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AmerisourceBergen Corp. Reports Operating Results (10-Q)

August 09, 2012 | About:
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10qk

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AmerisourceBergen Corp. (ABC) filed Quarterly Report for the period ended 2012-06-30.

Amerisourcebergen Corp. has a market cap of $9.96 billion; its shares were traded at around $38.905 with a P/E ratio of 14.3 and P/S ratio of 0.1. The dividend yield of Amerisourcebergen Corp. stocks is 1.3%. Amerisourcebergen Corp. had an annual average earning growth of 14.8% over the past 10 years. GuruFocus rated Amerisourcebergen Corp. the business predictability rank of 4.5-star.

Highlight of Business Operations:

Revenue of $19.8 billion in the quarter ended June 30, 2012 decreased 1.9% from the prior year quarter. The decrease in revenue was due to the 5% revenue decline of ABDC offset, in part, by an 8% increase in ABSGs revenue. Revenue of $60.2 billion in the nine months ended June 30, 2012 increased 0.7% from the prior year period as ABSGs revenue grew 6% and was offset by the 1% revenue decline of ABDC. Additionally, our recent acquisitions, with TheraCom being the largest contributor, added 1.5% and 1.1% to our revenue growth in the quarter and nine months ended June 30, 2012, respectively.

Gross profit in the quarter ended June 30, 2012 increased $35.6 million from the prior year quarter due to the contributions made by our recent acquisitions (primarily World Courier), the solid growth and profitability of our non-specialty generic programs, and brand price increases, all of which were offset in part by the reduced contribution from the sales of certain specialty oncology drugs, as further described below, the decline in revenue, and by competitive pressures on customer margins. Gross profit in the nine months ended June 30, 2012 increased $56.2 million from the prior year period due to the contributions made by our recent acquisitions (primarily World Courier and TheraCom), the solid growth and profitability of our non-specialty generic programs, and brand price increases, all of which were offset in part by the reduced contribution from the sales of certain specialty oncology drugs, and by competitive pressures on customer margins. In the quarter and nine months ended June 30, 2012, the gross profit contributions from the sales of Oxaliplatin, Gemcitabine and Docetaxel (all generic oncology drugs) were approximately $55.8 million and $111.4 million lower than the prior year periods, respectively. We had no sales of Oxaliplatin in our current quarter ended June 30, 2012. Quantities of Oxaliplatin are not expected to be available until the product is re-launched in mid-August 2012. Gross profit margins for Oxaliplatin upon the re-launch are expected to be significantly lower than the margin levels in fiscal 2011. The gross profit contributions from the sales of Oxaliplatin, Gemcitabine and Docetaxel will be significantly lower in fiscal 2012 in comparison to fiscal 2011. In fiscal 2012, the gross profit decline from the above-mentioned three specialty generic products will be partially offset by the gross profit contribution from over 30 ABDC brand to generic product conversions. However, there are unique circumstances surrounding the launch of each generic product and the actual gross profit from these launches can differ materially from what we expect. Additionally, in the nine months ended June 30, 2011, our gross profit was impacted by a non-recurring $12 million benefit in connection with a customer being acquired by a third party.

Pharmaceutical Distribution operating income decreased $9.6 million from the prior year quarter due to the decrease in its gross profit, offset in part by a decrease in its operating expenses. Other operating income increased $11.0 million and $23.2 million from the prior year quarter and nine month periods due to the contributions made by our recent acquisitions, primarily TheraCom and World Courier. Excluding acquisition-related costs, TheraCom and World Courier collectively contributed $7.5 million and $15.1 million to Other operating income for the quarter and nine months ended June 30, 2012, respectively.

Net income of $181.3 million in the quarter ended June 30, 2012 decreased 2% from the prior year quarter. Diluted earnings per share of $0.71 in the quarter ended June 30, 2012 increased 8% from $0.66 per share in the prior year quarter. Net income of $555.5 million in the nine months ended June 30, 2012 decreased 1% from the prior year period. Diluted earnings per share of $2.13 in the nine months ended June 30, 2012 increased 7% from $2.00 in the prior year period. The differences between diluted earnings per share growth and the changes in net income for the quarter and nine months ended June 30, 2012 were due to the 8% and 7% reduction, respectively, in weighted average common shares outstanding, primarily from purchases of our common stock, net of the impact of stock option exercises.

During the nine months ended June 30, 2011, our operating activities provided $807.8 million of cash. Cash provided by operations during the nine months ended June 30, 2011 was principally the result of net income of $559.3 million, non-cash items of $268.2 million, a decrease in merchandise inventories of $55.9 million, and an increase in accounts payable, accrued expenses and income taxes of $26.6 million, offset, in part, by an increase in accounts receivable of $93.6 million. Non-cash items included the provision for deferred income taxes of $122.2 million, which represented an increase of $61.5 million from the prior year nine-month period and was primarily attributable to tax bonus depreciation resulting from our Business Transformation capital expenditures. Merchandise inventories decreased slightly from the September 30, 2010 balance while the average number of inventory days on hand in the nine months ended June 30, 2011 decreased approximately one-half of one day from the prior year period. The average number of days payable outstanding in the nine months ended June 30, 2011 decreased approximately one-half of one day from the prior year period. Although accounts receivable increased from September 30, 2010, the average number of days sales outstanding during the quarter and nine months ended June 30, 2011 was relatively consistent to the prior year periods. Operating cash uses during the nine months ended June 30, 2011 included $47.5 million of interest payments and $184.9 million of income tax payments, net of refunds.

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