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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 $45.4 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
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 $1.85 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
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.
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
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:
Additional expectations now include:
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:
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:
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 FINANCIAL SUMMARY (In thousands, except per share data) (unaudited)
Three Months Ended June 30, 2020
% of Revenue
Three Months Ended June 30, 2019
% of Revenue
% Change
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.
AMERISOURCEBERGEN CORPORATION FINANCIAL SUMMARY (In thousands, except per share data) (unaudited)
Nine Months Ended June 30, 2020
% of Revenue
Nine Months Ended June 30, 2019
% of Revenue
% Change
Revenue
$
140,649,158
$
133,951,319
5.0%
Cost of goods sold
136,804,121
129,997,744
5.2%
Gross profit 1
3,845,037
2.73%
3,953,575
2.95%
(2.7)%
Operating expenses:
Distribution, selling, and administrative 2
2,046,251
1.45%
1,941,564
1.45%
5.4%
Depreciation and amortization
293,725
0.21%
353,862
0.26%
(17.0)%
Employee severance, litigation, and other 3
165,626
156,067
Impairment of PharMEDium assets
361,652
570,000
Total operating expenses
2,867,254
2.04%
3,021,493
2.26%
(5.1)%
Operating income
977,783
0.70%
932,082
0.70%
4.9%
Other loss (income), net 4
2,806
(11,739)
Interest expense, net
103,176
121,366
(15.0)%
Loss on early retirement of debt
22,175
—
Income before income taxes
849,626
0.60%
822,455
0.61%
3.3%
Income tax (benefit) expense 5
(595,321)
100,627
Net income
1,444,947
1.03%
721,828
0.54%
100.2%
Net (income) loss attributable to noncontrolling interest
(7,591)
918
Net income attributable to AmerisourceBergen Corporation
$
1,437,356
1.02%
$
722,746
0.54%
98.9%
Earnings per share:
Basic
$
7.01
$
3.45
103.2%
Diluted
$
6.95
$
3.42
103.2%
Weighted average common shares outstanding:
Basic
205,017
209,484
(2.1)%
Diluted
206,714
211,151
(2.1)%
________________________________________
1
Includes a $43.2 million LIFO expense, $12.6 million of PharMEDium remediation and shutdown costs, and an $8.5 million gain from antitrust litigation settlements in the nine months ended June 30, 2020. Includes a $142.7 million gain from antitrust litigation settlements, a $79.7 million LIFO credit, $41.9 million of PharMEDium remediation costs, and a $22.0 million reversal of a prior period assessment relating to the New York State Opioid Stewardship Act in the nine months ended June 30, 2019.
2
Includes $49.0 million of PharMEDium remediation and shutdown costs and a $12.2 million adjustment to Profarma's estimate of contingent consideration related to the purchase price of one of its prior business acquisitions in the nine months ended June 30, 2020. Includes $13.8 million of PharMEDium remediation costs in the nine months ended June 30, 2019.
3
Includes $32.4 million of employee severance, $86.9 million of litigation costs related to legal fees in connection with opioid lawsuits and investigations, and $46.4 million of other costs in connection with business transformation efforts, other restructuring initiatives, and acquisition-related deal and integration costs in the nine months ended June 30, 2020. Includes $29.6 million of employee severance, $47.2 million of litigation costs related to legal fees in connection with opioid lawsuits and investigations, and $79.3 million of other costs in connection with acquisition-related deal and integration costs, business transformation efforts, and other restructuring initiatives in the nine months ended June 30, 2019.
4
Includes a $13.7 million gain on the sale of an equity investment in the nine months ended June 30, 2019.
5
Includes $741.0 million of discrete tax benefits primarily attributable to the income tax deductions resulting from the shutdown of the PharMEDium business in the nine months ended June 30, 2020. Includes a $37.0 million measurement period adjustment of the one-time transition tax on historical earnings and profits through December 31, 2017 in the nine months ended June 30, 2019.
AMERISOURCEBERGEN CORPORATION GAAP TO NON-GAAP RECONCILIATIONS (in thousands, except per share data) (unaudited)
Three Months Ended June 30, 2020
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
$
1,225,716
$
820,885
$
404,831
$
343,835
$
56,567
$
2,171
$
289,439
$
1.41
Gain from antitrust litigation settlements
—
—
—
—
(15)
—
15
—
LIFO expense
6,061
—
6,061
6,061
1,555
—
4,506
0.02
PharMEDium shutdown costs
432
(12,504)
12,936
12,936
3,264
—
9,672
0.05
Acquisition-related intangibles amortization
—
(25,109)
25,109
25,109
6,276
(437)
18,396
0.09
Employee severance, litigation, and other
—
(58,585)
58,585
58,585
14,583
—
44,002
0.21
Impairment of PharMEDium assets
—
—
—
—
638
—
(638)
—
Contingent consideration adjustment
—
—
—
—
(22)
(1,833)
(1,811)
(0.01)
Loss on early retirement of debt
—
—
—
22,175
5,449
—
16,726
0.08
Adjusted Non-GAAP
$
1,232,209
$
724,687
$
507,522
$
468,701
$
88,295
$
(99)
$
380,307
$
1.85
Adjusted Non-GAAP % change vs. prior year quarter
0.2
%
0.3
%
0.2
%
(0.5)
%
(10.8)
%
2.3
%
5.1
%
Percentages of Revenue:
GAAP
Adjusted Non-GAAP
Gross profit
2.70%
2.72%
Operating expenses
1.81%
1.60%
Operating income
0.89%
1.12%
________________________________________
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 June 30, 2019
Gross Profit
Operating Expenses
Operating Income
Income Before Income Taxes
Income Tax Expense
Net Income Attributable to Noncontrolling Interest
Net Income Attributable to ABC
Diluted Earnings Per Share
GAAP
$
1,231,239
$
824,545
$
406,694
$
371,115
$
69,113
$
(43)
$
301,959
$
1.43
Gain from antitrust litigation settlements
(3,480)
—
(3,480)
(3,480)
(1,849)
—
(1,631)
(0.01)
LIFO credit
(9,913)
—
(9,913)
(9,913)
(3,061)
—
(6,852)
(0.03)
PharMEDium remediation costs
11,698
(7,646)
19,344
19,344
5,301
—
14,043
0.07
New York State Opioid Stewardship Act
—
—
—
—
(149)
—
149
—
Acquisition-related intangibles amortization
—
(34,024)
34,024
34,024
9,511
(440)
24,073
0.11
Employee severance, litigation, and other
—
(60,006)
60,006
60,006
16,329
—
43,677
0.21
Impairment of PharMEDium assets
—
—
—
—
3,848
—
(3,848)
(0.02)
Gain on sale of an equity investment
—
—
—
—
(93)
—
93
—
Adjusted Non-GAAP
$
1,229,544
$
722,869
$
506,675
$
471,096
$
98,950
$
(483)
$
371,663
$
1.76
Percentages of Revenue:
GAAP
Adjusted Non-GAAP
Gross profit
2.72%
2.72%
Operating expenses
1.82%
1.60%
Operating income
0.90%
1.12%
________________________________________
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)
Nine Months Ended June 30, 2020
Gross Profit
Operating Expenses
Operating Income
Income Before Income Taxes
Income Tax (Benefit) Expense
Net Income Attributable to Noncontrolling Interest
Net Income Attributable to ABC
Diluted Earnings Per Share
GAAP
$
3,845,037
$
2,867,254
$
977,783
$
849,626
$
(595,321)
$
(7,591)
$
1,437,356
$
6.95
Gain from antitrust litigation settlements
(8,546)
—
(8,546)
(8,546)
(2,100)
—
(6,446)
(0.03)
LIFO expense
43,195
—
43,195
43,195
10,614
—
32,581
0.16
PharMEDium shutdown and remediation costs
12,556
(49,015)
61,571
61,571
15,128
—
46,443
0.22
Acquisition-related intangibles amortization
—
(85,345)
85,345
85,345
20,971
(1,308)
63,066
0.31
Employee severance, litigation, and other
—
(165,626)
165,626
165,626
40,697
—
124,929
0.60
Impairment of PharMEDium assets
—
(361,652)
361,652
361,652
88,865
—
272,787
1.32
Contingent consideration adjustment
—
12,153
(12,153)
(12,153)
(2,987)
5,678
(3,488)
(0.02)
Loss on early retirement of debt
—
—
—
22,175
5,449
—
16,726
0.08
Certain discrete tax benefits 1
—
—
—
—
741,015
—
(741,015)
(3.58)
Adjusted Non-GAAP
$
3,892,242
$
2,217,769
$
1,674,473
$
1,568,491
$
322,331
$
(3,221)
$
1,242,939
$
6.01
Adjusted Non-GAAP % change vs. prior year period
3.8
%
2.9
%
5.0
%
6.6
%
4.9
%
6.8
%
9.1
%
Percentages of Revenue:
GAAP
Adjusted Non-GAAP
Gross profit
2.73%
2.77%
Operating expenses
2.04%
1.58%
Operating income
0.70%
1.19%
________________________________________
1
Includes $741.0 million of discrete tax benefits primarily attributable to the income tax deductions resulting from the shutdown of the PharMEDium business.
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)
Nine Months Ended June 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
$
3,953,575
$
3,021,493
$
932,082
$
822,455
$
100,627
$
918
$
722,746
$
3.42
Gain from antitrust litigation settlements
(142,735)
—
(142,735)
(142,735)
(37,299)
—
(105,436)
(0.50)
LIFO credit
(79,747)
—
(79,747)
(79,747)
(20,839)
—
(58,908)
(0.28)
PharMEDium remediation costs
41,943
(13,793)
55,736
55,736
14,565
—
41,171
0.19
New York State Opioid Stewardship Act
(22,000)
—
(22,000)
(22,000)
(5,749)
—
(16,251)
(0.08)
Acquisition-related intangibles amortization
—
(125,770)
125,770
125,770
32,866
(1,383)
91,521
0.43
Employee severance, litigation, and other
—
(156,067)
156,067
156,067
40,783
—
115,284
0.55
Impairment of PharMEDium assets
—
(570,000)
570,000
570,000
148,951
—
421,049
1.99
Gain on sale of an equity investment
—
—
—
(13,692)
(3,578)
—
(10,114)
(0.05)
Tax reform 1
—
—
—
—
36,997
—
(36,997)
(0.18)
Adjusted Non-GAAP
$
3,751,036
$
2,155,863
$
1,595,173
$
1,471,854
$
307,324
$
(465)
$
1,164,065
$
5.51
2
Percentages of Revenue:
GAAP
Adjusted Non-GAAP
Gross profit
2.95%
2.80%
Operating expenses
2.26%
1.61%
Operating income
0.70%
1.19%
________________________________________
1
Includes a measurement period adjustment of the one-time transition tax on historical foreign earnings and profits through December 31, 2017.
2
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 SUMMARY SEGMENT INFORMATION (dollars in thousands) (unaudited)
Three months ended June 30,
Revenue
2020
2019
% Change
Pharmaceutical Distribution Services
$
43,579,119
$
43,527,552
0.1%
Other
1,810,533
1,734,538
4.4%
Intersegment eliminations
(22,875)
(22,825)
Revenue
$
45,366,777
$
45,239,265
0.3%
Three months ended June 30,
Operating income
2020
2019
% Change
Pharmaceutical Distribution Services
$
426,643
$
411,707
3.6%
Other
82,875
95,110
(12.9)%
Intersegment eliminations
(1,996)
(142)
Total segment operating income
507,522
506,675
0.2%
Gain from antitrust litigation settlements
—
3,480
LIFO (expense) credit
(6,061)
9,913
PharMEDium shutdown and remediation costs
(12,936)
(19,344)
Acquisition-related intangibles amortization
(25,109)
(34,024)
Employee severance, litigation, and other
(58,585)
(60,006)
Operating income
$
404,831
$
406,694
Percentages of revenue:
Pharmaceutical Distribution Services
Gross profit
2.08%
2.08%
Operating expenses
1.10%
1.13%
Operating income
0.98%
0.95%
Other
Gross profit
18.17%
18.77%
Operating expenses
13.59%
13.29%
Operating income
4.58%
5.48%
AmerisourceBergen Corporation (GAAP)
Gross profit
2.70%
2.72%
Operating expenses
1.81%
1.82%
Operating income
0.89%
0.90%
AmerisourceBergen Corporation (Non-GAAP)
Adjusted gross profit
2.72%
2.72%
Adjusted operating expenses
1.60%
1.60%
Adjusted operating income
1.12%
1.12%
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)
Nine Months Ended June 30,
Revenue
2020
2019
% Change
Pharmaceutical Distribution Services
$
135,178,617
$
128,948,097
4.8%
Other
5,534,110
5,070,905
9.1%
Intersegment eliminations
(63,569)
(67,683)
Revenue
$
140,649,158
$
133,951,319
5.0%
Nine Months Ended June 30,
Operating income
2020
2019
% Change
Pharmaceutical Distribution Services
$
1,381,434
$
1,301,948
6.1%
Other
295,614
293,923
0.6%
Intersegment eliminations
(2,575)
(698)
Total segment operating income
1,674,473
1,595,173
5.0%
Gain from antitrust litigation settlements
8,546
142,735
LIFO (expense) credit
(43,195)
79,747
PharMEDium shutdown and remediation costs
(61,571)
(55,736)
New York State Opioid Stewardship Act
—
22,000
Acquisition-related intangibles amortization
(85,345)
(125,770)
Employee severance, litigation, and other
(165,626)
(156,067)
Impairment of PharMEDium assets
(361,652)
(570,000)
Contingent consideration adjustment
12,153
—
Operating income
$
977,783
$
932,082
Percentages of revenue:
Pharmaceutical Distribution Services
Gross profit
2.11%
2.15%
Operating expenses
1.09%
1.14%
Operating income
1.02%
1.01%
Other
Gross profit
18.78%
19.27%
Operating expenses
13.44%
13.47%
Operating income
5.34%
5.80%
AmerisourceBergen Corporation (GAAP)
Gross profit
2.73%
2.95%
Operating expenses
2.04%
2.26%
Operating income
0.70%
0.70%
AmerisourceBergen Corporation (Non-GAAP)
Adjusted gross profit
2.77%
2.80%
Adjusted operating expenses
1.58%
1.61%
Adjusted operating income
1.19%
1.19%
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)
June 30,
September 30,
2020
2019
ASSETS
Current assets:
Cash and cash equivalents
$
3,420,272
$
3,374,194
Accounts receivable, net
12,548,399
12,386,879
Inventories
11,849,201
11,060,254
Right to recover asset
1,340,935
1,147,483
Income tax receivable
596,024
5,859
Prepaid expenses and other
163,741
157,385
Total current assets
29,918,572
28,132,054
Property and equipment, net
1,455,008
1,770,516
Goodwill and other intangible assets
8,615,677
9,000,343
Other long-term assets
800,446
269,067
Total assets
$
40,789,703
$
39,171,980
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
29,145,149
$
28,385,074
Other current liabilities
966,712
1,057,208
Short-term debt
519,710
139,012
Total current liabilities
30,631,571
29,581,294
Long-term debt
3,620,641
4,033,880
Accrued income taxes
268,519
284,075
Deferred income taxes
1,806,260
1,860,195
Other long-term liabilities
494,761
419,330
Total equity
3,967,951
2,993,206
Total liabilities and equity
$
40,789,703
$
39,171,980
AMERISOURCEBERGEN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
Nine Months Ended June 30,
2020
2019
Operating Activities:
Net income
$
1,444,947
$
721,828
Adjustments to reconcile net income to net cash provided by operating activities 1
822,005
957,240
Changes in operating assets and liabilities, excluding the effects of acquisitions:
Accounts receivable
(436,237)
(672,742)
Inventories
(910,828)
(280,148)
Accounts payable
824,105
964,667
Other, net 2
(836,184)
(19,644)
Net cash provided by operating activities
907,808
1,671,201
Investing Activities:
Capital expenditures
(251,101)
(230,767)
Cost of equity investments and acquired companies, net of cash acquired
(34,830)
(64,044)
Other, net
7,824
(2,222)
Net cash used in investing activities
(278,107)
(297,033)
Financing Activities:
Net repayments
(10,960)
(130,493)
Payment of premium on early retirement of debt
(21,448)
—
Purchases of common stock 3
(420,449)
(522,778)
Exercises of stock options
137,748
54,860
Cash dividends on common stock
(256,764)
(255,064)
Other
(11,750)
(13,650)
Net cash used in financing activities
(583,623)
(867,125)
Increase in cash and cash equivalents
46,078
507,043
Cash and cash equivalents at beginning of period
3,374,194
2,492,516
Cash and cash equivalents at end of period
$
3,420,272
$
2,999,559
________________________________________
1
Includes a LIFO expense of $43.2 million and an impairment of PharMEDium assets of $361.7 million in the nine months ended June 30, 2020. Includes a LIFO credit of $79.7 million and an impairment of PharMEDium assets of $570.0 million in the nine months ended June 30, 2019.
2
Includes a $590.2 million increase in income tax receivable for the nine months ended June 30, 2020 primarily as a result of recognizing certain discrete tax benefits.
3
Purchases of common stock in the nine months ended June 30, 2020 includes $14.8 million of September 2019 purchases that cash settled in October 2019. Purchases of common stock in the nine months ended June 30, 2019 includes $24.0 million of September 2018 purchases that cash settled in October 2018 and excludes $0.1 million of June 2019 purchases that cash settled in July 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. For the nine months ended June 30, 2020 adjusted free cash flow of $714.8 million consisted of net cash provided by operating activities of $907.8 million, plus $66.7 million in cash payments made relating to unfavorable legal settlements, minus $8.5 million in cash payments received related to favorable legal settlements, and minus capital expenditures of $251.1 million. 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/20200805005192/en/
Bennett S. Murphy Senior Vice President, Investor Relations 610-209-5691 bmurphy@amerisourcebergen.com
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