Cencora, Inc.

Human capital and workforce · Labor relations and union negotiations

Approximately 28% of our employees are covered by collective bargaining agreements, nearly all of whom are employees located outside of the United States. If any of our employees in the locations that are unionized should engage in strikes or other such bargaining tactics in connection with the negotiation of collective bargaining agreements, such tactics could be disruptive to our operations.

Supply chain and procurement · Supplier financial distress and capability

Our relationships with pharmaceutical suppliers give rise to substantial amounts that are due to us from the suppliers. The bankruptcy, insolvency, or other credit failure of any supplier at a time when the supplier has a substantial account payable balance due to us could have a material adverse effect on our results of operations.

Supply chain and procurement · Transportation and logistics disruption

Our business exposes us to risks that are inherent in the distribution of pharmaceuticals and the provision of related services, including cold chain storage and shipping. The volume of cold chain storage and shipping has increased, and we expect this trend to continue.

Economic and market conditions · Inflation and deflation pressures

Significantly higher and sustained rates of inflation, with subsequent increases in operational costs, could have a material adverse effect on our business, financial position, results of operations, and cash flows.

Economic and market conditions · Economic recession and downturns

Our operations and performance depend on the economic conditions in the United States and other countries or regions where we do business. Deterioration in general economic conditions could adversely affect the number of prescriptions that are filled and the number of pharmaceutical products purchased by consumers.

Geopolitical and trade · Trade policies tariffs and sanctions

Changes or uncertainty in U.S. policies or the policies of other countries and regions in which we do business, including any changes or uncertainty with respect to U.S. or international trade policies or tariffs, also can disrupt our global operations. During fiscal 2024, we continued to experience increased costs, including for fuel, and it is possible that we could experience supply disruptions or shortages if tariffs or other protective measures are enacted.

Natural and catastrophic events · Natural disasters and extreme weather

Natural disasters and other catastrophic events such as earthquakes, floods, or severe weather, including as a result of climate change, can disrupt operations for us, our suppliers, our vendors, and our customers, as well as impair product manufacturing, supply, and transport availability and cost.

Market position and competition · Patent expiration and generic competition

Generic pharmaceuticals are also subject to price deflation. If the frequency or rate of generic pharmaceutical price deflation accelerates, the negative impact on our results of operations would be greater.

Customer and revenue · Customer concentration and key customer dependence

We may lose a key customer or GPO relationship if any existing contract with such customer or GPO expires without being extended, renewed, renegotiated or replaced or is terminated by the customer or GPO prior to expiration. The loss of any key customer or GPO relationship could adversely affect our revenue, results of operations, and cash flows.

Market position and competition · Industry consolidation and market concentration

The healthcare industry continues to experience increasing consolidation, including through the formation of strategic alliances among pharmaceutical manufacturers, retail pharmacies, healthcare providers and health insurers, which may create further competitive pressures on our pharmaceutical distribution business.

Strategic execution · Merger acquisition and divestiture risks

We may find that our ability to integrate PharmaLex, RCA, and other acquisitions is more difficult, time consuming, or costly than expected. Acquisitions and investments involve numerous risks and uncertainties and may be of businesses or in regions in which we lack operational or market experience.

Reputation and brand · Esg environmental social governance performance

Our reputation may also depend on the success of our environmental, social and governance ('ESG') initiatives, inclusive of sustainability, social impact and corporate responsibility. Our reputation could be damaged if we do not, or are perceived to not, act responsibly with respect to sustainability matters, which could also have a material adverse effect on our business, financial position, results of operations, and cash flows.

Reputation and brand · Brand damage and negative publicity

We believe that maintaining and enhancing our reputation is critical to our ability to expand and retain our customer base, strategic partnerships and other key relationships. Any negative publicity about us or our industry may adversely impact our business and operations.

Legal and litigation · Intellectual property disputes

We rely on trade secret, trademark, patent, and copyright laws, nondisclosure obligations, and other contractual provisions and technical measures to protect our proprietary rights. We may be unable to prevent third parties from using our intellectual property without our authorization, and we might initiate costly and time-consuming litigation to protect our trade secrets.

Industry regulation · Regulatory compliance and changes

We are subject to extensive and frequently changing laws and regulations relating to healthcare fraud and abuse, both in the United States and abroad. If we fail to comply with applicable laws and regulations, we could be subject to administrative, civil and criminal penalties, including the loss of licenses or our ability to participate in Medicare, Medicaid, and other federal, state, or governmental healthcare programs.

Technology infrastructure · Cloud services and data center operations

Our businesses rely on sophisticated information systems to obtain, rapidly process, analyze, and manage data. To the extent our information systems are not successfully implemented or fail, or to the extent there are data center interruptions or outages caused by factors such as infrastructure overload, ransomware attacks, security breaches or natural disaster, our business and results of operations may be materially adversely affected.

Cybersecurity and data protection · Third party data security and vendors

We heavily depend on our supply chain to provide our products and services to customers, and a cybersecurity incident involving a supplier or subcontractor could significantly affect us. Despite our comprehensive approach to conducting diligence on the cybersecurity controls of our third-party business partners, we may not be able to prevent a third-party business partner from experiencing a cybersecurity incident.

Cybersecurity and data protection · Data breaches and cyber attacks

Information security risks have generally increased in recent years because of the changing threat landscape, evolving vulnerabilities, proliferation of cloud-based infrastructure and other services, new technologies, supply chain dependencies and the increased sophistication and activities of perpetrators of cyber-attacks. Security incidents such as ransomware attacks are becoming increasingly prevalent and severe.

International and currency · International operations and emerging markets

We conduct operations in over 50 countries and, in fiscal 2024, approximately 10% of our revenue was derived from our international operations, which subjects us to various risks inherent in global operations. Turkey remains a 'highly inflationary economy,' as defined under U.S. GAAP, which impacted our consolidated financial statements.

Market and investment · Asset valuation and impairment

U.S. generally accepted accounting principles ('GAAP') require us to test our goodwill for impairment on an annual basis, or more frequently if indicators for potential impairment exist. We may be required to record a significant charge to earnings in our consolidated financial statements during the period in which any impairment of our goodwill or long-lived assets is determined.