AmeriSource Reports Record Fiscal Third Quarter Revenues and Earnings; Operating Revenue Up 19 Percent, EPS Increased 23 Percent

July 27, 2000

VALLEY FORGE, Pa.--(BW HealthWire)--July 27, 2000--AmeriSource Health Corporation (NYSE:AAS) today reported record results for its fiscal third quarter and nine months ended June 30, 2000.

Operating revenue increased 19 percent, or $466 million, to $2.9 billion in the quarter compared to $2.5 billion for the same period last year. Net income for the quarter, was up 15 percent to $25.1 million, which included the positive impact of $696,000 for the reversal of restructuring reserves. Net income for same quarter last year was $21.8 million. Fiscal third quarter 2000 earnings per share increased 23 percent to $.48 per diluted share from $.39 per diluted share in the prior year. Excluding the reversal, net income and earnings per diluted share for the quarter were $24.4 million and $.47, respectively.

For the first nine months of fiscal 2000, operating revenue increased 19 percent to $8.6 billion compared to $7.2 billion in the prior year. Net income for the first nine months of fiscal 2000 increased by 19 percent to $71.0 million or $1.37 per diluted share from $59.9 million or $1.16 per diluted share for the same period one year ago. Excluding the reversal in the third quarter, net income and earnings per diluted share for the fiscal 2000 nine-month period were $70.3 million and $1.36, respectively. Subsequent discussion of the third quarter and nine months does not include the restructuring reversal.

R. David Yost, AmeriSource President and Chief Executive Officer, said, "This was another outstanding quarter for AmeriSource. Return on committed capital (ROCC), our key financial measurement of success because it best reflects our decisions in managing our assets and operating the Company, was a strong 24.3 percent, well above our goal. We continued to deliver strong, profitable revenue growth in all market segments and across all regions.

"Our market leading acute-care hospital segment, which we now call 'Health Systems,' continues to strengthen as we build business through buying group alliances such as Novation and Premier. Our current discussions with Novation customers during the critical summer renewal period are extremely promising, and we expect to add significant new revenue in the first quarter of FY2001.

"Our recent win of $1.2 billion in business over three years from Anthem Prescription Management and Option Care has accelerated our growing Alternate Site segment, and the new, five-year contract with Medi-Cap Pharmacies--valued at over $1 billion--leads our retail chain efforts. Independent retail pharmacies, where AmeriSource is a major player, continue to grow same store sales in double digits."

Kurt J. Hilzinger, AmeriSource Chief Operating Officer, continued, "Positive impact from our centralization initiatives was also clearly evident in the quarter with improved procurement performance, expense control and capital productivity. In addition, we added new offerings for our customers as we continually focus on ways to improve their businesses. The acquisition of Pharmaceutical Healthcare Solutions brings the leading indigent care pharmaceutical recovery program and new consulting services to the Health Systems market. The roll out of iECHO, our internet-based B2B portal for ordering and information, already has more than 1,000 participants, and Virtual Internet Pharmacy (VIP), our on-line e-commerce service for independent and chain retail pharmacies, is growing rapidly. Earlier this month we signed a strategic alliance with healthAtoZ.com, which will bring the content of this leading wellness and disease management site to all VIP websites."

For the third quarter of fiscal 2000, the Company's gross margin as a percentage of operating revenue was 4.44 percent versus 4.60 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 business. The Company's customer mix in the current quarter consists of 51 percent institutional, which encompasses Health Systems and Alternate Site, and 49 percent retail, including independent and chain pharmacies.

Operating expenses as a percentage of operating revenue declined 11 basis points to 2.80 percent in the third quarter of fiscal 2000 from 2.91 percent a year ago. This reduction was driven by the shift in customer mix, increased efficiencies of scale and cost reductions related to centralization efforts.

The Company's operating income advanced 15 percent to $47.8 million in the third quarter of fiscal year 2000 from $41.5 million for the same quarter last year.

For the first nine months of fiscal year 2000 operating income increased 13 percent over the same period last year. For the fiscal third quarter, operating margin, as a percentage of operating revenue, was 1.64 percent compared to 1.69 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 2.0 percent to $8.4 million, reflecting the net impact of lower average levels of debt and lower borrowing spreads offset by higher interest rates.

In looking ahead, Mr. Yost said, "Our customer portfolio has never been stronger and our organization has never been more solid. AmeriSource operates in an industry with good fundamentals, and we are exceptionally well positioned in the healthcare supply channel. Our focus on ROCC underlies our continuing commitment to our long-term goals: being recognized by our customers as the highest quality service provider, delivering strong and consistent financial performance, and building value for our shareholders."

About AmeriSource

AmeriSource Health Corporation, with more than $11 billion in operating revenue, is a leading distributor of pharmaceutical and related healthcare 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 24 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 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 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. -0-

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


                     Three                 Three
                  Months Ended   % of   Months Ended   % of
                    June 30,   Operating  June 30,   Operating   %
                     2000       Revenue   1999(a)     Revenue  Change
                  ------------  ------- ------------  ------- -------

Revenue:
 Operating
  revenue           $2,921,424  100.00%   $2,455,797  100.00%   19%
 Bulk deliveries
  to customer
  warehouses            10,282                12,740
                  ------------          ------------
Total revenue        2,931,706             2,468,537

Cost of
 goods sold:
 Operating cost
  of goods sold      2,791,794   95.56%    2,342,772   95.40%   19%
 Cost of goods
  sold - bulk
  deliveries            10,282                12,740
                  ------------          ------------
Total cost of
 goods sold          2,802,076             2,355,512
                  ------------          ------------

Gross profit           129,630    4.44%      113,025    4.60%   15%

Operating
 expenses:
 Selling and
  administrative        77,944    2.67%       67,330    2.74%   16%
 Depreciation and
  amortization           3,910    0.13%        4,228    0.17%   -8%
 Facility
  consolidations
  and employee
  severance             (1,123)  -0.04%            0    0.00%   N/A
                  ------------          ------------

Operating income        48,899    1.67%       41,467    1.69%   18%

Interest expense         8,383    0.29%        8,218    0.33%    2%
Interest expense
 - adjustment of
 common stock put
 warrant to
 fair value                  0                (1,499)  -0.06%  -100%
                  ------------          ------------

Income before
 taxes                  40,516    1.39%       34,748    1.41%   17%

Taxes on income         15,396    0.53%       12,988    0.53%   19%
                  ------------          ------------

Net income             $25,120    0.86%      $21,760    0.89%   15%
                  ============          ============


Earnings per
 share (a):
 Basic                   $0.49                 $0.43
 Assuming
  dilution (b)           $0.48                 $0.39

Weighted average
 common shares
 outstanding (a):
 Basic                  51,583                50,731
 Assuming
  dilution              52,086                51,666

(a) Prior year restated for July 1999 C. D. Smith merger accounted for as a pooling of interests. (b) Note - earnings per share assuming dilution before facility consolidations and employee severance was $0.47 for the three months ended June 30, 2000.

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


                     Nine                  Nine
                  Months Ended   % of   Months Ended   % of
                    June 30,   Operating  June 30,   Operating   %
                     2000       Revenue   1999(a)     Revenue  Change
                  ------------  ------- ------------  ------- -------

Revenue:
 Operating
  revenue           $8,582,219  100.00%   $7,191,317   100.00%   19%
 Bulk deliveries
  to customer
  warehouses            31,072                37,126
                  ------------          ------------
Total revenue        8,613,291             7,228,443

Cost of
 goods sold:
 Operating cost
  of goods sold      8,201,256   95.56%    6,844,180     95.17%  20%
 Cost of goods
  sold - bulk
  deliveries            31,072                37,126
                  ------------          ------------
Total cost of
 goods sold          8,232,328             6,881,306
                  ------------          ------------

Gross profit           380,963    4.44%      347,137      4.83%  10%

Operating
 expenses:
 Selling and
  administrative       224,512    2.62%      206,741      2.87%   9%
 Depreciation and
  amortization          11,826    0.14%       12,785      0.18%  -8%
 Facility
  consolidations
  and employee
  severance             (1,123)  -0.01%            0      0.00%  N/A
                  ------------          ------------

Operating income       145,748    1.70%      127,611      1.77%  14%

Interest expense        31,203    0.36%       29,884      0.42%   4%
Interest expense -
 adjustment of
 common stock put
 warrant to fair
 value                       0    0.00%          334      0.00% -100%
                  ------------          ------------

Income before
 taxes                 114,545    1.33%       97,393      1.35%   18%

Taxes on income         43,527    0.51%       37,519      0.52%   16%
                  ------------          ------------

Net income             $71,018    0.83%      $59,874      0.83%   19%
                  ============          ============


Earnings per
 share (a):
 Basic                   $1.38                 $1.18
 Assuming
  dilution (b)           $1.37                 $1.16

Weighted average
 common shares
 outstanding (a):
 Basic                  51,414                50,540
 Assuming
  dilution              51,770                51,695

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

(b) Note - earnings per share assuming dilution before facility consolidations and employee severance was $1.36 for the nine months ended June 30, 2000.

                    AMERISOURCE HEALTH CORPORATION
                      CONSOLIDATED BALANCE SHEETS
                        (dollars in thousands)



   ASSETS                  (unaudited)
                             June 30,     September 30,   Increase
                              2000           1999        (Decrease)
                           -----------    -----------    -----------
Current assets:
 Cash and cash
  equivalents              $    36,160    $    59,497    ($   23,337)
 Accounts  receivable,
  less allowance for
  doubtful accounts            595,397        612,520        (17,123)
 Merchandise
  inventories                1,629,073      1,243,153        385,920
 Prepaid expenses
  and other                      5,564          4,836            728
                           -----------    -----------    -----------
   Total current
    assets                   2,266,194      1,920,006        346,188

Property and
 equipment, net                 64,884         64,384            500

Other assets, less
 accumulated
 amortization                   71,702         76,209         (4,507)
                           -----------    -----------    -----------

   Total assets            $ 2,402,780    $ 2,060,599    $   342,181
                           ===========    ===========    ===========


   LIABILITIES AND
    STOCKHOLDERS' EQUITY

Current liabilities:
 Accounts payable          $ 1,449,529    $ 1,175,619    $   273,910
 Accrued expenses
  and other                     51,645         50,329          1,316
 Accrued income taxes           15,289         10,854          4,435
 Deferred  income taxes         99,667         90,481          9,186
                           -----------    -----------    -----------
   Total current
    liabilities              1,616,130      1,327,283        288,847

Long-term debt:
 Revolving credit
  facility                     149,591        225,227        (75,636)
 Receivables
  securitization
  financing                    375,000        325,000         50,000
 Other debt                      8,288          8,478           (190)

Other liabilities                8,628          8,334            294

Stockholders' equity:
 Common stock and
  capital in excess
  of par value                 274,977        267,315          7,662
 Accumulated deficit           (23,614)       (94,632)        71,018
 Cost of common stock
  in treasury                   (6,220)        (6,220)             0
 Note receivable
  from ESOP                          0           (186)           186
                           -----------    -----------    -----------
    Total
     stockholders'
     equity                    245,143        166,277         78,866
                           -----------    -----------    -----------

    Total liabilities
     and stockholders'
     equity                $ 2,402,780    $ 2,060,599    $   342,181
                           ===========    ===========    ===========