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 |
|---|
|
|---|
|
|---|