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Share Name | Share Symbol | Market | Type |
---|---|---|---|
AmerisourceBergen Corp | NYSE:ABC | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 179.98 | 0 | 01:00:00 |
Revenues of $45.6 Billion for the Fourth Quarter, a 5.4 Percent Increase Year-Over-Year
Fourth Quarter GAAP Diluted EPS of $0.63 and Adjusted Diluted EPS of $1.61
Revenues of $179.6 Billion for Fiscal Year 2019, a 6.9 Percent Increase Year-Over-Year
Fiscal Year 2019 GAAP Diluted EPS of $4.04 and Adjusted Diluted EPS of $7.09
AmerisourceBergen Corporation (NYSE:ABC) today reported that in its fiscal year 2019 fourth quarter ended September 30, 2019, revenue increased 5.4 percent to $45.6 billion. Revenue increased 6.9 percent to $179.6 billion for the fiscal year. On the basis of U.S. generally accepted accounting principles (GAAP), diluted earnings per share (EPS) was $0.63 for the September quarter of fiscal 2019, compared to $1.07 in the prior year quarter. Adjusted diluted EPS, which is a non-GAAP measure that excludes items described below, increased 11.0 percent to $1.61 in the fiscal fourth quarter. For fiscal year 2019, adjusted diluted EPS increased 9.2 percent to $7.09.
“In fiscal 2019, AmerisourceBergen performed extremely well, driven by execution across our Pharmaceutical Distribution and Global Commercialization Services & Animal Health teams. Working as a unified and connected organization, we created value for our shareholders, partners, customers, and the patients they serve,” said Steven H. Collis, Chairman, President and Chief Executive Officer of AmerisourceBergen.
“As we enter fiscal 2020, we will continue to leverage our differentiated strategy and partnerships to grow our business,” Mr. Collis continued. “AmerisourceBergen is well positioned to deliver long-term value for all of our stakeholders as we continue to focus on innovation, execution, advancing our talent and culture, and living our purpose of being united in our responsibility to create healthier futures.”
Fourth Quarter Fiscal Year 2019 Summary Results
GAAP
Adjusted (Non-GAAP)
Revenue
$45.6B
$45.6B
Gross Profit
$1.2B
$1.2B
Operating Expenses
$1,005M
$789M
Operating Income
$180M
$456M
Interest Expense, Net
$36M
$36M
Effective Tax Rate
8.5%
19.6%
Net Income Attributable to ABC
$133M
$338M
Diluted Earnings Per Share
$0.63
$1.61
Diluted Shares Outstanding
210M
210M
Below, AmerisourceBergen presents descriptive summaries of the Company’s GAAP and adjusted (non-GAAP) quarterly and fiscal year 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.
Fourth Quarter GAAP Results
Opioid Litigation
Fourth Quarter Adjusted (non-GAAP) Results
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 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 $43.9 billion, an increase of 5.1 percent compared to the same quarter in the prior fiscal year primarily due to continued strong specialty product sales and increased volume associated with the growth of some of its largest customers. Segment operating income of $369.3 million in the fourth quarter of fiscal 2019 was up 3.5 percent compared to the same period in the previous fiscal year, primarily due to the increase in gross profit, offset in part by an increase in operating expenses.
Other
Revenue in Other was $1.8 billion in the fourth quarter of fiscal 2019, an increase of 12.6 percent compared to the same period in the prior fiscal year primarily due to growth at MWI and ABCS's growth in its Canadian operations. Operating income in Other increased 14.9 percent to $86.7 million in the fourth quarter of fiscal 2019. This increase was due to the results of World Courier, ABCS's Lash Consulting Services, and MWI.
Fiscal Year 2019 Summary Results
GAAP
Adjusted (non-GAAP)
Revenue
$179.6B
$179.6B
Gross Profit
$5.1B
$5.0B
Operating Expenses
$4.0B
$2.9B
Operating Income
$1.1B
$2.1B
Interest Expense, Net
$158M
$158M
Tax Rate
11.7%
20.6%
Net Income Attributable to ABC
$855M
$1,502M
Diluted Earnings Per Share
$4.04
$7.09
Diluted Shares Outstanding
212M
212M
Summary Fiscal Year GAAP Results
In fiscal year 2019, GAAP diluted EPS was $4.04, compared to $7.53 in the prior year. Revenue of $179.6 billion was up 6.9 percent over the last fiscal year. Gross profit increased 11.4 percent to $5.1 billion primarily due to increases in gross profit within Pharmaceutical Distribution Services and Other. Total gross profit in fiscal year 2019 was also favorably impacted by increases in gains from antitrust litigation settlements, a LIFO credit in the current year period versus a LIFO expense in the prior year, and the reversal of a previously estimated assessment related to the New York State Opioid Stewardship Act. Operating expenses increased 27.1 percent over the prior fiscal year primarily due to a $570 million impairment of PharMEDium's long-lived assets, an increase in employee severance, litigation, and other costs, and an increase in distribution, selling and administrative expenses. Operating income decreased 23.0 percent and operating income margin decreased 24 basis points in the current fiscal year as the increase in operating expenses exceeded the increase in gross profit. Diluted weighted average shares outstanding in fiscal 2019 were 211.8 million, down 3.9 percent from the prior fiscal year.
Summary Fiscal Year Adjusted (non-GAAP) Results
In fiscal year 2019, adjusted diluted EPS was $7.09, an increase of 9.2 percent over the prior fiscal year primarily due to an increase in operating income, a decrease in net interest expense, and a decrease in adjusted diluted weighted average shares outstanding. Adjusted diluted weighted average shares outstanding in fiscal 2019 were 211.8 million, down 3.9 percent from the prior fiscal year. Revenue increased 6.9 percent from last fiscal year to $179.6 billion. Adjusted gross profit increased by $269.7 million, or 5.7 percent, from prior fiscal year to $5.0 billion primarily due to the increases in gross profit within Pharmaceutical Distribution Services and Other. Adjusted operating income increased 3.5 percent as the increase in adjusted gross profit exceeded the increase in adjusted operating expenses. Adjusted operating income margin decreased 4 basis points from 1.18 percent to 1.14 percent primarily due to a lower contribution from PharMEDium.
Recent Company Highlights & Milestones
Dividend Declaration
The Company's Board of Directors declared a quarterly cash dividend of $0.40 per common share, payable December 2, 2019, to stockholders of record at the close of business on November 18, 2019.
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 and 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 introduced its fiscal year 2020 financial guidance, which reflects growth in both Pharmaceutical Distribution Services and businesses focused on Global Commercialization Services & Animal Health. Notably, our revenue growth reflects the onboarding of new volume through our second largest customer. The Company expects:
Additional expectations include:
Conference Call & Slide Presentation
The Company will host a conference call to discuss the results at 8:30 a.m. ET on November 7, 2019. 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:
The dial-in number for the live call will be (612) 288-0340. 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 two hours after the completion of the call and will remain available for 30 days. The telephone replay will also be available approximately two hours after the completion of the call and will remain available for seven days. To access the telephone replay from within the U.S., dial (800) 475-6701. From outside the U.S., dial (320) 365-3844. The access code for the replay is 472893.
Upcoming Investor Events
AmerisourceBergen management will be attending the following investor conference in the coming months:
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 opioid medications, 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 developments or 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; 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 the production, labeling or packaging of products compounded by our compounded sterile preparations (CSP) business or the related consent decree; suspension of production of CSPs, including continued suspension at PharMEDium's Memphis facility; 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; substantial defaults in payment, material reduction in purchases by or the loss, bankruptcy or insolvency of a major customer; 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 or PharMEDium), resulting in a charge to earnings; the acquisition of businesses that do not perform as expected, or that are difficult to integrate or control, including the integration of PharMEDium, 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, 2018 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 FINANCIAL SUMMARY (In thousands, except per share data) (unaudited)
Three
Months Ended September 30, 2019
% of
Revenue
Three
Months Ended September 30, 2018
% of
Revenue
%
Change
Revenue
$
45,637,802
$
43,297,136
5.4%
Cost of goods sold
44,453,065
42,264,495
5.2%
Gross profit 1
1,184,737
2.60%
1,032,641
2.39%
14.7%
Operating expenses:
Distribution, selling, and administrative
721,944
1.58%
657,805
1.52%
9.8%
Depreciation and amortization
108,545
0.24%
120,558
0.28%
(10.0)%
Goodwill impairment charge 2
—
59,684
Employee severance, litigation, and other 3
174,407
40,497
Total operating expenses
1,004,896
2.20%
878,544
2.03%
14.4%
Operating income
179,841
0.39%
154,097
0.36%
16.7%
Other income
(1,213
)
(820
)
Interest expense, net
36,403
43,047
(15.4)%
Income before income taxes
144,651
0.32%
111,870
0.26%
29.3%
Income tax expense (benefit)
12,344
(82,134
)
Net income
132,307
0.29%
194,004
0.45%
(31.8)%
Net income attributable to noncontrolling interest
312
39,284
Net income attributable to AmerisourceBergen Corporation
$
132,619
0.29%
$
233,288
0.54%
(43.2)%
Earnings per share:
Basic
$
0.64
$
1.08
(40.7)%
Diluted
$
0.63
$
1.07
(41.1)%
Weighted average common shares outstanding:
Basic
207,979
215,430
(3.5)%
Diluted
209,680
217,492
(3.6)%
________________________________________
1
Includes a $57.2 million LIFO expense, $6.7 million of PharMEDium remediation costs, and a $3.1 million gain from antitrust litigation settlements in the three months ended September 30, 2019. Includes an $83.5 million LIFO expense, $26.6 million of PharMEDium remediation costs, and an estimated $22.0 million assessment relating to the New York State Opioid Stewardship Act (for the period covering January 1, 2017 through September 30, 2018) in the three months ended September 30, 2018.
2
The goodwill impairment charge in the three months ended September 30, 2018 was related to the Company's non-wholly owned subsidiary in Brazil.
3
Includes $4.5 million of employee severance, $116.7 million of legal settlements, $21.3 million of litigation and opioid-related costs primarily related to legal fees in connection with opioid lawsuits and investigations, and $31.9 million of other costs in connection with acquisition-related deal and integration costs, business transformation efforts, and other restructuring initiatives in the three months ended September 30, 2019. Includes $3.5 million of employee severance, $12.1 million of litigation costs primarily related to opioid lawsuits and investigations, and $25.0 million of other costs related to acquisition-related deal and integration costs, business transformation efforts, and other restructuring initiatives in the three months ended September 30, 2018.AMERISOURCEBERGEN CORPORATION FINANCIAL SUMMARY (In thousands, except per share data) (unaudited)
Fiscal Year Ended
September 30, 2019
% of
Revenue
Fiscal Year Ended
September 30, 2018
% of
Revenue
%
Change
Revenue
$
179,589,121
$
167,939,635
6.9%
Cost of goods sold
174,450,809
163,327,318
6.8%
Gross profit 1
5,138,312
2.86%
4,612,317
2.75%
11.4%
Operating expenses:
Distribution, selling, and administrative
2,663,508
1.48%
2,460,301
1.46%
8.3%
Depreciation and amortization
462,407
0.26%
465,127
0.28%
(0.6)%
Goodwill impairment charge 2
—
59,684
Employee severance, litigation, and other 3
330,474
183,520
Impairment of long-lived assets 4
570,000
—
Total operating expenses
4,026,389
2.24%
3,168,632
1.89%
27.1%
Operating income
1,111,923
0.62%
1,443,685
0.86%
(23.0)%
Other (income) loss 5
(12,952
)
25,469
Interest expense, net
157,769
174,699
(9.7)%
Loss on consolidation of equity investments
—
42,328
Loss on early retirement of debt
—
23,766
Income before income taxes
967,106
0.54%
1,177,423
0.70%
(17.9)%
Income tax expense (benefit)
112,971
(438,469
)
Net income
854,135
0.48%
1,615,892
0.96%
(47.1)%
Net loss attributable to noncontrolling interest
1,230
42,513
Net income attributable to AmerisourceBergen Corporation
$
855,365
0.48%
$
1,658,405
0.99%
(48.4)%
Earnings per share:
Basic
$
4.07
$
7.61
(46.5)%
Diluted
$
4.04
$
7.53
(46.3)%
Weighted average common shares outstanding:
Basic
210,165
217,872
(3.5)%
Diluted
211,840
220,336
(3.9)%
________________________________________ 1Includes a $145.9 million gain from antitrust litigation settlements, $48.6 million of PharMEDium remediation costs, a $22.5 million LIFO credit, and a $22.0 million reversal of a prior period assessment relating to the New York State Opioid Stewardship Act in the fiscal year ended September 30, 2019. Includes a $67.3 million LIFO expense, $61.1 million of PharMEDium remediation costs, a $35.9 million gain from antitrust litigation settlements, and an estimated $22.0 million assessment relating to the New York State Opioid Stewardship Act (for the period covering January 1, 2017 through September 30, 2018) in the fiscal year ended September 30, 2018.
2
The goodwill impairment charge in the fiscal year ended September 30, 2018 was related to the Company's non-wholly owned subsidiary in Brazil.
3
Includes $34.1 million of employee severance, $116.7 million of legal settlements, $68.5 million of litigation and opioid-related costs primarily related to legal fees in connection with opioid lawsuits and investigations, and $111.2 million of other costs in connection with acquisition-related deal and integration costs, business transformation efforts, and other restructuring initiatives in the fiscal year ended September 30, 2019. Includes $36.7 million of employee severance, $61.5 million of litigation costs primarily related to opioid lawsuits, investigations, and related initiatives, and $85.3 million of other costs related to acquisition-related deal and integration costs, business transformation efforts, and other restructuring initiatives in the fiscal year ended September 30, 2018.
4
Impairment of finite-lived intangible assets and property and equipment relating to PharMEDium in the fiscal year ended September 30, 2019.
5Includes a $13.7 million gain on the sale of an equity investment in the fiscal year ended September 30, 2019. Includes a $30.0 million impairment on a non-customer note receivable in the fiscal year ended September 30, 2018.
AMERISOURCEBERGEN CORPORATION GAAP TO NON-GAAP RECONCILIATIONS (in thousands, except per share data) (unaudited)
Three Months Ended September 30, 2019
Gross Profit
Operating Expenses
Operating Income
Income Before Income Taxes
Income Tax
Expense
Net Loss (Income) Attributable to Noncontrolling Interest
Net Income Attributable to ABC
Diluted Earnings Per Share
GAAP
$
1,184,737
$
1,004,896
$
179,841
$
144,651
$
12,344
$
312
$
132,619
$
0.63
Gain from antitrust litigation settlements
(3,137
)
—
(3,137
)
(3,137
)
(764
)
—
(2,373
)
(0.01
)
LIFO expense
57,203
—
57,203
57,203
14,956
—
42,247
0.20
PharMEDium remediation costs
6,660
(7,027
)
13,687
13,687
3,550
—
10,137
0.05
Acquisition-related intangibles amortization
—
(34,078
)
34,078
34,078
8,844
(438
)
24,796
0.12
Employee severance, litigation, and other
—
(174,407
)
174,407
174,407
43,855
—
130,552
0.62
Other
—
—
—
—
(204
)
—
204
—
Adjusted Non-GAAP
$
1,245,463
$
789,384
$
456,079
$
420,889
$
82,581
$
(126
)
$
338,182
$
1.61
Adjusted Non-GAAP % change vs. prior year quarter
6.9
%
7.8
%
5.5
%
7.9
%
7.8
%
7.3
%
11.0
%
Percentages of Revenue:
GAAP
Adjusted
Non-GAAP
Gross profit
2.60%
2.73%
Operating expenses
2.20%
1.73%
Operating income
0.39%
1.00%
________________________________________
Note: For more information related to non-GAAP financial measures, refer to the section titled "Supplemental Information Regarding Non-GAAP Financial Measures" of this release.
AMERISOURCEBERGEN CORPORATION GAAP TO NON-GAAP RECONCILIATIONS (in thousands, except per share data) (unaudited)
Three Months Ended September 30, 2018
Gross Profit
Operating Expenses
Operating Income
Income Before Income Taxes
Income Tax (Benefit) Expense
Net Loss Attributable to Noncontrolling Interest
Net Income Attributable to ABC
Diluted Earnings Per Share
GAAP
$
1,032,641
$
878,544
$
154,097
$
111,870
$
(82,134
)
$
39,284
$
233,288
$
1.07
LIFO expense
83,466
—
83,466
83,466
23,124
—
60,342
0.28
PharMEDium remediation costs
26,580
(1,617
)
28,197
28,197
8,083
—
20,114
0.09
New York State Opioid Stewardship Act
22,000
—
22,000
22,000
6,122
—
15,878
0.07
Goodwill impairment charge
—
(59,684
)
59,684
59,684
—
(36,945
)
22,739
0.10
Acquisition-related intangibles amortization
—
(44,484
)
44,484
44,484
13,191
(775
)
30,518
0.14
Employee severance, litigation, and other
—
(40,497
)
40,497
40,497
83,317
1
—
(42,820
)
(0.20
)
Tax Reform 2
—
—
—
—
25,000
—
(25,000
)
(0.11
)
Other
—
—
—
—
(77
)
—
77
—
Adjusted Non-GAAP
$
1,164,687
$
732,262
$
432,425
$
390,198
$
76,626
$
1,564
$
315,136
$
1.45
3
Percentages of Revenue:
GAAP
Adjusted
Non-GAAP
Gross profit
2.39%
2.69%
Operating expenses
2.03%
1.69%
Operating income
0.36%
1.00%
________________________________________
1
During the fourth quarter of fiscal 2018, the Company determined a significant portion of a fiscal 2017 legal settlement charge is tax deductible.
2
Includes a measurement period adjustment of the one-time transition tax on historical foreign earnings and profits through December 31, 2017.
3
The sum of the components does not equal the total due to rounding.
Note: For more information related to non-GAAP financial measures, refer to the section titled "Supplemental Information Regarding Non-GAAP Financial Measures" of this release.
AMERISOURCEBERGEN CORPORATION GAAP TO NON-GAAP RECONCILIATIONS (in thousands, except per share data) (unaudited)
Fiscal Year Ended September 30, 2019
Gross Profit
Operating Expenses
Operating Income
Income Before Income Taxes
Income Tax Expense
Net Loss (Income) Attributable to Noncontrolling Interest
Net Income Attributable to ABC
Diluted Earnings Per Share
GAAP
$
5,138,312
$
4,026,389
$
1,111,923
$
967,106
$
112,971
$
1,230
$
855,365
$
4.04
Gain from antitrust litigation settlements
(145,872
)
—
(145,872
)
(145,872
)
(38,063
)
—
(107,809
)
(0.51
)
LIFO credit
(22,544
)
—
(22,544
)
(22,544
)
(5,883
)
—
(16,661
)
(0.08
)
PharMEDium remediation costs
48,603
(20,820
)
69,423
69,423
18,115
—
51,308
0.24
New York State Opioid Stewardship Act
(22,000
)
—
(22,000
)
(22,000
)
(5,741
)
—
(16,259
)
(0.08
)
Acquisition-related intangibles amortization
—
(159,848
)
159,848
159,848
41,710
(1,821
)
116,317
0.55
Employee severance, litigation, and other
—
(330,474
)
330,474
330,474
84,638
—
245,836
1.16
Impairment of long-lived assets
—
(570,000
)
570,000
570,000
148,734
—
421,266
1.99
Gain on sale of an equity investment
—
—
—
(13,692
)
(3,573
)
—
(10,119
)
(0.05
)
Tax reform 1
—
—
—
—
36,997
—
(36,997
)
(0.17
)
Adjusted Non-GAAP
$
4,996,499
$
2,945,247
$
2,051,252
$
1,892,743
$
389,905
$
(591
)
$
1,502,247
$
7.09
Adjusted Non-GAAP % change vs. prior year
5.7
%
7.3
%
3.5
%
4.5
%
1.3
%
5.1
%
9.2
%
Percentages of Revenue:
GAAP
Adjusted
Non-GAAP
Gross profit
2.86%
2.78%
Operating expenses
2.24%
1.64%
Operating income
0.62%
1.14%
________________________________________
1
Includes a measurement period adjustment to the one-time transition tax on historical foreign earnings and profits through December 31, 2017.
Note: For more information related to non-GAAP financial measures, refer to the section titled "Supplemental Information Regarding Non-GAAP Financial Measures" of this release.
AMERISOURCEBERGEN CORPORATION
GAAP TO NON-GAAP RECONCILIATIONS
(in thousands, except per share data)
(unaudited)
Fiscal Year Ended September 30, 2018
Gross Profit
Operating Expenses
Operating Income
Income Before Income Taxes
Income Tax (Benefit) Expense
Net Loss Attributable to Noncontrolling Interest
Net Income Attributable to ABC
Diluted Earnings Per Share
GAAP
$
4,612,317
$
3,168,632
$
1,443,685
$
1,177,423
$
(438,469
)
$
42,513
$
1,658,405
$
7.53
Gain from antitrust litigation settlements
(35,938
)
—
(35,938
)
(35,938
)
(10,000
)
—
(25,938
)
(0.12
)
LIFO expense
67,324
—
67,324
67,324
18,733
—
48,591
0.22
PharMEDium remediation costs
61,129
(5,075
)
66,204
66,204
18,421
—
47,783
0.22
New York State Opioid Stewardship Act
22,000
—
22,000
22,000
6,122
—
15,878
0.07
Goodwill impairment charge
—
(59,684
)
59,684
59,684
—
(36,945
)
22,739
0.10
Acquisition-related intangibles amortization
—
(174,751
)
174,751
174,876
48,660
(1,846
)
124,370
0.56
Employee severance, litigation, and other
—
(183,520
)
183,520
183,520
122,222
1
—
61,298
0.28
Loss on consolidation of equity investments
—
—
—
42,328
—
—
42,328
0.19
Impairment on non-customer note receivable
—
—
—
30,000
—
—
30,000
0.14
Loss on early retirement of debt
—
—
—
23,766
6,613
—
17,153
0.08
Tax reform 2
—
—
—
—
612,595
—
(612,595
)
(2.78
)
Adjusted Non-GAAP
$
4,726,832
$
2,745,602
$
1,981,230
$
1,811,187
$
384,897
$
3,722
$
1,430,012
$
6.49
Percentages of Revenue:
GAAP
Adjusted Non-GAAP
Gross profit
2.75%
2.81%
Operating expenses
1.89%
1.63%
Operating income
0.86%
1.18%
________________________________________1
The Company determined a significant portion of a fiscal 2017 legal settlement charge is tax deductible.
2
Includes the impact of applying a lower U.S. federal income tax rate to the Company's net deferred tax liabilities as of December 31, 2017, offset in part by a one-time transition tax on historical foreign earnings and profits through December 31, 2017.
Note: For more information related to non-GAAP financial measures, refer to the section titled "Supplemental Information Regarding Non-GAAP Financial Measures" of this release.
AMERISOURCEBERGEN CORPORATION
SUMMARY SEGMENT INFORMATION
(dollars in thousands)
(unaudited)
Three Months Ended September 30,
Revenue
2019
2018
% Change
Pharmaceutical Distribution Services
$
43,865,440
$
41,726,426
5.1%
Other
1,797,436
1,596,178
12.6%
Intersegment eliminations
(25,074
)
(25,468
)
Revenue
$
45,637,802
$
43,297,136
5.4%
Three Months Ended September 30,
Operating income
2019
2018
% Change
Pharmaceutical Distribution Services
$
369,303
$
356,808
3.5%
Other
86,737
75,465
14.9%
Intersegment eliminations
39
152
Total segment operating income
456,079
432,425
5.5%
Gain from antitrust litigation settlements
3,137
—
LIFO expense
(57,203
)
(83,466
)
PharMEDium remediation costs
(13,687
)
(28,197
)
New York State Opioid Stewardship Act
—
(22,000
)
Goodwill impairment charge
—
(59,684
)
Acquisition-related intangibles amortization
(34,078
)
(44,484
)
Employee severance, litigation, and other
(174,407
)
(40,497
)
Operating income
$
179,841
$
154,097
Percentages of revenue:
Pharmaceutical Distribution Services
Gross profit
2.07%
2.06%
Operating expenses
1.23%
1.21%
Operating income
0.84%
0.86%
Other
Gross profit
18.76%
19.02%
Operating expenses
13.93%
14.29%
Operating income
4.83%
4.73%
AmerisourceBergen Corporation (GAAP)
Gross profit
2.60%
2.39%
Operating expenses
2.20%
2.03%
Operating income
0.39%
0.36%
AmerisourceBergen Corporation (Non-GAAP)
Adjusted gross profit
2.73%
2.69%
Adjusted operating expenses
1.73%
1.69%
Adjusted operating income
1.00%
1.00%
Note: For more information related to non-GAAP financial measures, refer to the section titled "Supplemental Information Regarding Non-GAAP Financial Measures" of this release.
AMERISOURCEBERGEN CORPORATION
SUMMARY SEGMENT INFORMATION
(dollars in thousands)
(unaudited)
Fiscal Year Ended September 30,
Revenue
2019
2018
% Change
Pharmaceutical Distribution Services
$
172,813,537
$
161,699,343
6.9%
Other
6,868,341
6,332,730
8.5%
Intersegment eliminations
(92,757
)
(92,438
)
Revenue
$
179,589,121
$
167,939,635
6.9%
Fiscal Year Ended September 30,
Operating income
2019
2018
% Change
Pharmaceutical Distribution Services
$
1,671,251
$
1,626,748
2.7%
Other
380,660
355,091
7.2%
Intersegment eliminations
(659
)
(609
)
Total segment operating income
2,051,252
1,981,230
3.5%
Gain from antitrust litigation settlements
145,872
35,938
LIFO credit (expense)
22,544
(67,324
)
PharMEDium remediation costs
(69,423
)
(66,204
)
New York State Opioid Stewardship Act
22,000
(22,000
)
Goodwill impairment charge
—
(59,684
)
Acquisition-related intangibles amortization
(159,848
)
(174,751
)
Employee severance, litigation, and other
(330,474
)
(183,520
)
Impairment of long-lived assets
(570,000
)
—
Operating income
$
1,111,923
$
1,443,685
Percentages of revenue:
Pharmaceutical Distribution Services
Gross profit
2.13%
2.14%
Operating expenses
1.16%
1.14%
Operating income
0.97%
1.01%
Other
Gross profit
19.13%
19.90%
Operating expenses
13.59%
14.30%
Operating income
5.54%
5.61%
AmerisourceBergen Corporation (GAAP)
Gross profit
2.86%
2.75%
Operating expenses
2.24%
1.89%
Operating income
0.62%
0.86%
AmerisourceBergen Corporation (Non-GAAP)
Adjusted gross profit
2.78%
2.81%
Adjusted operating expenses
1.64%
1.63%
Adjusted operating income
1.14%
1.18%
Note: For more information related to non-GAAP financial measures, refer to the section titled "Supplemental Information Regarding Non-GAAP Financial Measures" of this release.
AMERISOURCEBERGEN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
September 30,
September 30,
2019
2018
ASSETS
Current assets:
Cash and cash equivalents
$
3,374,194
$
2,492,516
Accounts receivable, net
12,386,879
11,314,226
Inventories
11,060,254
11,918,508
Right to recover asset 1
1,147,483
—
Prepaid expenses and other
163,244
169,122
Total current assets
28,132,054
25,894,372
Property and equipment, net
1,770,516
1,892,424
Goodwill and other intangible assets
9,000,343
9,612,100
Other long-term assets
269,067
270,942
Total assets
$
39,171,980
$
37,669,838
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
28,385,074
$
26,836,873
Other current liabilities
1,057,208
881,157
Short-term debt
139,012
151,657
Total current liabilities
29,581,294
27,869,687
Long-term debt
4,033,880
4,158,532
Accrued income taxes
284,075
299,600
Deferred income taxes
1,860,195
1,829,410
Other long-term liabilities
419,330
462,648
Total equity
2,993,206
3,049,961
Total liabilities and equity
$
39,171,980
$
37,669,838
1
Right to recover asset represents the inventory value associated with the accrual for estimated customer sales returns. The inventories balance at September 30, 2018 includes a $988.8 million accrual for estimated customer sales returns.
AMERISOURCEBERGEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Fiscal Year Ended September 30,
2019
2018
Operating Activities:
Net income
$
854,135
$
1,615,892
Adjustments to reconcile net income to net cash provided by operating activities 1, 2
1,126,509
(2,415
)
Changes in operating assets and liabilities, excluding the effects of acquisitions:
Accounts receivable
(1,241,890
)
(657,770
)
Inventories
(167,990
)
(4,923
)
Accounts payable
1,561,048
859,036
Other 3
212,211
(398,432
)
Net cash provided by operating activities
2,344,023
1,411,388
Investing Activities:
Capital expenditures
(310,222
)
(336,411
)
Cost of acquired companies, net of cash acquired
(63,951
)
(785,299
)
Other
(1,659
)
10,596
Net cash used in investing activities
(375,832
)
(1,111,114
)
Financing Activities:
Net (repayments) borrowings 4
(133,073
)
635,695
Payment of premium on early retirement of debt
—
(22,348
)
Purchases of common stock 5
(674,031
)
(639,235
)
Exercises of stock options
76,234
138,456
Cash dividends on common stock
(338,974
)
(333,041
)
Other
(16,669
)
(22,400
)
Net cash used in financing activities
(1,086,513
)
(242,873
)
Increase in cash and cash equivalents
881,678
57,401
Cash and cash equivalents at beginning of year
2,492,516
2,435,115
Cash and cash equivalents at end of year
$
3,374,194
$
2,492,516
________________________________________
1
Adjustments include a LIFO credit of $22.5 million and an impairment of long-lived assets of $570.0 million for the fiscal year ended September 30, 2019. Includes a LIFO credit of $67.3 million in the fiscal year ended September 30, 2018.
2
Includes a $795.5 million benefit for deferred income taxes in the fiscal year ended September 30, 2018, primarily as a result of applying a lower U.S. federal income tax rate to the Company's net deferred tax liabilities as of December 31, 2017 in connection with tax reform.
3
Includes a $209.9 million increase in income taxes payable in the fiscal year ended September 30, 2018, primarily as a result of a one-time transition tax on historical foreign earnings and profits through December 31, 2017 in connection with tax reform. Includes a $625.0 million decrease in a litigation accrual that was paid in the fiscal year ended September 30, 2018.
4
Net borrowings in the fiscal year ended September 30, 2018 were primarily used to finance the acquisition of H.D. Smith, which was completed on January 2, 2018.
5
Purchases of common stock in the fiscal year ended September 30, 2019 includes $24.0 million of September 2018 purchases that cash settled in October 2018 and excludes $14.8 million of September 2019 purchases that cash settled in October 2019.
SUPPLEMENTAL INFORMATION REGARDING NON-GAAP FINANCIAL MEASURES
To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses the non-GAAP financial measures described below. The non-GAAP financial measures should be viewed in addition to, and not in lieu of, financial measures calculated in accordance with GAAP. These supplemental measures may vary from, and may not be comparable to, similarly titled measures by other companies.
The non-GAAP financial measures are presented because management uses non-GAAP financial measures to evaluate the Company’s operating performance, to perform financial planning, and to determine incentive compensation. Therefore, the Company believes that the presentation of non-GAAP financial measures provides useful supplementary information to, and facilitates additional analysis by, investors. The presented non-GAAP financial measures exclude items that management does not believe reflect the Company’s core operating performance because such items are outside the control of the Company or are inherently unusual, non-operating, unpredictable, non-recurring, or non-cash. We have included the following non-GAAP earnings-related financial measures in this release:
In addition, the Company has provided non-GAAP fiscal year 2020 guidance for diluted earnings per share, operating expense, operating income, and effective income tax rate that excludes the same or similar items as those that are excluded from the historical non-GAAP financial measures, as well as significant items that are outside the control of the Company or inherently unusual, non-operating, unpredictable, non-recurring or non-cash in nature. In addition, it has provided fiscal year 2020 adjusted free cash flow guidance. For fiscal year 2020, we have defined the non-GAAP financial measure of adjusted free cash flow as net cash provided by operating activities, excluding other significant unpredictable or non-recurring cash payments or receipts relating to legal settlements, minus capital expenditures. The Company does not provide forward looking guidance on a GAAP basis for such metrics because certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated. For example, LIFO expense (credit) is largely dependent upon the future inflation or deflation of brand and generic pharmaceuticals, which is out of the Company’s control, and acquisition-related intangibles amortization depends on the timing and amount of future acquisitions, which cannot be reasonably estimated. Similarly, the timing and amount of litigation settlements is unpredictable and non-recurring.
View source version on businesswire.com: https://www.businesswire.com/news/home/20191107005196/en/
Bennett S. Murphy Vice President, Investor Relations 610-727-3693 bmurphy@amerisourcebergen.com
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