of generic drugs and biosimilars that will be available over the next few years as a result of the expiration of certain drug patents held by brand-name pharmaceutical manufacturers and the rate of conversion from brand products to those generic drugs and biosimilars, price inflation and price deflation, general economic conditions in the United States and Europe, currency exchange rates, competition within the industry, customer consolidation, changes in pharmaceutical manufacturer pricing and distribution policies and practices, increased downward pressure on government and other third-party reimbursement rates to our customers, changes in government rules and regulations, and the impact of COVID-19.

Revenue increased by 9.9% from the prior fiscal year primarily due to growth in the U.S.

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

Revenue increased by $31.8 billion, or 12.1%, from the prior fiscal year primarily due to growth in the U.S.

Healthcare Solutions segment.

Healthcare Solutions segment grew its revenue by $22.7 billion, or 10.7%, from the prior fiscal year due to overall market growth primarily driven by unit volume growth, including increased sales of products labeled for diabetes and/or weight loss in the GLP-1 class and increased sales of specialty products to physician practices and health systems, offset in part by a decrease in sales of COVID-19 treatments (primarily commercial treatments).

The total increase in U.S.

Healthcare Solutions revenues included increases in sales of products labeled for diabetes and/or weight loss of $7.7 billion from the prior fiscal year.

COVID-19 treatment revenue declined by $1.0 billion in the fiscal year ended September 30, 2023 in comparison to the prior fiscal year.

Sales, including GLP-1 products and COVID-19 treatments, to our two largest customers increased by $7.7 billion from the prior fiscal year.

These increases were offset in part due to the June 2022 divestiture of our Brazil specialty business.

Our European distribution business' revenue in the current fiscal year was negatively impacted by unfavorable foreign currency exchange rates in comparison to the prior fiscal year.

Healthcare Solutions segment grew its revenue by $30.6 billion, or 13.0%, from the prior fiscal year due to overall market growth primarily driven by unit volume growth, including increased sales of $8.6 billion, or 43.4%, of products labeled for diabetes and/or weight loss in the GLP-1 class, increased sales of specialty products to physician practices and health systems, and increased sales of COVID-19 therapies and vaccines.

Sales, including GLP-1 products and COVID-19 vaccines, to our two largest customers increased by $11.3 billion from the prior fiscal year.

International Healthcare Solutions' revenue increased by $1.2 billion, or 4.4%, from the prior fiscal year primarily due to increased sales of $0.7 billion at our European distribution business and increased sales of $0.4 billion at our Canadian business.

A number of our contracts with customers, including group purchasing organizations, are typically subject to expiration each year.

We may lose a significant customer if an existing contract with such customer expires without being extended, renewed, or replaced.

During the fiscal year ended September 30, 2023, no significant contracts expired.

Over the next twelve months, there are no significant contracts scheduled to expire.

Additionally, from time to time, significant contracts may be terminated in accordance with their terms or extended, renewed, or replaced prior to their expiration dates.

We may lose a key customer if an existing contract with such customer expires without being extended, renewed, or replaced.

During fiscal 2024, no key contracts expired.

Additionally, from time to time, key contracts may be terminated in accordance with their terms or extended, renewed, or replaced prior to their expiration dates.

If those contracts are extended, renewed, or replaced at less favorable terms, they may also negatively impact our revenue, results of operations, and cash flows.

We anticipate a potential June 2025 loss of an oncology customer following its recently announced pending acquisition.

In September 2024, we extended our pharmaceutical supply agreement with Evernorth Health Services (formerly Express Scripts, Inc.) for an additional three years through September 2029.

Fiscal Year Ended

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Gains from antitrust litigation settlements 170,904 239,092

LIFO expense (204,595) (67,171)

LIFO credit (expense) 52,168 (204,595)

Turkey highly inflationary impact (54,087) (86,967)

Gross profit $ 9,910,029 $ 8,959,493 10.6%

Gross profit increased by $663.1 million, or 8.0%, from the prior fiscal year.

Healthcare Solutions gross profit increased by $366.4 million, or 6.7%, from the prior fiscal year due to increased sales.

Gross profit increased by $950.5 million, or 10.6%, from the prior fiscal year primarily due to the increases in gross profit in both reportable segments and a LIFO credit in the current fiscal year in comparison to LIFO expense in the prior fiscal year, offset in part by lower gains from antitrust litigation settlements.

Healthcare Solutions gross profit increased by $602.0 million, or 10.3%, from the prior fiscal year primarily due to increased sales.

As a percentage of revenue, U.S.

Healthcare Solutions' gross profit margin of 2.48% in the current fiscal year decreased 9 basis points compared to the prior fiscal year primarily due to higher sales of GLP-1 products, which have lower gross profit margins, and lower sales of COVID-19 treatments, which have higher gross profit margins.

Our European distribution business' gross profit in the current fiscal year was negatively impacted by unfavorable foreign currency exchange rates in comparison to the prior fiscal year.

We recognized gains from antitrust litigation settlements with pharmaceutical manufacturers of $239.1 million and $1.8 million in the fiscal years ended September 30, 2023 and 2022, respectively.

Healthcare Solutions' gross profit margin of 2.42% in the current fiscal year declined 6 basis points compared to the prior fiscal year primarily due to higher sales of GLP-1 products, which have lower gross profit margins, offset in part by increased sales of COVID-19 vaccines, which have higher gross profit margins.

Gross profit in International Healthcare Solutions increased $130.1 million, or 4.1%, from the prior fiscal year due to growth at all of its businesses.

We recognized gains from antitrust litigation settlements with pharmaceutical manufacturers of $170.9 million and $239.1 million in fiscal 2024 and 2023, respectively.

The gains were recorded as reductions to Cost of Goods Sold (see Note 14 of the Notes to Consolidated Financial Statements).

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Changes to any of the above factors may have a material impact on our annual LIFO provision.

The increase in LIFO expense in the current fiscal year was primarily driven by lower generic pharmaceutical deflation and higher brand inventory product mix, offset in part by lower brand pharmaceutical inflation.

We recognized an expense in Cost of Goods Sold of $87.0 million and $40.0 million in the fiscal years ended September 30, 2023 and 2022, respectively, related to the impact of Turkey highly inflationary accounting.

The expense recognized in each period was driven by the continued weakening of the Turkish Lira.

The LIFO credit in fiscal 2024 in comparison to LIFO expense in the fiscal 2023 was primarily driven by lower brand pharmaceutical inflation largely due to manufacturer price decreases of wholesale acquisition costs of certain products.

We recognized expenses in Cost of Goods Sold of $54.1 million and $87.0 million in fiscal 2024 and 2023, respectively, related to the impact of Turkey highly inflationary accounting driven by the continued weakening of the Turkish Lira.

Operating Expenses

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Depreciation and amortization 1,091,974 963,904 13.3%

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

Litigation and opioid-related expenses (credit), net 227,070 (24,693)

Acquisition-related deal and integration expenses 103,001 139,683

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Goodwill impairment 418,000 —

Impairment of assets — 4,946

Total operating expenses $ 7,734,780 $ 6,618,762 16.9%

Distribution, selling, and administrative expenses increased by $351.1 million, or 6.6%, from the prior fiscal year.

The increase from the prior fiscal year was primarily to support revenue growth and included inflationary impacts on certain operating expenses.

As a percentage of revenue, distribution, selling, and administrative expenses were 2.03% in the current fiscal year and was flat compared to the prior fiscal year as inflationary impacts on certain operating expenses were offset in

part by recent initiatives undertaken to improve operating efficiency across many of our businesses and administrative functions.

The increase from the prior fiscal year was primarily to support revenue growth.

As a percentage of revenue, distribution, selling, and administrative expenses were 1.93% in the current fiscal year, which represented a decline of 10 basis points compared to the prior fiscal year as initiatives taken in fiscal 2023 improved operating efficiency across many of our businesses and administrative functions and the 12.1% revenue growth in the current fiscal year improved our operating leverage.

Depreciation expense increased 4.4% from the prior fiscal year.

Amortization expense increased 80.1% from the prior fiscal year primarily due to accelerated amortization expense recorded in connection with the shortened useful lives of certain trade names resulting from our company name change and the gradual transition away from other tradenames used, which were acquired through prior acquisitions.

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

Smith opioid litigation indemnity escrow.

Litigation and opioid-related credit was offset in part by $58.7 million of legal fees in connection with opioid lawsuits and investigations in the fiscal year ended September 30, 2023.

Litigation and opioid-related expenses in the fiscal year ended September 30, 2022 included a $36.6 million accrual related to opioid litigation settlements and $86.6 million of legal fees in connection with opioid lawsuits and investigations.

Acquisition-related deal and integration expenses in the fiscal year ended September 30, 2023 primarily related to the continued integration of Alliance Healthcare and the acquisition of PharmaLex.

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

Amortization expense increased 19.9% from the prior fiscal year primarily due to accelerated amortization expense, which we began recording in February 2023, in connection with

the shortened useful lives of certain trade names resulting from our company name change and gradual transition away from other tradenames used, which were acquired through prior acquisitions.

Litigation and opioid-related expenses, net in fiscal 2024 included a $214.0 million litigation expense accrual for ongoing litigation related to the distribution of prescription opioid medications, a $49.1 million litigation expense accrual related to our animal health business (see Note 13 of the Notes to Consolidated Financial Statements) and $56.1 million of legal fees in connection with opioid lawsuits and investigations, offset in part by a net $92.2 million opioid litigation settlement accrual reduction primarily as a result of our prepayment of the net present value of a future obligation as permitted under our opioid settlement agreements.

Litigation and opioid-related credit, net in fiscal 2023 included the receipt of $83.4 million from the H.D.

Smith opioid litigation indemnity escrow and was offset in part by $58.7 million of legal fees in connection with opioid lawsuits and investigations.

Acquisition-related deal and integration expenses in fiscal 2024 and 2023 primarily related to the continued integration of Alliance Healthcare and PharmaLex.

Restructuring and other expenses are comprised of the following:

Fiscal year ended September 30,

Fiscal Year Ended

September 30,

(in thousands) 2024 2023

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Business transformation efforts 130,069 82,117

Other expenses 42,547 192

Other, net 33,592 42,547

Total restructuring and other expenses $ 233,629 $ 229,884

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 our 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 our office optimization plan and restructuring activities within certain businesses in the U.S.

Healthcare Solutions reportable segment.

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

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

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

Restructuring and employee severance costs in fiscal 2024 primarily included expenses incurred related to facility closures in connection with our office optimization plan and workforce reductions in both of our reportable segments.

Restructuring and employee severance costs in fiscal 2023 primarily included expenses incurred in connection with workforce reductions in both of our reportable segments.

Business transformation efforts in fiscal 2024 and 2023 included rebranding costs associated with our name change to Cencora and non-recurring expenses related to significant strategic initiatives to improve operational efficiency, including certain technology initiatives.

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

In March 2023, one of our 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, we incurred costs to restore the foreign business unit's operations in that country, which was recorded in Other expenses in the above table.

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

We recorded a goodwill impairment of $75.9 million in our Profarma reporting unit in the fiscal year ended September 30, 2022.

In March 2024, we experienced a cybersecurity event where data from our information systems was exfiltrated.

In connection with this event, we incurred costs that were recorded in Other, net in the above table.

The majority of the costs included in Other, net in fiscal 2024 related to this cybersecurity event.

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

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

The majority of the costs included in Other, net in fiscal 2023 related to this cybersecurity event.

We recorded a $418.0 million goodwill impairment related to PharmaLex in fiscal 2024 (see Note 5 of the Notes to Consolidated Financial Statements).

Operating Income

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Gains from antitrust litigation settlements 170,904 239,092

LIFO expense (204,595) (67,171)

LIFO credit (expense) 52,168 (204,595)

Turkey highly inflationary impact (54,087) (86,967)

Acquisition-related intangibles amortization (660,292) (551,046)

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

Litigation and opioid-related (expenses) credit, net (227,070) 24,693

Acquisition-related deal and integration expenses (103,001) (139,683)

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Goodwill impairment (418,000) —

Impairment of assets — (4,946)

Operating income $ 2,175,249 $ 2,340,731 (7.1)%

Healthcare Solutions operating income increased $139.6 million, or 5.7%, from the prior fiscal year primarily due to the increase in gross profit, as noted above, and was offset in part by an increase in operating expenses.

Healthcare Solutions operating income increased $338.3 million, or 13.0%, from the prior fiscal year primarily due to the increase in gross profit, as noted above, and was offset in part by the increase in operating expenses.

As a percentage of revenue, U.S.

Healthcare Solutions operating income margin was 1.11% and represented a decrease of 5 basis points compared to the prior fiscal year.

The decrease from the prior year fiscal year was primarily due to the declines in gross profit margins, as described above in the Gross Profit section.

Operating income in International Healthcare Solutions decreased by $13.9 million, or 2.0%, from the prior fiscal year due to a decrease in operating income in our European distribution business primarily due to unfavorable foreign currency exchange rates in comparison to the prior fiscal year and a significant decline in operating income at its less-than-wholly-owned subsidiary in Egypt (that was divested on September 30, 2023), and the June 2022 divestiture of our Brazil specialty business.

The above-mentioned declines were offset in part by the strong performance of our global specialty logistics business.

Other Income, Net

Included in Other Income, Net, we recognized $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.

Healthcare Solutions operating income margin was 1.11% and was flat compared to the prior fiscal year as the decline in gross profit margin, as described above in the Gross Profit section, was offset by the decline in operating expense margin, as described above in the Operating Expense section.

International Healthcare Solutions' operating income increased by $20.8 million, or 3.0%, from the prior fiscal year.

The increase in the current fiscal year was primarily due to our Canadian business, our global specialty logistics business, our less-than-wholly-owned Brazil full-line distribution business, and the January 2023 acquisition of PharmaLex, offset in part by foreign currency pressure and higher information technology operating expenses in our European distribution business.

Other Loss (Income), Net

We recognized gains of $40.7 million from the divestiture of non-core businesses in fiscal 2023.

Interest Expense, Net

Interest expense, net and the respective weighted average interest rates were as follows:

Interest expense, net and the respective weighted average interest rates are as follows:

Fiscal Year Ended September 30,

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Interest expense, net $ 156,991 $ 228,931

Interest expense, net increased $18.3 million, or 8.7%, from the prior fiscal year primarily due to the increase in interest expense.

The increase in interest expense was primarily driven by an increase in our variable-rate borrowings and associated interest rates.

The increase in interest expense was offset in part by an increase in interest income, which was primarily driven by higher investment interest rates in the current fiscal year in comparison to the prior fiscal year.

The higher investment interest rates were offset in part by a lower average investment cash balance in the current fiscal year in comparison to the prior fiscal year.

Interest expense, net decreased $71.9 million, or 31.4%, from the prior fiscal year due to the increase in interest income and the decrease in interest expense.

The increase in interest income was driven by higher investment interest rates and higher average investment cash balances in the current fiscal year in comparison to the prior fiscal year.

The decrease in interest expense was primarily driven by a decrease in interest expense at our European distribution business primarily due to the September 2023 divestiture of our less-than-wholly-owned subsidiary in Egypt and decreased borrowings in Turkey.

Income Tax Expense

Our effective tax rates were 19.8% and 23.7% in the fiscal years ended September 30, 2023 and 2022, respectively.

Our effective tax rate in the fiscal year ended September 30, 2023 was lower than the U.S.

Our effective tax rates were 24.2% and 19.8% in fiscal 2024 and 2023, respectively.

Our effective tax rate in fiscal 2024 was higher than the U.S.

statutory rate primarily due to PharmaLex goodwill impairment, which is largely not deductible for income tax purposes, and U.S.

state income taxes, offset in part by the discrete tax benefits associated with foreign valuation allowance adjustments, the benefit of non-U.S.

income taxed at rates lower than the U.S.

statutory rate, and tax benefits associated with equity compensation.

Our effective tax rate in fiscal 2023 was lower than the U.S.

statutory rate primarily due to the benefit of non-U.S.

income taxed at rates lower than the U.S.

statutory rate, benefits from tax authority audit resolutions, and tax benefits associated with the vesting of restricted stock units and stock option exercises, offset in part by U.S.

statutory rate, benefits from tax authority audit resolutions, and tax benefits associated with equity compensation, offset in part by U.S.

state income taxes.

Our effective tax rate in the fiscal year ended September 30, 2022 was higher than the U.S.

statutory rate primarily due to U.S.

state income taxes, offset in part by the benefit of non-U.S.

income taxed at rates lower than the U.S.

statutory rate.

Fiscal Year Ended September 30, 2022 compared to the Fiscal Year Ended September 30, 2021

For a discussion of the comparison of our results of operations for the fiscal years ended September 30, 2022 and 2021, refer to the Management's Discussion and Analysis of Financial Condition and Results of Operations section in our previously filed Annual Report on Form 10-K for the fiscal year ended September 30, 2022.

Critical Accounting Policies and Estimates

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We perform formal, documented reviews of the allowance at least quarterly and perform monthly credit loss reviews in connection with our largest businesses and our higher risk customer accounts.

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.

There were no significant changes to this process during fiscal 2024, 2023, and 2022, and bad debt expense was computed in a consistent manner during these periods.

The bad debt expense for any period presented is equal to the changes in the period end allowance for credit losses, net of write-offs, recoveries, and other adjustments.

Bad debt expense for the fiscal years ended September 30, 2023, 2022 and 2021 was $54.4 million, $26.1 million, and $12.1 million respectively.

Bad debt expense for fiscal 2024, 2023, and 2022 was $40.8 million, $54.4 million, and $26.1 million respectively.

An increase or decrease of 0.1% in the 2024 allowance as a percentage of trade receivables would result in an increase or decrease in the provision on accounts receivable of approximately $24.0 million.

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These estimates are based upon historical experience and information obtained from the management of the acquired companies and are inherently uncertain.

Critical estimates in valuing certain of the intangible assets include, but are not limited to:

discount rates and expected future cash flows from and economic lives of customer relationships, trade names, existing technology, and other intangible assets.

Critical estimates in valuing certain of the intangible assets include but are not limited to (i) discount rates and expected future cash flows from and economic lives of customer relationships, (ii) trade names, (iii) existing technology, and (iv) other intangible assets.

Unanticipated events and circumstances may occur, which may affect the accuracy or validity of such assumptions or estimates.

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If we conclude based on our qualitative assessment that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we perform a quantitative analysis.

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

We 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.

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

Consulting Service and Innomar reporting units, under our prior reporting structure) and Profarma reporting units.

We elected to perform quantitative impairment assessments of goodwill for all our reporting units in fiscal 2024, 2023, and 2022 with the exception of our PharmaLex reporting unit in fiscal 2023 since it was acquired in fiscal 2023.

We elected to perform qualitative impairment assessments of indefinite-lived intangible assets in fiscal 2024 and fiscal 2023 and a quantitative impairment assessment of indefinite-lived intangible assets in fiscal 2022.

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

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We generally believe that market participants would use a discounted cash flow analysis to determine the fair value of our reporting units in a sale transaction.

The annual goodwill impairment test requires us to make a number of assumptions and estimates concerning future levels of revenue growth, operating margins, depreciation, amortization, capital expenditures, and working capital requirements, which are based upon our long-range plan.

The annual goodwill impairment test requires us to make a number of assumptions and estimates concerning future levels of revenue growth, earnings before interest, taxes, depreciation and amortization ("EBITDA"), EBITDA margins, capital expenditures, and working capital requirements, which are based upon our long-range plan.

The discount rate is an estimate of the overall after-tax rate of return required by a market participant whose weighted average cost of capital includes both debt and equity, including a risk premium.

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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.

We completed our required annual impairment tests relating to goodwill and indefinite-lived intangible assets in the fiscal years ended September 30, 2023, 2022, and 2021.

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

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.

We completed our required annual impairment assessments relating to goodwill and indefinite-lived intangible assets in fiscal 2024, 2023, and 2022 and recorded a $418.0 million goodwill impairment in our PharmaLex reporting unit in connection with our 2024 impairment assessment (see Note 5 of the Notes to Consolidated Financial Statements) and a $75.9 million goodwill impairment in our Profarma reporting unit in connection with our fiscal 2022 impairment assessment.

No goodwill impairments were recorded in fiscal 2023 and no indefinite-lived intangible asset impairments were recorded in fiscal 2024, 2023, or 2022.

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

We perform a recoverability assessment of our long-lived assets when impairment indicators are present.

We performed a recoverability assessment of PharmaLex’s long-lived asset group as of July 1, 2024, and it was determined to be recoverable.

Our income tax expense, deferred tax assets and liabilities, and uncertain tax positions reflect management's assessment of estimated future taxes to be paid on items in the financial statements.

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The significant assumptions and estimates described in the preceding paragraphs are important contributors to the ultimate effective tax rate in each year.

If any of our assumptions or estimates were to change, an increase or decrease in our effective tax rate by 1% on income before income taxes would have caused income tax expense to change by $21.6 million in the fiscal year ended September 30, 2023.

For a complete discussion of the tax impact of UK Tax Reform and Swiss Tax Reform, refer to Note 4 of the Notes to Consolidated Financial Statements.

Inventories are stated at the lower of cost or market.

Cost for approximately 66% of our inventories as of September 30, 2023 and 2022 has been determined using the last-in, first-out ("LIFO") method.

Cost for approximately 65% and 66% of our inventories as of September 30, 2024 and 2023 has been determined using the LIFO method.

If we had used the first-in, first-out method of inventory valuation, which approximates current replacement cost, inventories would have been approximately $1,535.8 million and $1,588.0 million higher than the amounts reported as of September 30, 2024 and 2023, respectively.

We recorded LIFO expense of $204.6 million and $67.2 million in the fiscal years ended September 30, 2023 and 2022, respectively.

We recorded a LIFO credit of $203.0 million in the fiscal year ended September 30, 2021.

We recorded a LIFO credit of $52.2 million in fiscal 2024 and LIFO expense of $204.6 million and $67.2 million in fiscal and 2023 and 2022, respectively.

The annual LIFO provision is affected by manufacturer pricing practices, which may be impacted by market and other external influences, changes in inventory quantities, and product mix, many of which are difficult to predict.

Changes to any of the above factors can have a material impact to our annual LIFO provision.

Cost for our inventory that is not determined using the LIFO method is stated at the lower of cost or market using the first-in, first-out method or moving average price method.

Loss Contingencies

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We also perform an assessment of the materiality of loss contingencies where a loss is either not probable or it is reasonably possible that a loss could be incurred in excess of amounts accrued.

If a loss or an additional loss has at least a reasonable possibility of occurring and the impact on the financial statements would be material, we provide disclosure of the loss contingency and whether a reasonable estimate of the loss or the range of the loss can made in the footnotes to our financial statements.

We review all contingencies at least quarterly to determine whether the likelihood of loss has changed and to assess whether a reasonable estimate of the loss or the range of the loss can be made.

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We have increased seasonal needs related to our inventory build during the December and March quarters that, depending on our cash balance, may require the use of our credit facilities to fund short-term capital needs.

Our cash balances in the fiscal years ended September 30, 2023 and 2022 were supplemented by intra-period credit facility borrowings to cover short-term working capital needs.

The largest amount of intra-period borrowings under our revolving and securitization credit facilities that was outstanding at any one time during the fiscal years ended September 30, 2023 and 2022 was $2,121.0 million and $590.0 million, respectively.

We had $77,851.0 million, $4,435.9 million, and $4,730.5 million of cumulative intra-period borrowings that were repaid under our credit facilities during the fiscal years ended September 30, 2023, 2022, and 2021, respectively.

During the fiscal year ended September 30, 2023, our operating activities provided cash of $3,911.3 million and was principally the result of the following:

• An increase in accounts payable of $6,103.5 million primarily due to the increase in our inventory balances and the timing of scheduled payments to our suppliers;

• Net income of $1,732.6 million;

• Positive non-cash items of $1,304.2 million, which is primarily comprised of amortization expense of $562.0 million, depreciation expense of $418.8 million, and LIFO expense of $204.6 million, offset in part by:

◦ An increase in accounts receivable of $2,711.8 million primarily due to an increase in sales and the timing of scheduled payments from our customers;

◦ An increase in inventories of $2,183.4 million to support the increase in business volume;

Our cash balances in fiscal 2024 and 2023 were supplemented by intra-period credit facility borrowings to cover short-term working capital needs.

The largest amount of intra-period borrowings under our revolving and securitization credit facilities that was outstanding at any one time during fiscal 2024 and 2023 was $3.2 billion and $2.1 billion, respectively.

We had $69.7 billion, $77.9 billion, and $4.4 billion of cumulative intra-period borrowings that were repaid under our credit facilities during fiscal 2024, 2023, and 2022, respectively.

Our net cash provided by operating activities decreased by $426.6 million in fiscal 2024 compared to fiscal 2023 largely due to the timing of cash receipts and disbursements related to our working capital accounts.

More specifically, in fiscal 2024, the growth of our accounts receivable, inventories, and accounts payable balances provided $704.2 million of cash from operations compared to $1.2 billion in fiscal 2023.

During fiscal 2024, our operating activities provided cash of $3.5 billion and was principally the result of the following:

• An increase in accounts payable of $5.0 billion primarily due to the increase in our inventory balances and the timing of scheduled payments to our suppliers;

• Positive non-cash items of $1.7 billion, which is primarily comprised of amortization expense of $670.6 million, depreciation expense of $448.2 million, and a $418.0 million goodwill impairment;

• Net income of $1.5 billion, offset in part by:

◦ An increase in accounts receivable of $2.8 billion primarily due to an increase in sales and the timing of scheduled payments from our customers;

◦ An increase in inventories of $1.5 billion to support the increase in business volume;

◦ A decrease in long-term accrued litigation liability of $506.2 million due to opioid litigation settlement payments.

During the fiscal years ended September 30, 2022, our operating activities provided cash of $2,703.1 million and was principally the result of the following:

• An increase in accounts payable of $3,320.7 million primarily due to the increase in our inventory balances and the timing of scheduled payments to our suppliers;

• Net income of $1,666.5 million;

• Positive non-cash items of $1,176.2 million, which is primarily comprised of depreciation expense of $390.6 million, amortization expense of $319.2 million, and the provision for deferred income taxes of $196.2 million, offset in part by:

◦ An increase in accounts receivable of $1,659.5 million primarily due to an increase in sales and the timing of scheduled payments from our customers;

◦ An increase in inventories of $665.4 million to support the increase in business volume;

During fiscal 2023, our operating activities provided cash of $3.9 billion and was principally the result of the following:

• An increase in accounts payable of $6.1 billion primarily due to the increase in our inventory balances and the timing of scheduled payments to our suppliers;

• Net income of $1.7 billion;

• Positive non-cash items of $1.3 billion, which is primarily comprised of amortization expense of $562.0 million, depreciation expense of $418.8 million, and LIFO expense of $204.6 million, offset in part by:

◦ An increase in accounts receivable of $2.7 billion primarily due to an increase in sales and the timing of scheduled payments from our customers;

◦ An increase in inventories of $2.2 billion to support the increase in business volume;

◦ A decrease in long-term accrued litigation liability of $400.0 million due to opioid litigation settlement payments.

◦ A decrease in accrued expenses of $457.2 million;

◦ A decrease in income taxes payable and other liabilities of $330.1 million.

We use days sales outstanding, days inventory on hand, and days payable outstanding to evaluate our working capital performance.

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Our cash flows from operating activities can vary significantly from period to period based upon fluctuations in our period-end working capital account balances.

Additionally, any changes to payment terms with a significant customer or manufacturer supplier could have a material impact to our cash flows from operations.

Operating cash flows during the fiscal year ended September 30, 2023 included $271.3 million of interest payments and $463.1 million of income tax payments, net of refunds.

Operating cash flows during the fiscal year ended September 30, 2022 included $219.8 million of interest payments and $244.4 million of income tax payments, net of refunds.

Operating cash flows during the fiscal year ended September 30, 2021 included $170.9 million of interest payments and $93.5 million of income tax payments, net of refunds.

Capital expenditures in the fiscal years ended September 30, 2023, 2022, and 2021 were $458.4 million, $496.3 million, and $438.2 million, respectively.

Any changes to payment terms with a key customer or manufacturer supplier could have a material impact on our cash flows from operations.

The addition of any new key customer or the loss of any existing key customer could have a material impact on our cash flows from operations.

Operating cash flows during fiscal 2024 included $250.1 million of interest payments and $603.9 million of income tax payments, net of refunds.

Operating cash flows during fiscal 2023 included $271.3 million of interest payments and $463.1 million of income tax payments, net of refunds.

Operating cash flows during fiscal 2022 included $219.8 million of interest payments and $244.4 million of income tax payments, net of refunds.

Capital expenditures in fiscal 2024, 2023, and 2022 were $487.2 million, $458.4 million, and $496.3 million, respectively.

Significant capital expenditures in fiscal 2024, 2023, and 2022 included investments in various technology initiatives, including technology initiatives at Alliance Healthcare.

Significant capital expenditures in fiscal 2021 included costs associated with facility expansions and various technology initiatives, including costs related to enhancing and upgrading our primary information technology operating systems.

We currently expect to spend approximately $500 million for capital expenditures during fiscal 2024.

Larger 2024 capital expenditures will include investments relating to various technology initiatives, including technology investments at Alliance Healthcare.

In addition to capital expenditures, net cash used in investing activities in the fiscal year ended September 30, 2023 included $1,406.5 million for the acquisition of PharmaLex and $718.4 million for our investment in OneOncology (see Note 2 of the Notes to Consolidated Financial Statements).

In addition to capital expenditures, net cash used in investing activities in the fiscal year ended September 30, 2022 included $133.8 million of cash to acquire companies, including $60.0 million that was paid to settle accrued consideration related to the Alliance Healthcare acquisition (see Note 2 of the Notes to Consolidated Financial Statements), and was offset in part by $272.6 million in proceeds from the divestiture of non-core businesses.

In addition to capital expenditures, net cash used in investing activities in the fiscal year ended 2021 included $5,563.0 million of cash to acquire companies, which principally related to the June 2021 acquisition of Alliance Healthcare, net of cash acquired, and $162.6 million for equity investments.

Net cash used in financing activities in the fiscal year ended September 30, 2023 principally resulted from $1,180.7 million purchases of our common stock, a $675 million repayment of our 0.737% senior notes that matured in March 2023, and $398.8 million in cash dividends paid on our common stock.

Net cash used in financing activities in the fiscal year ended September 30, 2022 principally resulted from an $850 million repayment of our 0.737% senior notes that matured in 2023, the repayment of our $250 million term loan, $391.7 million in cash dividends paid on our common stock, and $483.7 million in purchases of our common stock.

We expect to spend approximately $600 million for capital expenditures during fiscal 2025.

Larger 2025 capital expenditures will include investments relating to the expansion and enhancement of our distribution network and various technology initiatives.

In addition to capital expenditures, net cash used in investing activities in fiscal 2023 included $1.4 billion for the acquisition of PharmaLex and $718.4 million for our investment in OneOncology (see Note 2 of the Notes to Consolidated Financial Statements).

In addition to capital expenditures, net cash used in investing activities in fiscal 2022 included $133.8 million of cash to acquire companies, including $60.0 million that was paid to settle accrued consideration related to the Alliance Healthcare acquisition, and was offset in part by $272.6 million in proceeds from the divestiture of non-core businesses.

Net cash used in financing activities in fiscal 2024 included $1.5 billion in purchases of our common stock, the repayment of our $500 million of 3.400% senior notes that matured in May 2024, $416.2 million in cash dividends paid on our common stock, and a $350.0 million repayment on our Receivables Securitization Facility (as defined below), offset in part by the issuance of our $500 million of 5.125% senior notes in February 2024.

Net cash used in financing activities in fiscal 2023 included $1.2 billion in purchases of our common stock, a $675 million repayment of our 0.737% senior notes that matured in March 2023, and $398.8 million in cash dividends paid on our common stock.

Net cash used in financing activities in fiscal 2022 included an $850 million repayment of our 0.737% senior notes, $483.7 million in purchases of our common stock, $391.7 million in cash dividends paid on our common stock, and the repayment of our $250 million term loan.

Debt and Credit Facility Availability

The following illustrates our debt structure as of September 30, 2023, including availability under the multi-currency revolving credit facility, the receivables securitization facility, the revolving credit note, the money market facility, Alliance Healthcare debt, and the overdraft facility:

The following illustrates our debt structure as of September 30, 2024, including availability under the multi-currency revolving credit facility, the receivables securitization facility, the money market facility, and the Alliance Healthcare debt:

(in thousands) Outstanding

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Receivables securitization facility due 2027 — 1,450,000

Revolving credit note — 75,000

Overdraft facility due 2024 (£10,000) — 12,200

Money market facility — 100,000

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Total debt $ 4,388,076 $ 4,427,910

In March 2021, we 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 was payable semi-annually in arrears and commenced on September 15, 2021.

In the fiscal year ended September 30, 2022, we 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.

In March 2021, we issued $1,000 million of 2.70% senior notes due March 15, 2031 (the "2031 Notes").

The 2031 Notes were sold at 99.79% of the principal amount and have an effective yield of 2.706%.

Interest on the 2031 Notes is payable semi-annually in arrears and commenced on September 15, 2021.

The 2031 Notes rank pari passu to our other senior notes, the Multi-Currency Revolving Credit Facility, the Revolving Credit Note, the Overdraft Facility, and the Money Market Facility.

We used the proceeds from the 2023 Notes and 2031 Notes to finance a portion of the June 2021 Alliance Healthcare acquisition.

We have a $2.4 billion multi-currency senior unsecured revolving credit facility ("Multi-Currency Revolving Credit Facility"), which was scheduled to expire in October 2027, with a syndicate of lenders.

In February 2024, we issued $500 million of 5.125% senior notes due in February 2034 (the "2034 Notes").

The 2034 Notes were sold at 99.867% of the principal amount with an effective yield of 5.132%.

Interest on the 2034 Notes is payable semi-annually in arrears on February 15 and August 15 beginning on August 15, 2024.

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

We have a $2.4 billion multi-currency senior unsecured revolving credit facility ("Multi-Currency Revolving Credit Facility") with a syndicate of lenders, which was scheduled to expire in October 2028.

In October 2024, we amended and restated the Multi-Currency Revolving Credit Facility to extend the expiration to October 2029.

Interest on borrowings under the Multi-Currency Revolving Credit Facility accrues at specified rates based upon our 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.

We pay facility fees to maintain the availability under the Multi-Currency Revolving Credit Facility at specified rates based upon our debt rating, ranging from 7 basis points to 15 basis points, annually, of the total commitment (10 basis points as of September 30, 2023).

Interest on borrowings under the Multi-Currency Revolving Credit Facility accrues at specified rates based upon our debt rating.

We pay facility fees to maintain the availability under the Multi-Currency Revolving Credit Facility at specified rates based upon our debt rating.

We may choose to repay or reduce our commitments under the Multi-Currency Revolving Credit Facility at any time.

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The notes will bear interest, if interest bearing, or will be sold at a discount from their face amounts.

The commercial paper program

does not increase our borrowing capacity as it is fully backed by our Multi-Currency Revolving Credit Facility.

The commercial paper program does not increase our borrowing capacity as it is fully backed by our Multi-Currency Revolving Credit Facility.

There were no borrowings outstanding under our commercial paper program as of September 30, 2024 and 2023.

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

We have a $1,450 million receivables securitization facility ("Receivables Securitization Facility"), which was scheduled to expire in October 2026.

In October 2024, we amended the Receivables Securitization Facility to extend the expiration to October 2027.

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

Interest rates are based upon prevailing market rates for short-term commercial paper or 30-day Term SOFR plus a program fee.

We pay a customary unused fee at prevailing market rates, annually, to maintain the availability under the Receivables Securitization Facility.

In connection with the Receivables Securitization Facility, AmerisourceBergen Drug Corporation and a specialty distribution subsidiary sell on a revolving basis certain accounts receivable to Amerisource Receivables Financial Corporation, a wholly-owned special purpose entity, which in turn sells a percentage ownership interest in the receivables to financial institutions and commercial paper conduits sponsored by financial institutions.

We pay a customary unused fee at prevailing market rates, monthly, to maintain the availability under the Receivables Securitization Facility.

institutions and commercial paper conduits sponsored by financial institutions.

AmerisourceBergen Drug Corporation is the servicer of the accounts receivable under the Receivables Securitization Facility.

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The Receivables Securitization Facility contains similar covenants to the Multi-Currency Revolving Credit Facility, with which we were compliant as of September 30, 2024.

We have an uncommitted, unsecured line of credit available to us pursuant to a revolving credit note ("Revolving Credit Note").

The Revolving Credit Note provides us with the ability to request short-term unsecured revolving credit loans from time to time in a principal amount not to exceed $75 million.

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

We also have a £10 million uncommitted U.K.

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

We had an uncommitted, unsecured line of credit available to us pursuant to a revolving credit note that was terminated in April 2024.

We also had a £10 million uncommitted U.K.

overdraft facility, which expired in February 2024, to fund short-term normal trading cycle fluctuations related to our MWI animal health business.

We have an uncommitted, unsecured line of credit available to us pursuant to a money market credit agreement ("Money Market Facility").

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

In February 2021, we 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.

In April 2021, we reduced our commitment under the February 2021 Term Loan to $500 million.

In June 2021, we borrowed $500 million under the February 2021 Term Loan to finance a portion of the June 2021 Alliance Healthcare acquisition.

We 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.

Alliance Healthcare debt is comprised of uncommitted revolving credit facilities in various currencies with various rates.

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

These facilities are used to fund its working capital needs.

Nonrecourse debt is comprised of short-term and long-term debt belonging to the Brazil subsidiaries and is repaid solely from the Brazil subsidiaries' cash flows and such debt agreements provide that the repayment of the loans (and interest thereon) is secured solely by the capital stock, physical assets, contracts, and cash flows of the Brazil subsidiaries.

Nonrecourse debt is comprised of short-term and long-term debt belonging to the Brazil subsidiary and is repaid solely from the Brazil subsidiary' cash flows and such debt agreements provide that the repayment of the loans (and interest thereon) is secured solely by the capital stock, physical assets, contracts, and cash flows of the Brazil subsidiary.

Share Purchase Programs and Dividends

In October 2018, our Board of Directors authorized a share repurchase program allowing us to purchase up to $1.0 billion of our shares of common stock, subject to market conditions.

During the fiscal year ended September 30, 2021, we purchased $55.5 million of our common stock to complete our authorization under this program.

In May 2020, our Board of Directors authorized a share repurchase program allowing us to purchase up to $500 million of our outstanding shares of common stock, subject to market conditions.

During the fiscal year ended September 30, 2021, we purchased $26.6 million of our common stock.

During the fiscal year ended September 30, 2022, we purchased $473.4 million of our common stock to complete our authorization under this program.

During fiscal 2022, we purchased $473.4 million of our common stock to complete our authorization under this program.

In May 2022, our Board of Directors authorized a share repurchase program allowing us to purchase up to $1.0 billion of our outstanding shares of common stock, subject to market conditions.

During the fiscal year ended September 30, 2022, we purchased $38.7 million of common stock, which included $28.4 million of September 2022 purchases that cash settled in October 2022.

During the fiscal year ended September 30, 2023, we purchased $961.3 million of our common stock, including $882.5 million from WBA, to complete our authorization under this program.

In March 2023, our Board of Directors authorized a new share repurchase program allowing us 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, we purchased $191.0 million of our common stock, including $167.5 million from WBA.

During fiscal 2022, we purchased $38.7 million of common stock, which included $28.4 million of September 2022 purchases that cash settled in October 2022.

During fiscal 2023, we purchased $961.3 million of our common stock, including $882.5 million from WBA, to complete our authorization under this program.

In March 2023, our Board of Directors authorized a share repurchase program allowing us to purchase up to $1.0 billion of our outstanding shares of common stock, subject to market conditions.

During fiscal 2023, we purchased $191.0 million of our common stock, including $167.5 million from WBA.

During fiscal 2024, we purchased $809.0 million of our common stock, including $522.6 million from WBA, to complete our authorization under this program.

In March 2024, our Board of Directors authorized a new share repurchase program allowing us to purchase up to $2.0 billion of our outstanding common stock, subject to market conditions.

During fiscal 2024, we purchased $682.3 million of our common stock, including $427.4 million from WBA.

As of September 30, 2024, we had $1,317.7 million of availability under this program.

From October 1, 2023 through November 20, 2023, we purchased $325.3 million of our common stock, including $250.0 million from WBA.

From October 1, 2024 through November 22, 2024, we purchased $385.4 million of our common stock.

Our Board of Directors approved the following quarterly dividend increases:

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The Distributor Settlement Agreement became effective on April 2, 2022, and as of September 30, 2024, it included 48 of 49 eligible states (the "Settling States") as well as 99% by population of the eligible political subdivisions in the Settling States.

Our remaining estimated liability related to the Distributor Settlement Agreement, the State of Alabama (with whom we have not reached a settlement agreement), and other opioid-related litigation for which we have reached settlement agreements is approximately $5.5 billion on our Consolidated Balance Sheet as of September 30, 2023 and is expected to be paid over the next 15 years.

Our accrued litigation liability related to the Distributor Settlement Agreement, including the State of Alabama and an estimate for non-participating government subsidiaries (with whom we have not reached a settlement agreement), as well as other opioid-related litigation for which we have reached settlement agreements on our Consolidated Balance Sheet as of September 30, 2024 is $4.9 billion and is expected to be paid over the next 14 years.

We currently estimate that $630.2 million will be paid prior to September 30, 2025.

The payment of the aforementioned litigation liability has not and is not expected to have an impact on our ability to pay dividends.

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Total $ 5,985,957 $ 1,479,569 $ 332,413 $ 7,797,939

The 2017 Tax Act required a one-time transition tax to be recognized on historical foreign earnings and profits.

We expect to pay $139.0 million, net of overpayments and tax credits, related to this transition tax, as of September 30, 2023, which is payable in installments over a six-year period that commenced in January 2021.

The 2017 Tax Act requires a one-time transition tax to be recognized on historical foreign earnings and profits.

As of September 30, 2024, we expect to pay a remaining $104.2 million, net of overpayments and tax credits, related to this transition tax over the next two years.

The transition tax commitment is included in "Other Commitments" in the above table.

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We may use derivative instruments to hedge our foreign currency exposure, but not for speculative or trading purposes.

Revenue from our foreign operations during the fiscal year ended September 30, 2023 was approximately 10% of our consolidated revenue.

Revenue from our foreign operations during fiscal 2024 was approximately 10% of our consolidated revenue.

We have market risk exposure to interest rate fluctuations relating to our debt.

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We also have market risk exposure to interest rate fluctuations relating to our cash and cash equivalents.

We had $2,592.1 million in cash and cash equivalents as of September 30, 2023.

We had $3.1 billion in cash and cash equivalents as of September 30, 2024.

The unfavorable impact of a hypothetical decrease in interest rates on cash and cash equivalents would be partially offset by the favorable impact of such a decrease on variable-rate debt.

For every $100 million of cash invested that is in excess of variable-rate debt, a 10-basis point decrease in interest rates would increase our annual net interest expense by $0.1 million.

Deterioration of general economic conditions, among other factors, could adversely affect the number of prescriptions that are filled and the amount of pharmaceutical products purchased by consumers and, therefore, could reduce purchases by our customers.

Deterioration of general economic conditions, among other factors, could adversely affect the number of prescriptions that are filled and the number of pharmaceutical products purchased by consumers and, therefore, could reduce purchases by

our customers.

In addition, volatility in financial markets and higher borrowing costs may also negatively impact our customers' ability to obtain credit to finance their businesses on acceptable terms.

Reduced purchases by our customers or changes in the ability of our customers to remit payments to us could adversely affect our revenue growth, our profitability, and our cash flow from operations.

Recent elevated levels of inflation in the global and U.S.

Reduced purchases by our customers or changes in the ability of our customers to remit payments to us could adversely affect our revenue growth, our profitability, and our cash flows from operations.

Elevated levels of inflation in the global and U.S.

economies have impacted certain operating expenses.

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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 7. Management’s Discussion and Analysis