AmerisourceBergen Reports Fiscal 2021 Third Quarter Results

CONSHOHOCKEN, Pa.–(BUSINESS WIRE)–AmerisourceBergen Corporation (NYSE: ABC) today reported that in its fiscal year 2021 third quarter ended June 30, 2021, revenue increased 17.7 percent year-over-year to $53.4 billion. On the basis of U.S. generally accepted accounting principles (GAAP), diluted earnings per share (EPS) was $1.40 for the June quarter of fiscal 2021, compared to $1.41 in the prior year quarter. Adjusted diluted EPS, which is a non-GAAP measure that excludes items described below, increased 16.8 percent to $2.16 in the fiscal third quarter. 

AmerisourceBergen is updating its outlook for fiscal year 2021. The Company does not provide forward-looking guidance on a GAAP basis, as discussed below in Fiscal Year 2021 Expectations. Adjusted diluted EPS guidance has been raised from the previous range of $8.90 to $9.10 to a range of $9.15 to $9.30, reflecting growth of 16 percent to 18 percent versus the previous fiscal year.

“During the third quarter, AmerisourceBergen continued to capitalize on our differentiated, pharmaceutical-centric value proposition and successfully executed on our key strategic initiatives including completing the acquisition of Alliance Healthcare,” said Steven H. Collis, Chairman, President and Chief Executive Officer of AmerisourceBergen. “We are proud of the execution by our teams to deliver these results and pleased to increase financial guidance for fiscal 2021 to reflect the continued strong performance across our businesses.”

“AmerisourceBergen’s purpose-driven teams continue to provide critical pharmaceutical distribution services and innovative pharmaceutical services to customers across our global footprint,” Mr. Collis continued. “By providing differentiated value to our stakeholders, focusing on our customers, expanding on our leadership in specialty distribution, and executing, innovating, and supporting pharmaceutical innovation globally, we are well positioned to create long-term stakeholder value as we remain united in our responsibility to create healthier futures.”

Third Quarter Fiscal Year 2021 Summary Results

GAAP

Adjusted (Non-GAAP)

Revenue

$53.4B

$53.4B

Gross Profit

$1.9B

$1.6B

Operating Expenses

$1,267M

$996M

Operating Income

$621M

$631M

Interest Expense, Net

$51M

$51M

Effective Tax Rate

48.5%

21.0%

Net Income Attributable to ABC

$292M

$452M

Diluted Earnings Per Share

$1.40

$2.16

Diluted Shares Outstanding

209M

209M

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 2021, revenue was $53.4 billion, up 17.7 percent compared to the same quarter in the previous fiscal year, reflecting a 13.2 percent increase in Pharmaceutical Distribution Services revenue and a 128.0 percent increase in revenue within Other primarily driven by the June 2021 acquisition of Alliance Healthcare.
  • Gross Profit: Gross profit in the third quarter of fiscal 2021 was $1.9 billion, a 54.0 percent increase compared to the same period in the previous fiscal year. Gross profit was favorably impacted by increases in gross profit in Pharmaceutical Distribution Services and Other, a LIFO credit in the current year quarter in comparison to a LIFO expense in the prior year quarter and increases in gains from antitrust litigation settlements. Gross profit as a percentage of revenue was 3.54%, an increase of 84 basis points from the prior year quarter primarily driven by the acquisition of Alliance Healthcare, an increase in sales of specialty products in Pharmaceutical Distribution Services and growth in some of the Company’s higher margin businesses.
  • Operating Expenses: In the third quarter of fiscal 2021, operating expenses were $1,267.5 million, a 54.4 percent increase compared to the same period last fiscal year. The increase in operating expenses was primarily due to the acquisition of Alliance Healthcare and a $124.3 million accrual related to opioid settlement discussions. Operating expenses as a percentage of revenue in the fiscal 2021 third quarter were 2.37 percent, compared to 1.81 percent for the same period in the previous fiscal year primarily due to the items mentioned above.
  • Operating Income: In the fiscal 2021 third quarter, operating income increased to $620.7 million from $404.8 million. Operating income as a percentage of revenue was 1.16 percent in the third quarter of fiscal 2021, compared to 0.89 percent for the same period in the previous fiscal year primarily due to the acquisition of Alliance Healthcare and growth in some of the Company’s higher margin businesses.
  • Interest Expense, Net: In the fiscal 2021 third quarter, net interest expense of $51.3 million was up 36.0 percent versus the prior year quarter due to the issuance of debt to finance a portion of the acquisition of Alliance Healthcare.
  • Effective Tax Rate: The effective tax rate was 48.5 percent for the third quarter of fiscal 2021 primarily due to tax reform in the United Kingdom. This compares to 16.5 percent in the prior year quarter, which was favorably impacted by a discrete tax benefit.
  • Diluted Earnings Per Share: Diluted earnings per share was $1.40 in the third quarter of fiscal 2021 compared to $1.41 in the previous fiscal year’s third quarter.
  • Diluted Shares Outstanding: Diluted weighted average shares outstanding for the third quarter of fiscal 2021 were 208.9 million, a 1.6 percent increase versus the prior fiscal year third quarter resulting from stock option exercises, restricted stock vesting, and the issuance of 2 million Company shares to Walgreens for the June 2021 acquisition of Alliance Healthcare.

Third Quarter Adjusted (non-GAAP) Results

  • Revenue: No adjustments were made to the GAAP presentation of revenue. In the third quarter of fiscal 2021, revenue was $53.4 billion, up 17.7 percent compared to the same quarter in the previous fiscal year, reflecting a 13.2 percent increase in Pharmaceutical Distribution Services revenue and an 128.0 percent increase in revenue within Other primarily driven by the June 2021 acquisition of Alliance Healthcare.
  • Adjusted Gross Profit: Adjusted gross profit in the fiscal 2021 third quarter was $1.6 billion, which was up 32.0 percent compared to the same period in the previous fiscal year due to the Alliance Healthcare acquisition and increases in gross profit in Pharmaceutical Distribution Services and Other. Adjusted gross profit as a percentage of revenue was 3.05 percent in the fiscal 2021 third quarter, an increase of 33 basis points when compared to the prior year quarter primarily driven by the Alliance Healthcare acquisition, an increase in sales of specialty products in Pharmaceutical Distribution Services and growth in some of the Company’s higher margin businesses.
  • Adjusted Operating Expenses: In the third quarter of fiscal 2021, adjusted operating expenses were $996.2 million, an increase of 37.5 percent compared to the same period in the previous fiscal year due to the acquisition of Alliance Healthcare and an increase in payroll-related operating costs to support the Company’s current and future revenue growth. Adjusted operating expenses as a percentage of revenue in the fiscal 2021 third quarter was 1.87 percent, an increase of 27 basis points when compared to the prior year quarter primarily due to the acquisition of Alliance Healthcare.
  • Adjusted Operating Income: In the fiscal 2021 third quarter, adjusted operating income of $630.6 million increased 24.3 percent from the prior year quarter due to a 13.4 percent increase in Pharmaceutical Distribution Services’ operating income and a 77.2 percent increase in operating income within Other. Adjusted operating income as a percentage of revenue was 1.18 percent in the fiscal 2021 third quarter, an increase of 6 basis points when compared to the prior year quarter due to the Alliance Healthcare acquisition and growth in higher margin businesses.
  • Interest Expense, Net: No adjustments were made to the GAAP presentation of net interest expense. In the fiscal 2021 third quarter, net interest expense of $51.3 million was up 36.0 percent versus the prior year quarter due to the issuance of debt to finance a portion of the acquisition of Alliance Healthcare.
  • Adjusted Effective Tax Rate: The adjusted effective tax rate was 21.0 percent for the third quarter of fiscal 2021 compared to 18.8 percent in the prior year quarter, which benefited from a discrete tax item.
  • Adjusted Diluted Earnings Per Share: Adjusted diluted earnings per share was up 16.8 percent to $2.16 in the third quarter of fiscal 2021 compared to $1.85 in the previous fiscal year’s third quarter, driven by the increase in adjusted operating income and partially offset by higher interest expense, a higher effective tax rate, and a higher diluted share count.
  • 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 2021 were 208.9 million, a 1.6 percent increase versus the prior fiscal year third quarter resulting from stock option exercises, restricted stock vesting, and the issuance of 2 million Company shares to Walgreens for the June 2021 acquisition of Alliance Healthcare.

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, animal health (MWI Animal Health or “MWI”), and international pharmaceutical wholesale and related service operations (Alliance Healthcare). The operating segments that focus on global commercialization services include AmerisourceBergen Consulting Services (“ABCS”) and World Courier.

Pharmaceutical Distribution Services Segment

Pharmaceutical Distribution Services revenue was $49.3 billion in the third quarter of fiscal 2021, an increase of 13.2 percent compared to the same quarter in the prior fiscal year primarily due to increased sales of specialty products, including COVID-19 treatments, and overall market growth. Segment operating income of $483.9 million in the third quarter of fiscal 2021 was up 13.4 percent compared to the same period in the previous fiscal year as a result of strong performance across our distribution businesses including increased sales of specialty products.

Other

Revenue in Other was $4.1 billion in the third quarter of fiscal 2021, an increase of 128.0 percent compared to the same period in the prior fiscal year primarily due to the acquisition of Alliance Healthcare and growth in the other operating segments: MWI, World Courier, and ABCS. Operating income in Other increased 77.2 percent to $146.9 million in the third quarter of fiscal 2021 primarily due to the acquisition of Alliance Healthcare and growth at MWI and World Courier.

Recent Company Highlights & Milestones

  • AmerisourceBergen announced the completion of its acquisition of the majority of Walgreens Boots Alliance’s Alliance Healthcare businesses. The acquisition extends AmerisourceBergen’s pharmaceutical distribution presence and global platform of manufacturer services to support pharmaceutical innovation.
  • 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 tenth time that Good Neighbor Pharmacy has earned the achievement in the last 12 years.
  • AmerisourceBergen was named 8th on the 2021 DiversityInc Philanthropy list. Launched in 2001, the survey is the most comprehensive, data-driven D&I analysis of some of the largest U.S. employers. The assessment collects data across six key areas: Leadership Accountability, Human Capital Diversity Metrics, Talent Programs, Workforce Practices, Supplier Diversity, and Philanthropy.

Fiscal Year 2021 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 2021 Expectations on an Adjusted (non-GAAP) Basis

In June 2021, AmerisourceBergen updated its fiscal year 2021 financial guidance for revenue, adjusted diluted EPS and weighted average shares following the closing of the Alliance Healthcare acquisition to reflect the expected contribution from Alliance Healthcare and the weighted average share count impact of the 2 million shares of AmerisourceBergen common stock that the Company delivered to Walgreens at the closing of the transaction.

AmerisourceBergen is now updating its fiscal year 2021 financial guidance to reflect the Company’s continued strong performance across its businesses. The Company now expects:

  • Adjusted Diluted EPS to be in the range of $9.15 to $9.30, raised from the previous range of $8.90 to $9.10.

Additional expectations now include:

  • Adjusted operating expense to be approximately $3.9 billion, up from growth in the high-single digit percent range;
  • Adjusted operating income to be approximately $2.6 billion, up from growth in the high-single digit percent range;
    • Pharmaceutical Distribution Services operating income growth to be in the low-double digit percent range, up from growth in the high-single digit percent range;
    • Other, which is comprised of Alliance Healthcare and the Global Commercialization Services & Animal Health businesses, operating income to be approximately $610 to $620 million, up from growth in the low-double digit percent range; and
  • Adjusted free cash flow to be approximately $1.7 billion, up from approximately $1.5 billion.

All other previously communicated aspects of the Company’s fiscal year 2021 financial guidance and assumptions remain the same.

Dividend Declaration

The Company’s Board of Directors declared a quarterly cash dividend of $0.44 per common share, payable September 7, 2021, to stockholders of record at the close of business on August 16, 2021.

Opioid Litigation

On July 21, 2021, AmerisourceBergen announced that it and the two other national pharmaceutical distributors have negotiated a comprehensive proposed settlement agreement that, if all conditions are satisfied, would result in the resolution of a substantial majority of opioid lawsuits filed by state and local governmental entities.

About AmerisourceBergen

AmerisourceBergen fosters a positive impact on the health of people and communities around the world by advancing the development and delivery of pharmaceuticals and healthcare products. As a leading global healthcare company, with a foundation in pharmaceutical distribution and solutions for manufacturers, pharmacies and providers, we create unparalleled access, efficiency and reliability for human and animal health. Our 41,000 global team members power our purpose: We are united in our responsibility to create healthier futures. AmerisourceBergen is ranked #8 on the Fortune 500 with more than $200 billion in annual revenue. Learn more at investor.amerisourcebergen.com.