CENCORA, INC. Overview
The following discussion should be read in conjunction with the Consolidated Financial Statements and notes thereto contained herein and in conjunction with the financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year endedSeptember 30, 2022 . We are one of the largest global pharmaceutical sourcing and distribution services companies, helping both healthcare providers and pharmaceutical and biotech manufacturers improve patient access to products and enhance patient care. We deliver innovative programs and services designed to increase the effectiveness and efficiency of the pharmaceutical supply chain in both human and animal health. We are organized geographically based upon the products and services we provide to our customers, and we report our results under two reportable segments:U.S. Healthcare Solutions and International Healthcare Solutions.
TheU.S. Healthcare Solutions reportable segment distributes a comprehensive offering of brand-name, specialty brand-name and generic pharmaceuticals, over-the-counter healthcare products, home healthcare supplies and equipment, and related services to a wide variety of healthcare providers, including acute care hospitals and health systems, independent and chain retail pharmacies, mail order pharmacies, medical clinics, long-term care and alternate site pharmacies, and other customers. TheU.S. Healthcare Solutions reportable segment also provides pharmaceutical distribution (including plasma and other blood products, injectable pharmaceuticals, vaccines, and other specialty pharmaceutical products) and additional services to physicians who specialize in a variety of disease states, especially oncology, and to other healthcare providers, including hospitals and dialysis clinics. Additionally, theU.S. Healthcare Solutions reportable segment provides data analytics, outcomes research, and additional services for biotechnology and pharmaceutical manufacturers. TheU.S. Healthcare Solutions reportable segment also provides pharmacy management, staffing and additional consulting services, and supply management software to a variety of retail and institutional healthcare providers. It also provides a full suite of integrated manufacturer services that ranges from clinical trial support to product post-approval and commercialization support. Additionally, it delivers packaging solutions to institutional and retail healthcare providers. Through its animal health business, theU.S. Healthcare Solutions reportable segment sells pharmaceuticals, vaccines, parasiticides, diagnostics, micro feed ingredients, and various other products to customers in both the companion animal and production animal markets. It also offers demand-creating sales force services to manufacturers.
International Healthcare Solutions Segment
The International Healthcare Solutions reportable segment consists of businesses that focus on international pharmaceutical wholesale and related service operations and global commercialization services.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 inEurope . It also is a leading global specialty transportation and logistics provider for the biopharmaceutical industry. InCanada , the business drives innovative partnerships with manufacturers, providers, and pharmacies to improve product access and efficiency throughout the healthcare supply chain. 20
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Table of Contents Recent Developments PharmaLex Acquisition We acquired and assumed control ofPharmaLex Holding Gmbh ("PharmaLex") effectiveJanuary 1, 2023 for €1.381 billion, subject to customary adjustments, including a €27.5 million cash holdback. Subsequent to the signing of the definitive agreement inSeptember 2022 to acquire PharmaLex for €1.28 billion, PharmaLex completed other acquisitions that we had agreed to, and, as a result, we paid an incremental €101 million at transaction closing. PharmaLex is a leading provider of specialized services for the life sciences industry. PharmaLex's services include regulatory affairs, development consulting and scientific affairs, pharmacovigilance, and quality management and compliance. PharmaLex is headquartered inGermany and operates in over 30 countries. The acquisition will advance our role as a partner of choice for biopharmaceutical partners across the pharmaceutical development and commercialization journey. PharmaLex will be a component of our International Healthcare Solutions reportable segment.
Company Name Change
OnJanuary 24, 2023 , we announced our intent to change our name to better reflect our bold vision and purpose-driven approach to creating healthier futures. We intend to begin operating as Cencora in the second half of calendar year 2023. The new name represents a unified presence that will continue to fuel our ongoing growth strategy and advance our impact across healthcare. In connection with the name change, the useful lives of certain trade names will be shortened, which will result in additional acquisition-related intangibles amortization expense over the next few years.
Executive Summary
This executive summary provides highlights from the results of operations that follow:
•Revenue increased by$3.2 billion , or 5.4%, from the prior year quarter due to growth in ourU.S. Healthcare Solutions segment. TheU.S. Healthcare Solutions segment grew its revenue by$3.3 billion , or 6.1%, from the prior quarter primarily due to overall market growth driven by unit volume growth and increased sales to specialty physician practices, offset in part by a decline in sales of COVID-19 treatments (primarily commercial treatments). Revenue in International Healthcare Solutions decreased$38.5 million from the prior year quarter due to a decline at Alliance Healthcare, our European distribution business, resulting from unfavorable foreign currency exchange rates in the current year quarter in comparison to the prior year quarter and theJune 2022 divestiture of ourBrazil specialty business, offset in part by increases in sales in our less-than-wholly-ownedBrazil full-line distribution business, ourCanada operations, and our global specialty logistics business; •Gross profit increased by$85.6 million , or 4.2%, from the prior year quarter. Gross profit in the current year quarter was favorably impacted by an increase in gross profit inU.S. Healthcare Solutions and gains from antitrust litigation settlements. The increase was offset in part by last-in, first-out ("LIFO") expense in the current year quarter in comparison to a LIFO credit in the prior year quarter.U.S. Healthcare Solutions gross profit increased by$107.6 million , or 8.4%, from the prior year quarter primarily due to increased sales and a 5-basis point improvement in gross profit margin. Gross profit in International Healthcare Solutions increased by$1.4 million , or 0.2%, from prior year quarter primarily due to our less-than-wholly-ownedBrazil full-line distribution business and our global specialty logistics business, and was largely offset by a decrease in our European distribution business resulting from unfavorable foreign currency exchange rates in the current year quarter in comparison to the prior year quarter and theJune 2022 divestiture of ourBrazil specialty business; •Total operating expenses increased by$96.9 million , or 6.8%, compared to the prior year quarter primarily as a result of an increase in distribution, selling, and administrative expenses, offset in part by lower litigation and opioid-related expenses in the current year quarter; •Total segment operating income decreased by$15.4 million , or 2.1%, from the prior year quarter primarily due to the decrease in operating income in the International Healthcare Solutions segment resulting from unfavorable foreign currency exchange rates in the current year quarter in comparison to the prior year quarter; and •Our effective tax rates were 19.8% and 24.6% for the three months endedDecember 31, 2022 and 2021, respectively. The effective tax rate for the three months endedDecember 31, 2022 was lower than theU.S. statutory rate primarily due to the benefit of non-U.S. income taxed at rates lower than theU.S. statutory rate, as well as tax benefits associated with the vesting of restricted stock units and stock option exercises, offset in part byU.S. state income taxes. 21
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Results of Operations
Revenue
Three months ended
December 31,
(dollars in thousands) 2022 2021 Change
U.S. Healthcare Solutions:
Human Health $ 55,076,613 $ 51,782,129 6.4%
Animal Health 1,159,966 1,197,518 (3.1)%
Total U.S. Healthcare Solutions 56,236,579 52,979,647 6.1%
International Healthcare Solutions:
Alliance Healthcare 5,460,691 5,556,671 (1.7)%
Other Healthcare Solutions 1,150,587 1,093,111 5.3%
Total International Healthcare Solutions 6,611,278 6,649,782 (0.6)%
Intersegment eliminations (1,025) (619)
Revenue $ 62,846,832 $ 59,628,810 5.4%
Our future revenue growth will continue to be affected by various factors, such
as industry growth trends, including drug utilization, the introduction of new,
innovative brand therapies, the likely increase in the number of generic drugs
and biosimilars that will be available over the next few years as a result of
the expiration of certain drug patents held by brand-name pharmaceutical
manufacturers and the rate of conversion from brand products to those generic
drugs and biosimilars, price inflation and price deflation, general economic
conditions in the United States and Europe , 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 the
COVID-19 pandemic.
Revenue increased by 5.4% from the prior year quarter due to growth in the
TheU.S. Healthcare Solutions segment grew its revenue by$3.3 billion , or 6.1%, from the prior year quarter primarily due to overall market growth driven by unit volume growth and increased sales to specialty physician practices, offset in part by a decline in sales of COVID-19 treatments (primarily commercial treatments).
More specifically, the increase in the
Increased sales to specialty physician practices$0.8 Decreased sales of COVID-19 treatments$(0.3) Increased sales to other customers$2.8 The International Healthcare Solutions' revenue decreased by$38.5 million , or 0.6%, from the prior year quarter primarily due to a decline at Alliance Healthcare, our European distribution business, resulting from unfavorable foreign currency exchange rates in the current year quarter in comparison to the prior year quarter and theJune 2022 divestiture of ourBrazil specialty business, offset in part by increases in sales in our less-than-wholly-ownedBrazil full-line distribution business, ourCanada operations, and our global specialty logistics 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 three months endedDecember 31, 2022 , 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. 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. 22
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Gross Profit
Three months ended
December 31,
(dollars in thousands) 2022 2021 Change
U.S. Healthcare Solutions $ 1,386,148 $ 1,278,553 8.4%
International Healthcare Solutions 738,540 737,127 0.2%
Gains from antitrust litigation settlements 49,899 - LIFO (expense) credit
(25,050) 44,679
Turkey highly inflationary impact (3,584) - Gross profit$ 2,145,953 $ 2,060,359 4.2% Gross profit increased by$85.6 million , or 4.2%, from the prior year quarter. Gross profit in the current year quarter was favorably impacted by an increase in gross profit inU.S. Healthcare Solutions and gains from antitrust litigation settlements. The increase was offset in part by LIFO expense in the current year quarter in comparison to a LIFO credit in the prior year quarter.U.S. Healthcare Solutions gross profit increased by$107.6 million , or 8.4%, from the prior year quarter primarily due to increased sales and a 5-basis point improvement in gross profit margin to 2.46% in the current year quarter from 2.41% in the prior year quarter. Gross profit in International Healthcare Solutions increased by$1.4 million , or 0.2%, from the prior year quarter primarily due to our less-than-wholly-ownedBrazil full-line distribution business and our global specialty logistics business, and was largely offset by a decrease in our European distribution business resulting from unfavorable foreign currency exchange rates in the current year quarter in comparison to the prior year quarter and theJune 2022 divestiture of ourBrazil specialty business. We recognized gains from antitrust litigation settlements with pharmaceutical manufacturers of$49.9 million in the three months endedDecember 31, 2022 . The gains were recorded as reductions to Cost of Goods Sold (see Note 10 of the Notes to Consolidated Financial Statements). Our cost of goods sold for interim periods includes a LIFO provision that is recorded ratably on a quarterly basis and is based on our estimated annual LIFO provision. The annual LIFO provision, which we estimate on a quarterly basis, is affected by manufacturer pricing practices, which may be impacted by market and other external influences, expected changes in inventory quantities, and product mix, many of which are difficult to predict. Changes to any of the above factors may have a material impact on our annual LIFO provision. The$25.1 million LIFO expense in the current year quarter is primarily due to higher brand pharmaceutical inflation and inventory product mix, offset in part by greater generic pharmaceutical deflation. Operating Expenses Three months ended December 31, (dollars in thousands) 2022 2021 Change Distribution, selling, and administrative$ 1,290,928 $ 1,170,110 10.3% Depreciation and amortization 171,940 175,929 (2.3)% Litigation and opioid-related expenses 12,706 32,635 Acquisition, integration, and restructuring expenses 37,236 32,334 Impairment of assets - 4,946 Total operating expenses$ 1,512,810 $ 1,415,954 6.8% Distribution, selling, and administrative expenses increased by$120.8 million , or 10.3%, compared to prior year quarter primarily to support revenue growth inU.S. Healthcare Solutions and included inflationary impacts on certain operating expenses. As a percentage of revenue, distribution, selling, and administrative expenses were 2.05% in the current year quarter and represented a 9-basis point increase compared to the prior year quarter. Depreciation expense increased 4.1% from the prior year quarter. Amortization expense decreased 9.9% from the prior year quarter primarily due to favorable foreign currency exchange rates in the current year quarter in comparison to the prior year quarter. 23
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Litigation and opioid-related expenses in the three months endedDecember 31, 2022 included legal fees in connection with opioid lawsuits and investigations. Litigation and opioid-related expenses in the three months endedDecember 31, 2021 included a$6.8 million accrual related to opioid litigation settlements and$25.8 million of legal fees in connection with opioid lawsuits and investigations. Acquisition, integration, and restructuring expenses in the three months endedDecember 31, 2022 included$21.0 million of acquisition-related deal and integration costs primarily related to the integration of Alliance Healthcare,$12.9 million related to our business transformation efforts, and$3.3 million of other restructuring initiatives and severance. Acquisition, integration, and restructuring expenses in the three months endedDecember 31, 2021 included$21.4 million of acquisition-related deal and integration costs primarily related to the integration of Alliance Healthcare,$6.6 million of other restructuring initiatives and severance, and$4.3 million related to our business transformation efforts. Operating Income Three months ended December 31, (dollars in thousands) 2022 2021 Change U.S. Healthcare Solutions$ 572,416 $ 569,087 0.6% International Healthcare Solutions 161,282 180,060 (10.4)% Total segment operating income 733,698 749,147 (2.1)% Gains from antitrust litigation settlements 49,899 - LIFO (expense) credit (25,050) 44,679 Turkey highly inflationary impact (3,584) - Acquisition-related intangibles amortization (71,878) (79,506) Litigation and opioid-related expenses (12,706) (32,635) Acquisition, integration, and restructuring expenses (37,236) (32,334) Impairment of assets - (4,946) Operating income$ 633,143 $ 644,405 (1.7)% Segment operating income is evaluated before gains from antitrust litigation settlements; LIFO (expense) credit;Turkey highly inflationary impact; acquisition-related intangibles amortization; litigation and opioid-related expenses; acquisition, integration, and restructuring expenses; and impairment of assets.U.S. Healthcare Solutions' operating income increased by$3.3 million , or 0.6%, from prior year quarter primarily due to the increase in gross profit, as noted above, and was largely offset in part by the increase in operating expenses. As a percentage of revenue,U.S. Healthcare Solutions' operating income margin was 1.02% in the current year quarter ended and represented a decline of 5 basis points compared to the prior year quarter primarily due to the increase in operating expenses. Operating income in International Healthcare Solutions decreased by$18.8 million , or 10.4%, from the prior year quarter primarily due to a decrease in operating income in our European distribution business resulting from unfavorable foreign currency exchange rates in the current year quarter in comparison to the prior year quarter and theJune 2022 divestiture of ourBrazil specialty business. Interest Expense, Net
Interest expense, net and the respective weighted average interest rates in the
three months ended
2022 2021
Weighted Average Weighted Average
(dollars in thousands) Amount Interest Rate Amount Interest Rate
Interest expense $ 60,806 3.21% $ 56,632 2.58%
Interest income (14,790) 2.86% (3,260) 0.88%
Interest expense, net $ 46,016 $ 53,372
Interest expense, net decreased by $7.4 million , or 13.8%, from the prior year
quarter primarily due to the increase in interest income. The increase in
interest income was primarily due to higher investment interest rates and higher
average
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investment cash balances in the current year quarter compared to the prior year quarter. The increase in interest income was offset in part by an increase in interest expense that was primarily driven by an increase in interest rates associated with our domestic variable-rate debt.
Income Tax Expense
Our effective tax rates were 19.8% and 24.6% for the three months endedDecember 31, 2022 and 2021, respectively. The effective tax rate for the three months endedDecember 31, 2022 was lower than theU.S. statutory rate primarily due to the benefit of non-U.S. income taxed at rates lower than theU.S. statutory rate, as well as tax benefits associated with the vesting of restricted stock units and stock option exercises, offset in part byU.S. state income taxes. The effective tax rate in the three months endedDecember 31, 2021 was higher than theU.S. statutory rate primarily due toU.S. state income taxes as well as discrete tax expense associated with foreign valuation allowance adjustments.
Liquidity and Capital Resources
Our operating results have generated cash flows, which, together with availability under our debt agreements and credit terms from suppliers, have provided sufficient capital resources to finance working capital and cash operating requirements, and to fund capital expenditures, acquisitions, repayment of debt, the payment of interest on outstanding debt, dividends, and purchases of shares of our common stock. Our primary ongoing cash requirements will be to finance working capital, fund the repayment of debt, fund the payment of interest on debt, fund the payment of dividends, fund purchases of our common stock, finance acquisitions, and fund capital expenditures and routine growth and expansion through new business opportunities. Future cash flows from operations and borrowings are expected to be sufficient to fund our ongoing cash requirements, including the opioid litigation payments that will be made over 18 years (see below).
Cash Flows
As ofDecember 31, 2022 andSeptember 30, 2022 , our cash and cash equivalents held by foreign subsidiaries were$830.6 million and$688.4 million , respectively. We have the ability to repatriate the majority of our cash and cash equivalents held by our foreign subsidiaries without incurring significant additional taxes upon repatriation. We have increased seasonal needs related to our inventory build during the December and March quarters that, depending on our cash balance, may require the use of our credit facilities to fund short-term capital needs. Our cash balances in the three months endedDecember 31, 2022 and 2021 were supplemented by intra-period credit facility borrowings to cover short-term working capital needs. The largest amount of intra-period borrowings under our revolving and securitization credit facilities that was outstanding at any one time during the three months endedDecember 31, 2022 and 2021 was$1,315.0 million and$266.4 million , respectively. We had$1,558.1 million and$710.8 million of cumulative intra-period borrowings that were repaid under our credit facilities during the three months endedDecember 31, 2022 and 2021, respectively.
During the three months ended
•An increase in accounts payable of$1,381.1 million primarily due to the increase in our inventory balances and the timing of scheduled payments to our suppliers; •Net income of$476.2 million ; and •Positive non-cash items of$242.9 million , which is primarily comprised of depreciation expense of$100.3 million and amortization expense of$75.1 million .
The cash provided by the above items was offset in part by the following:
•An increase in inventories of$1,178.0 million to support the increase in business volume and due to seasonal needs; and •A decrease in accrued expenses of$233.6 million primarily due to the payment of accrual liabilities that were on our Consolidated Balance Sheet as ofSeptember 30, 2022 .
Cash provided by operations during the three months ended
•An increase in accounts payable of$824.1 million primarily due to the increase in our inventory balances and the timing of scheduled payments to our suppliers; •A decrease in accounts receivable of$716.4 million primarily due to the timing of scheduled payments from our customers, offset in part by an increase in sales; 25 -------------------------------------------------------------------------------- Table of Contents •Net income of$449.4 million ; and •Positive non-cash items of$221.7 million , which is primarily comprised of depreciation expense of$96.9 million and amortization expense of$83.5 million .
The cash provided by the above items was offset in part by the following:
•An increase in inventories of$990.0 million to support the increase in business volume and due to seasonal needs; and •A decrease in accrued expenses of$314.7 million primarily due to the payment of accrual liabilities that were on our Consolidated Balance Sheet as ofSeptember 30, 2021 . We use days sales outstanding, days inventory on hand, and days payable outstanding to evaluate our working capital performance. The below financial metrics are calculated based upon a quarterly average and can be impacted by the timing of cash receipts and disbursements, which can vary significantly depending upon the day of the week on which the month ends. Three months ended December 31, 2022 2021 Days sales outstanding 27.5 28.1 Days inventory on hand 27.4 28.2 Days payable outstanding 59.4 59.2 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 three months endedDecember 31, 2022 included$63.1 million of interest payments and$30.3 million of income tax payments, net of refunds. Operating cash flows during the three months endedDecember 31, 2021 included$51.9 million of interest payments and$43.7 million of income tax payments, net of refunds. Capital expenditures in the three months endedDecember 31, 2022 and 2021 were$75.7 million and$79.7 million , respectively. Significant capital expenditures in the three months endedDecember 31, 2022 and 2021 included investments in various technology initiatives, including technology investments at Alliance Healthcare. We currently expect to invest approximately$500 million for capital expenditures during fiscal 2023. Larger 2023 capital expenditures will include investments relating to various technology initiatives, including technology investments at Alliance Healthcare and those needed to comply with new regulatory requirements.
In addition to capital expenditures, net cash used in investing activity in the
three months ended
Net cash used in financing activities in the three months endedDecember 31, 2022 principally resulted from$807.2 million in purchases of our common stock and$99.7 million in cash dividends paid on our common stock.
Net cash used in financing activities in the three months ended
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Debt and Credit Facility Availability
The following table illustrates our debt structure as ofDecember 31, 2022 , including availability under the multi-currency revolving credit facility, the receivables securitization facility, the revolving credit note, the money market facility, the Alliance Healthcare debt, and the overdraft facility: Outstanding Additional (in thousands) Balance Availability Fixed-Rate Debt: 0.737% senior notes due 2023$ 673,866 $
-
$500,000 , 3.400% senior notes due 2024 499,316
-
$500,000 , 3.250% senior notes due 2025 498,517
-
$750,000 , 3.450% senior notes due 2027 745,833
-
$500,000 , 2.800% senior notes due 2030 495,501
-
$1,000,000 , 2.700% senior notes due 2031 990,760
-
$500,000 , 4.250% senior notes due 2045 495,216
-
$500,000 , 4.300% senior notes due 2047 493,354 - Nonrecourse debt 55,392 - Total fixed-rate debt 4,947,755 - Variable-Rate Debt: Multi-currency revolving credit facility due 2027 -
2,400,000
Receivables securitization facility due 2025 350,000
1,100,000
Revolving credit note -
75,000
Overdraft facility due 2024 (£10,000) - 12,083 Money market facility - 100,000 Alliance Healthcare debt 270,258 113,671 Nonrecourse debt 76,291 - Total variable-rate debt 696,549 3,800,754 Total debt$ 5,644,304 $ 3,800,754 We have a$2.4 billion multi-currency senior unsecured revolving credit facility ("Multi-Currency Revolving Credit Facility") with a syndicate of lenders, which is scheduled to expire inOctober 2027 . Interest on borrowings under the Multi-Currency Revolving Credit Facility accrues at specified rates based on 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 SOFR/EURIBOR/CDOR/RFR as ofDecember 31, 2022 ) 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 on our debt rating, ranging from 7 basis points to 15.0 basis points, annually, of the total commitment (10 basis points as ofDecember 31, 2022 ). We may choose to repay or reduce our commitments under the Multi-Currency Revolving Credit Facility at any time. The Multi-Currency Revolving Credit Facility contains covenants, including compliance with a financial leverage ratio test, as well as others that impose limitations on, among other things, indebtedness of subsidiaries and asset sales, with which we were compliant as ofDecember 31, 2022 . We have a commercial paper program whereby we may from time to time issue short-term promissory notes in an aggregate amount of up to$2.4 billion at any one time. Amounts available under the program may be borrowed, repaid, and re-borrowed from time to time. The maturities on the notes will vary, but may not exceed 365 days from the date of issuance. The notes will bear interest, if interest bearing, or will be sold at a discount from their face amounts. The commercial paper program does not increase our borrowing capacity as it is fully backed by our Multi-Currency Revolving Credit Facility. There were no borrowings outstanding under our commercial paper program as ofDecember 31, 2022 . We have a$1,450 million receivables securitization facility ("Receivables Securitization Facility"), which is scheduled to expire inOctober 2025 . We have available to us an accordion feature whereby the commitment on the Receivables Securitization Facility may be increased by up to$250 million , subject to lender approval, for seasonal needs during the December and March quarters. Interest rates are based on prevailing market rates for short-term commercial paper or 30-day Term SOFT plus a program fee. We pay a customary unused fee at prevailing market rates, annually, to maintain the availability under the Receivables Securitization Facility. The Receivables Securitization Facility contains similar covenants to the Multi-Currency Revolving Credit Facility, with which we were compliant as ofDecember 31, 2022 . We have an uncommitted, unsecured line of credit available to us pursuant to a revolving credit note ("Revolving Credit Note"). The Revolving Credit Note provides us with the ability to request short-term unsecured revolving credit loans 27
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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 uncommittedU.K. overdraft facility ("Overdraft Facility"), which expires inFebruary 2024 , to fund short-term normal trading cycle fluctuations related to ourMWI Animal Health business. We have an uncommitted, unsecured line of credit available to us pursuant to a money market credit agreement ("Money Market Facility"). The Money Market Facility provides us with the ability to request short-term unsecured revolving credit loans from time to time in a principal amount not to exceed$100 million . The Money Market Facility may be decreased or terminated by the bank or us at any time without prior notice.
Alliance Healthcare debt is comprised of uncommitted revolving credit facilities
in various currencies with various rates. A majority of the outstanding
borrowings were held in
Nonrecourse debt is comprised of short-term and long-term debt belonging to theBrazil subsidiary and is repaid solely from theBrazil 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 theBrazil subsidiary.
Share Purchase Programs and Dividends
InMay 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. In the three months endedDecember 31, 2022 , we purchased$778.8 million of our common stock, including$700 million from Walgreens Boots Alliance, Inc. These purchases excluded$28.4 million of purchases inSeptember 2022 that cash settled inOctober 2022 . As ofDecember 31, 2022 , we had$182.5 million of availability remaining under this program. InNovember 2022 , our board of directors increased the quarterly dividend paid on common stock by 5% from$0.460 per share to$0.485 per share. We anticipate that we will continue to pay quarterly cash dividends in the future. However, the payment and amount of future dividends remains within the discretion of our board of directors and will depend upon future earnings, financial condition, capital requirements, and other factors.
Commitments and Obligations
As discussed and defined in Note 9 of the Notes to Consolidated Financial Statements, onJuly 21, 2021 , it was announced that we and the two other national pharmaceutical distributors had negotiated a Distributor Settlement Agreement. The Distributor Settlement Agreement became effective on April 2, 2022, and as of December 31 2022, it included 48 of 49 eligible states (the "Settling States") as well as 99% by population of the eligible political subdivisions in the Settling States. Pursuant to the Distributor Settlement Agreement and related agreements with Settling States, we will pay up to approximately$6.4 billion over 18 years. Our estimated liability related to theState of Alabama (with whom we have not reached a settlement agreement), as well as other opioid-related litigation for which we have reached settlement agreements is approximately$0.4 billion . We have a$5.9 billion liability on our Consolidated Balance Sheet as ofDecember 31, 2022 for litigation relating to our comprehensive opioid settlement as well as other opioid-related litigation. The payment of the aforementioned litigation liability has not and is not expected to have an impact on our ability to pay dividends. The following is a summary of our contractual obligations for future principal and interest payments on our debt, minimum rental payments on our noncancellable operating leases, and minimum payments on our other commitments as ofDecember 31, 2022 : Debt, Including Interest Operating Other Payments Due by Period (in thousands) Payments Leases Commitments Total Within 1 year$ 1,167,924 $ 198,659 $ 123,770 $ 1,490,353 1-3 years 1,716,006 342,652 135,481 2,194,139 4-5 years 994,938 259,516 57,782 1,312,236 After 5 years 3,434,922 448,967 - 3,883,889 Total$ 7,313,790 $ 1,249,794 $ 317,033 $ 8,880,617 The 2017 Tax Act requires a one-time transition tax to be recognized on historical foreign earnings and profits. We expect to pay$157.1 million , net of overpayments and tax credits, related to the transition tax as ofDecember 31, 2022 , which is payable in installments over a six-year period, and commenced inJanuary 2021 . The transition tax commitment is included in "Other Commitments" in the above table. Our liability for uncertain tax positions was$553.5 million (including interest and penalties) as ofDecember 31, 2022 . This liability represents an estimate of tax positions that we have taken in our tax returns which may ultimately not be sustained upon examination by taxing authorities. Since the amount and timing of any future cash settlements cannot be predicted with reasonable certainty, the estimated liability has been excluded from the above contractual obligations table. Our liability for 28
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uncertain tax positions as ofDecember 31, 2022 primarily includes an uncertain tax benefit related to the legal accrual for litigation related to the distribution of prescription opioid pain medications, as disclosed in Note 9 of the Notes to Consolidated Financial Statements.
Market Risks
We have exposure to foreign currency and exchange rate risk from our non-U.S. operations. Our largest exposure to foreign exchange rates exists primarily with the U.K. Pound Sterling , the Euro, the Turkish Lira, the Egyptian Pound, the Brazilian Real, and the Canadian Dollar. We use forward contracts to hedge against the foreign currency exchange rate impact on certain intercompany receivable and payable balances. We may use derivative instruments to hedge our foreign currency exposure, but not for speculative or trading purposes. Revenue from our foreign operations during the three months endedDecember 31, 2022 was approximately 11% of our consolidated revenue. We have market risk exposure to interest rate fluctuations relating to our debt. We manage interest rate risk by using a combination of fixed-rate and variable-rate debt. The amount of variable-rate debt fluctuates during the year based on our working capital requirements. We had$696.5 million of variable-rate debt outstanding as ofDecember 31, 2022 . We periodically evaluate financial instruments to manage our exposure to fixed and variable interest rates. However, there are no assurances that such instruments will be available in the combinations we want and/or on terms acceptable to us. There were no such financial instruments in effect as ofDecember 31, 2022 . We also have market risk exposure to interest rate fluctuations relating to our cash and cash equivalents. We had$1,692.2 million in cash and cash equivalents as ofDecember 31, 2022 . The unfavorable impact of a hypothetical decrease in interest rates on cash and cash equivalents would be partially offset by the favorable impact of such a decrease on variable-rate debt. For every$100 million of cash invested that is in excess of variable-rate debt, a 10-basis point decrease in interest rates would increase our annual net interest expense by$0.1 million . Deterioration of general economic conditions, among other factors, could adversely affect the number of prescriptions that are filled and the amount of pharmaceutical products purchased by consumers and, therefore, could reduce purchases by our customers. In addition, volatility in financial markets may also negatively impact our customers' ability to obtain credit to finance their businesses on acceptable terms. Reduced purchases by our customers or changes in the ability of our customers to remit payments to us could adversely affect our revenue growth, our profitability, and our cash flow from operations.
Recent elevated levels of inflation in the global and
We have risks from other geopolitical trends and events, such as the
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