Revenues of $45.4 billion for the Third Quarter, a 0.3 Percent Increase Year-Over-Year
Third Quarter GAAP Diluted EPS of $1.41 and Adjusted Diluted EPS of $1.85
Adjusted Diluted EPS Guidance Range Raised to $7.80 to $7.95 for Fiscal 2020
VALLEY FORGE, Pa.–(BUSINESS WIRE)–AmerisourceBergen Corporation (NYSE: ABC) today reported that in its fiscal year 2020 third quarter ended June 30, 2020, revenue increased 0.3 percent year-over-year to $45.4 billion. On the basis of U.S. generally accepted accounting principles (GAAP), diluted earnings per share (EPS) was $1.41 for the June quarter of fiscal 2020, compared to $1.43 in the prior year quarter. Adjusted diluted EPS, which is a non-GAAP measure that excludes items described below, increased 5.1 percent to $1. (Read more…)85 in the fiscal third quarter.
The Company raised its adjusted diluted EPS guidance for fiscal 2020 to a range of $7.80 to $7.95 from the previous range of $7.35 to $7.65. The Company does not provide forward-looking guidance on a GAAP basis, as discussed below in Fiscal Year 2020 Expectations.
“In the third quarter of the fiscal year, we saw the resilience of our business as our associates worked diligently to ensure continued patient access. Our updated outlook for fiscal 2020 reflects the continued execution by our teams and the strength of AmerisourceBergen’s value proposition, deep partnerships and strategic positioning,” said Steven H. Collis, Chairman, President and Chief Executive Officer of AmerisourceBergen.
“Our teams are leveraging the power of AmerisourceBergen’s culture to deliver collaborative and innovative services and solutions for our partners as they navigate the complexity of the current environment,” Mr. Collis continued. “AmerisourceBergen is living our purpose of being united in our responsibility to create healthier futures as we continue to focus on protecting our associates, execution across our company and advancing our talent and culture, driving long-term value creation for all our stakeholders.”
Third Quarter Fiscal Year 2020 Summary Results
|
|
GAAP |
Adjusted (Non-GAAP) |
||||||||
|
Revenue |
|
$45.4B |
|
|
$45.4B |
|||||
|
Gross Profit |
|
$1.2B |
|
|
$1.2B |
|||||
|
Operating Expenses |
|
$821M |
|
|
$725M |
|||||
|
Operating Income |
|
$405M |
|
|
$508M |
|||||
|
Interest Expense, Net |
|
$38M |
|
|
$38M |
|||||
|
Effective Tax Rate |
|
16.5% |
|
|
18.8% |
|||||
|
Net Income Attributable to ABC |
|
$289M |
|
|
$380M |
|||||
|
Diluted Earnings Per Share |
|
$1.41 |
|
|
$1.85 |
|||||
|
Diluted Shares Outstanding |
|
206M |
|
|
206M |
Below, AmerisourceBergen presents descriptive summaries of the Company’s GAAP and adjusted (non-GAAP) quarterly results. In the tables that follow, GAAP results and GAAP to non-GAAP reconciliations are presented. For more information related to non-GAAP financial measures, including adjustments made in the periods presented, please refer to the “Supplemental Information Regarding non-GAAP Financial Measures” following the tables.
Third Quarter GAAP Results
- Revenue: In the third quarter of fiscal 2020, revenue was $45.4 billion, up 0.3 percent compared to the same quarter in the previous fiscal year, reflecting a 0.1 percent increase in Pharmaceutical Distribution Services revenue and a 4.4 percent increase in revenue within Other.
- Gross Profit: Gross profit in the fiscal 2020 third quarter was $1.2 billion, a 0.4 percent decrease compared to the same period in the previous fiscal year. Gross profit was unfavorably impacted by lower gains from antitrust litigation settlements and a LIFO expense in comparison to a LIFO credit in the prior year period, which were offset in part by increases in gross profit in Pharmaceutical Distribution Services and Other and lower PharMEDium remediation and shutdown costs. Gross profit as a percentage of revenue was 2.70 percent, a decrease of 2 basis points from the prior year quarter.
- Operating Expenses: In the third quarter of fiscal 2020, operating expenses were $820.9 million, compared to $824.5 million in the same period last fiscal year. The decrease in operating expenses was primarily due to lower depreciation and amortization expense, offset in part by an increase in distribution, selling and administrative costs. Operating expenses as a percentage of revenue in the fiscal 2020 third quarter was 1.81 percent, compared to 1.82 percent for the same period in the previous fiscal year.
- Operating Income: In the fiscal 2020 third quarter, operating income decreased to $404.8 million from $406.7 million in the prior year quarter. Operating income as a percentage of revenue was 0.89 percent in the third quarter of fiscal 2020, compared to 0.90 percent for the same period in the previous fiscal year.
- Interest Expense, Net: In the fiscal 2020 third quarter, net interest expense of $37.7 million was up 5.1 percent versus the prior year quarter due to a decrease in interest income resulting primarily from a decline in investment interest rates and was substantially offset by a decrease in interest expense.
- Effective Tax Rate: The effective tax rate was 16.5 percent for the third quarter of fiscal 2020 and 18.6 percent in the prior year quarter, reflecting a benefit resulting from a discrete tax item.
- Diluted Earnings Per Share: Diluted earnings per share was $1.41 in the third quarter of fiscal 2020 compared to $1.43 in the previous fiscal year’s third quarter.
- Diluted Shares Outstanding: Diluted weighted average shares outstanding for the third quarter of fiscal 2020 were 205.5 million, a 2.7 percent decline versus the prior fiscal year third quarter primarily due to share repurchases, net of stock option exercises.
Third Quarter Adjusted (non-GAAP) Results
The comments below compare adjusted results, which exclude: gain from antitrust litigation settlements; LIFO expense/credit; PharMEDium remediation and shutdown costs; New York State Opioid Stewardship Act; contingent consideration adjustment; acquisition-related intangibles amortization; employee severance, litigation, and other; impairment of PharMEDium assets; a loss on early retirement of debt; a gain on the sale of an equity investment; certain discrete tax benefits; and tax reform.
- Revenue: No adjustments were made to the GAAP presentation of revenue. In the third quarter of fiscal 2020, revenue was $45.4 billion, up 0.3 percent compared to the same quarter in the previous fiscal year, reflecting a 0.1 percent increase in Pharmaceutical Distribution Services revenue and a 4.4 percent increase in revenue within Other.
- Adjusted Gross Profit: Adjusted gross profit in the fiscal 2020 third quarter was $1.2 billion, which was up 0.2 percent compared to the same period in the previous year, due to the increases in gross profit in Pharmaceutical Distribution Services and Other. Adjusted gross profit as a percentage of revenue was 2.72 percent in the fiscal 2020 third quarter, flat when compared to the prior year quarter.
- Adjusted Operating Expenses: In the third quarter of fiscal 2020, adjusted operating expenses were $724.7 million, an increase of 0.3 percent compared to the same period in the previous fiscal year. Adjusted operating expenses as a percentage of revenue in the fiscal 2020 third quarter was 1.60 percent, flat when compared to the prior year quarter.
- Adjusted Operating Income: In the fiscal 2020 third quarter, adjusted operating income of $507.5 million increased 0.2 percent from the prior year period due to a 3.6 percent increase in operating income within Pharmaceutical Distribution Services, offset in part by a 12.9 percent decline in operating income within Other. Adjusted operating income as a percentage of revenue was 1.12 percent in the fiscal 2020 third quarter, flat when compared to the prior year quarter.
- Interest Expense, Net: No adjustments were made to the GAAP presentation of net interest expense. In the fiscal 2020 third quarter, net interest expense of $37.7 million was up 5.1 percent versus the prior year quarter due to a decrease in interest income resulting primarily from a decline in investment interest rates and was substantially offset by a decrease in interest expense.
- Adjusted Effective Tax Rate: The adjusted effective tax rate was 18.8 percent for the third quarter of fiscal 2020 compared to 21.0 percent in the prior year quarter, reflecting a benefit resulting from a discrete tax item.
- Adjusted Diluted Earnings Per Share: Adjusted diluted earnings per share was up 5.1 percent to $1.85 in the third quarter of fiscal 2020 compared to $1.76 in the previous fiscal year’s third quarter, driven primarily by the lower adjusted effective tax rate and a lower number of diluted shares outstanding.
- Diluted Shares Outstanding: No adjustments were made to the GAAP presentation of diluted shares outstanding. Diluted weighted average shares outstanding for the third quarter of fiscal 2020 were 205.5 million, a 2.7 percent decline versus the prior fiscal year third quarter primarily due to share repurchases, net of stock option exercises.
Segment Discussion
The Company’s operations are comprised of the Pharmaceutical Distribution Services reportable segment and other operating segments that are not significant enough to require separate reportable segment disclosure and, therefore, have been included in Other for the purpose of the reportable segment presentation. Other consists of operating segments that focus on global commercialization services and animal health and includes AmerisourceBergen Consulting Services (ABCS), World Courier and MWI Animal Health (MWI).
Pharmaceutical Distribution Services Segment
Pharmaceutical Distribution Services revenue was $43.6 billion, an increase of 0.1 percent compared to the same quarter in the prior fiscal year primarily due to the onset of COVID-19 in March 2020, when many of our customers increased their purchases in the fiscal quarter ended March 31, 2020, which resulted in fewer purchases in the fiscal quarter ended June 30, 2020. Segment operating income of $426.6 million in the third quarter of fiscal 2020 was up 3.6 percent compared to the same period in the previous fiscal year, due to lower operating expenses and higher gross profit.
Other
Revenue in Other was $1.8 billion in the third quarter of fiscal 2020, an increase of 4.4 percent compared to the same period in the prior fiscal year due to growth at ABCS and World Courier. Operating income in Other decreased 12.9 percent to $82.9 million in the third quarter of fiscal 2020. This decrease was primarily due to impacts of COVID-19 at MWI.
Recent Company Highlights & Milestones
- Good Neighbor Pharmacy, AmerisourceBergen’s national independent pharmacy network, announced that it has been ranked “Highest in Customer Satisfaction with Chain Drug Store Pharmacies” in the J.D. Power 2020 U.S. Pharmacy Study. This marks the ninth time that Good Neighbor Pharmacy has earned the achievement in the last 11 years.
- AmerisourceBergen has been named a 2020 DiversityInc ‘Noteworthy’ company for the fourth year in a row, based on its hiring, retention and promotion of women, minorities, people with disabilities, LGBT and veterans.
- The AmerisourceBergen Foundation, a separate not-for-profit charitable giving organization, hosted its second annual conference, bringing together over sixty non-profit partners to address challenging issues society is facing today and share strategies and best practices.
Fiscal Year 2020 Expectations
The Company does not provide forward-looking guidance on a GAAP basis as certain financial information, the probable significance of which cannot be determined, is not available or cannot be reasonably estimated. Please refer to the Supplemental Information Regarding Non-GAAP Financial Measures following the tables for additional information.
Fiscal Year 2020 Expectations on an Adjusted (non-GAAP) Basis
AmerisourceBergen has updated its fiscal year 2020 financial guidance to reflect the Company’s continued strong performance and solid execution. The Company now expects:
- Revenue growth in the mid-single digit percent range, up from the low- to mid- single digit percent range; and
- Adjusted Diluted EPS to be in the range of $7.80 to $7.95, up from the previous range of $7.35 to $7.65.
Additional expectations now include:
-
Adjusted operating income growth in the mid- to high-single digit percent range, up from the low- to mid-single digit percent range;
- Pharmaceutical Distribution Services segment operating income growth in the mid- to high-single digit percent range, up from the low- to mid-single digit percent range;
- Other, which is comprised of businesses focused on Global Commercialization Services & Animal Health, operating income growth in the low-single digit percent range, up from operating income decline in the low-single digit percent rage; and
- Adjusted effective tax rate of approximately 21 percent, down from the previous range of 21 percent to 22 percent; and
- Capital expenditures of approximately $375 million, down from the $400 million range.
All other previously communicated aspects of the Company’s fiscal year 2020 financial guidance and assumptions remain the same.
Dividend Declaration
The Company’s Board of Directors declared a quarterly cash dividend of $0.42 per common share, payable September 1, 2020, to stockholders of record at the close of business on August 17, 2020.
Conference Call & Slide Presentation
The Company will host a conference call to discuss the results at 8:30 a.m. ET on August 5, 2020. A slide presentation for investors has also been posted on the Company’s website at investor.amerisourcebergen.com. Participating in the conference call will be:
- Steven H. Collis, Chairman, President & Chief Executive Officer
- James F. Cleary, Executive Vice President & Chief Financial Officer
The dial-in number for the live call will be (844) 808-6694. From outside the United States, dial (412) 317-5282. No access code is required. The live call will also be webcast via the Company’s website at investor.amerisourcebergen.com. Users are encouraged to log on to the webcast approximately 10 minutes in advance of the scheduled start time of the call.
Replays of the call will be made available via telephone and webcast. A replay of the webcast will be posted on investor.amerisourcebergen.com approximately one hour after the completion of the call and will remain available for one year. The telephone replay will also be available approximately one hour after the completion of the call and will remain available for seven days. To access the telephone replay from within the U.S., dial (877) 344-7529. From Canada, dial (855) 669-9658. From outside the United States and Canada, dial (412) 317-0088. The access code for the replay is 10145670.
Upcoming Investor Events
AmerisourceBergen management will be participating in the following investor conference in the coming months:
- Morgan Stanley Annual Global Healthcare Conference, September 14-18.
Please check the website for updates regarding the timing of the live presentation webcasts, if any, and for replay information.
About AmerisourceBergen
AmerisourceBergen provides pharmaceutical products, value-driving services and business solutions that improve access to care. Tens of thousands of healthcare providers, veterinary practices and livestock producers trust us as their partner in the pharmaceutical supply chain. Global manufacturers depend on us for services that drive commercial success for their products. Through our daily work—and powered by our 22,000 associates—we are united in our responsibility to create healthier futures. AmerisourceBergen is ranked #10 on the Fortune 500, with more than $175 billion in annual revenue. The company is headquartered in Valley Forge, Pa. and has a presence in 50+ countries. Learn more at investor.amerisourcebergen.com.
AmerisourceBergen’s Cautionary Note Regarding Forward-Looking Statements
Certain of the statements contained in this press release are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Words such as “expect,” “likely,” “outlook,” “forecast,” “would,” “could,” “should,” “can,” “project,” “intend,” “plan,” “continue,” “sustain,” “synergy,” “on track,” “believe,” “seek,” “estimate,” “anticipate,” “may,” “possible,” “assume,” variations of such words, and similar expressions are intended to identify such forward-looking statements. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances and speak only as of the date hereof. These statements are not guarantees of future performance and are based on assumptions and estimates that could prove incorrect or could cause actual results to vary materially from those indicated. Among the factors that could cause actual results to differ materially from those projected, anticipated, or implied are the following: unfavorable trends in brand and generic pharmaceutical pricing, including in rate or frequency of price inflation or deflation; competition and industry consolidation of both customers and suppliers resulting in increasing pressure to reduce prices for our products and services; changes in the United States healthcare and regulatory environment, including changes that could impact prescription drug reimbursement under Medicare and Medicaid; increasing governmental regulations regarding the pharmaceutical supply channel and pharmaceutical compounding; declining reimbursement rates for pharmaceuticals; continued federal and state government enforcement initiatives to detect and prevent suspicious orders of controlled substances and the diversion of controlled substances; continued prosecution or suit by federal, state and other governmental entities of alleged violations of laws and regulations regarding controlled substances, including due to failure to achieve a global resolution of the multi-district opioid litigation and other related state court litigation, and any related disputes, including shareholder derivative lawsuits; increased federal scrutiny and litigation, including qui tam litigation, for alleged violations of laws and regulations governing the marketing, sale, purchase and/or dispensing of pharmaceutical products or services, and associated reserves and costs; failure to comply with the Corporate Integrity Agreement; material adverse resolution of pending legal proceedings; the retention of key customer or supplier relationships under less favorable economics or the adverse resolution of any contract or other dispute with customers or suppliers; changes to customer or supplier payment terms, including as a result of the COVID-19 impact on such payment terms; risks associated with the strategic, long-term relationship between Walgreens Boots Alliance, Inc. and the Company, including principally with respect to the pharmaceutical distribution agreement and/or the global generic purchasing services arrangement; changes in tax laws or legislative initiatives that could adversely affect the Company’s tax positions and/or the Company’s tax liabilities or adverse resolution of challenges to the Company’s tax positions; regulatory or enforcement action in connection with our former compounded sterile preparations (CSP) business or the related consent decree; managing foreign expansion, including non-compliance with the U.S. Foreign Corrupt Practices Act, anti-bribery laws, economic sanctions and import laws and regulations; financial market volatility and disruption; the loss, bankruptcy or insolvency of a major supplier, including as a result of COVID-19; substantial defaults in payment, material reduction in purchases by or the loss, bankruptcy or insolvency of a major customer, including as a result of COVID-19; financial and other impacts of COVID-19 on our operations or business continuity; changes to the customer or supplier mix; malfunction, failure or breach of sophisticated information systems to operate as designed; risks generally associated with data privacy regulation and the international transfer of personal data; natural disasters or other unexpected events that affect the Company’s operations; the impairment of goodwill or other intangible assets (including any additional impairments with respect to foreign operations), resulting in a charge to earnings; the acquisition of businesses that do not perform as expected, or that are difficult to integrate or control, or the inability to capture all of the anticipated synergies related thereto or to capture the anticipated synergies within the expected time period; the Company’s ability to manage and complete divestitures; the disruption of the Company’s cash flow and ability to return value to its stockholders in accordance with its past practices; interest rate and foreign currency exchange rate fluctuations; declining economic conditions in the United States and abroad; and other economic, business, competitive, legal, tax, regulatory and/or operational factors affecting the Company’s business generally. Certain additional factors that management believes could cause actual outcomes and results to differ materially from those described in forward-looking statements are set forth (i) in Item 1A (Risk Factors), in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2019 and elsewhere in that report and (ii) in other reports filed by the Company pursuant to the Securities Exchange Act. The Company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by the federal securities laws.
|
AMERISOURCEBERGEN CORPORATION |
||||||||||||||
|
|
|
Three |
|
% of |
|
Three |
|
% of |
|
% |
||||
|
Revenue |
|
$ |
45,366,777 |
|
|
|
|
$ |
45,239,265 |
|
|
|
|
0.3% |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cost of goods sold |
|
44,141,061 |
|
|
|
|
44,008,026 |
|
|
|
|
0.3% |
||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Gross profit 1 |
|
1,225,716 |
|
|
2.70% |
|
1,231,239 |
|
|
2.72% |
|
(0.4)% |
||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
||||
|
Distribution, selling, and administrative 2 |
|
666,885 |
|
|
1.47% |
|
656,943 |
|
|
1.45% |
|
1.5% |
||
|
Depreciation and amortization |
|
95,415 |
|
|
0.21% |
|
107,596 |
|
|
0.24% |
|
(11.3)% |
||
|
Employee severance, litigation, and other 3 |
|
58,585 |
|
|
|
|
60,006 |
|
|
|
|
|
||
|
Total operating expenses |
|
820,885 |
|
|
1.81% |
|
824,545 |
|
|
1.82% |
|
(0.4)% |
||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Operating income |
|
404,831 |
|
|
0.89% |
|
406,694 |
|
|
0.90% |
|
(0.5)% |
||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Other loss (income), net |
|
1,073 |
|
|
|
|
(342) |
|
|
|
|
|
||
|
Interest expense, net |
|
37,748 |
|
|
|
|
35,921 |
|
|
|
|
5.1% |
||
|
Loss on early retirement of debt |
|
22,175 |
|
|
|
|
— |
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Income before income taxes |
|
343,835 |
|
|
0.76% |
|
371,115 |
|
|
0.82% |
|
(7.4)% |
||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Income tax expense |
|
56,567 |
|
|
|
|
69,113 |
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net income |
|
287,268 |
|
|
0.63% |
|
302,002 |
|
|
0.67% |
|
(4.9)% |
||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net loss (income) attributable to noncontrolling interest |
|
2,171 |
|
|
|
|
(43) |
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net income attributable to AmerisourceBergen Corporation |
|
$ |
289,439 |
|
|
0.64% |
|
$ |
301,959 |
|
|
0.67% |
|
(4.1)% |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
||||
|
Basic |
|
$ |
1.42 |
|
|
|
|
$ |
1.44 |
|
|
|
|
(1.4)% |
|
Diluted |
|
$ |
1.41 |
|
|
|
|
$ |
1.43 |
|
|
|
|
(1.4)% |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
||||
|
Basic |
|
203,654 |
|
|
|
|
209,705 |
|
|
|
|
(2.9)% |
||
|
Diluted |
|
205,544 |
|
|
|
|
211,161 |
|
|
|
|
(2.7)% |
||
|
________________________________________ |
||
|
1 |
Includes a $6.1 million LIFO expense and $0.4 million of PharMEDium shutdown costs in the three months ended June 30, 2020. Includes $11.7 million of PharMEDium remediation costs, a $9.9 million LIFO credit, and a $3.5 million gain from antitrust litigation settlements in the three months ended June 30, 2019. |
|
|
|
|
|
|
2 |
Includes $12.5 million of PharMEDium shutdown costs in the three months ended June 30, 2020. Includes $7.6 million of PharMEDium remediation costs in the three months ended June 30, 2019. |
|
|
|
|
|
|
3 |
Includes $6.5 million of employee severance, $31.4 million of litigation costs related to legal fees in connection with opioid lawsuits and investigations, and $20.7 million of other costs in connection with business transformation efforts, acquisition-related deal and integration costs, and other restructuring initiatives in the three months ended June 30, 2020. Includes $10.8 million of employee severance, $18.8 million of litigation costs related to legal fees in connection with opioid lawsuits and investigations, and $30.4 million of other costs in connection with business transformation efforts, acquisition-related deal and integration costs, and other restructuring initiatives in the three months ended June 30, 2019. |
|
Contacts
Bennett S. Murphy
Senior Vice President, Investor Relations
610-209-5691
bmurphy@amerisourcebergen.com