Fiscal Year 2009 Diluted EPS from Continuing Operations Expected to Grow in a Range of 7 Percent to 12 PercentFiscal Fourth Quarter Highlights
--
Total revenue of $17.2 billion, up 5 percent.
--
Diluted earnings per share from continuing operations of $0.73, up 18
percent.
--
Pharmaceutical Distribution operating margin of 1.19 percent, up 17
basis points.
--
Cash flow from operations of $514 million.
--
$126 million of share repurchases.
Fiscal Year 2008 Highlights
--
Record total revenue of $70.2 billion, up 7 percent.
--
Record diluted earnings per share from continuing operations of $2.89,
including $0.03 in special charges, a 14 percent increase.
--
Pharmaceutical Distribution operating margin of 1.19 percent, up 7
basis points.
--
Cash flow from operations of $737 million; capital expenditures of
$137 million.
--
$680 million of share repurchases.
"Our results from continuing operations in the
September quarter and fiscal year 2008 reflect exceptional performance
and resiliency across our businesses," said R.
David Yost, AmerisourceBergen's President and
Chief Executive Officer. "In a pharmaceutical
market where growth was soft by historical standards, our strong
performance was based on: above-market revenue growth, an excellent
contribution from our PRxO(R)
Generics program, a diverse customer mix, and outstanding expense
management. Our working capital management remains exceptional with
lower average receivable-days-outstanding and average
inventory-days-on-hand. Our balance sheet remains very strong. And
looking ahead, our demonstrated discipline in fiscal 2008 will serve us
well in fiscal year 2009 as we expect to achieve diluted earnings per
share in the range of $3.08 to $3.25, a 7 percent to 12 percent increase
over diluted earnings per share from continuing operations in the
previous fiscal year."
Consolidated Results
--
Total Revenue: In the fourth
quarter of fiscal 2008, total revenue was $17.2 billion compared to
$16.3 billion for the same period last year, a 5 percent increase,
reflecting a 6 percent increase in the Pharmaceutical Distribution
Segment. For fiscal year 2008 total revenue was $70.2 billion, up 7
percent from the $65.7 billion in the previous fiscal year.
--
Operating Income: Driven by a 23
percent increase in operating income in the Pharmaceutical
Distribution Segment, consolidated operating income in the fiscal 2008
fourth quarter increased 15 percent to $202.7 million from $177.0
million in the previous fiscal year's fourth quarter. In fiscal year
2008's fourth quarter, special charges, primarily for employee
severance, had a $3.0 million negative impact on consolidated
operating income, partially offset by a gain of $1.9 million from
antitrust litigation settlements. In the previous fiscal year's fourth
quarter, special items had a net positive impact of $7.9 million; a
$28 million write-down to market value of tetanus-diphtheria vaccine
inventory in the Specialty Group negatively impacted operating income;
and PharMerica Long-Term Care (LTC), which was spun off in July 2007,
contributed $3.8 million. For fiscal year 2008, consolidated operating
income was up 5 percent from the previous fiscal year to $827.9
million, and included $12.4 million in special charges reflected in
facility consolidations, employee severance and other, which were
offset in part by a $3.5 million gain from antitrust litigation
settlements. In fiscal year 2007, special items were a net benefit of
$33.8 million primarily due to the positive impact of antitrust
litigation settlements.
--
Tax Rate: The effective tax rate
for the fourth quarter of fiscal 2008 was 38.7 percent, compared to
35.4 percent in the previous fiscal year's fourth quarter. For fiscal
year 2008, the effective tax rate was 38.4 percent, which the Company
expects will approximate its effective tax rate going forward.
--
Earnings Per Share: In the
fourth quarter of fiscal 2008, diluted earnings per share from
continuing operations were up 18 percent to $0.73 compared to $0.62 in
the previous fiscal year's fourth quarter. In last fiscal year's
fourth quarter, special items had a $0.03 benefit, PharMerica LTC
contributed $0.01, the lower effective tax rate provided a $0.03
benefit, and the tetanus-diphtheria vaccine inventory write-down had a
negative impact of $0.10. For fiscal year 2008, diluted earnings per
share from continuing operations were $2.89, up 14 percent over last
year's $2.53. Special items had a net negative impact of $0.03 in
fiscal 2008 and a net benefit of $0.09 in the previous fiscal year.
PharMerica LTC added $0.08 to fiscal year 2007.
--
Shares Outstanding: For the
fourth quarter of fiscal year 2008, average diluted shares outstanding
were 158.5 million, down 18.4 million shares from the previous fiscal
year's fourth quarter due to share repurchases, net of option
exercises. For fiscal year 2008 average diluted shares outstanding
were 162.5 million down 25.4 million from the previous fiscal year.
AmerisourceBergen consists of the following two reportable segments:
Pharmaceutical Distribution (which includes the operations of
AmerisourceBergen Drug Corporation, Specialty Group, Packaging Group and
Bellco Health) and Other (which includes PharMerica LTC through July 31,
2007, and excludes PMSI, which has been reclassified to discontinued
operations).
Pharmaceutical Distribution Segment
Results
--
Total Revenue: In the fourth
quarter of fiscal 2008, total revenue of $17.2 billion was a 6 percent
increase over the same quarter in the previous fiscal year, due to a 6
percent increase in AmerisourceBergen Drug Corporation revenue, which
included 3 percent from Bellco Health, and a 6 percent increase in
Specialty Group, which experienced double-digit growth in its
non-oncology distribution businesses and 2 percent growth in oncology
distribution. Across all of AmerisourceBergen, anemia drugs used in
oncology represented approximately 2 percent of total revenues in the
fiscal year 2008 fourth quarter, reflecting a decrease of 23 percent
compared to the previous year's fourth
quarter and a 14 percent decrease sequentially from the third quarter
of fiscal 2008.
--
Gross Profit: As a percentage of
total revenue, gross profit increased 16 basis points to 3.06 percent
in the fiscal 2008 fourth quarter compared to the same period in the
previous year. This margin performance was driven by increased
contributions from generic drugs, a $12 million settlement of disputed
fees with a supplier in the Specialty Group, and the prior year's
fourth quarter $28 million write-down to market value of
tetanus-diphtheria vaccine inventory. The LIFO charge in the fiscal
2008 fourth quarter was $3.4 million compared with a $4.9 million
credit in the previous year's fourth
quarter. For the 2008 fiscal year, the LIFO charge was $21 million
compared to a $2 million charge last year, reflecting significant
increases in brand-name drug price inflation.
--
Operating Expenses: As a
percentage of total revenue, operating expenses in the fiscal fourth
quarter of 2008 did not change from the same period in the previous
fiscal year, due to improved productivity and the benefits of the
Company's cE2 cost management initiative.
The improved performance in the fiscal 2008 fourth quarter offset
fixed asset write-downs of $5.6 million related to IT assets abandoned
as a result of the Company's Business
Transformation Program and $5.3 million of intangible asset
write-downs involving certain smaller business units.
--
Operating Income: In the fiscal
2008 fourth quarter, operating income increased a robust 23 percent to
$203.7 million compared with the previous year's
fourth quarter due to solid revenue growth, improved gross profit, and
strong expense management.
--
Operating Margin: As a
percentage of total revenue, the operating margin in the fiscal 2008
fourth quarter was 1.19 percent, a significant 17 basis point increase
over the same period in the previous fiscal year. For fiscal year
2008, the operating margin increased an impressive 7 basis points to
1.19 percent, exceeding expectations.
Other Segment Results
--
PMSI: AmerisourceBergen
completed the sale of its PMSI workers'
compensation business to H.I.G. Capital, LLC in October 2008. In the
fiscal 2008 year and fourth quarter, the Other Segment had no results
because the PMSI workers' compensation
business was reclassified as a discontinued operation.
--
PharMerica LTC: In the fourth
quarter of fiscal year 2007, PharMerica LTC contributed revenue and
operating income of $104.3 million and $3.8 million, respectively. For
fiscal year 2007, revenue and operating income from PharMerica LTC
contributed $1.0 billion and $25.0 million, respectively.
Fiscal Year 2009 Expectations
"We expect diluted earnings per share for
fiscal year 2009 to be in a range of $3.08 to $3.25, which represents an
increase of 7 percent to 12 percent over the $2.89 from continuing
operations in fiscal 2008," said Yost. "Key
assumptions supporting this diluted earnings per share range are: total
revenue growth of between 1 percent and 3 percent, reflecting expected
market conditions, our customer mix, and the 3 percent negative impact
from the loss on July 1, 2008 of a large retail drug chain; operating
margin expansion in the low to mid single digit basis point range; and
free cash flow in the range of $460 million to $535 million, which
includes capital expenditures in the $140 million range. Also, subject
to the approval of our Board of Directors and market conditions, we
expect to spend approximately $350 million to repurchase our common
shares in fiscal 2009."
Conference Call
The Company will host a conference call to discuss its results at 11:00
a.m. Eastern Time on October 30, 2008. Participating in the conference
call will be: R. David Yost, President and Chief Executive Officer and
Michael D. DiCandilo, Executive Vice President, Chief Financial Officer
and Chief Operating Officer for AmerisourceBergen Drug Corporation.
To access the live conference call via
telephone:
Dial in: (612) 332-0923, 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
1:00 p.m. October 30, 2008 until 11:59 p.m. November 6, 2008. The
Webcast replay will be available for 30 days.
To access the replay via telephone:
Dial in: 800-475-6701 from within the U.S., access code: 963753
(320) 365-3844 from outside the U.S., access code: 963753
To access the archived webcast:
Go to the Quarterly Webcasts section on the Investor Relations
page at http://www.amerisourcebergen.com.
About AmerisourceBergen
AmerisourceBergen is one of the world's largest pharmaceutical services
companies serving the United States, Canada and selected global markets.
Servicing both pharmaceutical manufacturers and healthcare providers in
the pharmaceutical supply channel, the Company provides drug
distribution and related services designed to reduce costs and improve
patient outcomes. AmerisourceBergen's service solutions range from
pharmacy automation and pharmaceutical packaging to reimbursement and
pharmaceutical consulting services. With more than $70 billion in annual
revenue, AmerisourceBergen is headquartered in Valley Forge, PA, and
employs approximately 11,000 people. AmerisourceBergen is ranked #28 on
the Fortune 500 list. For more information, go to www.amerisourcebergen.com.
Forward-Looking Statements
This news release contains forward-looking statements about
AmerisourceBergen's future business and
financial performance, estimates and prospects. These statements are
based on our current expectations and are subject to uncertainty and
change in circumstances. 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;
changes in customer mix; customer or supplier defaults or insolvencies;
changes in 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;
changes in U.S. legislation or regulatory action affecting
pharmaceutical product pricing or reimbursement policies, including
under Medicaid and Medicare; changes in regulatory or clinical medical
guidelines and/or labeling for the pharmaceuticals we distribute,
including erythropoiesis-stimulating agents (ESAs) used to treat anemia
patients; price inflation in branded pharmaceuticals and price deflation
in generics; significant breakdown or interruption of our information
technology systems; success of integration, restructuring or systems
initiatives; interest rate and foreign currency exchange rate
fluctuations; economic, business, competitive and/or regulatory
developments in Canada, the United Kingdom and elsewhere outside of the
United States; the impact of divestitures or 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 legislation or adverse resolution of challenges to our tax
positions; our ability to maintain adequate liquidity and financing
sources; continued volatility and further deterioration of the capital
markets; and other economic, business, competitive, legal, tax,
regulatory and/or operational factors affecting our business generally.
Our most recent annual report on Form 10-K, quarterly reports on Forms
10-Q and current reports 8-K (which we may revise or supplement in
future reports filed to the SEC) provide additional information about
these risks, uncertainties and other matters. We do not undertake to
update our forward-looking statements.
AMERISOURCEBERGEN CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share data)
(unaudited)
Three Three
Months Ended % of Months Ended % of
September 30, Total September 30, Total %
2008 Revenue 2007 Revenue Change
Revenue:
Operating revenue $16,661,922 $15,199,152 10 %
Bulk deliveries to customer warehouses 495,924 1,093,327 -55 %
Total revenue 17,157,846 100.00 % 16,292,479 100.00 % 5 %
Cost of goods sold 16,630,393 15,790,736 5 %
Gross profit 527,453 3.07 % 501,743 3.08 % 5 %
Operating expenses:
Distribution, selling and administrative 303,279 1.77 % 311,924 1.91 % -3 %
Depreciation and amortization 18,531 0.11 % 20,427 0.13 % -9 %
Facility consolidations, employee severance and other 2,951 0.02 % (7,582 ) -0.05 % N/M
Operating income 202,692 1.18 % 176,974 1.09 % 15 %
Other loss (income) 1,514 0.01 % (954 ) -0.01 % N/M
Interest expense, net 13,415 0.08 % 7,920 0.05 % 69 %
Income from continuing operations before income taxes 187,763 1.09 % 170,008 1.04 % 10 %
Income taxes 72,701 0.42 % 60,256 0.37 % 21 %
Income from continuing operations 115,062 0.67 % 109,752 0.67 % 5 %
Loss from discontinued operations, net of tax (155 ) (22,176 )
Net income $114,907 $87,576 31 %
Basic earnings per share:
Continuing operations $0.73 $0.63 16 %
Discontinued operations - (0.13 )
Total $0.73 $0.50
Diluted earnings per share:
Continuing operations $0.73 $0.62 18 %
Discontinued operations - (0.13 )
Rounding - 0.01
Total $0.73 $0.50
Weighted average common shares outstanding:
Basic 157,011 174,467
Diluted (1) 158,491 176,902
(1) Includes the dilutive effect of stock options and restricted
stock.
AMERISOURCEBERGEN CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share data)
(unaudited)
Fiscal Fiscal
Year Ended % of Year Ended % of
September 30, Total September 30, Total %
2008 Revenue 2007 Revenue Change
Revenue:
Operating revenue $67,518,933 $61,266,792 10 %
Bulk deliveries to customer warehouses 2,670,800 4,405,280 -39 %
Total revenue 70,189,733 100.00 % 65,672,072 100.00 % 7 %
Cost of goods sold 68,142,731 63,453,013 7 %
Gross profit 2,047,002 2.92 % 2,219,059 3.38 % -8 %
Operating expenses:
Distribution, selling and administrative 1,124,683 1.60 % 1,343,575 2.05 % -16 %
Depreciation and amortization 82,081 0.12 % 84,675 0.13 % -3 %
Facility consolidations, employee severance and other 12,377 0.02 % 2,072 - N/M
Operating income 827,861 1.18 % 788,737 1.20 % 5 %
Other loss 2,027 - 3,004 - -33 %
Interest expense, net 64,496 0.09 % 32,244 0.05 % 100 %
Income from continuing operations before income taxes 761,338 1.08 % 753,489 1.15 % 1 %
Income taxes 292,274 0.42 % 278,686 0.42 % 5 %
Income from continuing operations 469,064 0.67 % 474,803 0.72 % -1 %
Loss from discontinued operations, net of tax (218,505 ) (5,636 )
Net income $250,559 $469,167
Basic earnings per share:
Continuing operations $2.92 $2.56 14 %
Discontinued operations (1.36 ) (0.03 )
Total $1.56 $2.53
Diluted earnings per share:
Continuing operations $2.89 $2.53 14 %
Discontinued operations (1.34 ) (0.03 )
Rounding (0.01 ) -
Total $1.54 $2.50
Weighted average common shares outstanding:
Basic 160,642 185,181
Diluted (1) 162,460 187,886
(1) Includes the dilutive effect of stock options and restricted
stock.
AMERISOURCEBERGEN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
ASSETS
September 30, September 30,
2008 2007
Current assets:
Cash and cash equivalents $878,114 $640,204
Short-term investment securities available-for-sale - 467,419
Accounts receivable, net 3,415,452 3,415,772
Merchandise inventories 4,211,775 4,097,811
Prepaid expenses and other 55,914 31,828
Assets held for sale 43,691 284,818
Total current assets 8,604,946 8,937,852
Property and equipment, net 552,159 493,647
Other long-term assets 2,995,866 2,878,565
Total assets $12,152,971 $12,310,064
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $7,261,765 $6,964,594
Current portion of long-term debt 1,719 476
Other current liabilities 821,531 872,703
Liabilities held for sale 17,759 26,337
Total current liabilities 8,102,774 7,864,110
Long-term debt, less current portion 1,187,412 1,227,077
Other long-term liabilities 152,740 119,157
Stockholders' equity 2,710,045 3,099,720
Total liabilities and stockholders' equity $12,152,971 $12,310,064
AMERISOURCEBERGEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Fiscal Fiscal
Year Ended Year Ended
September 30, September 30,
2008 2007
Operating Activities:
Net income $250,559 $469,167
Loss from discontinued operations 218,505 5,636
Income from continuing operations 469,064 474,803
Adjustments to reconcile income from continuing operations to net 220,419 182,051
cash provided by operating activities
Changes in operating assets and liabilities 31,022 551,766
Net cash provided by operating activities - continuing operations 720,505 1,208,620
Net cash provided by (used in) operating activities - discontinued 16,564 (716 )
operations
Net cash provided by operating activities 737,069 1,207,904
Investing Activities:
Capital expenditures (137,309 ) (111,278 )
Cost of acquired companies, net of cash acquired (169,230 ) (86,266 )
Proceeds from sales of property and equipment 3,020 8,077
Proceeds from sales of other assets 1,878 5,205
Net short-term investment activity 467,419 (399,579 )
Net cash provided by (used in) investing activities - continuing 165,778 (583,841 )
operations
Net cash used in investing activities - discontinued operations (2,357 ) (90,596 )
Net cash provided by (used in) investing activities 163,421 (674,437 )
Financing Activities:
Net (repayments) borrowings (16,396 ) 101,753
Purchases of common stock (679,684 ) (1,434,385 )
Exercises of stock options 84,394 94,620
Cash dividends on common stock (48,674 ) (37,249 )
Proceeds from borrowing related to PharMerica Long-Term Care - 125,000
distribution
Deferred financing costs and other (2,057 ) (4,270 )
Net cash used in financing activities - continuing operations (662,417 ) (1,154,531 )
Net cash used in financing activities - discontinued operations (163 ) -
Net cash used in financing activities (662,580 ) (1,154,531 )
Increase (decrease) in cash and cash equivalents 237,910 (621,064 )
Cash and cash equivalents at beginning of year 640,204 1,261,268
Cash and cash equivalents at end of year $878,114 $640,204
AMERISOURCEBERGEN CORPORATION
SUMMARY SEGMENT INFORMATION
(dollars in thousands)
(unaudited)
Three Months Ended September 30,
Total Revenue 2008 2007 % Change
Pharmaceutical Distribution $17,157,846 $16,256,986 6 %
Other (1) - 104,278 N/M
Intersegment eliminations - (68,785 ) N/M
Total revenue $17,157,846 $16,292,479 5 %
Three Months Ended September 30,
Operating Income 2008 2007 % Change
Pharmaceutical Distribution $203,737 $165,347 23 %
Other (1) - 3,770 N/M
Facility consolidations, employee severance and other (2,951 ) 7,582 N/M
Gain on antitrust litigation settlements 1,906 275 N/M
Operating income $202,692 $176,974 15 %
Percentages of total revenue:
Pharmaceutical Distribution
Gross profit 3.06 % 2.90 %
Operating expenses 1.88 % 1.88 %
Operating income 1.19 % 1.02 %
Other
Gross profit N/A 29.49 %
Operating expenses N/A 25.88 %
Operating income N/A 3.62 %
AmerisourceBergen Corporation
Gross profit 3.07 % 3.08 %
Operating expenses 1.89 % 1.99 %
Operating income 1.18 % 1.09 %
(1) Other includes the operating results of PharMerica Long-Term
Care for the month ended July 31, 2007.
AMERISOURCEBERGEN CORPORATION
SUMMARY SEGMENT INFORMATION
(dollars in thousands)
(unaudited)
Fiscal Year Ended September 30,
Total Revenue 2008 2007 % Change
Pharmaceutical Distribution $70,189,733 $65,340,623 7 %
Other (1) - 1,045,663 N/M
Intersegment eliminations - (714,214 ) N/M
Total revenue $70,189,733 $65,672,072 7 %
Fiscal Year Ended September 30,
Operating Income 2008 2007 % Change
Pharmaceutical Distribution $836,747 $729,978 15 %
Other (1) - 24,994 N/M
Facility consolidations, employee severance and other (12,377 ) (2,072 ) N/M
Gain on antitrust litigation settlements 3,491 35,837 -90 %
Operating income $827,861 $788,737 5 %
Percentages of total revenue:
Pharmaceutical Distribution
Gross profit 2.91 % 2.87 %
Operating expenses 1.72 % 1.75 %
Operating income 1.19 % 1.12 %
Other
Gross profit N/A 29.37 %
Operating expenses N/A 26.98 %
Operating income N/A 2.39 %
AmerisourceBergen Corporation
Gross profit 2.92 % 3.38 %
Operating expenses 1.74 % 2.18 %
Operating income 1.18 % 1.20 %
(1) Other includes the operating results of PharMerica Long-Term
Care for the ten-months ended July 31, 2007.
SOURCE: AmerisourceBergen Corporation
AmerisourceBergen Corporation
Michael N. Kilpatric, 610-727-7118
mkilpatric@amerisourcebergen.com