Acquisition of U.S.’s Largest Independent Wholesaler Enhances &
Expands Strategic Scale, Strengthens Support to Community Pharmacy and
Drives Long-Term, Durable Value
VALLEY FORGE, Pa. & SPRINGFIELD, Ill.--(BUSINESS WIRE)--Nov. 20, 2017--
AmerisourceBergen Corporation (NYSE:ABC) and H. D. Smith today announced
that the companies have signed a definitive agreement under which
AmerisourceBergen will purchase H. D. Smith, the largest independent
wholesaler in the U.S., for $815 million in cash. AmerisourceBergen
plans to fund the acquisition through the issuance of new long-term
debt. The acquisition is expected to be slightly accretive to adjusted
diluted earnings per share (EPS) in fiscal year 2018, and to achieve
full run-rate synergies and be approximately $0.15 accretive to the
Company’s adjusted EPS in fiscal year 20201. This acquisition
was not contemplated in the previous guidance the Company provided for
fiscal year 2018. Based on the estimated contribution of this
acquisition, the Company now expects revenue growth to be in the range
of 8 percent to 11 percent, adjusted operating income growth to be in
the range of 4 percent to 7 percent and Pharmaceutical Distribution
Services segment operating income growth in the range of 4 percent to 7
percent. AmerisourceBergen is reaffirming the rest of its previously
announced fiscal 2018 financial guidance. The transaction is subject to
regulatory review and other closing conditions and is expected to close
in early calendar 2018.
“The acquisition of H. D. Smith – a best-in-class private distributor
with facilities across the country and a diversified customer base –
strengthens our core business and expands and enhances our strategic
scale in U.S. pharmaceutical distribution,” said Steven H. Collis,
Chairman, President and Chief Executive Officer of AmerisourceBergen.
“This acquisition also builds upon our foundation and meaningfully
expands our support for independent community pharmacies. We remain
committed to building our business to meet the evolving needs of our
customers, driving long-term value for the healthcare system and
delivering compelling returns for our shareholders. Importantly, we are
united in our responsibility to create healthier futures.”
“H. D. Smith has always shared our passion for supporting its customers
– across community pharmacy, health systems, long-term care and
specialty distribution,” said Robert P. Mauch, Group President,
Pharmaceutical Distribution and Strategic Global Sourcing at
AmerisourceBergen. “The established legacy of H. D. Smith in serving
community pharmacies is strongly aligned with and complements the
services AmerisourceBergen provides through Good Neighbor Pharmacy
and Elevate Provider Network. Together, we will continue to offer the
differentiated support independent community pharmacies need to thrive
in an evolving healthcare marketplace. We welcome the opportunity to
provide valuable solutions, along with our industry leading customer
experience, to all of these healthcare providers.”
Since 1954, H. D. Smith has built a reputation for excellence and
customer-focused healthcare distribution. The company is among the
largest national wholesalers and, with 10 distribution centers across
the U.S., it provides full-line distribution of brand, generic and
specialty drugs, as well as high-value services and solutions for
manufacturers and healthcare providers. H. D. Smith customers include
retail pharmacies, specialty pharmacies, long-term care facilities,
institutional / hospital systems and independent physicians and clinics.
H. D. Smith subsidiaries Triplefin, a pharmaceutical brand support
provider, and Arete Pharmacy Network, a pharmacy services administrative
organization, are not included in this transaction.
“Our ultimate priority and commitment has been, and continues to be, the
needs of our customers and trading partners,” said Dale Smith, Chairman
and CEO, H. D. Smith Holding Company. “Working toward a common goal, H.
D. Smith associates have been committed to providing the best customer
experience with a focus on honesty and integrity. We remain proud of our
contributions to improve healthcare across the country, and we are
honored to have supported the success of community healthcare providers
and our manufacturer partners. We believe AmerisourceBergen will
continue the strong foundation set by my father. In joining
AmerisourceBergen, we are confident our mission will continue, and
remain a point of pride for the H. D. Smith family and its enduring
legacy.”
Citi acted as financial advisor, and Cravath, Swaine & Moore LLP
provided legal advice to AmerisourceBergen. Morgan Stanley acted as
financial advisor, and Schiff Hardin LLP provided legal advice to H. D.
Smith.
About AmerisourceBergen
AmerisourceBergen provides pharmaceutical products, value-driving
services and business solutions that improve access to care. Tens of
thousands of healthcare providers, veterinary practices and livestock
producers trust us as their partner in the pharmaceutical supply chain.
Global manufacturers depend on us for services that drive commercial
success for their products. Through our daily work—and powered by our
20,000 associates—we are united in our responsibility to create
healthier futures. AmerisourceBergen is ranked #11 on the Fortune 500,
with more than $150 billion in annual revenue. The company is
headquartered in Valley Forge, Pa. and has a presence in 50+ countries.
Learn more at amerisourcebergen.com.
About H. D. Smith
H. D. Smith is the largest, privately held national wholesaler, with a
complete line of healthcare products and solutions to improve patient
care. The company creates value and an extraordinary customer experience
by impacting the healthcare supply chain. Bridging the gap between
manufacturer and patient, H. D. Smith’s specialty solutions division
offers a unique suite of strategic programs for patient access on behalf
of pharmaceutical suppliers. Headquartered in Springfield, Illinois, H.
D. Smith also operates CompleteCare Pharmacy, Smith Medical Partners,
Triplefin and Valley Wholesale Drug.
AmerisourceBergen's Cautionary Note Regarding Forward-Looking
Statements
Certain of the statements contained in this press 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: unfavorable trends
in brand and generic pharmaceutical pricing, including in rate or
frequency of price inflation or deflation; competition and industry
consolidation of both customers and suppliers resulting in increasing
pressure to reduce prices for our products and services; changes in
pharmaceutical market growth rates; changes in the United States
healthcare and regulatory environment, including changes that could
impact prescription drug reimbursement under Medicare and Medicaid;
increasing governmental regulations regarding the pharmaceutical supply
channel and pharmaceutical compounding; declining reimbursement rates
for pharmaceuticals; federal and state government enforcement
initiatives to detect and prevent suspicious orders of controlled
substances and the diversion of controlled substances; increased public
concern over the abuse of opioid medications; prosecution or suit by
federal, state and other governmental entities of alleged violations of
laws and regulations regarding controlled substances, and any related
disputes, including shareholder derivative lawsuits; increased federal
scrutiny and litigation, including qui tam litigation, for alleged
violations of laws and regulations governing the marketing, sale,
purchase and/or dispensing of pharmaceutical products or services, and
associated reserves and costs, including the reserve recorded in
connection with the proceedings with the United States Attorney’s Office
for the Eastern District of New York; material adverse resolution of
pending legal proceedings; the retention of key customer or supplier
relationships under less favorable economics or the adverse resolution
of any contract or other dispute with customers or suppliers; changes to
customer or supplier payment terms; risks associated with the strategic,
long-term relationship between Walgreens Boots Alliance, Inc. and the
Company, including with respect to the pharmaceutical distribution
agreement and/or the global sourcing arrangement; changes in tax laws or
legislative initiatives that could adversely affect the Company’s tax
positions and/or the Company’s tax liabilities or adverse resolution of
challenges to the Company’s tax positions; regulatory action in
connection with the production, labeling or packaging of products
compounded by our compounded sterile preparations (CSP) business;
failure to realize the expected benefits from our reorganization and
other business process initiatives; managing foreign expansion,
including non-compliance with the U.S. Foreign Corrupt Practices Act,
anti-bribery laws and economic sanctions and import laws and
regulations; declining economic conditions in the United States and
abroad; financial market volatility and disruption; substantial defaults
in payment, material reduction in purchases by or the loss, bankruptcy
or insolvency of a major customer; the loss, bankruptcy or insolvency of
a major supplier; changes to the customer or supplier mix; malfunction,
failure or breach of sophisticated information systems to operate as
designed; risks generally associated with data privacy regulation and
the international transfer of personal data; natural disasters or other
unexpected events that affect the Company’s operations; the impairment
of goodwill or other intangible assets, resulting in a charge to
earnings; the acquisition of businesses that do not perform as expected,
or that are difficult to integrate or control, including the integration
of H. D. Smith and PharMEDium, or the inability to capture all of the
anticipated synergies related thereto or to capture the anticipated
synergies within the expected time period; risks associated with
uncertainties as to the timing and completion of the acquisition of H.
D. Smith, including relating to the timing, receipt and terms and
conditions of any required governmental and regulatory approvals for the
proposed transaction that could reduce anticipated benefits or cause the
parties to abandon the transaction; the possibility that various
conditions to the consummation of the acquisition of H. D. Smith may not
be satisfied or waived; the effects of disruption from the transactions
on the respective businesses of the Company and H. D. Smith and the fact
that the announcement and pendency of the transactions may make it more
difficult to establish or maintain relationships with employees,
suppliers, customers and other business partners; the disruption of the
Company’s cash flow and ability to return value to its stockholders in
accordance with its past practices; interest rate and foreign currency
exchange rate fluctuations; and other economic, business, competitive,
legal, tax, regulatory and/or operational factors affecting the
Company’s 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) in the Company’s Annual Report on Form 10-K for
the fiscal year ended September 30, 2016 and elsewhere in that report
and (ii) in other reports filed by the Company pursuant to the
Securities Exchange Act.
1 The Company does not provide forward-looking guidance on a
GAAP basis as certain financial information, the probable significance
of which cannot be determined, is not available and cannot be reasonably
estimated.

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Source: AmerisourceBergen Corporation
AmerisourceBergen
Investors
/ Financial Media:
Keri P. Mattox
Vice
President, Corporate & Investor Relations
610-576-7801
kmattox@amerisourcebergen.com
or
Bennett
S. Murphy
Director, Corporate & Investor Relations
610-727-3693
bmurphy@amerisourcebergen.com
or
Business
/ Trade Media:
Gabe Weissman
Group Vice
President, Communications
610-727-3696
gweissman@amerisourcebergen.com
or
H.D.
Smith
Media:
Sarah Kinkade, MBA
Public
Relations Manager
217-747-0672
sarah.kinkade@hdsmith.com
or
Inquiries
regarding Triplefin or Arete
Pharmacy Network:
Carolyn
Webb
Vice President of Strategic Planning
217-747-8125
carolyn.webb@hdsmith.com