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AmerisourceBergen Reports Second Quarter Fiscal Year 2014 Results

04/24/14

Now Expects Fiscal 2014 Adjusted Diluted EPS from Continuing Operations to be in the range of $3.64 to $3.74

VALLEY FORGE, Pa.--(BUSINESS WIRE)--Apr. 24, 2014-- AmerisourceBergen Corporation (NYSE:ABC) today reported that in its fiscal year 2014 second quarter ended March 31, 2014, adjusted diluted earnings per share from continuing operations increased 19.1 percent to $1.06. Revenue increased 38.6 percent to $28.5 billion in the quarter. On the basis of U.S. generally accepted accounting principles (GAAP), diluted earnings per share from continuing operations were $0.76 for the March quarter of fiscal 2014. In the tables that follow, we present our GAAP results as well as a reconciliation of GAAP income from continuing operations to adjusted non-GAAP income from continuing operations.

“We delivered strong performance in our March quarter, as we continued to onboard substantial new business, and made significant progress against our strategic objectives,” said Steven H. Collis, AmerisourceBergen President and Chief Executive Officer. “With excellent operational performance and improving working capital trends that helped generate tremendous free cash flow in the quarter, we have good momentum heading into the second half of our fiscal year. In addition, we continued to make important investments in our business for the long-term, including signing a definitive agreement to acquire a minority stake in Profarma Distribuidora de Produtos Farmacêuticos S.A. of Brazil, and returned funds to shareholders through repurchasing over $250 million of our common stock.”

The comments below compare adjusted results from continuing operations, which exclude:

  • Gains on antitrust litigation settlements;
  • LIFO expense;
  • Acquisition related intangibles amortization;
  • Warrant expense; and
  • Employee severance, litigation, and other expenses.

In addition, we calculate our adjusted earnings per share for each period using a diluted weighted average share count, which excludes the accounting dilution resulting from the impact of the unexercised equity warrants.

Summary of Adjusted Quarterly Results

  • Revenue: In the second quarter of fiscal 2014, revenue was $28.5 billion, up 38.6 percent compared to the same quarter in the previous fiscal year, reflecting a 46 percent increase in AmerisourceBergen Drug Corporation (ABDC) revenue, and a 10 percent increase in AmerisourceBergen Specialty Group (ABSG) revenue.
  • Gross Profit: Gross profit in the fiscal 2014 second quarter was $831.6 million, a 16.6 percent increase over the same period in the previous year, driven by strong overall revenue growth and generic sales in ABDC. Gross profit as a percentage of revenue decreased 56 basis points to 2.92 percent, primarily due to a substantial increase in lower margin brand business.
  • Operating Expenses: In the second quarter of fiscal 2014, operating expenses were $415.0 million, up 16.1 percent over the same period in the last fiscal year. The increase in operating expenses in the quarter was due primarily to costs associated with onboarding the new Walgreen Co. business. Operating expenses as a percentage of revenue in the fiscal 2014 second quarter were 1.46 percent compared with 1.74 percent for the same period in the previous fiscal year.
  • Operating Income: In the fiscal 2014 second quarter, operating income of $416.6 million was up 17.0 percent versus the prior year, as the percentage increase in gross profit was slightly higher than the percentage increase in operating expenses. Operating income as a percentage of revenue decreased 27 basis points to 1.46 percent in the fiscal 2014 second quarter compared to the previous year’s second quarter.
  • Tax Rate: The effective tax rate for the second quarter of fiscal 2014 was 38.2 percent, in line with the previous fiscal year’s second quarter. Going forward, we expect our annualized effective tax rate to be in the low 38 percent range.
  • Earnings Per Share: Diluted earnings per share from continuing operations were up 19.1 percent to $1.06 in the second quarter of fiscal year 2014 compared to $0.89 in the previous fiscal year’s second quarter, driven primarily by the increase in operating income.
  • Shares Outstanding: Diluted weighted average shares outstanding for the second quarter of fiscal year 2014 were 234.3 million, a slight decrease versus the prior year as share repurchases offset option exercises.

Segment Discussion

The Pharmaceutical Distribution segment includes both AmerisourceBergen Drug Corporation and AmerisourceBergen Specialty Group. Other includes AmerisourceBergen Consulting Services (ABCS) and World Courier.

Pharmaceutical Distribution Segment

In the second fiscal quarter of 2014, Pharmaceutical Distribution revenues were $27.9 billion, an increase of 39 percent compared to the same quarter in the prior year. ABDC revenues increased 46 percent, due primarily to the onboarding of all of the new Walgreens branded pharmaceuticals business and a portion of their generic pharmaceuticals business, and increased branded pharmaceutical sales to our other large customers. ABSG revenues increased 10 percent, which was driven by strong performance in our blood products, vaccine and physician office distribution businesses. Intrasegment revenues between ABDC and ABSG have been eliminated in the presentation of total Pharmaceutical Distribution revenue. Total intrasegment revenues were $976.3 million and $760.9 million in the quarters ended March 31, 2014 and 2013, respectively.

Operating income of $372.9 million in the March quarter of fiscal 2014 increased 16 percent compared to the same period in the previous year due to the new Walgreens branded and generic pharmaceuticals business in ABDC, strong contributions from generics overall, and solid performance in ABSG, as a flat performance in our community oncology business was offset by strong performance in our blood products and vaccine distribution businesses.

Other

Revenues in Other were $572.5 million in the second quarter of fiscal 2014, an increase of 11 percent over the same period in the prior year. Operating income increased 25 percent to $43.6 million in the second quarter of fiscal 2014, driven by strong performance in World Courier.

Fiscal Year 2014 Expectations

AmerisourceBergen now expects adjusted diluted earnings per share from continuing operations in fiscal year 2014 to be in the range of $3.64 to $3.74, a 13 percent to 17 percent increase over fiscal 2013. We continue to expect revenue growth in the range of 30 percent to 34 percent, and operating income growth in the 12 percent to 16 percent range. We continue to expect adjusted operating margin to decline in the 20 to 23 basis points range due to the onboarding of significant new lower margin business and growth in brand pharmaceutical business with our large customers. We continue to expect to generate free cash flow in the range of $500 to $700 million, with capital expenditures in the $300 million range, and to spend approximately $500 million in share repurchases, subject to market conditions.

Conference Call

The Company will host a conference call to discuss the results at 11:00 a.m. Eastern Time on April 24, 2014.

Participating in the conference call will be:

Steven H. Collis, President & Chief Executive Officer
Tim G. Guttman, Senior Vice President & Chief Financial Officer

The dial-in number for the live call will be (651) 291-0618. No access code is required. The live call will also be webcast via the Company’s website at www.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 www.amerisourcebergen.com approximately two hours after the completion of the call and will remain available for thirty 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 US, dial (800) 475-6701. From outside the US, dial (320) 365-3844. The access code for the replay is 323936.

About AmerisourceBergen

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. With over $100 billion in annualized revenue, AmerisourceBergen is headquartered in Valley Forge, PA, and employs approximately 13,000 people. AmerisourceBergen is ranked #32 on the Fortune 500 list. For more information, go to www.amerisourcebergen.com.

AmerisourceBergen's Cautionary Note Regarding Forward-Looking Statements

Certain of the statements contained in this news 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,” “will,” “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 change in circumstances. These statements are not guarantees of future performance and are based on assumptions 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: changes in pharmaceutical market growth rates; the loss of one or more key customer or supplier relationships; the retention of key customer or supplier relationships under less favorable economics; changes in customer mix; customer delinquencies, defaults or insolvencies; supplier defaults or insolvencies; changes in branded and/or generic pharmaceutical manufacturers’ pricing and distribution policies or practices; adverse resolution of any contract or other dispute with customers or suppliers; federal and state government enforcement initiatives to detect and prevent suspicious orders of controlled substances and the diversion of controlled substances, federal and state prosecution of alleged violations of related laws and regulations, and any related litigation, including shareholder derivative lawsuits or other disputes relating to our distribution of controlled substances; qui tam litigation for alleged violations of fraud and abuse laws and regulations and/or any other laws and regulations governing the marketing, sale, purchase and/or dispensing of pharmaceutical products or services and any related litigation, including shareholder derivative lawsuits; changes in federal and state legislation or regulatory action affecting pharmaceutical product pricing or reimbursement policies, including under Medicaid and Medicare, and the effect of such changes on our customers; changes in regulatory or clinical medical guidelines and/or labeling for the pharmaceutical products we distribute; price inflation in branded and generic pharmaceuticals and price deflation in generics; greater or less than anticipated benefit from launches of the generic versions of previously patented pharmaceutical products; significant breakdown or interruption of our information technology systems; our inability to realize the anticipated benefits of the implementation of an enterprise resource planning (ERP) system; interest rate and foreign currency exchange rate fluctuations; risks associated with international business operations, including non-compliance with the U.S. Foreign Corrupt Practices Act, anti-bribery laws and economic sanctions and import laws and regulations; economic, business, competitive and/or regulatory developments in countries where we do business and/or operate outside of the United States; risks associated with the strategic, long-term relationship among Walgreen Co., Alliance Boots GmbH, and AmerisourceBergen, the occurrence of any event, change or other circumstance that could give rise to the termination, cross-termination or modification of any of the transaction documents among the parties (including, among others, the distribution agreement or the generics agreement), an impact on our earnings per share resulting from the issuance of the Warrants, an inability to realize anticipated benefits (including benefits resulting from participation in the Walgreens Boots Alliance Development GmbH joint venture), the disruption of AmerisourceBergen’s cash flow and ability to return value to its stockholders in accordance with its past practices, disruption of or changes in vendor, payer and customer relationships and terms, and the reduction of AmerisourceBergen’s operational, strategic or financial flexibility; the acquisition of businesses that do not perform as we expect or that are difficult for us to integrate or control; our inability to successfully complete any other transaction that we may wish to pursue from time to time; changes in tax laws or legislative initiatives that could adversely affect our tax positions and/or our tax liabilities or adverse resolution of challenges to our tax positions; increased costs of maintaining, or reductions in our ability to maintain, adequate liquidity and financing sources; volatility and deterioration of the capital and credit markets; natural disasters or other unexpected events that affect our operations; and other economic, business, competitive, legal, tax, regulatory and/or operational factors affecting our 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) and Item 1 (Business) in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2013 and elsewhere in that report and (ii) in other reports.

       
AMERISOURCEBERGEN CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share data)
(unaudited)
 
 
Three Three
Months Ended Months Ended
March 31, % of March 31, % of %
2014 Revenue 2013 Revenue Change
 
Revenue $ 28,455,903 100.00 % $ 20,523,668 100.00 % 38.6 %
 
Cost of goods sold   27,726,310     19,806,679   40.0 %
 
Gross profit (1) 729,593 2.56 % 716,989 3.49 % 1.8 %
 
Operating expenses:
Distribution, selling and administrative 376,341 1.32 % 323,536 1.58 % 16.3 %
Depreciation and amortization 44,494 0.16 % 39,868 0.19 % 11.6 %
Warrants 5,663 0.02 % 3,761 0.02 %
Employee severance, litigation and other   1,967   0.01 %   (299 ) - %
Total operating expenses 428,465 1.51 % 366,866 1.79 % 16.8 %
 
Operating income 301,128 1.06 % 350,123 1.71 % -14.0 %
 
Other (income) loss (3,783 ) -0.01 % 749 - %
 
Interest expense, net   19,474   0.07 %   18,510   0.09 % 5.2 %
 
Income before income taxes 285,437 1.00 % 330,864 1.61 % -13.7 %
 
Income taxes   105,360   0.37 %   126,721   0.62 % -16.9 %
 
Income from continuing operations 180,077 0.63 % 204,143 0.99 % -11.8 %
 
Loss from discontinued operations, net of income taxes   -     (158,509 )
 
Net income $ 180,077   0.63 % $ 45,634   0.22 %
 
 
Basic earnings per share:
Continuing operations $ 0.78 $ 0.89 -12.4 %
Discontinued operations   -     (0.69 )

Total

 

$ 0.78   $ 0.20  
 
Diluted earnings per share:
Continuing operations $ 0.76 $ 0.87 -12.6 %
Discontinued operations   -     (0.68 )

Total

 

$ 0.76   $ 0.19  
 
Weighted average common shares outstanding:
Basic 229,409 230,422
Diluted (2) 236,268 234,587 0.7 %
 

 

 
(1) Includes a $0.8 million gain from antitrust litigation settlements and a $102.8 million LIFO expense in the three months ended March 31, 2014. Includes a $3.5 million gain from antitrust litigation settlements and a $0.2 million LIFO credit in the three months ended March 31, 2013.
(2) Includes the dilutive effect of stock options, restricted stock, restricted stock units and the Warrants issued to Walgreens and Alliance Boots.
 
         
AMERISOURCEBERGEN CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share data)
(unaudited)
 
 
Six Six
Months Ended Months Ended
March 31, % of March 31, % of %
2014 Revenue 2013 Revenue Change
 
Revenue $ 57,632,265 100.00 % $ 41,583,479 100.00 % 38.6 %
 
Cost of goods sold   56,214,447     40,205,662   39.8 %
 
Gross profit (1) 1,417,818 2.46 % 1,377,817 3.31 % 2.9 %
 
Operating expenses:
Distribution, selling and administrative 740,401 1.28 % 644,236 1.55 % 14.9 %
Depreciation and amortization 88,444 0.15 % 78,552 0.19 % 12.6 %
Warrants 121,960 0.21 % 3,761 0.01 %
Employee severance, litigation and other   6,269   0.01 %   1,705   - %
Total operating expenses 957,074 1.66 % 728,254 1.75 % 31.4 %
 
Operating income 460,744 0.80 % 649,563 1.56 % -29.1 %
 
Other (income) loss (4,380 ) -0.01 % 726 - %
 
Interest expense, net   38,306   0.07 %   37,035   0.09 % 3.4 %
 
Income before income taxes 426,818 0.74 % 611,802 1.47 % -30.2 %
 
Income taxes   197,810   0.34 %   233,038   0.56 % -15.1 %
 
Income from continuing operations 229,008 0.40 % 378,764 0.91 % -39.5 %
 
Loss from discontinued operations, net of income taxes   (7,546 )   (164,519 )
 
Net income $ 221,462   0.38 % $ 214,245   0.52 %
 
 
Basic earnings per share:
Continuing operations $ 1.00 $ 1.64 -39.0 %
Discontinued operations (0.03 ) (0.71 )
Rounding   (0.01 )   -  
Total $ 0.96   $ 0.93  
 
Diluted earnings per share:
Continuing operations $ 0.97 $ 1.61 -39.8 %
Discontinued operations   (0.03 )   (0.70 )
Total $ 0.94   $ 0.91  
 
Weighted average common shares outstanding:
Basic 229,852 231,409
Diluted (2) 236,650 235,307 0.6 %
 
  (1) Includes a $21.9 million gain from antitrust litigation settlements and a $160.4 million LIFO expense in the six months ended March 31, 2014. Includes a $15.8 million gain from antitrust litigation settlements and a $1.0 million LIFO expense in the six months ended March 31, 2013.
(2) Includes the dilutive effect of stock options, restricted stock, restricted stock units and the Warrants issued to Walgreens and Alliance Boots.
 
AMERISOURCEBERGEN CORPORATION
RECONCILIATION OF CONTINUING OPERATIONS (GAAP) TO ADJUSTED CONTINUING OPERATIONS (NON-GAAP)
(dollars in thousands, except per share data)
(unaudited)
               
Three Months Ended March 31, 2014
GAAP

Dilution of
Unexercised
Warrants

Gain on
Antitrust
Litigation
Settlements

LIFO Expense

Acquisition
Related
Intangibles
Amortization

Warrant
Expense

Employee
Severance,
Litigation
and Other

Adjusted
Non-GAAP

 
Revenue $ 28,455,903 $ - $ - $ - $ - $ - $ 28,455,903
Cost of goods sold   27,726,310       849     (102,828 )   -     -     -     27,624,331  
Gross profit 729,593 (849 ) 102,828 - - - 831,572
Operating expenses   428,465       -     -     (5,825 )   (5,663 )   (1,967 )   415,010  
Operating income 301,128 (849 ) 102,828 5,825 5,663 1,967 416,562
Other income (3,783 ) - - - - - (3,783 )
Interest expense, net   19,474       -     -     -     -     -     19,474  
Income before income taxes 285,437 (849 ) 102,828 5,825 5,663 1,967 400,871
Income taxes (1)   105,360       (361 )   38,862     2,207     6,315     750     153,133  
Income from continuing operations $ 180,077     $ (488 ) $ 63,966   $ 3,618   $ (652 ) $ 1,217   $ 247,738  
 
Diluted earnings per share from continuing operations (2) $ 0.76 $ 0.01 $ - $ 0.27 $ 0.02 $ - $ 0.01 $ 1.06

(3)

 
Diluted weighted average common shares outstanding (2) 236,268 234,272 234,272 234,272 234,272 234,272 234,272 234,272
 
Percentages of revenue:
 
Gross profit 2.56 % 2.92 %
Operating expenses 1.51 % 1.46 %
Operating income 1.06 % 1.46 %
 
(1) The amount of Warrant expense deductible for tax purposes is based on the initial valuation of the Warrants. Therefore, the income tax rate on Warrant expense will vary by quarter depending upon the quarterly changes in the fair value of the Warrants.
 
(2) For the reconciling items and for the non-GAAP presentation, diluted earnings per share and diluted weighted average common shares outstanding have been adjusted to exclude the impact of the accounting dilution from the unexercised Warrants.
 
(3) The sum of the components may not equal the total due to rounding.
 
Note: Management considers GAAP financial measures as well as the presented non-GAAP financial measures in evaluating the company's operating performance. Therefore, we believe that our presentation of non-GAAP financial measures provides useful supplementary information to, and facilitates additional analysis by, investors.
 
 
AMERISOURCEBERGEN CORPORATION
RECONCILIATION OF CONTINUING OPERATIONS (GAAP) TO ADJUSTED CONTINUING OPERATIONS (NON-GAAP)
(dollars in thousands, except per share data)
(unaudited)
               
Three Months Ended March 31, 2013
GAAP

Gain on
Antitrust
Litigation
Settlements

LIFO Credit

Acquisition
Related
Intangibles
Amortization

Warrant Expense

Employee
Severance, Litigation
and Other

Adjusted
Non-GAAP

 
Revenue $ 20,523,668 $ - $ - $ - $ - $ - $ 20,523,668
Cost of goods sold   19,806,679     3,456     215     -     -     -     19,810,350  
Gross profit 716,989 (3,456 ) (215 ) - - - 713,318
Operating expenses   366,866     -     -     (6,098 )   (3,761 )   299     357,306  
Operating income 350,123 (3,456 ) (215 ) 6,098 3,761 (299 ) 356,012
Other loss 749 - - - - - 749
Interest expense, net   18,510     -     -     -     -     -     18,510  
Income before income taxes 330,864 (3,456 ) (215 ) 6,098 3,761 (299 ) 336,753
Income taxes   126,721     (1,320 )   (82 )   2,330     1,130     (114 )   128,665  
Income from continuing operations $ 204,143   $ (2,136 ) $ (133 ) $ 3,768   $ 2,631   $ (185 ) $ 208,088  
 
Diluted earnings per share from continuing operations $ 0.87 $ (0.01 ) $ - $ 0.02 $ 0.01 $ - $ 0.89

(1)

 
Diluted weighted average common shares outstanding 234,587 234,587 234,587 234,587 234,587 234,587 234,587
 
Percentages of revenue:
 
Gross profit 3.49 % 3.48 %
Operating expenses 1.79 % 1.74 %
Operating income 1.71 % 1.73 %
 
(1) The sum of the components may not equal the total due to rounding.
 
Note: Management considers GAAP financial measures as well as the presented non-GAAP financial measures in evaluating the company's operating performance. Therefore, we believe that our presentation of non-GAAP financial measures provides useful supplementary information to, and facilitates additional analysis by, investors.
 
 
AMERISOURCEBERGEN CORPORATION
RECONCILIATION OF CONTINUING OPERATIONS (GAAP) TO ADJUSTED CONTINUING OPERATIONS (NON-GAAP)
(dollars in thousands, except per share data)
(unaudited)
                 
Six Months Ended March 31, 2014
GAAP

Dilution of
Unexercised
Warrants

Gain on
Antitrust
Litigation
Settlements

LIFO Expense

Acquisition
Related
Intangibles
Amortization

Warrant
Expense

Employee
Severance,
Litigation
and Other

Adjusted
Non-GAAP

 
Revenue $ 57,632,265 $ - $ - $ - $ - $ - $ 57,632,265
Cost of goods sold   56,214,447       21,872     (160,410 )   -     -     -     56,075,909  
Gross profit 1,417,818 (21,872 ) 160,410 - - - 1,556,356
Operating expenses   957,074       -     -     (11,783 )   (121,960 )   (6,269 )   817,062  
Operating income 460,744 (21,872 ) 160,410 11,783 121,960 6,269 739,294
Other income (4,380 ) - - - - - (4,380 )
Interest expense, net   38,306       -     -     -     -     -     38,306  
Income before income taxes 426,818 (21,872 ) 160,410 11,783 121,960 6,269 705,368
Income taxes (1)   197,810       (8,243 )   60,450     4,441     12,630     2,363     269,451  
Income from continuing operations $ 229,008     $ (13,629 ) $ 99,960   $ 7,342   $ 109,330   $ 3,906   $ 435,917  
 
Diluted earnings per share from continuing operations (2) $ 0.97 $ 0.01 $ (0.06 ) $ 0.43 $ 0.03 $ 0.47 $ 0.02 $ 1.86

(3)

 
Diluted weighted average common shares outstanding (2) 236,650 234,838 234,838 234,838 234,838 234,838 234,838 234,838
 
Percentages of revenue:
 
Gross profit 2.46 % 2.70 %
Operating expenses 1.66 % 1.42 %
Operating income 0.80 % 1.28 %
 
(1) The amount of Warrant expense deductible for tax purposes is based on the initial valuation of the Warrants. Therefore, the income tax rate on Warrant expense will vary by quarter depending upon the quarterly changes in the fair value of the Warrants.
 
(2) For the reconciling items and for the non-GAAP presentation, diluted earnings per share and diluted weighted average common shares outstanding have been adjusted to exclude the impact of the accounting dilution from the unexercised Warrants.
 
(3) The sum of the components may not equal the total due to rounding.
 
Note: Management considers GAAP financial measures as well as the presented non-GAAP financial measures in evaluating the company's operating performance. Therefore, we believe that our presentation of non-GAAP financial measures provides useful supplementary information to, and facilitates additional analysis by, investors.
  AMERISOURCEBERGEN CORPORATION
RECONCILIATION OF CONTINUING OPERATIONS (GAAP) TO ADJUSTED CONTINUING OPERATIONS (NON-GAAP)
(dollars in thousands, except per share data)
(unaudited)
             
Six Months Ended March 31, 2013
GAAP

Gain on
Antitrust
Litigation
Settlements

LIFO Expense

Acquisition
Related
Intangibles
Amortization

Warrant
Expense

Employee
Severance,
Litigation
and Other

Adjusted
Non-GAAP

 
Revenue $ 41,583,479 $ - $ - $ - $ - $ - $ 41,583,479
Cost of goods sold   40,205,662     15,764     (952 )   -     -     -     40,220,474  
Gross profit 1,377,817 (15,764 ) 952 - - - 1,363,005
Operating expenses   728,254     -     -     (12,197 )   (3,761 )   (1,705 )   710,591  
Operating income 649,563 (15,764 ) 952 12,197 3,761 1,705 652,414
Other loss 726 - - - - - 726
Interest expense, net   37,035     -     -     -     -     -     37,035  
Income before income taxes 611,802 (15,764 ) 952 12,197 3,761 1,705 614,653
Income taxes   233,038     (5,978 )   362     4,638     1,130     644     233,834  
Income from continuing operations $ 378,764   $ (9,786 ) $ 590   $ 7,559   $ 2,631   $ 1,061   $ 380,819  
 
Diluted earnings per share from continuing operations $ 1.61 $ (0.04 ) $ - $ 0.03 $ 0.01 $ - $ 1.62

(1)

 
Diluted weighted average common shares outstanding 235,307 235,307 235,307 235,307 235,307 235,307 235,307
 
Percentages of revenue:
 
Gross profit 3.31 % 3.28 %
Operating expenses 1.75 % 1.71 %
Operating income 1.56 % 1.57 %
  (1) The sum of the components may not equal the total due to rounding.
 
Note: Management considers GAAP financial measures as well as the presented non-GAAP financial measures in evaluating the company's operating performance. Therefore, we believe that our presentation of non-GAAP financial measures provides useful supplementary information to, and facilitates additional analysis by, investors.
     
AMERISOURCEBERGEN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
 
 
ASSETS
March 31, September 30,
2014 2013
Current assets:
Cash and cash equivalents $ 696,730 $ 1,231,006
Accounts receivable, net 6,506,412 6,051,920
Merchandise inventories 8,493,269 6,981,494
Prepaid expenses and other   63,616   129,231
Total current assets 15,760,027 14,393,651
 
Property and equipment, net 850,847 803,561
Other long-term assets   3,750,373   3,721,426
 
Total assets $ 20,361,247 $ 18,918,638
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
Accounts payable $ 14,909,626 $ 13,335,792
Other current liabilities   1,590,305   1,534,843
Total current liabilities 16,499,931 14,870,635
 
Long-term debt 1,396,948 1,396,606
 
Other long-term liabilities 318,853 331,652
 
Stockholders' equity   2,145,515   2,319,745
 
Total liabilities and stockholders' equity $ 20,361,247 $ 18,918,638
 
AMERISOURCEBERGEN CORPORATION
SUMMARY SEGMENT INFORMATION
(dollars in thousands)
(unaudited)
     
 
Three Months Ended March 31,
Revenue 2014 2013 % Change
 
Pharmaceutical Distribution $ 27,932,495 $ 20,054,159 39 %
Other 572,503 514,942 11 %
Intersegment eliminations   (49,095 )   (45,433 ) 8 %
 
Revenue $ 28,455,903   $ 20,523,668   39 %
 
 
 
 
Three Months Ended March 31,
Operating Income 2014 2013 % Change
 
Pharmaceutical Distribution $ 372,929 $ 321,077 16 %
Other 43,633 34,935 25 %
Gain on antitrust litigation settlements 849 3,456
LIFO (expense) credit (102,828 ) 215
Acquisition related intangibles amortization (5,825 ) (6,098 )
Warrant expense (5,663 ) (3,761 )
Employee severance, litigation and other   (1,967 )   299  
 
Operating income $ 301,128   $ 350,123   -14 %
 
 
 
Percentages of revenue:
 
Pharmaceutical Distribution
Gross profit 2.49 % 2.93 %
Operating expenses 1.15 % 1.33 %
Operating income 1.34 % 1.60 %
 
Other
Gross profit 23.82 % 24.40 %
Operating expenses 16.20 % 17.61 %
Operating income 7.62 % 6.78 %
 
AmerisourceBergen Corporation (GAAP)
Gross profit 2.56 % 3.49 %
Operating expenses 1.51 % 1.79 %
Operating income 1.06 % 1.71 %
 
AmerisourceBergen Corporation (Non-GAAP)
Gross profit 2.92 % 3.48 %
Operating expenses 1.46 % 1.74 %
Operating income 1.46 % 1.73 %
 
AMERISOURCEBERGEN CORPORATION
SUMMARY SEGMENT INFORMATION
(dollars in thousands)
(unaudited)
     
 
Six Months Ended March 31,
Revenue 2014 2013 % Change
 
Pharmaceutical Distribution $ 56,555,086 $ 40,653,207 39 %
Other 1,176,635 1,019,992 15 %
Intersegment eliminations   (99,456 )   (89,720 ) 11 %
 
Revenue $ 57,632,265   $ 41,583,479   39 %
 
 
 
 
Six Months Ended March 31,
Operating Income 2014 2013 % Change
 
Pharmaceutical Distribution $ 659,711 $ 587,754 12 %
Other 79,583 64,660 23 %
Gain on antitrust litigation settlements 21,872 15,764
LIFO expense (160,410 ) (952 )
Acquisition related intangibles amortization (11,783 ) (12,197 )
Warrant expense (121,960 ) (3,761 )
Employee severance, litigation and other   (6,269 )   (1,705 )
 
Operating income $ 460,744   $ 649,563   -29 %
 
 
 
Percentages of revenue:
 
Pharmaceutical Distribution
Gross profit 2.28 % 2.74 %
Operating expenses 1.11 % 1.30 %
Operating income 1.17 % 1.45 %
 
Other
Gross profit 22.69 % 24.23 %
Operating expenses 15.92 % 17.89 %
Operating income 6.76 % 6.34 %
 
AmerisourceBergen Corporation (GAAP)
Gross profit 2.46 % 3.31 %
Operating expenses 1.66 % 1.75 %
Operating income 0.80 % 1.56 %
 
AmerisourceBergen Corporation (Non-GAAP)
Gross profit 2.70 % 3.28 %
Operating expenses 1.42 % 1.71 %
Operating income 1.28 % 1.57 %
 
AMERISOURCEBERGEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
   
Six Six
Months Ended Months Ended
March 31, March 31,
2014 2013
 
Operating Activities:
Net income $ 221,462 $ 214,245
Loss from discontinued operations   7,546     164,519  
Income from continuing operations 229,008 378,764
Adjustments to reconcile income from continuing operations to net cash
provided by operating activities

231,572

141,401
Changes in operating assets and liabilities  

(340,381

)   178,059  
Net cash provided by operating activities - continuing operations 120,199 698,224
Net cash (used in) provided by operating activities - discontinued operations   (7,546 )   45,431  
Net cash provided by operating activities   112,653     743,655  
 
Investing Activities:
Capital expenditures (125,392 ) (88,377 )
Other   (2,743 )   81  
Net cash used in investing activities - continuing operations (128,135 ) (88,296 )
Net cash used in investing activities - discontinued operations   -     (9,643 )
Net cash used in investing activities   (128,135 )   (97,939 )
 
Financing Activities:
Purchases of common stock (251,961 ) (284,691 )
Exercises of stock options 59,675 65,850
Cash dividends on common stock (108,397 ) (98,203 )
Purchases of capped call options (211,397 ) -
Other   (6,714 )   (6,086 )
Net cash used in financing activities - continuing operations (518,794 ) (323,130 )
Net cash used in financing activities - discontinued operations   -     (41,897 )
Net cash used in financing activities   (518,794 )   (365,027 )
 
(Decrease) increase in cash and cash equivalents (534,276 ) 280,689
 
Cash and cash equivalents at beginning of period   1,231,006     1,066,608  
 
Cash and cash equivalents at end of period $ 696,730   $ 1,347,297  

Source: AmerisourceBergen Corporation

AmerisourceBergen Corporation
Barbara Brungess
Vice President, Corporate & Investor Relations
610-727-7199
bbrungess@amerisourcebergen.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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