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AmeriSource Reports Record Fiscal Second Quarter Revenues and Earnings

04/27/00

MALVERN, Pa.--(BUSINESS WIRE)--April 27, 2000--AmeriSource Health Corporation (NYSE:AAS) today reported record results for its second fiscal quarter and six months ended March 31, 2000. Operating revenue increased 19 percent, or $459.2 million, to $2.8 billion in the quarter compared to $2.4 billion for the same period last year. Net income for the quarter was up 20 percent to $24.3 million from $20.2 million, and earnings per share increased 21 percent to $.47 per diluted share from $.39 per diluted share in the prior year.

For the first six months of fiscal 2000, operating revenue increased 20 percent to $5.7 billion compared to $4.7 billion in the prior year. Net income for the first six months of fiscal 2000 increased by 20 percent to $45.9 million or $.89 per diluted share from $38.1 million or $.74 per diluted share for the same period one year ago.

R. David Yost, AmeriSource President and Chief Executive Officer, said, ''This was an outstanding quarter for AmeriSource. We demonstrated strong revenue momentum with nearly all of our key performance metrics meeting or exceeding our internal expectations. We continue to add new business with solid returns across our geography and customer segments, and our centralization initiatives are nearly finished.

''In addition, two significant activities occurred following the end of the quarter. First, we agreed, with four other companies, to form the New Health Exchange, an internet initiative that will focus on efficiency and connectivity across the healthcare supply chain, enabling the participants to collectively achieve what no single company acting on its own could accomplish. The Exchange will move to streamline the chargeback and rebate process, standardize product information and product content descriptions, and augment each company's existing Internet strategy.

''Second, our acute-care hospital business, where we are the U.S. leader, is growing ever stronger as we expand our buying group alliances. Novation, the supply company of VHA Inc. and the University Health System Consortium, again selected us as one of its primary suppliers, and the members of VHA and UHC, in a customer service satisfaction survey, voted us the top pharmaceutical distributor. We also strengthened our already powerful relationship with Premier. These new initiatives will add to our momentum going forward.''

For the second quarter of fiscal 2000, the Company's gross margin as a percentage of operating revenue was 4.64 percent versus 5.18 percent in the prior year. This expected year-to-year decline in gross margin primarily reflects a shift in customer mix to a higher level of institutional/hospital business and was partly offset by a decrease in operating expenses. The Company's customer mix in the current quarter consists of 51 percent institutions/hospitals, 37 percent independent pharmacies, and 12 percent retail chains.

Operating expenses as a percentage of operating revenue declined by 38 basis points to 2.84 percent in the second quarter of fiscal 2000 from 3.22 percent a year ago. This significant reduction was driven by cost reductions related to centralization efforts, increasingly more efficient warehouse operations and the shift in customer mix.

The Company's operating income advanced 10 percent to $51.1 million in the second quarter of fiscal year 2000 from $46.5 million for the same quarter last year. For the first six months of fiscal year 2000 operating income increased 12 percent over the same period last year. For the second quarter, operating margin, as a percentage of operating revenue, was 1.80 percent compared to 1.96 percent for the prior year period.

Interest expense, excluding the adjustment of a common stock put warrant to fair value in fiscal 1999, increased by 3 percent to $11.9 million, reflecting the net impact of higher interest rates, lower borrowing spreads and lower average levels of debt. Cash flow for the quarter was strong, reflecting the liquidation of Y2K inventories as well as normal seasonal patterns. Debt was reduced by $251 million from $720 million at December 31,1999 to $469 million at March 31,2000. The Company's return on committed capital--ROCC-- for the quarter continued strong at a 24.2 percent.

In looking ahead, Mr. Yost said, ''The best metric of our success continues to be our return on committed capital, which measures the effectiveness of our asset management. At 24.2 percent, our ROCC exceeded our goals as we continue to make the right business decisions. We operate in a solid industry with good fundamentals, and AmeriSource is exceptionally well-positioned in the healthcare supply channel. We remain committed to our long-term goals of being recognized by our customers as the highest quality service provider, delivering strong and consistent financial performance, and building value for our shareholders.''

AmeriSource, with over $10 billion in operating revenue, is one of the nation's leading, full-service wholesale distributors of pharmaceutical products and related healthcare services. Headquartered in Malvern, PA, the Company serves its base of 21,000 customers accounts through a national network of 24 strategically located distribution facilities. AmeriSource is the industry's largest provider of pharmaceuticals to the acute care/institutional market. For more information about AmeriSource, visit our website at www.amerisource.com.

Certain information contained in this press release includes forward-looking statements (as defined in Section 27A of the Securities Act and Section 21E of the Exchange Act) that reflect the Company's current views with respect to future events and financial performance. Certain factors such as competitive pressures, success of restructuring initiatives, continued industry consolidation, changes in customer mix, changes in pharmaceutical manufacturers' pricing and distribution policies, the loss of one or more key customer or supplier relationships and other matters contained in the Company's 10-K for fiscal year 1999 and other public documents could cause actual results to differ materially from those in the forward-looking statements. The company assumes no obligation to update the matters discussed in this press release.

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                    AMERISOURCE HEALTH CORPORATION
                           FINANCIAL SUMMARY
                 (In thousands, except per share data)
                              (Unaudited)


                      Three                 Three
                      Months                Months
                      Ended      % of       Ended       % of
                     March 31,  Operating  March 31,  Operating   %
                       2000      Revenue    1999(a)    Revenue  Change
                    ----------- --------- ---------- ---------- ------

Revenue:
 Operating
  revenue           $2,832,041   100.00%   $2,372,872   100.00%   19%
 Bulk deliveries
  to customer
  warehouses            10,162                 12,299
                    -----------            -----------
Total revenue        2,842,203              2,385,171
                    -----------            -----------

Cost of goods sold:
 Operating cost of
  goods sold         2,700,635    95.36%    2,249,886    94.82%   20%
 Cost of goods
  sold - bulk
  deliveries            10,162                 12,299
                    -----------            -----------
Total cost of goods
 sold                2,710,797              2,262,185
                    -----------            -----------
Gross profit           131,406     4.64%      122,986     5.18%    7%

Operating expenses:
 Selling and
  administrative        76,323     2.69%       72,238     3.04%    6%
 Depreciation and
  amortization           3,969     0.14%        4,268     0.18%   -7%
                    -----------            -----------
Operating income        51,114     1.80%       46,480     1.96%   10%

Interest expense        11,922     0.42%       11,582     0.49%    3%
Interest expense -
 adjustment of common
 stock put warrant to
 fair value                -                    1,223     0.05% -100%
                    -----------            -----------

Income before taxes     39,192     1.38%       33,675     1.42%   16%

Taxes on income         14,893     0.53%       13,456     0.57%   11%
                    -----------            -----------
Net income             $24,299     0.86%      $20,219     0.85%   20%
                    ===========            ===========

Earnings per
 share (a):
  Basic                  $0.47                  $0.40
  Assuming dilution      $0.47                  $0.39

Weighted average
 common shares
 outstanding (a):
   Basic                51,370                 50,555
   Assuming dilution    51,732                 51,574

    (a) Prior year restated for July 1999 C. D. Smith merger accounted
    for as a pooling of interests.


                  AMERISOURCE HEALTH CORPORATION
                         FINANCIAL SUMMARY
               (In thousands, except per share data)
                            (Unaudited)


                       Six                   Six
                      Months                Months
                      Ended      % of       Ended       % of
                     March 31,  Operating  March 31,  Operating   %
                       2000      Revenue    1999(a)    Revenue  Change
                    ----------- --------- ---------- ---------- ------
Revenue:
 Operating
  revenue           $5,660,795   100.00%   $4,735,520   100.00%   20%
 Bulk deliveries
  to customer
  warehouses            20,790                 24,386
                    -----------            -----------
Total revenue        5,681,585              4,759,906

Cost of goods
 sold:
 Operating
  cost of goods
  sold               5,409,462    95.56%    4,501,408    95.06%   20%
 Cost of goods
  sold - bulk
  deliveries            20,790                 24,386
                    -----------            -----------

Total cost of
 goods sold          5,430,252              4,525,794
                    -----------            -----------

Gross profit           251,333     4.44%      234,112     4.94%    7%

Operating
 expenses:
 Selling and
  administrative       146,568     2.59%      139,411     2.94%    5%
 Depreciation
  and amortization       7,916     0.14%        8,557     0.18%   -7%
                    -----------            -----------
Operating
 income                 96,849     1.71%       86,144     1.82%   12%

Interest expense        22,820     0.40%       21,666     0.46%    5%
Interest expense -
 adjustment of
 common stock put
 warrant to fair
 value                     -                    1,833     0.04% -100%
                    -----------            -----------
Income before
 taxes                  74,029     1.31%       62,645     1.32%   18%

Taxes on income         28,131     0.50%       24,531     0.52%   15%
                    -----------            -----------
Net income             $45,898     0.81%      $38,114     0.80%   20%
                    ===========            ===========

Earnings per
 share (a):
  Basic                  $0.89                  $0.76
  Assuming dilution      $0.89                  $0.74

Weighted average
 common shares
 outstanding (a):
  Basic                 51,329                 50,444
  Assuming dilution     51,612                 51,295

    (a) Prior year restated for July 1999 C. D. Smith merger accounted
    for as a pooling of interests.


                    AMERISOURCE HEALTH CORPORATION
                      CONSOLIDATED BALANCE SHEETS
                        (dollars in thousands)


             ASSETS        (unaudited)
                             March 31,      Sept. 30,      Increase
                               2000           1999        (Decrease)
                           ------------   ------------   ------------
Current assets:
  Cash and cash
   equivalents             $    49,240    $    59,497    ($   10,257)
  Accounts receivable,
   less allowance for
   doubtful accounts           642,485        612,520         29,965
  Merchandise
   inventories               1,272,795      1,243,153         29,642
  Prepaid expenses
   and other                     4,550          4,836           (286)
                           -----------    -----------    -----------
     Total current
      assets                 1,969,070      1,920,006         49,064

Property and
 equipment, net                 63,400         64,384           (984)

Other assets, less
 accumulated
 amortization                   69,226         76,209         (6,983)
                           -----------    -----------    -----------

     Total assets          $ 2,101,696    $ 2,060,599    $    41,097
                           ===========    ===========    ===========


LIABILITIES AND
 STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable         $ 1,254,829    $ 1,175,619    $    79,210
  Accrued  expenses and
   other                        46,247         50,329         (4,082)
  Accrued  income taxes          8,628         10,854         (2,226)
  Deferred  income taxes        99,822         90,481          9,341
                           -----------    -----------    -----------
     Total current
      liabilities            1,409,526      1,327,283         82,243

Long-term debt:
  Revolving credit
   facility                    136,046        225,227        (89,181)
  Receivables
   securitization
   financing                   325,000        325,000              0
  Other debt                     8,352          8,478           (126)

Other liabilities                8,980          8,334            646

Stockholders' equity:
  Common stock and
   capital in excess
   of par value                268,746        267,315          1,431
  Accumulated deficit          (48,734)       (94,632)        45,898
  Cost of common stock
   in treasury                  (6,220)        (6,220)             0
  Note receivable
   from ESOP                      --             (186)           186
                           -----------    -----------    -----------
     Total stockholders'
      equity                   213,792        166,277         47,515
                           -----------    -----------    -----------

     Total liabilities
      and stockholders'
      equity               $ 2,101,696    $ 2,060,599    $    41,097
                           ===========    ===========    ===========


Contact:
     AmeriSource Health
     G. L. James, Chief Financial Officer, 610/993-7736
     jjames@amerisource.com

Corporate Overview

AmerisourceBergen is one of the largest global pharmaceutical sourcing and distribution services companies, helping both healthcare providers and pharmaceutical and biotech manufacturers improve patient access to products and enhance patient care. With services ranging from drug distribution and niche premium logistics to reimbursement and pharmaceutical consulting services, AmerisourceBergen delivers innovative programs and solutions across the pharmaceutical supply channel..

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