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AMERISOURCEBERGEN REPORTS 4TH QTR AND 2014 RESULTS.

AmerisourceBergen Corporation has reported that in its fiscal year 2014 fourth quarter ended September 30, 2014, adjusted diluted earnings per share from continuing operations increased 35.8 percent to $1.10. Revenue increased 29.1 percent to $31.6 billion in the quarter. On the basis of U.S. generally accepted accounting principles (GAAP), diluted earnings per share from continuing operations were $0.29 for the September quarter of fiscal 2014. In the tables that follow, we present our GAAP results as well as a reconciliation of GAAP income from continuing operations to adjusted non-GAAP income from continuing operations.

In addition, they calculate adjusted earnings per share for each period using a diluted weighted average share count, which excludes the accounting dilution resulting from the impact of the unexercised equity warrants, and the impact from the shares repurchased under the special $650 million share repurchase program. Solely in connection with the special share repurchase program, they issued $600 million of 1.15% senior notes due in May 2017. The interest expense incurred relating to this borrowing is also excluded from the non-GAAP presentation.

Summary of Adjusted Quarterly Results

Revenue: In the fourth quarter of fiscal 2014, revenue was $31.6 billion, up 29.1 percent compared to the same quarter in the previous fiscal year, reflecting a 33 percent increase in AmerisourceBergen Drug Corporation (ABDC) revenue, and a 13 percent increase in AmerisourceBergen Specialty Group (ABSG) revenue.

Gross Profit: Gross profit in the fiscal 2014 fourth quarter was $926.9 million, a 28.7 percent increase over the same period in the previous year, driven by strong overall revenue growth and generic sales in ABDC. Gross profit as a percentage of revenue decreased 1 basis point to 2.93 percent, primarily due to the increase in lower margin brand business, which was offset in part by an increase in the contribution from the sale of generic products.

Operating Expenses: In the fourth quarter of fiscal 2014, operating expenses were $503.1 million, up 27.5 percent over the same period in the last fiscal year. The increase in operating expenses in the quarter was due primarily to costs associated with onboarding the new Walgreen Co. business, an increase in employee incentive compensation, and expenses relating to the launch of the AmerisourceBergen Foundation. Operating expenses as a percentage of revenue in the fiscal 2014 fourth quarter were 1.59 percent compared with 1.61 percent for the same period in the previous fiscal year.

Operating Income: In the fiscal 2014 fourth quarter, operating income of $423.8 million was up 30.1 percent versus the prior year, driven primarily by the increase in gross profit. Operating income as a percentage of revenue increased 1 basis point to 1.34 percent in the fiscal 2014 fourth quarter compared to the previous year's fourth quarter.

Tax Rate: The effective tax rate for the fourth quarter of fiscal 2014 was 37.5 percent, slightly lower than the previous fiscal year's fourth quarter. Going forward, we expect our annualized effective tax rate to be approximately 37.0 percent.

Earnings Per Share: Diluted earnings per share from continuing operations were up 35.8 percent to $1.10 in the fourth quarter of fiscal year 2014 compared to $0.81 in the previous fiscal year's fourth quarter, driven by the strong increase in operating income.

Shares Outstanding: Diluted weighted average shares outstanding for the fourth quarter of fiscal year 2014 were 230.9 million, a 1.8 percent decrease versus the prior year due to share repurchases, offset in part by option exercises.

The Pharmaceutical Distribution segment includes both AmerisourceBergen Drug Corporation and AmerisourceBergen Specialty Group. Other includes AmerisourceBergen Consulting Services (ABCS) and World Courier.

In the fourth fiscal quarter of 2014, Pharmaceutical Distribution revenues were $31.0 billion, an increase of 29 percent compared to the same quarter in the prior year. ABDC revenues increased 33 percent, due primarily to the onboarding of all of the new Walgreens branded pharmaceuticals business and a substantial portion of their generic pharmaceuticals business, and increased branded pharmaceutical sales to our other large customers. ABSG revenues increased 13 percent, driven by strong performance in our blood products, vaccine, and specialty distribution businesses. Intrasegment revenues between ABDC and ABSG have been eliminated in the presentation of total Pharmaceutical Distribution revenue. Total intrasegment revenues were $1.1 billion and $934.2 million in the quarters ended September 30, 2014 and 2013, respectively.

Operating income of $386.5 million in the September quarter of fiscal 2014 increased 31 percent compared to the same period in the previous year due to the new Walgreens branded and generic pharmaceuticals business in ABDC, and strong contributions from generics overall.

Revenues in Other were $652.2 million in the fourth quarter of fiscal 2014, an increase of 26 percent over the same period in the prior year. Operating income of $37.4 million was 25 percent higher than the fourth quarter of the prior year, due primarily to solid performance in World Courier offset in part by a decline in our consulting businesses.

In fiscal year 2014, adjusted diluted earnings per share from continuing operations were $3.97, an increase of 23.7% over the prior fiscal year. Revenue of $119.6 billion was up 35.9% over the last fiscal year. Gross profit increased 19.7% and operating income increased 20.6%, driven primarily by the increase in revenues. Operating income margin decreased 17 basis points to 1.30% due to the new Walgreens business. Diluted weighted average shares outstanding in fiscal 2014 were 232.8 million, down one percent from the prior fiscal year.

AmerisourceBergen expects adjusted diluted earnings per share from continuing operations in fiscal year 2015 to be in the range of $4.36 to $4.50, an increase of 10 to 13 percent over fiscal 2014. We expect revenue growth in the 7 percent to 8 percent range, and adjusted operating income growth in the 8 percent to 10 percent range. Adjusted operating margin is expected to be flat to up slightly in the low single digit basis points range. We expect free cash flow to be in the range of $1.4 to $1.7 billion, with capital expenditures in the $300 million range for the full year. In addition, we expect to spend approximately $400 million in share repurchases under our regular repurchase program, and $400 million under our special repurchase program, subject to market conditions.

About AmerisourceBergen

AmerisourceBergen is a global pharmaceutical sourcing and distribution services companies. With services ranging from drug distribution and niche premium logistics to reimbursement and pharmaceutical consulting services, AmerisourceBergen delivers programs and solutions across the pharmaceutical supply channel. With nearly $120 billion in annual revenue, AmerisourceBergen is headquartered in Valley Forge, PA, and employs approximately 14,000 people.

For more information, go to www.amerisourcebergen.com or call 610/727-7199.
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Publication:Biotech Financial Reports
Article Type:Financial report
Date:Nov 1, 2014
Words:1146
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