Now Expects Fiscal Year 2015 Adjusted
Diluted EPS to be in the range of $4.92 to $4.97
AmerisourceBergen Corporation (NYSE:ABC) today reported that in
its fiscal year 2015 third quarter ended June 30, 2015, adjusted
diluted earnings per share increased 18.8 percent to $1.20. Revenue
increased 12.8 percent to $34.2 billion in the quarter. On the
basis of U.S. generally accepted accounting principles (GAAP),
diluted earnings per share were $0.89 for the June quarter of
fiscal 2015. In the tables that follow, we present our GAAP results
as well as GAAP to non-GAAP reconciliations.
“Strong performance in our June quarter positions us very well
to meet our financial and strategic objectives for the full year,”
said Steven H. Collis, AmerisourceBergen President and Chief
Executive Officer. “Our outstanding cash generation, the
investments we have made and will continue to make in improving our
infrastructure and capabilities, and the strength of our presence
in key growing markets has put us on course to deliver adjusted
earnings per share growth of over 20 percent for the second
consecutive year. While it is still early in our planning process
and there are many moving parts, we see a pathway to building on
that performance and achieving adjusted earnings per share growth
in the low-teens range for fiscal 2016.”
The comments below compare adjusted results, which exclude:
- Warrant expense;
- Gains on antitrust litigation
settlements;
- LIFO expense;
- Acquisition related intangibles
amortization; and
- Employee severance, litigation, and
other expenses.
In addition, we calculate our 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 our special share repurchase programs. We
previously issued $600 million of 1.15% senior notes due in May
2017 to fund our initial special share repurchase program. The
interest expense incurred relating to this borrowing is also
excluded from the non-GAAP presentation.
Summary of Adjusted Quarterly
Results
- Revenue:
In the third quarter of fiscal 2015, revenue was $34.2 billion, up
12.8 percent compared to the same quarter in the previous fiscal
year, reflecting a 9 percent increase in AmerisourceBergen Drug
Corporation (ABDC) revenue, and a 22 percent increase in
AmerisourceBergen Specialty Group (ABSG) revenue.
- Gross
Profit: Gross profit in the fiscal 2015 third quarter was
$1.0 billion, a 22.4 percent increase over the same period in the
previous year, driven by strong revenue growth in ABDC and ABSG,
and the addition of a full quarter of results from MWI Veterinary
Supply, Inc. (MWI). Gross profit as a percentage of revenue
increased 23 basis points to 2.94 percent.
- Operating
Expenses: In the third quarter of fiscal 2015, operating
expenses were $551 million, up 28.5 percent over the same period in
the last fiscal year. The increase in operating expenses in the
quarter was driven by additional costs to support the increase in
revenue growth and the addition of MWI. Operating expenses as a
percentage of revenue in the fiscal 2015 third quarter were 1.61
percent compared with 1.41 percent for the same period in the
previous fiscal year, driven by the higher expense profile of
MWI.
- Operating
Income: In the fiscal 2015 third quarter, operating income
of $455 million was up 15.7 percent versus the prior year, driven
by the increase in gross profit, which was offset in part by the
increase in operating expenses. Operating income as a percentage of
revenue increased 3 basis points to 1.33 percent in the fiscal 2015
third quarter compared to the previous year’s third quarter.
- Tax Rate:
The effective tax rate for the third quarter of fiscal 2015 was
35.3 percent, down from 38.0 percent in the previous fiscal year’s
third quarter, as growth in our international businesses, including
our global manufacturer services business in Switzerland, has
changed the mix of our domestic and foreign taxable income. We
expect our annualized effective tax rate to be between 36 and 36.5
percent for the full fiscal year.
- Earnings Per
Share: Diluted earnings per share were up 18.8 percent to
$1.20 in the third quarter of fiscal year 2015 compared to $1.01 in
the previous fiscal year’s third quarter, driven by the increase in
operating income.
- Shares
Outstanding: Diluted weighted average shares outstanding for
the third quarter of fiscal year 2015 were 231.3 million, flat
versus the prior year as share repurchases offset employee stock
option exercises.
Segment Discussion
The Pharmaceutical Distribution segment includes both
AmerisourceBergen Drug Corporation and AmerisourceBergen Specialty
Group. Other includes AmerisourceBergen Consulting Services, World
Courier, and MWI Veterinary Supply.
Pharmaceutical Distribution
Segment
In the third fiscal quarter of 2015, Pharmaceutical Distribution
revenues were $32.8 billion, an increase of 10 percent compared to
the same quarter in the prior year. ABDC revenues increased 9
percent, due primarily to the onboarding of the new Walgreens Boots
Alliance, Inc. generic pharmaceuticals business, and solid organic
sales growth in our independent pharmacy, alternate site, and
health systems customers. ABSG revenues increased 22 percent, which
was driven by strong performance in our blood products, vaccine and
physician office distribution businesses, the impact of
manufacturer shifts of certain oncology products from full line
distribution to specialty distribution, and an increase in sales to
community oncology practices. Intrasegment revenues between ABDC
and ABSG have been eliminated in the presentation of total
Pharmaceutical Distribution revenue. Total intrasegment revenues
were $1.6 billion and $1.1 billion in the quarters ended June 30,
2015 and 2014, respectively.
Operating income of $377.8 million in the June quarter of fiscal
2015 increased 5 percent compared to the same period in the
previous year driven primarily by the strong revenue growth in
ABSG.
Other
Revenues in Other were $1.5 billion in the third quarter of
fiscal 2015, an increase of 147 percent over the same period in the
prior year due to the addition of a full quarter of revenues from
MWI. Operating income increased 130 percent to $77 million in the
third quarter of fiscal 2015, driven by the additional income from
MWI.
Fiscal Year 2015
Expectations
Our updated expectations for financial performance in fiscal
2015, including the impact of the MWI transaction, are as
follows:
- Adjusted diluted earnings per share in
the range of $4.92 to $4.97, a 24 percent to 25 percent increase
over fiscal 2014;
- Revenue growth in the range of 12
percent to 13 percent;
- Adjusted operating income growth in the
20 percent to 22 percent range;
- Adjusted operating margin increase of 9
to 11 basis points;
- Free cash flow generation in the range
of $2.8 billion to $3.2 billion;
- Capital expenditures in the $215
million range;
- Regular share repurchases of
approximately $300 million; and
- Special share repurchases of
approximately $750 million.
Conference Call
The Company will host a conference call to discuss the results
at 11:00 a.m. Eastern Time on July 23, 2015.
Participating in the conference call will be:
Steven H. Collis, President & Chief
Executive OfficerTim G. Guttman, Executive Vice President &
Chief Financial Officer
The dial-in number for the live call will be (612) 234-9960. No
access code is required. The live call will also be webcast via the
Company’s website at www.amerisourcebergen.com. Users are encouraged to
log on to the webcast approximately 10 minutes in advance of the
scheduled start time of the call.
Replays of the call will be made available via telephone and
webcast. A replay of the webcast will be posted on www.amerisourcebergen.com approximately two hours
after the completion of the call and will remain available for
thirty days. The telephone replay will also be available
approximately two hours after the completion of the call and will
remain available for seven days. To access the telephone replay
from within the US, dial (800) 475-6701. From outside the US, dial
(320) 365-3844. The access code for the replay is 364195.
About AmerisourceBergen
AmerisourceBergen is one of the largest global pharmaceutical
sourcing and distribution services companies, helping both
healthcare providers and pharmaceutical and biotech manufacturers
improve patient access to products and enhance patient care. With
services ranging from drug distribution and niche premium logistics
to reimbursement and pharmaceutical consulting services,
AmerisourceBergen delivers innovative programs and solutions across
the pharmaceutical supply channel in human medicine and animal
health. With over $120 billion in annual revenue, AmerisourceBergen
is headquartered in Valley Forge, PA, and employs approximately
16,000 people. AmerisourceBergen is ranked #16 on the Fortune 500
list. For more information, go to www.amerisourcebergen.com.
AmerisourceBergen's Cautionary Note Regarding Forward-Looking
Statements
Certain of the statements contained in this press release are
"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. Words such as "expect," "likely," "outlook,"
"forecast," "would," "could," "should," "can," "will," "project,"
"intend," "plan," "continue," "sustain," "synergy," "on track,"
"believe," "seek," "estimate," "anticipate," "may," "possible,"
"assume," variations of such words, and similar expressions are
intended to identify such forward-looking statements. These
statements are based on management's current expectations and are
subject to uncertainty and change in circumstances. These
statements are not guarantees of future performance and are based
on assumptions that could prove incorrect or could cause actual
results to vary materially from those indicated. Among the factors
that could cause actual results to differ materially from those
projected, anticipated, or implied are the following: competition;
industry consolidation of both customers and suppliers resulting in
increasing pressure to reduce prices for our products and services;
changes in pharmaceutical market growth rates; price inflation in
branded and generic pharmaceuticals and price deflation in
generics; declining economic conditions in the United States and
abroad; financial market volatility and disruption; substantial
defaults in payment, material reduction in purchases by or the
loss, bankruptcy or insolvency of a major customer; the loss,
bankruptcy or insolvency of a major supplier; changes to the
customer or supplier mix; the retention of key customer or supplier
relationships under less favorable economics or the adverse
resolution of any contract or other dispute with customers or
suppliers; interest rate and foreign currency exchange rate
fluctuations; the disruption of AmerisourceBergen's cash flow and
ability to return value to its stockholders in accordance with its
past practices; risks associated with the strategic, long-term
relationship between Walgreen Boots Alliance, Inc. and
AmerisourceBergen, including with respect to the pharmaceutical
distribution agreement and/or the global sourcing joint venture;
risks associated with the potential impact on AmerisourceBergen's
earnings per share resulting from the issuance of the warrants to
subsidiaries of Walgreen Boots Alliance, Inc. (the "Warrants");
AmerisourceBergen's inability to implement its hedging strategy to
mitigate the potentially dilutive effect of the issuance of its
common stock in accordance with the Warrants under its special
share repurchase program due to its financial performance, the
current and future share price of its common stock, its expected
cash flows, competing priorities for capital, and overall market
conditions; changes in the United States healthcare and regulatory
environment; increasing governmental regulations regarding the
pharmaceutical supply channel; federal and state government
enforcement initiatives to detect and prevent suspicious orders of
controlled substances and the diversion of controlled substances;
federal and state prosecution of alleged violations of related laws
and regulations, and any related litigation, including shareholder
derivative lawsuits or other disputes relating to our distribution
of controlled substances; increased federal scrutiny and qui tam
litigation for alleged violations of fraud and abuse laws and
regulations and/or any other laws and regulations governing the
marketing, sale, purchase and/or dispensing of pharmaceutical
products or services and any related litigation; material adverse
resolution of pending legal proceedings; declining reimbursement
rates for pharmaceuticals; the acquisition of businesses that do
not perform as expected, or that are difficult to integrate or
control, including the integration of recently-acquired MWI or
ability to capture all of the anticipated synergies related
thereto; managing foreign expansion, including non-compliance with
the U.S. Foreign Corrupt Practices Act, anti-bribery laws and
economic sanctions and import laws and regulations; malfunction,
failure or breach of the sophisticated information systems to
operate as designed; risks generally associated with data privacy
regulation and the international transfer of personal data; changes
in tax laws or legislative initiatives that could adversely affect
AmerisourceBergen's tax positions and/or AmerisourceBergen's tax
liabilities or adverse resolution of challenges to
AmerisourceBergen's tax positions; natural disasters or other
unexpected events that affect AmerisourceBergen's operations; and
other economic, business, competitive, legal, tax, regulatory
and/or operational factors affecting AmerisourceBergen's business
generally. Certain additional factors that management believes
could cause actual outcomes and results to differ materially from
those described in forward-looking statements are set forth (i) in
Item 1A (Risk Factors) and Item 1 (Business) in the Company’s
Annual Report on Form 10-K for the fiscal year ended September 30,
2014 and elsewhere in that report and (ii) in other reports.
AMERISOURCEBERGEN CORPORATION
FINANCIAL SUMMARY (In thousands, except per share data) (unaudited)
Three Three Months Ended Months Ended June 30, % of
June 30, % of % 2015 Revenue 2014 Revenue Change Revenue
$34,233,556 100.00 % $30,348,154 100.00 % 12.8 % Cost of
goods sold 33,342,092 29,656,150 12.4 % Gross
profit (1) 891,464 2.60 % 692,004 2.28 % 28.8 % Operating
expenses: Distribution, selling and administrative 502,744 1.47 %
387,611 1.28 % 29.7 % Depreciation and amortization 68,430 0.20 %
47,334 0.16 % 44.6 % Warrants (14,900 ) -0.04 % 145,040 0.48 %
Employee severance, litigation and other 2,625 0.01 % 1,142
- % Total operating expenses 558,899 1.63 % 581,127 1.91 %
-3.8 % Operating income 332,565 0.97 % 110,877 0.37 % 199.9
% Other income (1,534 ) - % (1,312 ) - % Interest
expense, net 29,793 0.09 % 20,903 0.07 % 42.5 % Loss on
early retirement of debt - - % 32,954 0.11 %
Income before income taxes 304,306 0.89 % 58,332 0.19 % 421.7 %
Income taxes 90,143 0.26 % 71,112 0.23 % 26.8
% Net income (loss) $214,163 0.63 % ($12,780 ) -0.04
% Earnings per share: Basic $0.98 ($0.06 ) Diluted
$0.89 ($0.06 ) Weighted average common shares outstanding:
Basic 219,359 225,727 Diluted (2) 240,236 225,727 6.4 %
(1)
Includes a $158.7 million LIFO expense
charge and a $43.6 million gain from antitrust litigation
settlements in the three months ended June 30, 2015. Includes a
$133.2 million LIFO expense charge and a $2.5 million gain from
antitrust litigation settlements in the three months ended June 30,
2014.
(2)
Stock options, restricted stock,
restricted stock units and the Warrants issued to Walgreens Boots
Alliance were dilutive for the three months ended June 30, 2015. As
a result of the net loss, these items were anti-dilutive in the
three months ended June 30, 2014.
AMERISOURCEBERGEN CORPORATION FINANCIAL SUMMARY (In
thousands, except per share data) (unaudited)
Nine Nine Months Ended Months Ended June 30, %
of June 30, % of % 2015 Revenue 2014 Revenue Change Revenue
$100,491,425 100.00 % $87,980,419 100.00 % 14.2 % Cost of
goods sold 97,935,686 85,870,597 14.1 % Gross
profit (1) 2,555,739 2.54 % 2,109,822 2.40 % 21.1 %
Operating expenses: Distribution, selling and administrative
1,361,678 1.36 % 1,128,012 1.28 % 20.7 % Depreciation and
amortization 173,932 0.17 % 135,778 0.15 % 28.1 % Warrants
1,109,211 1.10 % 267,000 0.30 % Employee severance, litigation and
other 30,999 0.03 % 7,411 0.01 % Total operating
expenses 2,675,820 2.66 % 1,538,201 1.75 % 74.0 % Operating
(loss) income (120,081 ) -0.12 % 571,621 0.65 % -121.0 %
Other loss (income) (2) 11,185 0.01 % (5,692 ) -0.01 %
Interest expense, net 70,081 0.07 % 59,209 0.07 % 18.4 %
Loss on early retirement of debt - - % 32,954 0.04 %
(Loss) income before income taxes (201,347 ) -0.20 % 485,150
0.55 % -141.5 % Income taxes 297,827 0.30 % 268,922
0.31 % 10.7 % (Loss) income from continuing
operations (499,174 ) -0.50 % 216,228 0.25 % -330.9 % Loss
from discontinued operations, net of income taxes - (7,546 )
Net (loss) income ($499,174 ) -0.50 % $208,682 0.24 %
Basic earnings per share: Continuing operations
($2.27 ) $0.95 -338.9 % Discontinued operations - (0.03 ) Rounding
- (0.01 ) Total ($2.27 ) $0.91 Diluted
earnings per share: Continuing operations ($2.27 ) $0.92 -346.7 %
Discontinued operations - (0.03 ) Total ($2.27 ) $0.89
Weighted average common shares outstanding: Basic
219,689 228,477 Diluted (3) 219,689 235,532 -6.7 %
(1)
Includes a $453.9 million LIFO expense
charge and a $65.1 million gain from antitrust litigation
settlements in the nine months ended June 30, 2015. Includes a
$293.6 million LIFO expense charge and a $24.4 million gain from
antitrust litigation settlements in the nine months ended June 30,
2014.
(2)
Includes a $9.1 million loss on the sale
of a small technology business.
(3)
As a result of the net loss, stock
options, restricted stock, restricted stock units and the Warrants
issued to Walgreens Boots Alliance were anti-dilutive for the nine
months ended June 30, 2015. The dilutive effect of these items is
included in the nine months ended June 30, 2014.
AMERISOURCEBERGEN CORPORATION GAAP TO NON-GAAP
RECONCILIATIONS (in thousands, except per share data) (unaudited)
Three
Months Ended June 30, 2015 Gross Profit
OperatingExpenses
OperatingIncome
InterestExpense, Net
Income BeforeIncome Taxes
IncomeTaxes
Net Income
DilutedEarnings PerShare
GAAP $891,464 $558,899 $332,565 $29,793 $304,306 $90,143
$214,163 $0.89 Warrant expense (1) - 14,900 (14,900 ) (2,159
) (12,741 ) 7,170 (19,911 ) (0.05 ) Gain on antitrust
litigation settlements (43,567 ) - (43,567 ) - (43,567 ) (17,076 )
(26,491 ) (0.11 ) LIFO expense 158,710 - 158,710 - 158,710
62,823 95,887 0.41 Acquisition related intangibles
amortization - (19,710 ) 19,710 - 19,941 7,831 12,110 0.05
Employee severance, litigation and other - (2,625 ) 2,625 - 2,625
856 1,769 0.01
Adjusted Non-GAAP $1,006,607 $551,464 $455,143
$27,634 $429,274 $151,747 $277,527
$1.20 Adjusted Non-GAAP % changes vs. prior
year quarter 22.4 % 28.5 % 15.7 % 38.3 % 14.5 % 6.5 % 19.4 % 18.8 %
Percentages of Revenue: GAAP
AdjustedNon-GAAP
Gross profit 2.60 % 2.94 % Operating expenses 1.63 % 1.61 %
Operating income 0.97 % 1.33 %
(1) The amount of Warrant expense
deductible for tax purposes is based on the initial valuation of
the Warrants. Therefore, the income tax rate on Warrant expense
will vary by quarter depending upon the quarterly changes in the
fair value of the Warrants. In connection with the fiscal 2014
special $650 million share repurchase program, the Company issued
$600 million of 1.15% senior notes due in May 2017. The interest
expense incurred relating to this borrowing has been excluded from
the non-GAAP presentation.
Note: Management considers GAAP financial measures as well
as the presented non-GAAP financial measures in evaluating the
Company's operating performance. Therefore, the Company believes
that the presentation of non-GAAP financial measures provides
useful supplementary information to, and facilitates additional
analysis by, investors.
AMERISOURCEBERGEN CORPORATION
GAAP TO NON-GAAP RECONCILIATIONS (in thousands, except per share
data) (unaudited)
Three Months Ended June 30, 2014 Gross Profit
OperatingExpenses
OperatingIncome
InterestExpense, Net
Loss onRetirement ofDebt
Income BeforeIncome Taxes
IncomeTaxes
Net (loss)Income
DilutedEarnings PerShare
GAAP $692,004 $581,127 $110,877 $20,903 ($32,954 ) $58,332
$71,112 ($12,780 ) $(0.06 ) Warrant expense (1) - (145,040 )
145,040 (926 ) - 145,966 6,665 139,301 0.61 Gain on
antitrust litigation settlements (2,524 ) - (2,524 ) - - (2,524 )
(981 ) (1,543 ) (0.01 ) LIFO expense 133,237 - 133,237 - -
133,237 50,564 82,673 0.36 Acquisition related intangibles
amortization - (5,701 ) 5,701 - - 5,701 2,170 3,531 0.02
Employee severance, litigation and other - (1,142 ) 1,142 - - 1,142
439 703 - Loss on early retirement of debt - - - - 32,954
32,954 12,458 20,496 0.09
Adjusted Non-GAAP $822,717 $429,244
$393,473 $19,977 $- $374,808
$142,427 $232,381 $1.01 Percentages of
Revenue: GAAP
AdjustedNon-GAAP
Gross profit 2.28 % 2.71 % Operating expenses 1.91 % 1.41 %
Operating income 0.37 % 1.30 %
(1) The amount of Warrant expense
deductible for tax purposes is based on the initial valuation of
the Warrants. Therefore, the income tax rate on Warrant expense
will vary by quarter depending upon the quarterly changes in the
fair value of the Warrants. In connection with the fiscal 2014
special $650 million share repurchase program, the Company issued
$600 million of 1.15% senior notes due in May 2017. The interest
expense incurred relating to this borrowing has been excluded from
the non-GAAP presentation.
Note: Management considers GAAP financial measures as well
as the presented non-GAAP financial measures in evaluating the
Company's operating performance. Therefore, the Company believes
that the presentation of non-GAAP financial measures provides
useful supplementary information to, and facilitates additional
analysis by, investors.
AMERISOURCEBERGEN CORPORATION GAAP TO NON-GAAP
RECONCILIATIONS (in thousands, except per share data) (unaudited)
Nine Months Ended June 30, 2015 Gross Profit
OperatingExpenses
Operating(Loss)Income
InterestExpense, Net
(Loss) IncomeBefore IncomeTaxes
IncomeTaxes
(Loss)Income FromContinuingOperations
DilutedEarnings PerShare
FromContinuingOperations
GAAP $2,555,739 $2,675,820 ($120,081 ) $70,081 ($201,347 )
$297,827 ($499,174 ) $(2.27 ) Warrant expense (1) -
(1,109,211 ) 1,109,211 (6,459 ) 1,115,670 21,468 1,094,202 4.86
Gain on antitrust litigation settlements (65,050 ) - (65,050
) - (65,050 ) (25,403 ) (39,647 ) (0.17 ) LIFO expense
453,878 - 453,878 - 453,878 177,249 276,629 1.20 Acquisition
related intangibles amortization - (34,478 ) 34,478 - 35,279 13,777
21,502 0.09 Employee severance, litigation and other -
(30,999 ) 30,999 - 30,999 11,774 19,225 0.08
Adjusted Non-GAAP $2,944,567
$1,501,132 $1,443,435 $63,622
$1,369,429 $496,692 $872,737 $3.79
Adjusted Non-GAAP % changes vs. prior year period 23.8 %
20.4 % 27.4 % 9.2 % 26.8 % 20.6 % 30.6 % 32.5 % Percentages
of Revenue: GAAP
AdjustedNon-GAAP
Gross profit 2.54 % 2.93 % Operating expenses 2.66 % 1.49 %
Operating income -0.12 % 1.44 %
(1) The amount of Warrant expense
deductible for income tax purposes is based on the initial
valuation of the Warrants. Therefore, the income tax rate on
Warrant expense will vary by quarter depending upon the quarterly
changes in the fair value of the Warrants. In connection with the
fiscal 2014 special $650 million share repurchase program, the
Company issued $600 million of 1.15% senior notes due in May 2017.
The interest expense incurred relating to this borrowing has been
excluded from the non-GAAP presentation.
Note: Management considers GAAP financial measures as well
as the presented non-GAAP financial measures in evaluating the
Company's operating performance. Therefore, the Company believes
that the presentation of non-GAAP financial measures provides
useful supplementary information to, and facilitates additional
analysis by, investors. AMERISOURCEBERGEN CORPORATION
GAAP TO NON-GAAP RECONCILIATIONS (in thousands, except per share
data) (unaudited)
Nine Months Ended June 30, 2014 Gross Profit
OperatingExpenses
OperatingIncome
InterestExpense, Net
Loss onRetirement ofDebt
Income BeforeIncome Taxes
IncomeTaxes
Income FromContinuing
Operations
DilutedEarnings PerShare
FromContinuingOperations
GAAP $2,109,822 $1,538,201 $571,621 $59,209 ($32,954 )
$485,150 $268,922 $216,228 $0.92 Warrant expense (1) -
(267,000 ) 267,000 (926 ) - 267,926 19,295 248,631 1.07 Gain
on antitrust litigation settlements (24,396 ) - (24,396 ) - -
(24,396 ) (9,224 ) (15,172 ) (0.06 ) LIFO expense 293,647 -
293,647 - - 293,647 111,014 182,633 0.78 Acquisition related
intangibles amortization - (17,484 ) 17,484 - - 17,484 6,611 10,873
0.05 Employee severance, litigation and other - (7,411 )
7,411 - - 7,411 2,802 4,609 0.02 Loss on early retirement of
debt - - - - 32,954 32,954 12,458 20,496 0.09
Adjusted Non-GAAP
$2,379,073 $1,246,306 $1,132,767 $58,283
$-
$1,080,176 $411,878 $668,298 $2.86
(2)
Percentages of Revenue: GAAP
AdjustedNon-GAAP
Gross profit 2.40 % 2.70 % Operating expenses 1.75 % 1.42 %
Operating income 0.65 % 1.29 %
(1) The amount of Warrant expense
deductible for income tax purposes is based on the initial
valuation of the Warrants. Therefore, the income tax rate on
Warrant expense will vary by quarter depending upon the quarterly
changes in the fair value of the Warrants. In connection with the
fiscal 2014 special $650 million share repurchase program, the
Company issued $600 million of 1.15% senior notes due in May 2017.
The interest expense incurred relating to this borrowing has been
excluded from the non-GAAP presentation.
(2) The sum of the components may not
equal the total due to rounding.
Note: Management considers GAAP financial measures as well
as the presented non-GAAP financial measures in evaluating the
Company's operating performance. Therefore, the Company believes
that the presentation of non-GAAP financial measures provides
useful supplementary information to, and facilitates additional
analysis by, investors. AMERISOURCEBERGEN CORPORATION
RECONCILIATION OF DILUTED SHARES OUTSTANDING (GAAP TO NON-GAAP) (In
thousands) (unaudited)
Three Months Ended June 30, Nine Months Ended June 30, 2015 2014
2015 2014 Basic shares outstanding 219,359 225,727 219,689
228,477 Stock option, restricted stock, and restricted stock
unit dilution 4,878 - - 4,834 Warrant dilution 15,999 - -
2,221 GAAP diluted shares outstanding
240,236 225,727 219,689 235,532 Warrant
dilution (1) (15,999 ) - - (2,221 ) Shares repurchased under
a special share repurchase program (1) 7,060 414 5,669 139
Stock option, restricted stock, and restricted stock unit dilution
(2) - 4,533 4,968 - Non-GAAP diluted
shares outstanding 231,297 230,674 230,326 233,450
(1) For the non-GAAP presentation, diluted
weighted average common shares outstanding have been adjusted to
exclude the impact of the Warrants and the shares repurchased under
special share repurchase programs, which were established to
mitigate the potentially dilutive effect of the Warrants and
supplement our previously executed hedging strategy.
(2) For the non-GAAP presentation, diluted
weighted average common shares outstanding have been adjusted to
include the impact of the stock options, restricted stock, and
restricted stock units that were anti-dilutive for the GAAP
presentation.
AMERISOURCEBERGEN CORPORATION WARRANT COVERAGE
INFORMATION (in millions) (unaudited)
2016 Warrant
Coverage:
6/30/2015 (1)
7/22/2015 (2)
Shares from 2016 Capped Calls 11.2
10.4
Share Repurchases (3)
8.5
9.3
2015 Call Options (4)
3.0
3.0
Total Shares Covered 22.7
22.7
2016 Warrant Shares 22.7 22.7
2016
Warrant Coverage 100.0 %
100.0
%
2017 Warrant
Coverage:
Shares from 2017 Capped Calls 10.3
9.4
Share Repurchases (3)
0.8
-
2015 Call Options (4)
-
-
Total Shares Covered 11.1
9.4
2017 Warrant Shares 22.7 22.7
2017
Warrant Coverage 48.7 %
41.6
%
(1)
Based on June 30, 2015 closing stock price
of $106.34.
(2)
Based on July 22, 2015 closing stock price
of $114.95.
(3)
Includes three million Call Options
exercised between April 2015 and June 2015.
(4)
Assumes the Company successfully exercises
the remaining three million Call Options between July 2015 and
October 2015, for a total cost of approximately $280 million.
AMERISOURCEBERGEN CORPORATION SUMMARY SEGMENT
INFORMATION (dollars in thousands) (unaudited)
Three Months Ended June 30, Revenue 2015 2014 % Change
Pharmaceutical Distribution $32,758,828 $29,812,837 9.9 % Other
1,532,907 620,275 147.1 % Intersegment eliminations (58,179 )
(84,958 ) -31.5 % Revenue $34,233,556 $30,348,154
12.8 % Three Months Ended June
30, Operating income 2015 2014 % Change Pharmaceutical
Distribution $377,771 $359,795 5.0 % Other 77,372 33,678
129.7 % Total segment operating income 455,143 393,473 Gains
on antitrust litigation settlements 43,567 2,524 LIFO expense
(158,710 ) (133,237 ) Acquisition related intangibles amortization
(19,710 ) (5,701 ) Warrant expense 14,900 (145,040 ) Employee
severance, litigation and other (2,625 ) (1,142 ) Operating
income $332,565 $110,877 199.9 %
Percentages of revenue: Pharmaceutical Distribution Gross
profit 2.28 % 2.32 % Operating expenses 1.12 % 1.11 % Operating
income 1.15 % 1.21 % Other Gross profit 17.01 % 21.19 %
Operating expenses 11.96 % 15.76 % Operating income 5.05 % 5.43 %
AmerisourceBergen Corporation (GAAP) Gross profit 2.60 %
2.28 % Operating expenses 1.63 % 1.91 % Operating income 0.97 %
0.37 % AmerisourceBergen Corporation (Non-GAAP) Gross profit
2.94 % 2.71 % Operating expenses 1.61 % 1.41 % Operating income
1.33 % 1.30 % AMERISOURCEBERGEN CORPORATION SUMMARY
SEGMENT INFORMATION (dollars in thousands) (unaudited)
Nine Months Ended June 30, Revenue 2015 2014 % Change
Pharmaceutical Distribution $97,504,075 $86,367,923 12.9 %
Other 3,214,977 1,796,910 78.9 % Intersegment eliminations (227,627
) (184,414 ) 23.4 % Revenue $100,491,425 $87,980,419
14.2 % Nine Months Ended June
30, Operating (loss) income 2015 2014 % Change
Pharmaceutical Distribution $1,256,747 $1,019,506 23.3 % Other
186,688 113,261 64.8 % Total segment operating income
1,443,435 1,132,767 27.4 % Gains on antitrust litigation
settlements 65,050 24,396 LIFO expense (453,878 ) (293,647 )
Acquisition related intangibles amortization (34,478 ) (17,484 )
Warrant expense (1,109,211 ) (267,000 ) Employee severance,
litigation and other (30,999 ) (7,411 ) Operating (loss)
income ($120,081 ) $571,621 -121.0 %
Percentages of revenue: Pharmaceutical Distribution Gross
profit 2.41 % 2.29 % Operating expenses 1.12 % 1.11 % Operating
income 1.29 % 1.18 % Other Gross profit 18.58 % 22.17 %
Operating expenses 12.78 % 15.87 % Operating income 5.81 % 6.30 %
AmerisourceBergen Corporation (GAAP) Gross profit 2.54 %
2.40 % Operating expenses 2.66 % 1.75 % Operating (loss) income
-0.12 % 0.65 % AmerisourceBergen Corporation (Non-GAAP)
Gross profit 2.93 % 2.70 % Operating expenses 1.49 % 1.42 %
Operating income 1.44 % 1.29 %
AMERISOURCEBERGEN CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands) (unaudited) ASSETS June 30, September
30, 2015 2014 Current assets: Cash and cash equivalents $2,555,183
$1,808,513 Accounts receivable, net 7,596,558 6,312,883 Merchandise
inventories 9,639,961 8,593,852 Prepaid expenses and other 110,332
84,957 Total current assets 19,902,034 16,800,205 Property
and equipment, net 958,687 899,582 Other long-term assets 6,472,783
3,832,396 Total assets $27,333,504 $21,532,183
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $19,348,994 $15,592,834 Short-term debt 7,370 -
Other current liabilities 1,760,927 1,657,326 Total current
liabilities 21,117,291 17,250,160 Long-term debt 3,742,781
1,995,632 Other long-term liabilities 897,808 329,492
Stockholders' equity 1,575,624 1,956,899 Total liabilities
and stockholders' equity $27,333,504 $21,532,183
AMERISOURCEBERGEN CORPORATION CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Nine
Nine Months Ended Months Ended June 30, June 30, 2015 2014
Operating Activities: Net (loss) income ($499,174 ) $208,682 Loss
from discontinued operations - 7,546 (Loss) income
from continuing operations (499,174 ) 216,228
Adjustments to reconcile (loss) income
from continuing operations to net cash provided by operating
activities (1)
1,314,045 456,446 Changes in operating assets and liabilities,
excluding the effects of acquisitions and divestitures: Accounts
receivable (868,708 ) (535,806 ) Merchandise inventories (2)
(700,331 ) (1,002,589 ) Accounts payable, accrued expenses, and
income taxes 3,531,365 1,475,627 Other (16,932 ) 30,135 Net
cash provided by operating activities - continuing operations
2,760,265 640,041 Net cash used in operating activities -
discontinued operations - (7,546 ) Net cash provided by
operating activities 2,760,265 632,495
Investing Activities: Capital expenditures (157,089 ) (198,670 )
Cost of acquired companies, net of cash acquired (2,606,524 )
(9,103 ) Cost of equity investments - (117,794 ) Other 18,974
6,366 Net cash used in investing activities
(2,744,639 ) (319,201 ) Financing Activities: Net borrowings
1,753,291 566,402 Purchases of common stock (3) (800,299 ) (570,593
) Exercises of stock options 178,146 109,694 Cash dividends on
common stock (192,054 ) (161,558 ) Purchases of call options
(180,000 ) (211,397 ) Other (28,040 ) (14,984 ) Net cash provided
by (used in) financing activities 731,044 (282,436 )
Increase in cash and cash equivalents 746,670 30,858 Cash
and cash equivalents at beginning of period 1,808,513
1,231,006 Cash and cash equivalents at end of period
$2,555,183 $1,261,864
(1)
Adjustments include non-cash warrant
expense of $1,109.2 million and $267.0 million for the nine months
ended June 30, 2015 and 2014, respectively.
(2)
Merchandise inventories include LIFO
expense of $453.9 million and $293.6 million for the nine months
ended June 30, 2015 and 2014, respectively.
(3)
Includes purchases made under the special
share repurchase program totaling $555.7 million in the nine months
ended June 30, 2015, which includes $18.0 million of fiscal 2014
purchases that cash settled in October 2014. Additional purchases
made in June 2015 under the special program totaling $14.3 million
cash settled in July 2015.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150723005256/en/
AmerisourceBergen CorporationBarbara
BrungessVice President, Corporate & Investor
Relations610-727-7199bbrungess@amerisourcebergen.com
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