What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-11-25 compared with 2024-11-26 · 166 added, 152 removed, 321 unchanged (50% of the section changed)

16 unchanged sentences

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.

Healthcare Solutions reportable segment also provides pharmaceutical distribution (including plasma and other blood products, injectable pharmaceuticals, vaccines, and other specialty pharmaceutical products) and additional services to physicians who specialize in a variety of disease states, especially oncology, and to other healthcare providers, including hospitals and dialysis clinics.

Additionally, the U.S.

Healthcare Solutions reportable segment provides data analytics, outcomes research, and additional services for biotechnology and pharmaceutical manufacturers.

Healthcare Solutions reportable segment also provides pharmacy management, staffing and additional consulting services, and supply management software to a variety of retail and institutional healthcare providers.

It also provides a full suite of integrated manufacturer services that ranges from clinical trial support to product post-approval and commercialization support.

Healthcare Solutions reportable segment also provides pharmaceutical distribution (including plasma and other blood products, injectable pharmaceuticals, vaccines, and other specialty pharmaceutical products) and additional services to physicians who specialize in a variety of disease states, especially oncology and retina, and to other healthcare providers, including hospitals, specialty retinal practices, and dialysis clinics.

Healthcare Solutions reportable segment also provides pharmacy management, staffing and additional patient access and adherence support services, and supply management software to a variety of retail and institutional healthcare providers.

Additionally, it delivers packaging solutions to institutional and retail healthcare providers.

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The International Healthcare Solutions reportable segment consists of businesses that focus on international pharmaceutical wholesale and related service operations and global commercialization services.

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

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

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

It 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.

It is also a provider of specialized services, including regulatory affairs, market access, pharmacovigilance, development consulting and scientific affairs, 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.

Recently, we undertook a strategic review of our business to ensure alignment with our growth priorities and strategic drivers.

As a result of this review, we have reorganized certain business components within our reporting structure.

Beginning in the first quarter of fiscal 2026, our reporting structure will be comprised of U.S.

Healthcare Solutions, International Healthcare Solutions, and Other.

Healthcare Solutions reportable segment will consist of U.S.

Human Health (excluding legacy U.S.

Consulting Services).

The International Healthcare Solutions reportable segment will consist of Alliance Healthcare, Innomar, World Courier, and strategic components of PharmaLex.

Other, which is not considered a reportable segment, will consist of businesses for which we have begun to explore strategic alternatives and includes MWI Animal Health, Profarma, U.S.

Consulting Services and the other components of PharmaLex.

Executive Summary

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

• 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 $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 $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.

• Revenue increased by $27.4 billion, or 9.3%, from the prior fiscal year due to growth in both reportable segments.

Healthcare Solutions segment grew its revenue by $25.6 billion, or 9.7%, from the prior fiscal year due to overall market growth largely driven by unit volume growth, including increased sales of specialty products to health systems and physician practices and increased sales of products labeled for diabetes and/or weight loss in the GLP-1 class of $7.7 billion, or 26.9%.

International Healthcare Solutions’ revenue increased by $1.7 billion, or 6.1%, from the prior fiscal year.

• Gross profit increased by $1,568.5 million, or 15.8%, from the prior fiscal year primarily due to the increase in gross profit in the U.S.

Healthcare Solutions reportable segment and larger gains from antitrust litigation settlements.

Healthcare Solutions’ gross profit increased by $1,482.3 million, or 23.1%, from the prior fiscal year primarily due to increased sales and the January 2025 acquisition of RCA.

Gross profit in International Healthcare Solutions decreased $5.6 million, or 0.2%, from the prior fiscal year.

• Total operating expenses increased by $1,115.2 million, or 14.4%, from the prior fiscal year primarily due to the January 2025 acquisition of RCA, a larger goodwill impairment in fiscal 2025, and an increase in acquisition-related deal and integration expenses, offset in part by a decrease in litigation and opioid-related expenses in the current fiscal year.

• Total segment operating income increased by $574.7 million, or 15.8%, 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.

Healthcare Solutions’ operating income increased by $639.8 million, or 21.8%, from prior fiscal year in part due to the January 2025 acquisition of RCA.

International Healthcare Solutions’ operating income decreased by $65.1 million, or 9.1%, from the prior fiscal year.

• Our effective tax rates were 30.6% and 24.2% in fiscal 2025 and 2024, respectively.

Our effective tax rate in fiscal 2025 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 equity compensation, offset in part by U.S.

state income taxes.

statutory rate primarily due to the impairments of PharmaLex goodwill and an equity investment, which are largely not deductible for income tax purposes, U.S.

state income taxes, and an increase in the amount of unrecognized tax benefits, offset in part by the benefit of income taxed at rates lower than the U.S.

statutory rate.

Results of Operations

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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 $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.

Revenue increased by $27.4 billion, or 9.3%, from the prior fiscal year due to growth in both reportable segments.

Healthcare Solutions segment grew its revenue by $25.6 billion, or 9.7%, from the prior fiscal year primarily due to overall market growth largely driven by unit volume growth, including increased sales of specialty products to health systems and physician practices and increased sales of products labeled for diabetes and/or weight loss in the GLP-1 class of $7.7 billion, or 26.9%.

Sales, including GLP-1 products, to our two largest customers increased by $6.2 billion from the prior fiscal year.

International Healthcare Solutions’ revenue increased by $1.7 billion, or 6.1%, from the prior fiscal year primarily due to increased sales at our European distribution business of $1.3 billion.

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

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

During fiscal 2024, no key contracts expired.

As previously disclosed, we received notice of non-renewal from an oncology customer, and in June 2025, our sales contract with that customer was terminated.

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

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 236,372 170,904

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

LIFO credit 76,876 52,168

Turkey highly inflationary impact (49,571) (54,087)

Gross profit $ 11,478,539 $ 9,910,029 15.8%

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.

Gross profit increased by $1,568.5 million, or 15.8%, from the prior fiscal year primarily due to the increase in gross profit in the U.S.

Healthcare Solutions reportable segment and larger gains from antitrust litigation settlements.

Healthcare Solutions’ gross profit increased by $1,482.3 million, or 23.1%, from the prior fiscal year primarily due to increased sales and the January 2025 acquisition of RCA.

As a percentage of revenue, U.S.

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.

Healthcare Solutions’ gross profit margin of 2.72% in the current fiscal year increased 30 basis points compared to the prior fiscal year primarily due to the January 2025 acquisition of RCA, offset in part by higher sales of GLP-1 products, which have lower gross profit margins, and lower sales of COVID vaccines, which have higher gross profit margins.

Gross profit in International Healthcare Solutions decreased $5.6 million, or 0.2%, from the prior fiscal year as the decline in gross profit at our global specialty logistics business and our specialized consulting services business was largely offset in part by an increase in gross profit at our European distribution business and our less-than-wholly-owned Brazil full-line distribution business.

We recognized gains from antitrust litigation settlements with pharmaceutical manufacturers of $236.4 million and $170.9 million in fiscal 2025 and 2024, respectively.

The gains were recorded as reductions to Cost of Goods Sold (see Note 13 of the Notes to Consolidated Financial Statements).

Our cost of goods sold includes a LIFO provision that 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.

Our cost of goods sold includes a last-in, first-out (“LIFO”) provision that 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 may have a material impact on our annual LIFO provision.

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.

The LIFO credit in fiscal 2025 was higher than the LIFO credit in fiscal 2024 primarily due to higher generic pharmaceutical deflation, offset in part by slightly higher brand pharmaceutical inflation.

We recognized expenses in Cost of Goods Sold of $49.6 million and $54.1 million in fiscal 2025 and 2024, respectively, related to the impact of Turkey highly inflationary accounting driven by the continued weakening of the Turkish Lira.

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Depreciation and amortization 1,051,075 1,091,974 (3.7)%

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

Litigation and opioid-related expenses, net 60,671 227,070

Acquisition-related deal and integration expenses 291,044 103,001

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Total operating expenses $ 8,849,938 $ 7,734,780 14.4%

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.

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 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.

Distribution, selling, and administrative expenses increased by $832.7 million, or 14.7%, from the prior fiscal year primarily due to the January 2025 acquisition of RCA and to support our revenue growth.

As a percentage of revenue, distribution, selling, and administrative expenses were 2.02% in the current fiscal year and represent an increase of 9 basis points compared to the prior fiscal year primarily due to the January 2025 acquisition of RCA, offset in part by our improved operating leverage from our 9.3% revenue growth from the prior fiscal year.

Depreciation expense increased by 15.3% from the prior fiscal year.

Amortization expense decreased by 16.1% from the prior fiscal year due to certain tradenames becoming fully amortized in connection with our company name change to Cencora and the gradual transition away from other tradenames used, which were acquired through prior acquisitions.

Litigation and opioid-related expenses, net in fiscal 2025 included legal fees in connection with opioid lawsuits and investigations.

Litigation and opioid-related expenses, net in fiscal 2024 included a $214.0 million litigation expense accrual for litigation related to the distribution of prescription opioid medications, a $49.1 million litigation expense accrual related to our animal health business (see Note 12 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.

Acquisition-related deal and integration expenses in fiscal 2025 primarily included costs related to the acquisition of RCA, including expenses related to equity units retained by RCA physicians and members of management of $121.7 million and $19.6 million related to the remeasurement of the fair value of contingent consideration associated with the RCA acquisition (see Note 2 of the Notes to Consolidated Financial Statements), and the continued integration of PharmaLex.

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

Restructuring and other expenses are comprised of the following:

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Total restructuring and other expenses $ 229,422 $ 233,629

Restructuring and employee severance costs in fiscal 2025 primarily included expenses incurred related to workforce reductions in both of our reportable segments.

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 2025 and 2024 included rebranding costs associated with our name change to Cencora and non-recurring expenses related to significant strategic initiatives to improve operational efficiency, including certain technology initiatives.

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

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

In fiscal 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).

We recorded goodwill impairments of $723.9 million and $418.0 million related to PharmaLex in fiscal 2025 and 2024, respectively (see Note 5 of the Notes to Consolidated Financial Statements).

Operating Income

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Gains from antitrust litigation settlements 236,372 170,904

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

LIFO credit 76,876 52,168

Turkey highly inflationary impact (49,571) (54,087)

Acquisition-related intangibles amortization (553,028) (660,292)

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

Litigation and opioid-related credit (60,671) (227,070)

Acquisition-related deal and integration expenses (291,044) (103,001)

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As a percentage of revenue, U.S.

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.

Healthcare Solutions operating income margin was 1.23% and represents a 12-basis point increase from the prior fiscal year due to the increase in gross profit margin, as described above in the Gross Profit section, offset in part by the increase in the operating expense margin.

International Healthcare Solutions’ operating income decreased by $65.1 million, or 9.1%, from the prior fiscal year.

The decrease was primarily due to lower operating income at our global specialty logistics business and our specialized consulting services business.

Other Loss (Income), Net

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

Other loss (income), net includes a $113.5 million impairment of an equity investment that was made in fiscal 2021 and a $35.5 million loss on the divestiture of non-core businesses, offset in part by our portion of an equity method investment’s gain on the sale of a business of $39.7 million and a $14.1 million gain on the remeasurement of an equity investment in fiscal 2025.

Interest Expense, Net

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Interest expense, net $ 291,548 $ 156,991

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.

Interest expense, net increased $134.6 million, or 85.7%, from the prior fiscal year due to the increase in interest expense, offset in part by an increase in interest income.

The increase in interest expense was primarily due to the issuance of our $1.8 billion of senior notes in December 2024 and the $1.5 billion variable-rate term loan, which we borrowed in January 2025 to finance a portion of the RCA acquisition, increased revolving credit facility borrowings to cover short-term working capital needs, and the May 2025 issuance of our €1.0 billion of senior notes, offset in part by the repayment of our $500 million of senior notes that matured in March 2025.

The increase in interest income was driven by higher average investment cash balances in fiscal 2025 in comparison to fiscal 2024.

Income Tax Expense

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Our effective tax rate in fiscal 2025 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.

statutory rate primarily due to the impairments of PharmaLex goodwill and an equity investment, which are largely not deductible for income tax purposes, U.S.

state income taxes, and an increase in the amount of unrecognized tax benefits, offset in part by the benefit of income taxed at rates lower than the U.S.

statutory rate.

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

statutory rate primarily due to the PharmaLex goodwill impairment, which was 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 and 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 equity compensation, offset in part by U.S.

state income taxes.

statutory rate.

Critical Accounting Policies and Estimates

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We perform ongoing credit evaluations of our customers’ financial condition and maintain reserves for expected credit losses and specific credit problems when they arise.

We write off balances against the reserves when collectability is deemed remote.

We write off balances against the reserves when collectibility is deemed remote.

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.

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We identify our reporting units based upon our management reporting structure, beginning with our operating segments.

We aggregate two or more components within an operating segment that have similar economic characteristics.

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

As of September 30, 2024, our reporting units include U.S.

We evaluate whether the components within our 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 and aggregate two or more components within an operating segment that have similar economic characteristics.

As of September 30, 2025, our reporting units included U.S.

Pharmaceutical Distribution Services, U.S.

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We elected to perform quantitative impairment assessments of goodwill for all our reporting units in fiscal 2025, 2024, and 2023 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.

We elected to perform qualitative impairment assessments of indefinite-lived intangible assets in fiscal 2025, 2024, and 2023.

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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While there are always changes in assumptions to reflect changing business and market conditions, our overall methodology and the population of assumptions used have remained unchanged.

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.

We estimate 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.

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.

We completed our required annual impairment assessments relating to goodwill and indefinite-lived intangible assets in fiscal 2025, 2024, and 2023 and, as a result, recorded goodwill impairments (see Note 5 of the Notes to Consolidated Financial Statements ) of $723.9 million and $418.0 million in our PharmaLex reporting unit in fiscal 2025 and 2024, respectively.

No goodwill impairments were recorded in fiscal 2023 and no indefinite-lived intangible asset impairments were recorded in fiscal 2025, 2024, or 2023.

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Expiring carryforwards and the required valuation allowances are adjusted annually.

After application of the valuation allowances described above, we anticipate that no limitations will apply with respect to utilization of any of the other deferred income tax assets described above.

application of the valuation allowances described above, we anticipate that no limitations will apply with respect to utilization of any of the other deferred income tax assets described above.

We prepare and file tax returns based upon our interpretation of tax laws and regulations and record estimates based upon these judgments and interpretations.

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Inventories are stated at the lower of cost or market.

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

Cost for approximately 63% and 65% of our inventories as of September 30, 2025 and 2024, respectively, 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 $1,458.9 million and $1,535.8 million higher than the amounts reported as of September 30, 2025 and 2024, respectively.

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.

We recorded LIFO credits of $76.9 million and $52.2 million in fiscal 2025 and 2024, respectively, and LIFO expense of $204.6 million in fiscal 2023.

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.

Changes to any of the above factors can have a material impact on 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

In the ordinary course of business, we become involved in lawsuits, administrative proceedings, government subpoenas, government investigations, stockholder demands, and other disputes, including antitrust, commercial, product liability, intellectual property, regulatory, employment discrimination, and other matters.

In the ordinary course of business, we become involved in lawsuits, administrative proceedings, government subpoenas, government investigations, stockholder demands, and other disputes, including antitrust, commercial, data privacy and security, product liability, intellectual property, regulatory, employment discrimination, and other matters.

Significant damages or penalties may be sought in some matters, and some matters may require years to resolve.

We record a liability when it is both probable that a loss has been incurred and the amount can be reasonably estimated.

We record a reserve for these matters when it is both probable that a loss has been incurred and the amount can be reasonably estimated.

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.

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We have the ability to repatriate the majority of our cash and cash equivalents held by our foreign subsidiaries without incurring significant additional taxes upon repatriation.

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

Our cash balances in fiscal 2025 and 2024 were supplemented by intra-period credit facility borrowings to cover short-term working capital needs.

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We had $132.2 billion, $69.7 billion, and $77.9 billion of cumulative intra-period borrowings that were repaid under our credit facilities during fiscal 2025, 2024, and 2023, 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.

Our net cash provided by operating activities increased by $390.4 million in fiscal 2025 compared to fiscal 2024 largely due to our growth, which resulted from an increase in net income, plus non-cash items of $653.7 million, offset in part by a decrease in cash generated from our working capital accounts due to the timing of cash receipts and disbursements.

More specifically, in fiscal 2025, the increase of our accounts receivable, inventories, and accounts payable balances provided $500.5 million of cash from operations compared to $704.2 million in fiscal 2024.

During fiscal 2025, our operating activities provided cash of $3.9 billion and was principally the result of the following:

• An increase in accounts payable of $3.7 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:

• Positive non-cash items of $2.3 billion, which was primarily comprised of asset impairments of $837.4 million, amortization expense of $567.1 million, and depreciation expense of $501.3 million;

• Net income of $1.6 billion.

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

• An increase in accounts receivable of $1.9 billion primarily due to an increase in sales and the timing of scheduled payments from our customers;

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• 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 was 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.

• 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:

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

• 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;

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

The below financial metrics are calculated based upon a quarterly average and can be impacted by the timing of cash receipts and disbursements, which can vary significantly depending upon the day of the week in which the month ends.

Fiscal Year Ended September 30,

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Capital expenditures in fiscal 2025, 2024, and 2023 were $668.0 million, $487.2 million, and $458.4 million, respectively.

Significant capital expenditures in fiscal 2025 included investments relating to the expansion and enhancement of our distribution network and various technology initiatives.

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

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.

We expect to spend approximately $900 million on capital expenditures during fiscal 2026.

Larger fiscal 2026 capital expenditures will include investments relating to the continued expansion and enhancement of our distribution network and various technology initiatives.

In addition to capital expenditures, net cash used in investing activities in fiscal 2025 included $3.9 billion for the acquisition of RCA and $196.2 million for equity investments.

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.

Net cash provided by financing activities in fiscal 2025 principally resulted from the $1.8 billion issuance of senior notes and $1.5 billion of term loan borrowings to finance a portion of the acquisition of RCA, as well as the issuance of €1.0 billion of senior notes that were used for general corporate purposes.

All of the above were offset in part by $700 million of term loan repayments, the repayment of our $500 million of 3.250% senior notes that matured in March 2025, $437.1 million in cash dividends paid on our common stock, and $435.5 million in purchases of our common stock.

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, 2024, including availability under the multi-currency revolving credit facility, the receivables securitization facility, the money market facility, and the Alliance Healthcare debt:

The following illustrates our debt structure as of September 30, 2025, including availability under the multi-currency revolving credit facility, the receivables securitization facility, the money market facility, the working capital credit facility, and the Alliance Healthcare debt:

(in thousands) Outstanding

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€500,000, 3.625% senior notes due 2032 581,685 —

$500,000, 5.125% senior notes due 2034 495,104 —

$700,000, 5.150% senior notes due 2035 694,909 —

$500,000, 4.250% senior notes due 2045 495,792 —

$500,000, 4.300% senior notes due 2047 494,088 —

Nonrecourse debt 92,672 —

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Multi-currency revolving credit facility due 2030 — 4,500,000

Receivables securitization facility due 2027 — 1,450,000

Money market facility — 100,000

Receivables securitization facility due in 2028 — 1,500,000

Term loan due in 2027 799,043 —

Money market facility due in 2027 — 500,000

Working capital credit facility due in 2026 — 500,000

Alliance Healthcare debt 1,424 465,632

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Total debt $ 7,660,773 $ 7,465,632

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.

We had 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 2029.

In June 2025, we amended and restated the Multi-Currency Revolving Credit Facility to extend the expiration to June 2030 and increase the aggregate amount of the commitments under this facility to $4.5 billion.

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

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

The Multi-Currency Revolving Credit Facility contains covenants, including compliance with a financial leverage ratio test, as well as others that impose limitations on, among other things, indebtedness of subsidiaries and asset sales, with which we were compliant as of September 30, 2025.

We have a commercial paper program whereby we may from time to time issue short-term promissory notes in an aggregate amount of up to $2.4 billion at any one time.

There were no borrowings outstanding under the Multi-Currency Revolving Credit Facility as of September 30, 2025 and 2024.

We had a $3.4 billion commercial paper program.

In September 2025, we increased the commercial paper program to $4.5 billion.

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

We may, from time to time, issue short-term promissory notes in an aggregate amount of up to $4.5 billion at any one time.

Amounts available under the program may be borrowed, repaid, and re-borrowed from time to 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.

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 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.

There were no borrowings outstanding under the commercial paper program as of September 30, 2025 and 2024.

In November 2024, we entered into an agreement pursuant to which we obtained a $1.0 billion senior unsecured revolving credit facility (the “364-Day Revolving Credit Facility”) with a syndicate of lenders, which was scheduled to expire

364 days after the January 2, 2025 closing of the RCA acquisition, the date on which borrowings under this facility became available to us.

In June 2025, in conjunction with the amendment to the Multi-Currency Revolving Credit Facility, we terminated the 364-Day Revolving Credit Facility.

We had a $1.45 billion receivables securitization facility (“Receivables Securitization Facility”), which was scheduled to expire in October 2027.

In June 2025, we amended the Receivables Securitization Facility to extend the expiration to June 2028, increase the size of the facility to $1.5 billion, and increase its accordion feature to $500 million from $250 million.

This accordion feature allows us to increase the commitment on the Receivables Securitization Facility up to $500 million, subject to lender approval.

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

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

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.

The Receivables Securitization Facility contains similar covenants to the Multi-Currency Revolving Credit Facility, with which we were compliant as of September 30, 2025.

There were no borrowings outstanding under the Receivables Securitization Facility as of September 30, 2025 and 2024.

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

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We securitize our trade accounts, which are generally non-interest bearing, in transactions that are accounted for as borrowings.

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

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”).

The Money Market Facility provides us with the ability to request short-term unsecured revolving credit loans from time to time in a principal amount not to exceed $100 million.

In September 2025, we entered into an amendment to the Money Market Facility pursuant to which we may request short-term unsecured revolving credit loans in a principal amount not to exceed $500 million on or after April 1 and before December 1 of any year and increases to $750 million on or after December 1 and before March 31 of any year.

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

There were no borrowings outstanding under the Money Market Facility as September 30, 2025 and 2024.

In July 2025, we entered into an uncommitted, unsecured line of credit to support our working capital needs (“Working Capital Credit Facility”).

The Working Capital Credit Facility provides us with the ability to request short-term, unsecured revolving credit loans from time to time in a principal amount not to exceed $500 million.

The Working Capital Credit Facility expires in July 2026 and may be decreased or terminated by the bank or us at any time without prior notice.

There were no borrowings outstanding under the Working Capital Credit Facility as of September 30, 2025.

In January 2025, we borrowed $1.5 billion on a variable-rate term loan (“Term Loan”) that was scheduled to mature in December 2027.

In September 2025, we amended the Term Loan to shorten the maturity to October 2027.

The Term Loan was used to finance a portion of the acquisition of RCA (see Note 2 of the Notes to Consolidated Financial Statements).

The Term Loan bears interest at a rate equal to either an adjusted SOFR plus an applicable margin or an alternate base rate plus an applicable margin.

The margins are based on our public debt ratings.

The Term Loan contains similar covenants to the Multi-Currency Revolving Credit Facility.

We have the right to prepay the borrowings under the Term Loan at any time, in whole or in part and without premium or penalty.

Through September 30, 2025, we elected to make early principal payments of $700 million on the Term Loan.

In December 2024, we issued $500 million of 4.625% senior notes due in December 2027 (the “2027 Notes”), $600 million of 4.850% senior notes due in December 2029 (the “2029 Notes”), and $700 million of 5.150% senior notes due in February 2035 (the “2035 Notes”).

The 2027 Notes were sold at 99.815% of the principal amount with an effective yield of 4.634%.

The 2029 Notes were sold at 99.968% of the principal amount with an effective yield of 4.852%.

The 2035 Notes were sold at 99.945% of the principal amount with an effective yield of 5.153%.

Interest on the 2027 Notes and the 2029 Notes is payable semi-annually in arrears on June 15 and December 15, which began on June 15, 2025.

Interest on the 2035 Notes is payable semi-annually in arrears on February 15 and August 15, which began on February 15, 2025.

We used the proceeds from the 2027 Notes, the 2029 Notes, and the 2035 Notes to finance a portion of the acquisition of RCA.

In May 2025, we issued €500 million of 2.875% senior notes due in May 2028 (the “2028 Notes”) and €500 million of 3.625% senior notes due in May 2032 (the “2032 Notes”).

The 2028 Notes were sold at 99.960% of the principal amount with an effective yield of 2.876%.

The 2032 Notes were sold at 99.757% of the principal amount with an effective yield of 3.634%.

Interest on the 2028 Notes and the 2032 Notes is payable annually in arrears beginning on May 22, 2026.

We used the proceeds from the 2028 Notes and the 2032 Notes for general corporate purposes.

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

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

These facilities are used to fund its working capital needs.

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

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

Share Purchase Programs and Dividends

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

During 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 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.

During fiscal 2023, we purchased $961.3 million of our common stock 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, 2024 through November 22, 2024, we purchased $385.4 million of our common stock.

During fiscal 2023, we purchased $191.0 million of our common stock under this program.

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

In March 2024, our Board of Directors authorized a 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 under this program.

During fiscal 2025, we purchased $435.4 million of our common stock under this program.

As of September 30, 2025, we had $882.2 million availability under this program.

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, 2025, it included 48 of 49 eligible states (the “Settling States”) as well as 99% by population of the eligible political subdivisions in the Settling States.

Our accrued litigation liability related to the Distributor Settlement Agreement, 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.

Our accrued litigation liability related to the Distributor Settlement Agreement and an estimate for non-participating government subsidiaries (with whom we have not reached a settlement agreement), as well as other opioid-related litigation for which we have reached settlement agreements on our Consolidated Balance Sheet as of September 30, 2025 is $4.3 billion and is expected to be paid over the next 13 years.

We currently estimate that $416.0 million will be paid prior to September 30, 2026.

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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.

As of September 30, 2025, we expect to pay the remaining $57.9 million related to the transition tax in January 2026.

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

Our liability for uncertain tax positions was $640.5 million (including interest and penalties) as of September 30, 2025.

This liability represents an estimate of tax positions that we have taken in our tax returns which may ultimately not be sustained upon examination by taxing authorities.

This liability represents an estimate of tax positions that we have taken in our tax returns that may ultimately not be sustained upon examination by taxing authorities.

Since the amount and timing of any future cash settlements cannot be predicted with reasonable certainty, the estimated liability has been excluded from the above contractual obligations table.

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We use forward contracts to hedge against the foreign currency exchange rate impact on certain intercompany receivable and payable balances.

We use foreign currency denominated debt held at the parent level to offset a portion of our foreign currency exchange rate exposure on our net investments in Euro-denominated subsidiaries (see Note 1 of the Notes to Consolidated Financial Statements).

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

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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 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 flows from operations.

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

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

economies have impacted certain operating expenses.

If elevated levels of inflation persist or increase, our operations and financial results could be adversely affected, particularly in certain global markets.

We have risks from other geopolitical trends and events, such as the ongoing conflicts in Ukraine and between Israel and Hamas.

Although the long-term implications of these conflicts are difficult to predict at this time, the financial impact of these conflicts has not been material.

We have risks from other geopolitical trends and events, such as rising nationalism, the conflict in Ukraine, and evolving conditions in the Middle East.

Although the long-term implications of these conflicts are difficult to predict at this time, the financial impact of these conflicts has not been material to our financial results.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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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