VALLEY FORGE, Pa.--(BUSINESS WIRE)--Jan. 24, 2003--
Record Operating Revenue Exceeds $11 Billion Driven By a 14 Percent
Increase in Pharmaceutical Distribution
AmerisourceBergen Corporation (NYSE:ABC) today reported record
results for its fiscal first quarter ended December 31, 2002.
In compliance with recently issued Security and Exchange
Commission regulations, the following results are presented on a GAAP
basis.
Fiscal First Quarter Highlights
-
Diluted earnings per share of $0.84, up 33 percent.
-
Net income of $92.7 million, up 37 percent.
-
Record operating revenue of $11.1 billion, up 15 percent.
-
Return On Committed Capital (ROCC) of 25.5 percent.
"This was another outstanding quarter at AmerisourceBergen," said
R. David Yost, AmerisourceBergen's Chief Executive Officer. "We
delivered record operating revenues with our first $11 billion quarter
and achieved excellent performance across all our businesses. Total
operating expenses as a percentage of operating revenue reached a
historic low. Strong working capital management and operating margin
expansion combined to drive excellent earnings per share growth.
"In January 2003, we expanded our position in the pharmaceutical
supply channel with the completion of two acquisitions, Bridge
Medical, Inc. and US Bioservices Corporation. Bridge provides the
leading bedside bar-code scanning software available today, improving
patient safety in the dispensing of pharmaceuticals. As part of our
Specialty Group, US Bioservices broadens our reimbursement consulting
capability and expands our presence with manufacturers in the delivery
of high-value pharmaceutical therapies. We expect to continue to seek
accretive acquisitions that will enhance our position in this
channel."
Discussion of Results
Diluted earnings per share for the first quarter of fiscal 2003
were $0.84, a 33 percent increase over the $0.63 in the prior year's
first quarter. Special items included in these results are a $0.84
million credit, net of tax, in first quarter of fiscal 2003 and a $4.5
million charge, net of tax, in the same period of the previous fiscal
year.
The fiscal 2003 credit is related to the reversal of accruals
recorded in the fourth quarter of fiscal year 2001 for facility
consolidation and employee severance activities, and the charge
reflects merger integration activities in the first quarter of fiscal
2002.
The earnings per share impact of the special items was an increase
of $0.01 in the first quarter of fiscal 2003 and a decrease of $0.04
in the first quarter of fiscal 2002.
AmerisourceBergen's operating revenue, which excludes bulk
deliveries to customer warehouses, was $11.1 billion in the first
quarter of fiscal 2003 compared to $9.7 billion for the same period
last year, a 15 percent increase.
"Our excellent operational performance in the December quarter was
driven by our on-going focus on customer service, continued
contributions from generic pharmaceuticals, strong merger integration
cost savings as we build our new pharmaceutical distribution network,
and solid working capital management," said Kurt J. Hilzinger,
AmerisourceBergen's President and Chief Operating Officer.
"The Company's leading customer service position was reinforced
again during the quarter, as Premier, one of the largest hospital
purchasing organizations in the U.S., named AmerisourceBergen the top
national pharmaceutical distributor in a recent customer service
satisfaction survey. The Company was also the leader in all previous
surveys."
"During the quarter, we made significant strides in creating our
new pharmaceutical distribution network," he continued. "Construction
is underway on two of our planned six new distribution centers, one in
Columbus, Ohio, and one in Sacramento, California. We also completed
the expansion of our Mansfield, Massachusetts, facility and
subsequently consolidated our other Boston area facility into the
newly expanded distribution center. We have now consolidated eight of
the 27 distribution centers scheduled for consolidation."
"In our PharMerica segment, strong operating revenue growth of 13
percent reflects improved growth in our long-term care business as
well as continued strong growth in PharMerica's workers' compensation
business," said Hilzinger. "Improved operating practices and
reductions in bad debt expenses drove operating expenses down and
expanded operating margins in the quarter."
Segment Review
AmerisourceBergen operates in two segments: Pharmaceutical
Distribution (which includes the AmerisourceBergen Drug Company and
AmerisourceBergen Specialty Group operations) and PharMerica (which
includes the institutional pharmacy and workers' compensation
fulfillment businesses).
Intersegment sales of $195.5 million in the first quarter of
fiscal 2003 from AmerisourceBergen Drug Company to PharMerica, which
are included in the Pharmaceutical Distribution segment operating
revenue, are eliminated for consolidated reporting purposes.
Pharmaceutical Distribution Segment
Operating revenue in the first quarter of fiscal 2003 increased to
$10.9 billion compared with $9.5 billion in the first quarter of
fiscal year 2002, a 14 percent increase.
Pharmaceutical Distribution customer mix in the first quarter of
fiscal 2003 was 55 percent institutional and 45 percent retail. Both
customer groups had double-digit growth in the quarter.
Operating income was $162.9 million in the first quarter of fiscal
2003, up 17 percent from $139.5 million for the same quarter last
year. For the first quarter of fiscal 2003, operating income as a
percentage of operating revenue was 1.49 percent, a 3 basis point
improvement from the first quarter of fiscal 2002.
Lower total operating expenses as a percentage of operating
revenue offset lower gross margins, which were impacted by the
Company's customer mix and the competitive environment.
Total operating expenses as a percentage of operating revenue in
the first quarter of fiscal 2003 were 2.10 percent, a 13 basis point
improvement over the same quarter last year, driven by merger
integration cost savings, customer mix and operating efficiencies.
AmerisourceBergen Specialty Group, with annualized revenue of more
than $3 billion, continued its strong quarterly performance, building
significant positions in oncology, blood plasma, and injectables
distribution as well as growing its manufacturing services businesses.
PharMerica
PharMerica's operating revenue for the first quarter of fiscal
2003 increased 13 percent to $402.8 million from $355.4 million in the
previous year's first quarter.
Operating income for the first quarter of fiscal 2003 was $23.5
million, up 22 percent from $19.3 million for the same quarter last
year. Operating income as a percentage of operating revenue increased
41 basis points in the quarter ended December 31, 2002 to 5.84 percent
from 5.43 percent in the prior year.
Looking Ahead
"For the remainder of fiscal year 2003, we expect to grow
operating revenue approximately 13 percent, and earnings per share 20
percent, excluding the impact of special items," said Yost. "ROCC is
expected to remain well above our 20 percent long-term target, and we
remain confident in our ability to achieve annual merger integration
cost savings of approximately $150 million by the end of fiscal year
2004, followed by additional cost savings as we complete the build out
of our distribution network."
Conference Call
The Company will host a conference call to discuss the results at
11:00 a.m. Eastern Standard Time on January 24, 2003. Participating in
the conference call will be: R. David Yost, Chief Executive Officer;
Kurt J. Hilzinger, President and Chief Operating Officer; and Michael
D. DiCandilo, Senior Vice President and Chief Financial Officer.
To access the live conference call via telephone:
Dial in: (888) 428-4480 from inside the U.S., no access code required
or (651) 291-0900 from outside the U.S., no access code
required.
To access the live webcast:
Go to the Quarterly Webcasts section on the Investor Relations page
at http://www.amerisourcebergen.com.
A replay of the telephone call and webcast will be available from 4:15
p.m. January 24, 2003 until 11:59 p.m. January 31, 2003.
To access the replay via telephone:
Dial in: (800) 475-6701 from within the U.S., access code: 668095
(320) 365-3844 from outside the U.S., access code: 668095
To access the archived webcast:
Go to the Quarterly Webcasts section on the Investor Relations page at
http://www.amerisourcebergen.com.
About AmerisourceBergen
AmerisourceBergen (NYSE:ABC) is the largest pharmaceutical
services company in the United States dedicated solely to the
pharmaceutical supply chain.
It is the leading distributor of pharmaceutical products and
services to the hospital systems/acute care market, physician's
offices, alternate care and mail order facilities, independent
community pharmacies, and regional chain pharmacies. The Company is
also a leader in the institutional pharmacy marketplace.
With more than $40 billion in annualized operating revenue,
AmerisourceBergen is headquartered in Valley Forge, PA, and employs
more than 13,000 people. For more information go to
www.amerisourcebergen.com.
Forward-Looking Statements
This news release may contain certain "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. These statements
are based on management's current expectations and are subject to
uncertainty and changes in circumstances.
Actual results may vary materially from the expectations contained
in the forward-looking statements. Forward-looking statements may
include statements addressing future financial and operating results
of AmerisourceBergen and the benefits and aspects of the 2001 merger
between AmeriSource Health Corporation and Bergen Brunswig
Corporation.
The following factors, among others, could cause actual results to
differ materially from those described in the forward-looking
statements: the risk that the businesses of AmeriSource and Bergen
Brunswig will not be integrated successfully; failure to obtain and
retain expected synergies; and other economic, business, competitive
and/or regulatory factors affecting the business of AmerisourceBergen
generally.
More detailed information about these factors is set forth in
AmerisourceBergen's filings with the Securities and Exchange
Commission, including its Annual Report on Form 10-K for fiscal 2002.
AmerisourceBergen is under no obligation to (and expressly
disclaims any such obligation to) update or alter any forward-looking
statements whether as a result of new information, future events or
otherwise.
AMERISOURCEBERGEN CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share data)
(unaudited)
Three Three
Months Ended % of Months Ended % of
Dec. 31, Operating Dec. 31, Operating %
2002 Revenue 2001 Revenue Change
---------- --------- ---------- --------- -------
Revenue:
Operating
revenue $11,106,905 100.00% $9,686,276 100.00% 15%
Bulk deliveries
to customer
warehouses 1,327,628 1,382,504 -4%
------------ ------------
Total revenue 12,434,533 11,068,780
Cost of goods sold 11,913,108 10,597,347 12%
------------ ------------
Gross profit 521,425 4.69% 471,433 4.87% 11%
Operating
expenses:
Distribution,
selling and
administrative 317,682 2.86% 297,592 3.07% 7%
Depreciation and
amortization 17,269 0.16% 15,047 0.16% 15%
Facility
consolidations
and employee
severance (1,381) -0.01% - 0.00% N/A
Merger costs - 0.00% 7,497 0.08% N/A
------------ ------------
Operating income 187,855 1.69% 151,297 1.56% 24%
Equity in losses
of affiliates and
other 183 0.00% 1,731 0.02% -89%
Interest expense 34,385 0.31% 36,993 0.38% -7%
------------ ------------
Income before
taxes 153,287 1.38% 112,573 1.16% 36%
Income taxes 60,548 0.55% 44,690 0.46% 35%
------------ ------------
Net income $92,739 0.83% $67,883 0.70% 37%
============ ===========
Earnings per
share:
Basic $0.87 $0.65
Diluted $0.84 $0.63
Weighted average
common shares
outstanding:
Basic 106,790 103,736
Diluted 113,402 111,182
AMERISOURCEBERGEN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
ASSETS
December September
31, 30, $
2002 2002 Change
----------- ----------- --------
Current assets:
Cash and cash equivalents $366,776 $663,340 ($296,564)
Accounts receivable, net 2,328,398 2,222,156 106,242
Merchandise inventories 6,381,477 5,437,878 943,599
Prepaid expenses and other 19,120 26,263 (7,143)
----------- ----------- --------
Total current assets 9,095,771 8,349,637 746,134
Long-term assets 2,863,401 2,863,375 26
----------- ----------- --------
Total assets $11,959,172 $11,213,012 $746,160
=========== =========== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable $5,542,195 $5,367,837 $174,358
Current portion of long-term debt 60,932 60,819 113
Other current liabilities 752,215 670,861 81,354
----------- ----------- --------
Total current liabilities 6,355,342 6,099,517 255,825
Long-term debt, less current portion 2,141,772 1,756,494 385,278
Other liabilities 42,034 40,663 1,371
Stockholders' equity 3,420,024 3,316,338 103,686
----------- ----------- --------
Total liabilities
and stockholders'
equity $11,959,172 $11,213,012 $746,160
=========== =========== ========
AMERISOURCEBERGEN CORPORATION
SUMMARY SEGMENT INFORMATION
(dollars in thousands)
(unaudited)
Three Months Ended December 31,
-------------------------------------
Operating Revenue 2002 2001 % Change
----------------- -------------------------------------
Pharmaceutical Distribution $10,899,570 $9,522,076 14%
PharMerica 402,842 355,415 13%
Intersegment Eliminations (195,507) (191,215) 2%
----------- -----------
Operating revenue $11,106,905 $9,686,276 15%
=========== ===========
Three Months Ended December 31,
-------------------------------------
Operating Income 2002 2001 % Change
---------------- -------------------------------------
Pharmaceutical Distribution $162,935 $139,484 17%
PharMerica 23,539 19,310 22%
Merger costs, facility
consolidations and employee
severance 1,381 (7,497) 118%
----------- -----------
Operating income $187,855 $151,297 24%
=========== ===========
Percentages of operating
revenue:
Pharmaceutical Distribution
Gross profit 3.59% 3.70%
Operating expenses 2.10% 2.23%
Operating income 1.49% 1.46%
PharMerica
Gross profit 32.18% 33.62%
Operating expenses 26.33% 28.18%
Operating income 5.84% 5.43%
AmerisourceBergen
Corporation
Gross profit 4.69% 4.87%
Operating expenses 3.00% 3.31%
Operating income 1.69% 1.56%
AMERISOURCEBERGEN CORPORATION
EARNINGS PER SHARE
(In thousands, except per share data)
(unaudited)
Basic earnings per share is computed on the basis of the weighted
average number of shares of common stock outstanding during the
periods presented. Diluted earnings per share 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 diluted earnings per share calculation considers 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
December 31,
2002 2001
------- -------
Net income $92,739 $67,883
Interest expense - convertible
subordinated notes, net of income
taxes 2,489 2,481
------- -------
Income available to common
stockholders $95,228 $70,364
======= =======
Weighted average common shares
outstanding - basic 106,790 103,736
Effect of dilutive securities:
Options to purchase common stock 948 1,782
Convertible subordinated notes 5,664 5,664
------- -------
Weighted average common shares
outstanding - diluted 113,402 111,182
======= =======
Earnings per share:
Basic $0.87 $0.65
Diluted $0.84 $0.63
| CONTACT: |
AmerisourceBergen Corporation, Valley Forge |
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Michael N. Kilpatric, 610/727-7118 |
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mkilpatric@amerisourcebergen.com |
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