Revenues of $49.2 billion for the Second
Quarter, a 3.7 Percent Increase Year-Over-Year
Second Quarter GAAP Diluted EPS of $2.10 and
Adjusted Diluted EPS of $2.53
Adjusted Diluted EPS Guidance Range Raised to
$8.45 to $8.60 for Fiscal 2021
AmerisourceBergen Corporation (NYSE: ABC) today reported that in
its fiscal year 2021 second quarter ended March 31, 2021, revenue
increased 3.7 percent year-over-year to $49.2 billion. On the basis
of U.S. generally accepted accounting principles (GAAP), diluted
earnings per share (EPS) was $2.10 for the March quarter of fiscal
2021, compared to $4.64 in the prior year quarter. Adjusted diluted
EPS, which is a non-GAAP measure that excludes items described
below, increased 5.4 percent to $2.53 in the fiscal second
quarter.
AmerisourceBergen is updating its outlook for fiscal year 2021.
The Company does not provide forward-looking guidance on a GAAP
basis, as discussed below in Fiscal Year 2021 Expectations.
Adjusted diluted EPS guidance has been raised from the previous
expectation of $8.40 to $8.60 to a range of $8.45 to $8.60,
reflecting growth of 7 percent to 9 percent versus the previous
fiscal year.
"AmerisourceBergen continues to prove our vital role as a key
pillar in the healthcare system. Our solid performance in the March
quarter was fueled by our associates who continue to work
diligently to provide innovative solutions for our partners to
ultimately serve their patients," said Steven H. Collis, Chairman,
President and Chief Executive Officer of AmerisourceBergen.
"Driven by our purpose of being united in our responsibility to
create healthier futures, we are strengthening our portfolio of
solutions for customers, expanding on our leadership in specialty,
focusing on execution and leveraging our capabilities and expertise
to support pharmaceutical innovation," Mr. Collis continued.
"AmerisourceBergen is well-positioned to deliver long-term,
sustainable growth, supported by our diverse and inclusive teams
and our investments in our people and culture."
Second Quarter Fiscal Year 2021 Summary
Results
GAAP
Adjusted (Non-GAAP)
Revenue
$49.2B
$49.2B
Gross Profit
$1.5B
$1.5B
Operating Expenses
$909M
$806M
Operating Income
$624M
$707M
Interest Expense, Net
$35M
$35M
Effective Tax Rate
23.4%
21.9%
Net Income Attributable to ABC
$435M
$524M
Diluted Earnings Per Share
$2.10
$2.53
Diluted Shares Outstanding
207M
207M
Below, AmerisourceBergen presents descriptive summaries of the
Company’s GAAP and adjusted (non-GAAP) quarterly results. In the
tables that follow, GAAP results and GAAP to non-GAAP
reconciliations are presented. For more information related to
non-GAAP financial measures, including adjustments made in the
periods presented, please refer to the "Supplemental Information
Regarding non-GAAP Financial Measures" following the tables.
Second Quarter GAAP
Results
- Revenue: In the second quarter of
fiscal 2021, revenue was $49.2 billion, up 3.7 percent compared to
the same quarter in the previous fiscal year, reflecting a 3.4
percent increase in Pharmaceutical Distribution Services revenue
and an 11.5 percent increase in revenue within Other.
- Gross Profit: Gross profit in the
second quarter of fiscal 2021 was $1.5 billion, a 10.5 percent
increase compared to the same period in the previous fiscal year.
Gross profit was favorably impacted by an increase in gross profit
for Pharmaceutical Distribution Services, a LIFO credit in the
current year quarter in comparison to a LIFO expense in the prior
year quarter, and an increase in gross profit for Other. Gross
profit as a percentage of revenue was 3.12%, an increase of 19
basis points from the prior year quarter primarily driven by an
increase in sales of specialty products in Pharmaceutical
Distribution Services and growth in some of the Company's higher
margin businesses.
- Operating Expenses: In the second
quarter of fiscal 2021, operating expenses were $909.0 million, a
15.7 percent decrease compared to the same period last fiscal year.
The decrease in operating expenses was primarily due to the $223.7
million impairment of PharMEDium assets recorded in the prior year
quarter, which was partially offset by an increase in distribution,
selling and administrative costs in the current year quarter.
Operating expenses as a percentage of revenue in the fiscal 2021
second quarter were 1.85 percent, compared to 2.27 percent for the
same period in the previous fiscal year.
- Operating Income: In the fiscal
2021 second quarter, operating income increased to $624.3 million
from $309.5 million in the prior year quarter. Operating income as
a percentage of revenue was 1.27 percent in the second quarter of
fiscal 2021, compared to 0.65 percent for the same period in the
previous fiscal year due to the increase in gross profit and
decrease in operating expenses.
- Interest Expense, Net: In the
fiscal 2021 second quarter, net interest expense of $34.5 million
was up 0.3 percent versus the prior year quarter due to a decrease
in interest income resulting primarily from a decline in investment
interest rates, which was largely offset by lower interest
expense.
- Effective Tax Rate: The effective
tax rate was 23.4 percent for the second quarter of fiscal 2021
compared to (251.6) percent in the prior year quarter which was
favorably impacted by tax benefits related to the Company's
decision to permanently exit the PharMEDium compounding business in
January 2020.
- Diluted Earnings Per Share:
Diluted earnings per share was $2.10 in the second quarter of
fiscal 2021 compared to $4.64 in the previous fiscal year’s second
quarter. The decrease was primarily due to discrete tax benefits
recognized in the prior year period.
- Diluted Shares Outstanding:
Diluted weighted average shares outstanding for the second quarter
of fiscal 2021 were 207.3 million, a 0.1 percent increase versus
the prior fiscal year second quarter.
Second Quarter Adjusted (non-GAAP)
Results
- Revenue: No adjustments were made
to the GAAP presentation of revenue. In the second quarter of
fiscal 2021, revenue was $49.2 billion, up 3.7 percent compared to
the same quarter in the previous fiscal year, reflecting a 3.4
percent increase in Pharmaceutical Distribution Services revenue
and an 11.5 percent increase in revenue within Other.
- Adjusted Gross Profit: Adjusted
gross profit in the fiscal 2021 second quarter was $1.5 billion,
which was up 6.7 percent compared to the same period in the
previous year due to increases in gross profit in Pharmaceutical
Distribution Services and Other. Adjusted gross profit as a
percentage of revenue was 3.08 percent in the fiscal 2021 second
quarter, an increase of 9 basis points when compared to the prior
year quarter primarily driven by an increase in sales of specialty
products in Pharmaceutical Distribution Services and growth in some
of the Company's higher margin businesses.
- Adjusted Operating Expenses: In
the second quarter of fiscal 2021, adjusted operating expenses were
$805.9 million, an increase of 8.1 percent compared to the same
period in the previous fiscal year due to higher distribution,
selling, and administrative expenses primarily due to an increase
in payroll-related operating costs to support the Company's current
and future revenue growth. Adjusted operating expenses as a
percentage of revenue in the fiscal 2021 second quarter was 1.64
percent, an increase of 7 basis points when compared to the prior
year quarter.
- Adjusted Operating Income: In the
fiscal 2021 second quarter, adjusted operating income of $706.6
million increased 5.2 percent from the prior year period due to a
4.6 percent increase in Pharmaceutical Distribution Services'
operating income and a 13.8 percent increase in operating income
within Other. Adjusted operating income as a percentage of revenue
was 1.44 percent in the fiscal 2021 second quarter, an increase of
2 basis points when compared to the prior year quarter.
- Interest Expense, Net: No
adjustments were made to the GAAP presentation of net interest
expense. In the fiscal 2021 second quarter, net interest expense of
$34.5 million was up 0.3 percent versus the prior year quarter due
to a decrease in interest income resulting primarily from a decline
in investment interest rates, which was largely offset by lower
interest expense.
- Adjusted Effective Tax Rate: The
adjusted effective tax rate was 21.9 percent for the second quarter
of fiscal 2021 compared to 21.5 percent in the prior year
quarter.
- Adjusted Diluted Earnings Per
Share: Adjusted diluted earnings per share was up 5.4
percent to $2.53 in the second quarter of fiscal 2021 compared to
$2.40 in the previous fiscal year’s second quarter, driven by the
increase in adjusted operating income.
- Diluted Shares Outstanding: No
adjustments were made to the GAAP presentation of diluted shares
outstanding. Diluted weighted average shares outstanding for the
second quarter of fiscal 2021 were 207.3 million, a 0.1 percent
increase versus the prior fiscal year second quarter.
Segment Discussion
The Company's operations are comprised of the Pharmaceutical
Distribution Services reportable segment and other operating
segments that are not significant enough to require separate
reportable segment disclosure and, therefore, have been included in
Other for the purpose of the reportable segment presentation. Other
consists of operating segments that focus on global
commercialization services and animal health and includes
AmerisourceBergen Consulting Services (ABCS), World Courier and MWI
Animal Health (MWI).
Pharmaceutical Distribution Services
Segment
Pharmaceutical Distribution Services revenue was $47.1 billion,
an increase of 3.4 percent compared to the same quarter in the
prior fiscal year primarily due to increased sales of specialty
products, including COVID-19 treatments. Segment operating income
of $589.0 million in the second quarter of fiscal 2021 was up 4.6
percent compared to the same period in the previous fiscal year,
primarily due to the growth in sales of specialty products.
Other
Revenue in Other was $2.1 billion in the second quarter of
fiscal 2021, an increase of 11.5 percent compared to the same
period in the prior fiscal year due to growth at all three
operating segments: MWI, ABCS, and World Courier. Operating income
in Other increased 13.8 percent to $123.2 million in the second
quarter of fiscal 2021 due to the strong performance of World
Courier and MWI.
Recent Company Highlights &
Milestones
- AmerisourceBergen released its 2020 Global Sustainability
Report and ESG Reporting Index, detailing the impact of its robust
sustainability and community efforts. This year, AmerisourceBergen
made its report available through the launch of a new microsite,
which serves as a comprehensive, interactive resource to showcase
data, information and relevant assets from the Company in
connection with topics related to ESG. For the third year in a row,
selected information within the 2020 report was assured by ERM
Certification and Verification Services.
- The Anti-Defamation League (ADL) Philadelphia chapter presented
the Americanism Award to Steven H. Collis, Chairman, President
& CEO, and AmerisourceBergen for their commitment to fighting
hate locally, across the country and the world. The Americanism
Award has honored leaders in business, community affairs and
charitable endeavors who distinguish themselves and their
organizations through their dedication to preserving liberty and
advancing the cause of human rights, respect, dignity and equal
opportunity.
- The AmerisourceBergen Foundation, an independent not-for-profit
charitable giving organization focused on supporting health-related
causes that enrich the global community, announced a $700,000
donation to Boys & Girls Clubs of America to support COVID-19
vaccine education and awareness in an effort to remove barriers to
vital healthcare access.
Fiscal Year 2021
Expectations
The Company does not provide forward-looking guidance on a GAAP
basis as certain financial information, the probable significance
of which cannot be determined, is not available or cannot be
reasonably estimated. Please refer to the Supplemental Information
Regarding Non-GAAP Financial Measures following the tables for
additional information.
Fiscal Year 2021 Expectations on an
Adjusted (non-GAAP) Basis
AmerisourceBergen has updated its fiscal year 2021 financial
guidance to reflect the Company’s continued strong performance,
including better than expected performance in our Global
Commercialization Services & Animal Health group, and an
incrementally higher expected share count for the year. This
updated financial guidance does not include any contribution from
the proposed Alliance Healthcare acquisition and does not reflect
the weighted average share count impact of the 2 million shares of
AmerisourceBergen common stock that will be delivered at closing of
the transaction. The Company now expects:
- Adjusted Diluted EPS to be in the range of $8.45 to $8.60,
raised from the previous range of $8.40 to $8.60.
Additional expectations now include:
- Adjusted operating expense growth in the high-single digit
percent range, narrowed from the mid- to high-single digit percent
range;
- Other, which is comprised of our Global Commercialization
Services & Animal Health businesses, operating income growth in
the low-double digit percent range, up from the mid- to high-single
digit percent range;
- Weighted average shares to be between 207 million and 208
million, raised from the previous expectation of approximately 207
million for the fiscal year.
All other previously communicated aspects of the Company's
fiscal year 2021 financial guidance and assumptions remain the
same.
Dividend Declaration
The Company's Board of Directors declared a quarterly cash
dividend of $0.44 per common share, payable June 1, 2021, to
stockholders of record at the close of business on May 17,
2021.
Conference Call & Slide
Presentation
The Company will host a conference call to discuss the results
at 8:30 a.m. ET on May 5, 2021. A slide presentation for investors
has also been posted on the Company's website at
investor.amerisourcebergen.com. Participating in the conference
call will be:
- Steven H. Collis, Chairman, President & Chief Executive
Officer
- James F. Cleary, Executive Vice President & Chief Financial
Officer
The dial-in number for the live call will be (844) 808-6694.
From outside the United States, dial +1 (412) 317-5282. No access
code is required. The live call will also be webcast via the
Company’s website at investor.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
investor.amerisourcebergen.com approximately one hour after the
completion of the call and will remain available for one year. The
telephone replay will also be available approximately one hour
after the completion of the call and will remain available for
seven days. To access the telephone replay from within the U.S.,
dial (877) 344-7529. From Canada, dial +1 (855) 669-9658. From
outside the United States and Canada, dial +1 (412) 317-0088. The
access code for the replay is 10153917.
About AmerisourceBergen
AmerisourceBergen fosters a positive impact on the health of
people and communities around the world by advancing the
development and delivery of pharmaceuticals and healthcare
products. As a leading global healthcare company, with a foundation
in pharmaceutical distribution and solutions for manufacturers,
pharmacies and providers, we create unparalleled access, efficiency
and reliability for human and animal health. Our 22,000 global team
members power our purpose: We are united in our responsibility to
create healthier futures. AmerisourceBergen is ranked #10 on the
Fortune 500 with more than $185 billion in annual revenue. Learn
more at investor.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, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Securities
Exchange Act"). Words such as "expect," "likely," "outlook,"
"forecast," "would," "could," "should," "can," "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 changes in circumstances and speak only as of the
date hereof. These statements are not guarantees of future
performance and are based on assumptions and estimates 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: unfavorable trends in brand and generic
pharmaceutical pricing, including in rate or frequency of price
inflation or deflation; competition and industry consolidation of
both customers and suppliers resulting in increasing pressure to
reduce prices for our products and services; changes in the United
States healthcare and regulatory environment, including changes
that could impact prescription drug reimbursement under Medicare
and Medicaid; increasing governmental regulations regarding the
pharmaceutical supply channel; declining reimbursement rates for
pharmaceuticals; continued federal and state government enforcement
initiatives to detect and prevent suspicious orders of controlled
substances and the diversion of controlled substances; continued
prosecution or suit by federal, state and other governmental
entities of alleged violations of laws and regulations regarding
controlled substances, including due to failure to achieve a global
resolution of the multi-district opioid litigation and other
related state court litigation, and any related disputes, including
shareholder derivative lawsuits; increased federal scrutiny and
litigation, including qui tam litigation, for alleged violations of
laws and regulations governing the marketing, sale, purchase and/or
dispensing of pharmaceutical products or services, and associated
reserves and costs; failure to comply with the Corporate Integrity
Agreement; material adverse resolution of pending legal
proceedings; 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; changes to customer or supplier payment terms, including
as a result of the COVID-19 impact on such payment terms; the
Company’s ability to consummate the proposed acquisition of
Walgreens Boots Alliance, Inc.’s Alliance Healthcare businesses and
related strategic transactions; the regulatory approvals required
for the proposed acquisition and related strategic transactions not
being obtained on the terms expected or on the anticipated schedule
or at all; the integration of the Alliance Healthcare business into
the Company being more difficult, time consuming or costly than
expected; the Company’s or Alliance Healthcare’s failure to achieve
expected or targeted future financial and operating performance and
results; the effects of disruption from the proposed acquisition
and related strategic transactions on the respective businesses of
the Company and Alliance Healthcare and the fact that the
announcement or pendency of the proposed acquisition and related
strategic transactions may make it more difficult to establish or
maintain relationships with employees, suppliers and other business
partners; the acquisition of businesses, including the proposed
acquisition of the Alliance Healthcare businesses and related
strategic transactions, that do not perform as expected, or that
are difficult to integrate or control, or the inability to capture
all of the anticipated synergies related thereto or to capture the
anticipated synergies within the expected time period; risks
associated with the strategic, long-term relationship between
Walgreens Boots Alliance, Inc. and the Company, including with
respect to the pharmaceutical distribution agreement and/or the
global generic purchasing services arrangement; managing foreign
expansion, including non-compliance with the U.S. Foreign Corrupt
Practices Act, anti-bribery laws, economic sanctions and import
laws and regulations; financial market volatility and disruption;
changes in tax laws or legislative initiatives that could adversely
affect the Company's tax positions and/or the Company's tax
liabilities or adverse resolution of challenges to the Company's
tax positions; substantial defaults in payment, material reduction
in purchases by or the loss, bankruptcy or insolvency of a major
customer, including as a result of COVID-19; the loss, bankruptcy
or insolvency of a major supplier, including as a result of
COVID-19; financial and other impacts of COVID-19 on our operations
or business continuity; changes to the customer or supplier mix;
malfunction, failure or breach of sophisticated information systems
to operate as designed; risks generally associated with data
privacy regulation and the international transfer of personal data;
natural disasters or other unexpected events, such as additional
pandemics, that affect the Company’s operations; the impairment of
goodwill or other intangible assets (including any additional
impairments with respect to foreign operations), resulting in a
charge to earnings; the Company's ability to manage and complete
divestitures; the disruption of the Company's cash flow and ability
to return value to its stockholders in accordance with its past
practices; interest rate and foreign currency exchange rate
fluctuations; declining economic conditions in the United States
and abroad; and other economic, business, competitive, legal, tax,
regulatory and/or operational factors affecting the Company'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), in the Company’s Annual
Report on Form 10-K for the fiscal year ended September 30, 2020
and elsewhere in that report and (ii) in other reports filed by the
Company pursuant to the Securities Exchange Act. The Company
undertakes no obligation to publicly update or revise any
forward-looking statements, except as required by the federal
securities laws.
AMERISOURCEBERGEN CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share
data)
(unaudited)
Three Months Ended
March 31, 2021
% of Revenue
Three Months Ended
March 31, 2020
% of Revenue
% Change
Revenue
$
49,154,171
$
47,417,639
3.7
%
Cost of goods sold
47,620,790
46,029,532
3.5
%
Gross profit 1
1,533,381
3.12
%
1,388,107
2.93
%
10.5
%
Operating expenses:
Distribution, selling, and administrative
2
730,081
1.49
%
693,413
1.46
%
5.3
%
Depreciation and amortization
100,797
0.21
%
93,795
0.20
%
7.5
%
Employee severance, litigation, and other
3
78,156
67,732
Impairment of PharMEDium assets
—
223,652
Total operating expenses
909,034
1.85
%
1,078,592
2.27
%
(15.7
)%
Operating income
624,347
1.27
%
309,515
0.65
%
101.7
%
Other loss (income), net 4
23,310
(1,109
)
Interest expense, net
34,526
34,421
0.3
%
Income before income taxes
566,511
1.15
%
276,203
0.58
%
105.1
%
Income tax expense (benefit) 5
132,506
(694,908
)
Net income
434,005
0.88
%
971,111
2.05
%
(55.3
)%
Net loss (income) attributable to
noncontrolling interests
1,262
(10,834
)
Net income attributable to
AmerisourceBergen Corporation
$
435,267
0.89
%
$
960,277
2.03
%
(54.7
)%
Earnings per share:
Basic
$
2.12
$
4.68
(54.7
)%
Diluted
$
2.10
$
4.64
(54.7
)%
Weighted average common shares
outstanding:
Basic
204,916
205,370
(0.2
)%
Diluted
207,315
207,062
0.1
%
________________________________________
1
Includes a $20.9 million LIFO
credit in the three months ended March 31, 2021. Includes a $23.9
million LIFO expense, a $0.1 million gain from antitrust litigation
settlements, and $5.0 million of PharMEDium shutdown costs in the
three months ended March 31, 2020.
2
Includes $27.5 million of
PharMEDium shutdown costs and a $12.2 million adjustment to
Profarma's estimate of contingent consideration related to the
purchase price of one of its prior business acquisitions in the
three months ended March 31, 2020.
3
Includes a $17.1 million legal
accrual for estimated costs related to injunctive relief terms
associated with our Multidistrict Litigation opioid settlement
discussions, $24.9 million of legal fees in connection with opioid
lawsuits and investigations, and $36.2 million of other costs in
connection with acquisition-related deal and integration costs,
business transformation efforts, and other restructuring
initiatives in the three months ended March 31, 2021. Includes
$25.0 million of employee severance, $30.8 million of litigation
costs related to legal fees in connection with opioid lawsuits and
investigations, and $11.9 million of other costs in connection with
business transformation efforts, other restructuring initiatives,
and acquisition-related deal and integration costs in the three
months ended March 31, 2020.
4
Includes a $21.4 million loss on
the currency remeasurement of the deferred tax assets relating to
Swiss tax reform in the three months ended March 31, 2021.
5
Includes $2.7 million of expense
relating to Swiss tax reform in the three months ended March 31,
2021. Includes $741.0 million of discrete tax benefits primarily
attributable to the income tax deductions resulting from the
permanent shutdown of the PharMEDium business in the three months
ended March 31, 2020.
AMERISOURCEBERGEN CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share
data)
(unaudited)
Six Months Ended
March 31, 2021
% of Revenue
Six Months Ended
March 31, 2020
% of Revenue
% Change
Revenue
$
101,670,727
$
95,282,381
6.7
%
Cost of goods sold
98,685,116
92,663,060
6.5
%
Gross profit 1
2,985,611
2.94
%
2,619,321
2.75
%
14.0
%
Operating expenses:
Distribution, selling, and administrative
2
1,465,149
1.44
%
1,379,366
1.45
%
6.2
%
Depreciation and amortization
200,350
0.20
%
198,310
0.21
%
1.0
%
Employee severance, litigation, and other
3
148,537
107,041
Impairment of PharMEDium assets
—
361,652
Total operating expenses
1,814,036
1.78
%
2,046,369
2.15
%
(11.4
)%
Operating income
1,171,575
1.15
%
572,952
0.60
%
104.5
%
Other loss, net 4
9,042
1,733
Interest expense, net
68,140
65,428
4.1
%
Income before income taxes
1,094,393
1.08
%
505,791
0.53
%
116.4
%
Income tax expense (benefit) 5
281,681
(651,888
)
Net income
812,712
0.80
%
1,157,679
1.21
%
(29.8
)%
Net income attributable to noncontrolling
interests
(2,600
)
(9,762
)
Net income attributable to
AmerisourceBergen Corporation
$
810,112
0.80
%
$
1,147,917
1.20
%
(29.4
)%
Earnings per share:
Basic
$
3.96
$
5.58
(29.0
)%
Diluted
$
3.91
$
5.54
(29.4
)%
Weighted average common shares
outstanding:
Basic
204,804
205,693
(0.4
)%
Diluted
207,063
207,293
(0.1
)%
________________________________________
1
Includes a $46.6 million LIFO
credit in the six months ended March 31, 2021. Includes a $37.1
million LIFO expense, an $8.5 million gain from antitrust
litigation settlements, and $12.1 million of PharMEDium shutdown
and remediation costs in the six months ended March 31, 2020.
2
Includes $36.5 million of
PharMEDium shutdown and remediation costs and a $12.2 million
adjustment to Profarma's estimate of contingent consideration
related to the purchase price of one of its prior business
acquisitions in the six months ended March 31, 2020.
3
Includes a $17.1 million legal
accrual for estimated costs related to injunctive relief terms
associated with our Multidistrict Litigation opioid settlement
discussions, $56.9 million of litigation and opioid-related costs
related to legal fees in connection with opioid lawsuits and
investigations, and $74.5 million of other costs in connection with
acquisition-related deal and integration costs, business
transformation efforts, and other restructuring initiatives in the
six months ended March 31, 2021. Includes $25.8 million of employee
severance, $55.5 million of litigation costs related to legal fees
in connection with opioid lawsuits and investigations, and $25.7
million of other costs in connection with business transformation
efforts, other restructuring initiatives, and acquisition-related
deal and integration costs in the six months ended March 31,
2020.
4
Includes a $7.3 million loss on
the currency remeasurement of the deferred tax assets relating to
Swiss tax reform in the six months ended March 31, 2021.
5
Includes $55.0 million of expense
relating to Swiss tax reform and $20.4 million of discrete tax
benefits primarily attributable to the income tax deductions
resulting from the permanent shutdown of the PharMEDium business in
the six months ended March 31, 2021. Includes $741.0 million of
discrete tax benefits primarily attributable to the income tax
deductions resulting from the permanent shutdown of the PharMEDium
business in the six months ended March 31, 2020.
AMERISOURCEBERGEN CORPORATION
GAAP TO NON-GAAP
RECONCILIATIONS
(in thousands, except per share
data)
(unaudited)
Three Months Ended March 31,
2021
Gross Profit
Operating Expenses
Operating Income
Income Before Income
Taxes
Income Tax Expense
Net Loss Attributable to
Noncontrolling Interests
Net Income Attributable to
ABC
Diluted Earnings Per
Share
GAAP
$
1,533,381
$
909,034
$
624,347
$
566,511
$
132,506
$
1,262
$
435,267
$
2.10
LIFO credit
(20,918
)
—
(20,918
)
(20,918
)
(4,957
)
—
(15,961
)
(0.08
)
Acquisition-related intangibles
amortization
—
(24,973
)
24,973
24,973
3,302
(437
)
21,234
0.10
Employee severance, litigation, and other
1
—
(78,156
)
78,156
78,156
18,494
—
59,662
0.29
Tax reform 2
—
—
—
21,368
(2,701
)
—
24,069
0.12
Adjusted Non-GAAP
$
1,512,463
$
805,905
$
706,558
$
670,090
$
146,644
$
825
$
524,271
$
2.53
Adjusted Non-GAAP % change vs. prior
year
6.7
%
8.1
%
5.2
%
5.0
%
6.9
%
5.4
%
5.4
%
Percentages of Revenue:
GAAP
Adjusted Non-GAAP
Gross profit
3.12
%
3.08
%
Operating expenses
1.85
%
1.64
%
Operating income
1.27
%
1.44
%
________________________________________
1
Includes a $17.1 million legal
expense accrual for estimated costs associated with the injunctive
relief terms of the potential framework that is part of the
advanced discussions to reach a global settlement of the
Multidistrict Litigation and related state-court opioid
litigation.
2
Includes tax expense relating to
Swiss tax reform and a loss on the currency remeasurement of the
related deferred tax assets, which is recorded within Other Loss
(Income).
Note: For more information
related to non-GAAP financial measures, refer to the section titled
"Supplemental Information Regarding Non-GAAP Financial Measures" of
this release.
AMERISOURCEBERGEN CORPORATION
GAAP TO NON-GAAP
RECONCILIATIONS
(in thousands, except per share
data)
(unaudited)
Three Months Ended March 31,
2020
Gross Profit
Operating Expenses
Operating Income
Income Before Income
Taxes
Income Tax (Benefit)
Expense
Net Income Attributable to
Noncontrolling Interests
Net Income Attributable to
ABC
Diluted Earnings Per
Share
GAAP
$
1,388,107
$
1,078,592
$
309,515
$
276,203
$
(694,908
)
$
(10,834
)
$
960,277
$
4.64
Gain from antitrust litigation
settlements
(54
)
—
(54
)
(54
)
(111
)
—
57
—
LIFO expense
23,853
—
23,853
23,853
5,972
—
17,881
0.09
PharMEDium shutdown costs
4,989
(27,481
)
32,470
32,470
8,107
—
24,363
0.12
Acquisition-related intangibles
amortization
—
(26,670
)
26,670
26,670
6,894
(435
)
19,341
0.09
Employee severance, litigation, and
other
—
(67,732
)
67,732
67,732
16,978
—
50,754
0.25
Impairment of PharMEDium assets
—
(223,652
)
223,652
223,652
56,156
—
167,496
0.81
Contingent consideration adjustment
—
12,153
(12,153
)
(12,153
)
(2,965
)
7,511
(1,677
)
(0.01
)
Certain discrete tax benefits 1
—
—
—
—
741,015
—
(741,015
)
(3.58
)
Adjusted Non-GAAP
$
1,416,895
$
745,210
$
671,685
$
638,373
$
137,138
$
(3,758
)
$
497,477
$
2.40
2
Percentages of Revenue:
GAAP
Adjusted
Non-GAAP
Gross profit
2.93%
2.99%
Operating expenses
2.27%
1.57%
Operating income
0.65%
1.42%
________________________________________
1
Represents discrete tax benefits
primarily attributable to the income tax deductions resulting from
the permanent shutdown of the PharMEDium business.
2
The sum of the components does
not equal the total due to rounding.
Note: For more information
related to non-GAAP financial measures, refer to the section titled
"Supplemental Information Regarding Non-GAAP Financial Measures" of
this release.
AMERISOURCEBERGEN CORPORATION
GAAP TO NON-GAAP
RECONCILIATIONS
(in thousands, except per share
data)
(unaudited)
Six Months Ended March 31,
2021
Gross Profit
Operating Expenses
Operating Income
Income Before Income
Taxes
Income Tax Expense
Net Income Attributable to
Noncontrolling Interests
Net Income Attributable to
ABC
Diluted Earnings Per
Share
GAAP
$
2,985,611
$
1,814,036
$
1,171,575
$
1,094,393
$
281,681
$
(2,600
)
$
810,112
$
3.91
LIFO credit
(46,645
)
—
(46,645
)
(46,645
)
(9,933
)
—
(36,712
)
(0.18
)
Acquisition-related intangibles
amortization
—
(50,007
)
50,007
50,007
7,398
(874
)
41,735
0.20
Employee severance, litigation, and other
1
—
(148,537
)
148,537
148,537
30,468
—
118,069
0.57
Certain discrete tax benefits 2
—
—
—
—
20,425
—
(20,425
)
(0.10
)
Tax reform 3
—
—
—
7,329
(55,019
)
—
62,348
0.30
Adjusted Non-GAAP
$
2,938,966
$
1,615,492
$
1,323,474
$
1,253,621
$
275,020
$
(3,474
)
$
975,127
$
4.71
4
Adjusted Non-GAAP % change vs. prior
year
10.5
%
8.2
%
13.4
%
14.0
%
17.5
%
13.0
%
13.2
%
Percentages of Revenue:
GAAP
Adjusted Non-GAAP
Gross profit
2.94%
2.89%
Operating expenses
1.78%
1.59%
Operating income
1.15%
1.30%
________________________________________
1
Includes a $17.1 million legal
expense accrual for estimated costs associated with the injunctive
relief terms of the potential framework that is part of the
advanced discussions to reach a global settlement of the
Multidistrict Litigation and related state-court opioid
litigation.
2
Represents discrete tax benefits
primarily attributable to the income tax deductions resulting from
the permanent shutdown of the PharMEDium business.
3
Includes tax expense relating to
Swiss tax reform and a loss on the currency remeasurement of the
related deferred tax assets, which is recorded within Other Loss
(Income).
4
The sum of the components does
not equal the total due to rounding.
Note: For more information
related to non-GAAP financial measures, refer to the section titled
"Supplemental Information Regarding Non-GAAP Financial Measures" of
this release.
AMERISOURCEBERGEN CORPORATION
GAAP TO NON-GAAP
RECONCILIATIONS
(in thousands, except per share
data)
(unaudited)
Six Months Ended March 31,
2020
Gross Profit
Operating Expenses
Operating Income
Income Before Income
Taxes
Income Tax (Benefit)
Expense
Net Income Attributable to
Noncontrolling Interests
Net Income Attributable to
ABC
Diluted Earnings Per
Share
GAAP
$
2,619,321
$
2,046,369
$
572,952
$
505,791
$
(651,888
)
$
(9,762
)
$
1,147,917
$
5.54
Gain from antitrust litigation
settlements
(8,546
)
—
(8,546
)
(8,546
)
(2,085
)
—
(6,461
)
(0.03
)
LIFO expense
37,134
—
37,134
37,134
9,059
—
28,075
0.14
PharMEDium shutdown and remediation
costs
12,124
(36,511
)
48,635
48,635
11,864
—
36,771
0.18
Acquisition-related intangibles
amortization
—
(60,236
)
60,236
60,236
14,695
(871
)
44,670
0.22
Employee severance, litigation, and
other
—
(107,041
)
107,041
107,041
26,114
—
80,927
0.39
Impairment of PharMEDium assets
—
(361,652
)
361,652
361,652
88,227
—
273,425
1.32
Contingent consideration adjustment
—
12,153
(12,153
)
(12,153
)
(2,965
)
7,511
(1,677
)
(0.01
)
Certain discrete tax benefits 1
—
—
—
—
741,015
—
(741,015
)
(3.57
)
Adjusted Non-GAAP
$
2,660,033
$
1,493,082
$
1,166,951
$
1,099,790
$
234,036
$
(3,122
)
$
862,632
$
4.16
2
Percentages of Revenue:
GAAP
Adjusted Non-GAAP
Gross profit
2.75%
2.79%
Operating expenses
2.15%
1.57%
Operating income
0.60%
1.22%
________________________________________
1
Represents discrete tax benefits
primarily attributable to the income tax deductions resulting from
the permanent shutdown of the PharMEDium business.
2
The sum of the components does
not equal the total due to rounding.
Note: For more information
related to non-GAAP financial measures, refer to the section titled
"Supplemental Information Regarding Non-GAAP Financial Measures" of
this release.
AMERISOURCEBERGEN CORPORATION
SUMMARY SEGMENT INFORMATION
(dollars in thousands)
(unaudited)
Three Months Ended March
31,
Revenue
2021
2020
% Change
Pharmaceutical Distribution Services
$
47,101,331
$
45,562,670
3.4
%
Other
2,092,772
1,876,593
11.5
%
Intersegment eliminations
(39,932
)
(21,624
)
Revenue
$
49,154,171
$
47,417,639
3.7
%
Three Months Ended March
31,
Operating income
2021
2020
% Change
Pharmaceutical Distribution Services
$
589,033
$
563,097
4.6
%
Other
123,180
108,260
13.8
%
Intersegment eliminations
(5,655
)
328
Total segment operating income
706,558
671,685
5.2
%
Gain from antitrust litigation
settlements
—
54
LIFO credit (expense)
20,918
(23,853
)
PharMEDium shutdown costs
—
(32,470
)
Acquisition-related intangibles
amortization
(24,973
)
(26,670
)
Employee severance, litigation, and
other
(78,156
)
(67,732
)
Impairment of PharMEDium assets
—
(223,652
)
Contingent consideration adjustment
—
12,153
Operating income
$
624,347
$
309,515
Percentages of revenue:
Pharmaceutical Distribution Services
Gross profit
2.39
%
2.32
%
Operating expenses
1.14
%
1.08
%
Operating income
1.25
%
1.24
%
Other
Gross profit
18.81
%
19.15
%
Operating expenses
12.92
%
13.38
%
Operating income
5.89
%
5.77
%
AmerisourceBergen Corporation (GAAP)
Gross profit
3.12
%
2.93
%
Operating expenses
1.85
%
2.27
%
Operating income
1.27
%
0.65
%
AmerisourceBergen Corporation
(Non-GAAP)
Adjusted gross profit
3.08
%
2.99
%
Adjusted operating expenses
1.64
%
1.57
%
Adjusted operating income
1.44
%
1.42
%
Note: For more information related to
non-GAAP financial measures, refer to the section titled
"Supplemental Information Regarding Non-GAAP Financial Measures" of
this release.
AMERISOURCEBERGEN CORPORATION
SUMMARY SEGMENT INFORMATION
(dollars in thousands)
(unaudited)
Six Months Ended March
31,
Revenue
2021
2020
% Change
Pharmaceutical Distribution Services
$
97,593,841
$
91,599,498
6.5
%
Other
4,145,046
3,723,577
11.3
%
Intersegment eliminations
(68,160
)
(40,694
)
Revenue
$
101,670,727
$
95,282,381
6.7
%
Six Months Ended March
31,
Operating income
2021
2020
% Change
Pharmaceutical Distribution Services
$
1,085,100
$
954,791
13.6
%
Other
244,827
212,739
15.1
%
Intersegment eliminations
(6,453
)
(579
)
Total segment operating income
1,323,474
1,166,951
13.4
%
Gain from antitrust litigation
settlements
—
8,546
LIFO credit (expense)
46,645
(37,134
)
PharMEDium shutdown and remediation
costs
—
(48,635
)
Acquisition-related intangibles
amortization
(50,007
)
(60,236
)
Employee severance, litigation, and
other
(148,537
)
(107,041
)
Impairment of PharMEDium assets
—
(361,652
)
Contingent consideration adjustment
—
12,153
Operating income
$
1,171,575
$
572,952
Percentages of revenue:
Pharmaceutical Distribution Services
Gross profit
2.22
%
2.13
%
Operating expenses
1.11
%
1.09
%
Operating income
1.11
%
1.04
%
Other
Gross profit
18.84
%
19.08
%
Operating expenses
12.94
%
13.37
%
Operating income
5.91
%
5.71
%
AmerisourceBergen Corporation (GAAP)
Gross profit
2.94
%
2.75
%
Operating expenses
1.78
%
2.15
%
Operating income
1.15
%
0.60
%
AmerisourceBergen Corporation
(Non-GAAP)
Adjusted gross profit
2.89
%
2.79
%
Adjusted operating expenses
1.59
%
1.57
%
Adjusted operating income
1.30
%
1.22
%
Note: For more information related to
non-GAAP financial measures, refer to the section titled
"Supplemental Information Regarding Non-GAAP Financial Measures" of
this release.
AMERISOURCEBERGEN CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands)
(unaudited)
March 31,
September 30,
2021
2020
ASSETS
Current assets:
Cash and cash equivalents
$
6,641,180
$
4,597,746
Accounts receivable, net
14,134,326
13,846,301
Inventories
12,954,676
12,589,278
Right to recover assets
1,217,032
1,344,649
Income tax receivable
331,291
488,428
Prepaid expenses and other
190,644
189,300
Total current assets
35,469,149
33,055,702
Property and equipment, net
1,482,753
1,484,808
Goodwill and other intangible assets
8,548,906
8,592,826
Deferred income taxes
302,554
361,640
Other long-term assets
1,199,888
779,854
Total assets
$
47,003,250
$
44,274,830
LIABILITIES AND STOCKHOLDERS’
DEFICIT
Current liabilities:
Accounts payable
$
31,420,390
$
31,705,055
Other current liabilities
1,532,171
1,646,763
Short-term debt
43,885
501,259
Total current liabilities
32,996,446
33,853,077
Long-term debt
6,147,112
3,618,261
Accrued income taxes
273,031
284,845
Deferred income taxes
768,551
686,485
Other long-term liabilities
708,174
472,855
Accrued litigation liability
6,212,718
6,198,943
Total deficit
(102,782
)
(839,636
)
Total liabilities and stockholders'
deficit
$
47,003,250
$
44,274,830
AMERISOURCEBERGEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended March
31,
2021
2020
Operating Activities:
Net income
$
812,712
$
1,157,679
Adjustments to reconcile net income to net
cash provided by operating activities 1
415,159
643,981
Changes in operating assets and
liabilities, excluding the effects of acquisitions:
Accounts receivable
(193,770
)
(2,052,216
)
Inventories
(314,294
)
(152,359
)
Accounts payable
(292,555
)
2,395,847
Other, net 2
21,898
(997,225
)
Net cash provided by operating
activities
449,150
995,707
Investing Activities:
Capital expenditures
(151,612
)
(144,382
)
Cost of equity investments
(162,620
)
(30,580
)
Other, net
—
7,162
Net cash used in investing activities
(314,232
)
(167,800
)
Financing Activities:
Net borrowings 3
2,069,645
947
Purchases of common stock 4
(82,150
)
(407,152
)
Exercises of stock options
130,326
76,757
Cash dividends on common stock
(182,365
)
(170,541
)
Other
(26,940
)
(10,174
)
Net cash provided by (used in) financing
activities
1,908,516
(510,163
)
Increase in cash and cash equivalents
2,043,434
317,744
Cash and cash equivalents at beginning of
period
4,597,746
3,374,194
Cash and cash equivalents at end of
period
$
6,641,180
$
3,691,938
________________________________________
1
Includes a $361.7 million
impairment of PharMEDium assets in the six months ended March 31,
2020.
2
Includes a $693.6 million
increase in income tax receivable for the six months ended March
31, 2020 primarily as a result of recognizing certain discrete tax
benefits.
3
Includes proceeds from the
issuance of the Company's $1,525 million of 0.737% senior notes and
$1,000 million of 2.700% senior notes that will be used to finance
a portion of the acquisition of a majority of WBA's Alliance
Healthcare businesses.
4
Purchases of common stock in the
six months ended March 31, 2020 includes $14.8 million of September
2019 purchases that cash settled in October 2019.
SUPPLEMENTAL INFORMATION REGARDING
NON-GAAP FINANCIAL MEASURES
To supplement the financial measures prepared in accordance with
U.S. generally accepted accounting principles (GAAP), the Company
uses the non-GAAP financial measures described below. The non-GAAP
financial measures should be viewed in addition to, and not in lieu
of, financial measures calculated in accordance with GAAP. These
supplemental measures may vary from, and may not be comparable to,
similarly titled measures by other companies.
The non-GAAP financial measures are presented because management
uses non-GAAP financial measures to evaluate the Company’s
operating performance, to perform financial planning, and to
determine incentive compensation. Therefore, the Company believes
that the presentation of non-GAAP financial measures provides
useful supplementary information to, and facilitates additional
analysis by, investors. The presented non-GAAP financial measures
exclude items that management does not believe reflect the
Company’s core operating performance because such items are outside
the control of the Company or are inherently unusual,
non-operating, unpredictable, non-recurring, or non-cash. We have
included the following non-GAAP earnings-related financial measures
in this release:
- Adjusted gross profit and adjusted gross profit margin:
Adjusted gross profit is a non-GAAP financial measure that excludes
the gain from antitrust litigation settlements, LIFO expense
(credit), and certain PharMEDium shutdown and remediation costs.
Gain from antitrust litigation settlements and LIFO expense
(credit) are excluded because the Company cannot control the
amounts recognized or timing of these items. PharMEDium remediation
costs are excluded because they were unpredictable expenses.
PharMEDium shutdown costs are excluded because they were unusual
and non-recurring. Adjusted gross profit margin is the ratio of
adjusted gross profit to total revenue. Management believes that
these non-GAAP financial measures are useful to investors as a
supplemental measure of the Company’s ongoing operating
performance. The gain from antitrust litigation settlements relates
to the settlement of lawsuits that have been filed against brand
pharmaceutical manufacturers alleging that the manufacturer, by
itself or in concert with others, took improper actions to delay or
prevent generic drugs from entering the market. The PharMEDium
remediation costs relate to costs incurred in connection with
suspended production activities following U.S. Food and Drug
Administration inspections. PharMEDium shutdown costs were costs
incurred in connection with the permanent shutdown of the
PharMEDium business. LIFO expense (credit) is affected by changes
in inventory quantities, product mix, and manufacturer pricing
practices, which may be impacted by market and other external
influences.
- Adjusted operating expenses and adjusted operating expense
margin: Adjusted operating expenses is a non-GAAP financial measure
that excludes acquisition-related intangibles amortization,
employee severance, litigation, and other, certain PharMEDium
shutdown and remediation costs, impairment of PharMEDium assets,
and a contingent consideration adjustment. Adjusted operating
expense margin is the ratio of adjusted operating expenses to total
revenue. Acquisition-related intangibles amortization is excluded
because it is a non-cash item and does not reflect the operating
performance of the acquired companies. We exclude employee
severance amounts that relate to unpredictable and/or non-recurring
business restructuring. We exclude the amount of litigation
settlements and other expenses, as well as PharMEDium shutdown and
remediation costs, a contingent consideration adjustment and the
impairment of PharMEDium assets, that are unusual, non-operating,
unpredictable, non-recurring or non-cash in nature because we
believe these exclusions facilitate the analysis of our ongoing
operational performance. The contingent consideration adjustment
reflects an adjustment made by one of the Company’s
non-wholly-owned subsidiaries, Profarma Distribuidora de Produtos
Farmacêuticos S.A., of its previous estimate of contingent
consideration related to the purchase price of a prior business
acquisition.
- Adjusted operating income and adjusted operating income margin:
Adjusted operating income is a non-GAAP financial measure that
excludes the same items that are described above and excluded from
adjusted gross profit and adjusted operating expenses. Adjusted
operating income margin is the ratio of adjusted operating income
to total revenue. Management believes that these non-GAAP financial
measures are useful to investors as a supplemental way to evaluate
the Company’s performance because the adjustments are unusual,
non-operating, unpredictable, non-recurring or non-cash in
nature.
- Adjusted income before income taxes: Adjusted income before
income taxes is a non-GAAP financial measure that excludes the same
items that are described above and excluded from adjusted operating
income. In addition, the loss on the currency remeasurement of the
deferred tax asset relating to Swiss tax reform in the three and
six months ended March 31, 2021 is excluded from adjusted income
before income taxes because it is unusual, non-operating, and
non-recurring. Management believes that this non-GAAP financial
measure is useful to investors because it facilitates the
calculation of the Company’s adjusted effective tax rate.
- Adjusted effective tax rate: Adjusted effective tax rate is a
non-GAAP financial measure that is determined by dividing adjusted
income tax expense/benefit by adjusted income before income taxes.
Management believes that this non-GAAP financial measure is useful
to investors because it presents an effective tax rate that does
not reflect unusual, non-operating, unpredictable, non-recurring,
or non-cash amounts or items that are outside the control of the
Company.
- Adjusted income tax expense: Adjusted income tax expense is a
non-GAAP financial measure that excludes the income tax expense
associated with the same items that are described above and
excluded from adjusted income before income taxes. Certain discrete
tax benefits primarily attributable to the income tax deduction
recognized in connection with the permanent shutdown of PharMEDium
as well as the Coronavirus Aid, Relief and Economic Security Act
(the "CARES Act") are also excluded from adjusted income tax
expense for the three and six months ended March 31, 2020 and the
six months ended March 31, 2021. Further, certain expenses relating
to tax reform in Switzerland is excluded from adjusted income tax
expense for the three and six months ended March 31, 2021.
Management believes that this non-GAAP financial measure is useful
to investors as a supplemental way to evaluate the Company’s
performance because the adjustments are unusual, non-operating,
unpredictable, non-recurring or non-cash in nature.
- Adjusted net income/loss attributable to noncontrolling
interests: Adjusted net income/loss attributable to noncontrolling
interests excludes the non-controlling interest portion of
acquisition-related intangibles amortization and a contingent
consideration adjustment. Management believes that this non-GAAP
financial measure is useful to investors because it facilitates the
calculation of adjusted net income attributable to ABC.
- Adjusted net income attributable to ABC: Adjusted net income
attributable to ABC is a non-GAAP financial measure that excludes
the same items that are described above. Management believes that
this non-GAAP financial measure is useful to investors as a
supplemental way to evaluate the Company's performance because the
adjustments are unusual, non-operating, unpredictable,
non-recurring or non-cash in nature.
- Adjusted diluted earnings per share: Adjusted diluted earnings
per share excludes the per share impact of adjustments including
gain from antitrust litigation settlements; LIFO expense (credit);
PharMEDium shutdown and remediation costs; acquisition-related
intangibles amortization; employee severance, litigation, and
other; impairment of PharMEDium assets; and a contingent
consideration adjustment, in each case net of the tax effect
calculated using the applicable effective tax rate for those items.
In addition, the per share impact of certain discrete tax benefits
primarily attributable to the income tax deduction recognized in
connection with the permanent shutdown of PharMEDium as well as the
CARES Act for the three and six months ended March 31, 2020 and the
six months ended March 31, 2021, and the per share impact of
certain expenses relating to tax reform in Switzerland are also
excluded from adjusted diluted earnings per share for the three and
six months ended March 31, 2021. Management believes that this
non-GAAP financial measure is useful to investors because it
eliminates the per share impact of the items that are outside the
control of the Company or that we consider to not be indicative of
our ongoing operating performance due to their inherent unusual,
non-operating, unpredictable, non-recurring, or non-cash
nature.
In addition, the Company updated its non-GAAP fiscal year 2021
guidance for diluted earnings per share, operating expense and
operating income and has previously provided non-GAAP fiscal year
2021 guidance for effective income tax rate. The guidance for each
metric excludes the same or similar items as those that are
excluded from the historical non-GAAP financial measures, as well
as significant items that are outside the control of the Company or
inherently unusual, non-operating, unpredictable, non-recurring or
non-cash in nature. In addition, it has previously provided fiscal
year 2021 adjusted free cash flow guidance. For fiscal year 2021,
we have defined the non-GAAP financial measure of adjusted free
cash flow as net cash provided by operating activities, excluding
other significant unpredictable or non-recurring cash payments or
receipts relating to legal settlements, minus capital expenditures.
For the six months ended March 31, 2021 adjusted free cash flow of
$297.5 million consisted of net cash provided by operating
activities of $449.2 million minus capital expenditures of $151.6
million. The Company does not provide forward looking guidance on a
GAAP basis for such metrics because certain financial information,
the probable significance of which cannot be determined, is not
available and cannot be reasonably estimated. For example, LIFO
expense (credit) is largely dependent upon the future inflation or
deflation of brand and generic pharmaceuticals, which is out of the
Company’s control, and acquisition-related intangibles amortization
depends on the timing and amount of future acquisitions, which
cannot be reasonably estimated. Similarly, the timing and amount of
litigation settlements is unpredictable and non-recurring.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210505005225/en/
Bennett S. Murphy Senior Vice President, Investor
Relations 610-727-3693
bmurphy@amerisourcebergen.com
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