AmeriSource Third Quarter Earnings Increase 21% On Strong Underlying Revenue Growth.

MALVERN, Pa.--(BUSINESS WIRE)--July 29, 1999--

AmeriSource Health Corporation (NYSE:AAS), one of the nation's leading wholesale pharmaceutical distributors, today reported its financial results for its third fiscal quarter ended June 30, 1999.

Net income advanced 21% to $20.0 million compared to $16.5 million recorded for the same period last year. Diluted earnings per share for the quarter rose 21% to $.41 compared to $.34 for the same period a year ago continuing the Company's long history of consistently meeting or exceeding its internal goal of 20% growth or greater.

For the first nine months of fiscal 1999, AmeriSource recorded net income of $58.2 million, an increase of 23% from the $47.2 million recorded for the same period one year ago. Diluted earnings per share of $1.19 for the first nine months of fiscal 1999 represents an increase of 23% from the $.97 recorded in the first nine months of fiscal 1998.

Operating revenue for the third quarter and the first nine months of fiscal 1999 was $2.3 billion and $6.6 billion, respectively. On a year-to-year comparison, the 7% increase for the quarter reflects improved sales momentum. Net of previously announced customer losses from the same period last year, operating revenue increased 14%.

For the third quarter of fiscal 1999, the Company's gross margin, as a percentage of operating revenue was 4.61% compared to 4.75% for the same period one year ago, reflecting among other factors, a shift in customer mix.

Continued focus on cost reduction and productivity improvements contributed to reduced operating expenses as a percentage of operating revenues by 11 basis points to 2.89% in the third quarter of fiscal 1999 versus 3.00% a year ago. The Company's operating margin was 1.72% in the third quarter of fiscal 1999 compared to 1.75% one year ago.

R. David Yost, President and CEO of AmeriSource said, "Within the last 30 days, we have won a number of significant new customer contracts including American Pharmacist Services Corporation, a Midwest retail buying group with incremental revenue of $120 million annually; and, Adventist Health Systems (a member of Premier, Inc.) with annual incremental revenue of $60 million. Our Western region, representing an important and fast growing market, has continued to contribute to the Company's success through significant growth in both revenue and earnings." He also said, "As expected, revenue momentum continues to build and we should see an even stronger fourth quarter. This will set a strong base for further growth in our fiscal year 2000."

Interest expense showed a significant decrease of 33% to $6.4 million as compared to $9.6 million for the same period last year. Good operating margins in combination with disciplined capital usage drove the Company's return on committed capital up to 25.8%, well in excess of its stated goal of 20% or greater.

Mr. Yost concluded his remarks with, "Our return on committed capital was very strong. This key measure of investment productivity is a long-term driver of shareholder value and reflects the discipline we employ in running our business."

Subsequent to the close of the quarter, AmeriSource finalized the acquisition of C. D. Smith Healthcare on schedule. C. D. Smith shareholders received 2.69 million shares of AmeriSource common stock for all of the outstanding common shares of C. D. Smith.

Kurt J. Hilzinger, AmeriSource COO said, "This business combination was an excellent strategic fit for both organizations and the long-term growth strategy of AmeriSource. C. D. Smith has consistently demonstrated growth and operating efficiencies, and when the operating models of both companies are combined, should yield further efficiencies while growing market share in the Midwest and in New England. An integration plan has been formulated and we are proceeding accordingly."

AmeriSource Health Corporation is a Fortune 200 company with revenue of $8.7 billion for fiscal year 1998. The Company is one of the nation's leading pharmaceutical distributors and serves the healthcare industry from a nationwide network of 22 strategically located distribution centers. News and additional information about AmeriSource are available 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, continued industry consolidation, changes in customer mix, changes in pharmaceutical manufacturers' pricing and distribution policy, the loss of one or more key customer or supplier relationships and other matters contained in the Company's Form 10-K for fiscal year 1998 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              Months
                  Ended     % of      Ended        % of
                 June 30, Operating   June 30,   Operating     %
                  1999     Revenue     1998       Revenue    Change
              ----------- --------- -----------  ---------  --------

Revenue:
 Operating
  revenue     $2,251,247  100.00%   $2,094,510    100.00%        7%
 Bulk
  deliveries
  to customer
  warehouses      10,102                34,682
              -----------           -----------
Total revenue  2,261,349             2,129,192

Cost of
 goods sold:
 Operating
  cost of
  goods sold   2,147,576   95.39%    1,995,041     95.25%        8%
 Cost of goods
  sold - bulk
  deliveries      10,102                34,682
              -----------           -----------
Total cost of
 goods sold    2,157,678             2,029,723
              -----------           -----------

Gross profit     103,671    4.61%       99,469      4.75%        4%

Operating
 expenses:
 Selling and
  admin-
  istrative       61,231    2.72%       59,009      2.82%        4%
 Depreciation      3,495    0.16%        3,549      0.17%       -2%
 Amortization        257    0.01%          343      0.02%      -25%
              -----------           -----------

Operating
 income           38,688    1.72%       36,568      1.75%        6%

Interest
 expense           6,413    0.28%        9,558      0.46%      -33%
              -----------           -----------

Income before
 taxes            32,275    1.43%       27,010      1.29%       19%

Taxes on
 income           12,264    0.54%       10,538      0.50%       16%
              -----------           -----------

Net income       $20,011    0.89%      $16,472      0.79%       21%
              ===========           ===========


Earnings per
 share: (a)
 Basic             $0.41                 $0.34
 Assuming
  dilution          0.41                  0.34

Weighted
 average
 common
 shares
 outstanding: (a)
 Basic            48,713                47,967
 Assuming
  dilution        49,080                48,559



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


                   Nine                 Nine
                   Months               Months
                   Ended      % of      Ended        % of
                  June 30,  Operating  June 30,    Operating    %
                   1999      Revenue     1998       Revenue  Change
                ----------- --------- -----------  ---------- -------

Revenue:
 Operating
  revenue       $6,580,135   100.00%  $6,541,355     100.00%      1%
 Bulk
  deliveries
  to customer
  warehouses        26,773                85,749
                -----------           -----------
Total revenue    6,606,908             6,627,104

Cost of
 goods sold:
 Operating cost
  of goods sold  6,263,545    95.19%   6,223,267      95.14%      1%
 Cost of goods
  sold - bulk
  deliveries        26,773                85,749
                -----------           -----------
Total cost of
 goods sold      6,290,318             6,309,016
                -----------           -----------

Gross profit       316,590     4.81%     318,088       4.86%      0%

Operating
 expenses:
 Selling and
  administrative   187,354     2.85%     195,461       2.99%     -4%
 Depreciation       10,495     0.16%      10,062       0.15%      4%
 Amortization          767     0.01%         986       0.02%    -22%
                -----------           -----------

Operating income   117,974     1.79%     111,579       1.71%      6%

Interest expense    24,064     0.37%      34,250       0.52%    -30%
                -----------           -----------

Income before
 taxes              93,910     1.43%      77,329       1.18%     21%

Taxes on income     35,686     0.54%      30,164       0.46%     18%
                -----------           -----------

Net income         $58,224     0.88%     $47,165       0.72%     23%
                ===========           ===========


Earnings per
 share:
 Basic               $1.20                 $0.99
 Assuming
  dilution            1.19                  0.97

Weighted average
 common shares
 outstanding:
 Basic              48,556                47,823
 Assuming
  dilution          49,123                48,496



                    AMERISOURCE HEALTH CORPORATION
                      CONSOLIDATED BALANCE SHEETS
                        (dollars in thousands)




        ASSETS         (unaudited)
                         June 30,        September 30,     Increase
                          1999               1998         (Decrease)
                      --------------    --------------   ------------
Current assets:
 Cash  and cash
  equivalents                $46,061           $48,461        ($2,400)
 Restricted cash              54,049            37,044         17,005
 Accounts  receivable,
  less allowance for
  doubtful accounts          485,868           458,238         27,630
 Merchandise
  inventories              1,205,632           870,223        335,409
 Prepaid expenses
  and other                    4,273             4,356            (83)
                      --------------    --------------   ------------
  Total current
   assets                  1,795,883         1,418,322        377,561

Property and
 equipment, net               59,727            60,789         (1,062)

Other assets, less
 accumulated
 amortization                 59,302            73,171        (13,869)
                      --------------    --------------   ------------

  Total assets            $1,914,912        $1,552,282       $362,630
                      ==============    ==============   ============


 LIABILITIES AND
  STOCKHOLDERS' EQUITY

Current liabilities:
 Accounts payable        $1,049,916          $873,181       $176,735
 Accrued expenses
  and other                  39,796            48,532         (8,736)
 Accrued income
  taxes                       9,217                78          9,139
 Deferred income
  taxes                      86,891            93,385         (6,494)
                      --------------    --------------   ------------
  Total current
   liabilities            1,185,820         1,015,176        170,644

Long-term debt:
 Revolving credit
  facility                  266,730           145,000        121,730
 Receivables
  securitization
  financing                 299,974           299,948             26
 Other debt                   8,539             8,813           (274)

Other liabilities             8,661             8,036            625

Stockholders' equity:
 Common stock and
  capital in excess
  of par value              256,593           244,938         11,655
 Retained earnings
  (deficit)                (105,185)         (163,409)        58,224
 Cost of common
  stock in treasury          (6,220)           (6,220)             0
                      --------------    --------------   ------------
  Total stockholders'
   equity                   145,188            75,309         69,879
                      --------------    --------------   ------------

  Total liabilities
   and stockholders'
   equity                $1,914,912        $1,552,282       $362,630
                      ==============    ==============   ============