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AmeriSource Reports Record Revenue and Earnings for Fiscal Second Quarter; Operating Revenue Up 23 Percent, Net Income Up 30 Percent, EPS Hits $.57

04/26/01

VALLEY FORGE, Pa.--(BW HealthWire)--April 26, 2001--AmeriSource Health Corporation (NYSE:AAS) today reported record results for its second fiscal quarter and six months ended March 31, 2001.

Operating revenue for the quarter increased 23 percent to a record of $3.5 billion compared to $2.8 billion for the same period last year. Net income for the quarter was up 30 percent to $31.5 million, from $24.3 million in the previous year's second quarter. Earnings per share for the fiscal second quarter were also a record at $.57 per diluted share, a 21 percent increase over the prior year.

For the first six months of fiscal 2001, operating revenue increased 20 percent to a six-month record $6.8 billion compared to $5.7 billion in the prior year. Net income for the first six months of fiscal 2001 increased 26 percent to $57.7 million from $45.9 million in the year-ago period. Earnings per share for the six-month period, also a record, were up 20 percent to $1.07 per diluted share compared to $0.89 per diluted share for the same period one year ago.

R. David Yost, AmeriSource Chairman and Chief Executive Officer, said, "This was another outstanding, record-setting quarter and six-month performance for AmeriSource, with robust revenue growth, significantly lower expense ratios, excellent return on committed capital (ROCC), and record earnings per share. All customer groups contributed to strong revenue growth. Total operating expenses as a percentage of operating revenue were below 2.50 percent for the first time. ROCC increased to 26.2 percent, well ahead of our 20 percent target, and earnings per share continued to show strong year over year growth in line with our long-term goals.

"Our solid performance continues to reflect the growth of the pharmaceutical marketplace and our ability to grow our current account base and capture new business while achieving our profitability goals.

"Industry growth, which is driven by favorable demographics more than general economic conditions, remains strong. Overall pharmaceutical dollar sales are projected to increase at a compounded annual growth rate of 13.8 percent over the next five years, according to IMS Health, a leading healthcare data service.

"Our strong revenue growth reflects our exceptional customer service. Our customer service performance continues to be anchored in execution at the distribution center level. We also continued to deliver on productivity improvement, both through the implementation of cost reduction programs and by holding down costs, while growing revenue."

Commenting on specifics of the quarter, Kurt J. Hilzinger, AmeriSource President and Chief Operating Officer, said, "Our Health Systems group, which leads the acute-care market, continued to build revenue momentum this quarter, as we completed assimilating $500 million in annualized, incremental business from Novation, a major hospital group purchasing organization. In the fast-growing Alternate Site group, we continued to add new accounts to our growing base.

"Our chain drugstore and independent community pharmacy customer groups continued to contribute to our revenue growth for the quarter. The recently announced three-year contract with Horizon Pharmacies, Inc., a national drugstore chain, and yesterday's announcement of the three-year agreement with Universal Health, LLC, a buying group for community pharmacies, will contribute to future growth in our retail businesses.

"Our centralization initiatives completed last year contributed to strong levels of procurement performance, expense control and capital productivity."

For the second quarter of fiscal 2001, the Company's gross margin as a percentage of operating revenue was 4.34 percent versus 4.64 percent in the prior year. This expected year-to-year decline in gross margin primarily reflects a shift in customer mix and a competitive marketplace. The Company's customer mix in the current quarter was 53 percent institutional, which encompasses Health Systems and Alternate Site customer groups, and 47 percent retail, including Independent Community Pharmacies and Chain Drugstores. In the same period last year, the customer mix was 51 percent institutional and 49 percent retail.

Total operating expenses as a percentage of operating revenue declined 35 basis points to a record low 2.49 percent in the second quarter of fiscal 2001 from 2.84 percent a year ago. For the comparable six-month periods, the ratio declined 22 basis points to a record 2.51 percent in fiscal 2001 from 2.73 percent last year. This reduction, which was accomplished while continuing to invest in future initiatives, was driven by the shift in customer mix, efficiencies of scale, and cost reductions aided by the centralization efforts.

The Company's operating income advanced 26 percent to $64.4 million in the second quarter of fiscal year 2001 from $51.1 million for the same quarter last year. For the fiscal second quarter, operating margin as a percentage of operating revenue, improved to

  • 1.85 percent compared to 1.80 percent for the prior year period. Interest expense was down slightly to $11.8 million, reflecting the combined impact of higher average levels of debt, lower borrowing spreads and rates, as well as the impact of the Company's $300 million of fixed rate convertible notes issued in mid-December of last year.

In looking ahead, Mr. Yost said, "AmeriSource is extremely well-positioned in the healthcare supply channel. Differentiated by exceptional customer service, disciplined operational expertise and the strongest balance sheet in our history, we continue to grow our diverse customer portfolio both internally and by adding new accounts. We continue to move forward under our recently announced agreement to combine with Bergen Brunswig to create a new company, called AmeriSource-Bergen Corporation. As planned, we have begun regulatory filings and high-level integration planning, even as each company remains focused on its business. This prospective business combination enhances our confidence that we can sustain a long-term earnings per share growth rate of 20 percent for our shareholders."

About AmeriSource

AmeriSource Health Corporation, with approximately $14 billion in annualized operating revenue, is a leading distributor of pharmaceutical and related healthcare products and services, and the industry's largest provider of pharmaceuticals to the acute care/health systems market.

Headquartered in Valley Forge, PA, the Company serves its base of about 15,000 customer accounts through a national network of more than 20 strategically located distribution facilities. For news and additional information about the company, visit its web site 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 and system initiatives, market interest rates, regulatory changes, 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 2000 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.

In connection with their proposed merger, AmeriSource and Bergen Brunswig will file a joint proxy statement/prospectus with the Securities and Exchange Commission. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of the joint proxy statement/prospectus (when available) and other documents filed by AmeriSource and Bergen Brunswig at the Securities and Exchange Commission's web site at www.sec.gov.

The joint proxy statement/prospectus and such other documents may also be obtained for free from AmeriSource by directing such request to AmeriSource Health Corporation, General Counsel, 1300 Morris Drive, Suite 100, Chesterbrook, Pennsylvania 19087-5594, Telephone: (610) 727-7000. AmeriSource's directors, executive officers and other members of its management and employees may be deemed to be participants in the solicitation of proxies from its stockholders in connection with the proposed merger. Information concerning AmeriSource's participants in the solicitation is set forth in AmeriSource's Current Report on Form 8-K filed with the Securities and Exchange Commission on March 19, 2001.

                    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   %
                      2001     Revenue       2000     Revenue   Change
                    ---------  ---------   ---------  --------  ------
Revenue:
  Operating
   revenue          $3,480,685   100.00%   $2,832,041   100.00%   23%
  Bulk
   deliveries
   to customer
   warehouses              313                 10,162
                    ----------             ----------
Total revenue        3,480,998              2,842,203

Cost of goods
 sold:
  Operating cost
   of goods sold     3,329,516    95.66%    2,700,635    95.36%   23%
  Cost of goods
   sold - bulk
   deliveries              313                 10,162
                    ----------             ----------
Total cost of
 goods sold          3,329,829              2,710,797
                    ----------             ----------

Gross profit           151,169     4.34%      131,406     4.64%   15%

Operating
 expenses:
  Selling and
   administrative       82,462     2.37%       76,323     2.69%    8%
  Depreciation
   and
   amortization          4,281     0.12%        3,969     0.14%    8%
                    ----------             ----------

Operating income        64,426     1.85%       51,114     1.80%   26%

Equity in net
 loss of
 unconsolidated
 affiliate               1,801                      0

Interest expense        11,793     0.34%       11,922     0.42%   -1%
                    ----------             ----------

Income before
 taxes                  50,832     1.46%       39,192     1.38%   30%

Taxes on income         19,316     0.55%       14,893     0.53%   30%
                    ----------             ----------

Net income          $   31,516     0.91%   $   24,299     0.86%   30%
                    ==========             ==========


Earnings per
 share:
  Basic             $     0.60                 $ 0.47
  Assuming
   dilution         $     0.57                 $ 0.47

Weighted average
  common shares
  outstanding:
  Basic                 52,701                 51,370
  Assuming
   dilution             59,349                 51,732



                    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   %
                      2001     Revenue       2000     Revenue   Change
                    ---------  ---------   ---------  --------  ------
Revenue:
  Operating
   revenue          $6,787,436   100.00%   $5,660,795   100.00%   20%
  Bulk
   deliveries
   to customer
   warehouses              757                 20,790
                    ----------             ----------
Total revenue        6,788,193              5,681,585

Cost of goods
 sold:
  Operating cost
   of goods sold     6,498,834    95.75%    5,409,462    95.56%   20%
  Cost of goods
  sold - bulk
  deliveries               757                 20,790
                    ----------             ----------
Total cost of
 goods sold          6,499,591              5,430,252
                    ----------             ----------

Gross profit           288,602     4.25%      251,333     4.44%   15%

Operating
 expenses:
  Selling and
   administrative      162,107     2.39%      146,568     2.59%   11%
  Depreciation
   and
   amortization          8,175     0.12%        7,916     0.14%    3%
                    ----------             ----------

Operating income       118,320     1.74%       96,849     1.71%   22%

Equity in net
 loss of
 unconsolidated
 affiliate               2,575                      0

Interest expense        22,669     0.33%       22,820     0.40%   -1%
                    ----------             ----------

Income before
 taxes                  93,076     1.37%       74,029     1.31%   26%

Taxes on income         35,369     0.52%       28,131     0.50%   26%
                    ----------             ----------

Net income          $   57,707     0.85%   $   45,898     0.81%   26%
                    ==========             ==========

Earnings per
 share:
  Basic             $     1.10             $     0.89
  Assuming
   dilution         $     1.07             $     0.89

Weighted
 average common
 shares
 outstanding:
  Basic                 52,528                 51,329
  Assuming
   dilution             56,939                 51,612


                    AMERISOURCE HEALTH CORPORATION
                      CONSOLIDATED BALANCE SHEETS
                        (dollars in thousands)


     ASSETS                  (unaudited)
                              March 31,      Sept. 30,      Increase
                                2001           2000        (Decrease)
                            -----------    -----------    -----------
Current assets:
  Cash and cash
   equivalents              $   126,268    $   120,818    $     5,450
  Accounts receivable,
   less allowance for
   doubtful accounts            676,654        623,961         52,693
  Merchandise
   inventories                1,820,202      1,570,504        249,698
  Prepaid expenses and
   other                          4,341          5,336           (995)
                            -----------    -----------    -----------
    Total current
     assets                   2,627,465      2,320,619        306,846

Property and
 equipment, net                  69,154         64,962          4,192

Other assets, less
 accumulated
 amortization                    87,791         72,986         14,805
                            -----------    -----------    -----------

    Total assets            $ 2,784,410    $ 2,458,567    $   325,843
                            ===========    ===========    ===========


     LIABILITIES AND
      STOCKHOLDERS'
      EQUITY

Current liabilities:
  Accounts payable          $ 1,756,364    $ 1,584,133    $   172,231
  Accrued expenses and
   other                         51,733         49,398          2,335
  Accrued income taxes           11,257         12,284         (1,027)
  Deferred income
   taxes                        118,472        105,654         12,818
                            -----------    -----------    -----------
    Total current
     liabilities              1,937,826      1,751,469        186,357

Long-term debt:
  Revolving credit
   facility                           0         20,000        (20,000)
  Receivables
   securitization
   financing                    171,181        385,000       (213,819)
  Convertible
   subordinated notes           300,000              0        300,000
  Other debt                      2,432          8,217         (5,785)

Other liabilities                 7,534         11,587         (4,053)

Stockholders' equity:
  Common stock and
   capital in excess
   of par value                 309,568        284,132         25,436
  Retained earnings              62,089          4,382         57,707
  Cost of common stock
   in treasury                   (6,220)        (6,220)             0
                            -----------    -----------    -----------
    Total stockholders'
     equity                     365,437        282,294         83,143
                            -----------    -----------    -----------

    Total liabilities
     and stockholders'
     equity                 $ 2,784,410    $ 2,458,567    $   325,843
                            ===========    ===========    ===========


                    AMERISOURCE HEALTH CORPORATION
                          EARNINGS PER SHARE
                 (In thousands, except per share data)
                              (unaudited)

    Earnings per share is computed on the basis of the weighted
average number of shares of common stock outstanding during the
periods presented. Earnings per share-assuming dilution is computed on
the basis of the weighted average number of shares of common stock
outstanding during the period plus the dilutive effect of stock
options. Additionally, the fiscal 2001 calculations consider the
convertible subordinated notes as if converted and, therefore, the
effect of interest expense related to those notes is added back to net
income in determining income available to common stockholders.

                      Three months ended   Six months ended
                           March 31,           March 31,
                      ------------------  -----------------
                        2001       2000     2001       2000
                      --------   -------  --------   ------

Net income             $31,516   $24,299   $57,707   $45,898
Interest expense -
 convertible
 subordinated
 notes, net of
 income taxes            2,528      --       3,086      --
                       -------   -------   -------   -------
Income available
 to common
 stockholders          $34,044   $24,299   $60,793   $45,898
                       =======   =======   =======   =======


Weighted average
 number of shares
 of common stock
 outstanding            52,701    51,370    52,528    51,329
Effect of dilutive
 securities:
   Stock options           984       362       988       283
   Convertible
    subordinated
    notes                5,664      --       3,423      --
                       -------   -------   -------   -------
Weighted average
 number of shares
 of common stock and
 dilutive potential
 common stock           59,349    51,732    56,939    51,612
                       =======   =======   =======   =======


Earnings per share:
   Basic               $  0.60   $  0.47   $  1.10   $  0.89
   Assuming dilution   $  0.57   $  0.47   $  1.07   $  0.89

CONTACT: AmeriSource Health Corporation
Michael N. Kilpatric, 610/727-7118
mkilpatric@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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