VALLEY FORGE, Pa.--(BUSINESS WIRE)--AmerisourceBergen Corporation (NYSE:ABC) today reported that in its fiscal year 2020 fourth quarter ended September 30, 2020, revenue increased 7.9 percent to $49.2 billion. Revenue increased 5.7 percent to $189.9 billion for the fiscal year. On the basis of U.S. generally accepted accounting principles (GAAP), diluted earnings per share (EPS) was $(23.74) for the September quarter of fiscal 2020, compared to $0.63 in the prior year quarter. Adjusted diluted EPS, which is a non-GAAP measure that excludes items described below, including a $6.6 billion expense accrual related to opioid lawsuits, increased 17.4 percent to $1.89 in the fiscal fourth quarter. For fiscal year 2020, adjusted diluted EPS increased 11.4 percent to $7.90.
“AmerisourceBergen delivered strong revenue and adjusted diluted EPS growth in fiscal year 2020. Working in an unprecedented environment, our associates rallied around our purpose of being united in our responsibility to create healthier futures. They proved the resilience of our business by continuously innovating to meet customer needs and delivering unparalleled execution to meet patient needs. By focusing on our values, we ensured a stable supply chain and demonstrated the vital nature of our role in the health system," said Steven H. Collis, Chairman, President & Chief Executive Officer of AmerisourceBergen.
"We are well-positioned as we enter fiscal 2021," Mr. Collis continued. "We will leverage our strong customer base, leadership in specialty, dedication to innovation, and successful corporate stewardship to grow our portfolio of pharmaceutical-centric services and solutions, further our execution excellence, advance our talent, and become an even more unified AmerisourceBergen. We also remain committed to delivering long-term growth and creating value for our shareholders, partners, customers, and the patients they serve."
Fourth Quarter Fiscal Year 2020 Summary Results
| GAAP | Adjusted (Non-GAAP) | |
| Revenue | $49.2B | $49.2B |
| Gross Profit | $1.3B | $1.3B |
| Operating Expenses | $7.5B | $795M |
| Operating (Loss) Income | $(6.1)B | $530M |
| Interest Expense, Net | $35M | $35M |
| Effective Tax Rate | 21.1% | 21.7% |
| Net (Loss) Income Attributable to ABC | $(4.8)B | $389M |
| Diluted Earnings Per Share | $(23.74) | $1.89 |
| Diluted Shares Outstanding | 204.1M | 206.4M |
- Revenue: In the fourth quarter of fiscal 2020, revenue was $49.2 billion, up 7.9 percent compared to the same quarter in the previous fiscal year, reflecting a 7.8 percent increase in Pharmaceutical Distribution Services revenue and a 10.8 percent increase in revenue within Other.
- Gross Profit: Gross profit in the fiscal 2020 fourth quarter was $1.3 billion, a 13.7 percent increase compared to the same period in the previous fiscal year. Gross profit in the current fiscal quarter was favorably impacted by the increases in gross profit for both Pharmaceutical Distribution Services and Other. Gross profit was also favorably impacted by a $35.8 million LIFO credit in the current year quarter versus a $57.2 million LIFO expense in the prior year period. Gross profit as a percentage of revenue was 2.74 percent, an increase of 14 basis points from the prior year quarter.
- Operating Expenses: In the fourth quarter of fiscal 2020, operating expenses were $7.5 billion, compared to $1.0 billion in the same prior year period primarily due to a $6.6 billion expense accrual in connection with opioid lawsuits. Operating expenses as a percentage of revenue in the fiscal 2020 fourth quarter were 15.15 percent, compared to 2.20 percent for the same period in the previous fiscal year.
- Operating (Loss) Income: In the fiscal 2020 fourth quarter, operating (loss) income was $(6.1) billion versus $179.8 million in the prior year quarter. Operating income was negatively impacted by the previously mentioned legal expense accrual. Operating (loss) income as a percentage of revenue in the fiscal 2020 fourth quarter was (12.41) percent compared to 0.39 percent for the same period in the previous fiscal year.
- Interest Expense, Net:In the fiscal 2020 fourth quarter, net interest expense of $34.7 million was down 4.7 percent versus the prior year quarter due to a decrease in interest expense, substantially offset by a decrease in interest income as a result of a decline in investment interest rates.
- Effective Tax Rate: The effective tax rate was 21.1 percent for the fourth quarter of fiscal 2020 reflecting the legal expense accrual and a credit related to Swiss tax reform.
- Diluted Earnings Per Share: Diluted earnings per share was $(23.74) in the fourth quarter of fiscal 2020 compared to $0.63 in the previous fiscal year fourth quarter. This decrease was primarily due to the legal expense accrual.
- Diluted Shares Outstanding: Diluted weighted average shares outstanding for the fourth quarter of fiscal 2020 were 204.1 million, a 2.7 percent decline versus the prior fiscal year fourth quarter primarily due to share repurchases made earlier in the fiscal year, net of stock option exercises.
Opioid Litigation
In the fourth quarter of fiscal 2020, with regard to litigation relating to the distribution of prescription opioid pain medications, the Company recorded a $6.6 billion ($5.5 billion after tax) charge, which is excluded from its adjusted (non-GAAP) results. The Company is in advanced discussions, which are ongoing, to reach a global settlement to be paid over an 18-year period to resolve cases currently filed and that could be filed by states, counties, municipalities and other governmental entities covered by the settlement. The Company has recorded the charge now that it has determined that a loss is probable and the amount is reasonably estimable. A global settlement remains subject to contingencies that could impact whether the parties ultimately decide to move forward.
Fourth Quarter Adjusted (non-GAAP) Results
- Revenue: No adjustments were made to the GAAP presentation of revenue. In the fourth quarter of fiscal 2020, revenue was $49.2 billion, up 7.9 percent compared to the same quarter in the previous fiscal year, reflecting a 7.8 percent increase in Pharmaceutical Distribution Services revenue and a 10.8 percent increase in revenue within Other.
- Adjusted Gross Profit: Adjusted gross profit in the fiscal 2020 fourth quarter was $1.3 billion, which was up 6.4 percent compared to the same period in the previous year, due to the increases in gross profit within Pharmaceutical Distribution Services and Other primarily resulting from higher revenue. Adjusted gross profit as a percentage of revenue was 2.69 percent in the fiscal 2020 fourth quarter, a decrease of 4 basis points from the prior year quarter.
- Adjusted Operating Expenses: In the fourth quarter of fiscal 2020, adjusted operating expenses were $795.4 million, an increase of 0.8 percent compared to the same period in the previous fiscal year. Adjusted operating expenses as a percentage of revenue in the fiscal 2020 fourth quarter was 1.62 percent, compared to 1.73 percent for the same period in the previous fiscal year.
- Adjusted Operating Income: In the fiscal 2020 fourth quarter, adjusted operating income of $530.0 million increased 16.2 percent from the prior year period due to a 15.2 percent increase in operating income within Pharmaceutical Distribution Services and a 20.5 percent increase in operating income within Other. Adjusted operating income as a percentage of revenue was 1.08 percent, which was up 8 basis points from the prior year quarter.
- Interest Expense, Net:No adjustments were made to the GAAP presentation of net interest expense.In the fiscal 2020 fourth quarter, net interest expense of $34.7 million was down 4.7 percent versus the prior year quarter due to a decrease in interest expense, substantially offset by a decrease in interest income as a result of a decline in investment interest rates.
- Adjusted Effective Tax Rate: The adjusted effective tax rate was 21.7 percent for the fourth quarter of fiscal 2020 and included a discrete unfavorable item. The prior year fourth quarter effective tax rate was 19.6 percent and included a favorable discrete item.
- Adjusted Diluted Earnings Per Share: Adjusted diluted earnings per share was up 17.4 percent to $1.89 in the fourth quarter of fiscal 2020 compared to $1.61 in the previous fiscal year fourth quarter, primarily driven by the increase in adjusted operating income and a slightly lower diluted share count.
- Adjusted Diluted Shares Outstanding: Adjusted diluted weighted average shares outstanding for the fourth quarter of fiscal 2020 were 206.4 million, a 1.6 percent decline versus the prior fiscal year fourth quarter primarily due to share repurchases earlier in the fiscal year, net of stock option exercises.
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 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 $47.3 billion, an increase of 7.8 percent compared to the same quarter in the prior fiscal year primarily due to increased volume associated with the growth of some of its largest customers and continued strong specialty product sales. Segment operating income of $425.6 million in the fourth quarter of fiscal 2020 was up 15.2 percent compared to the same period in the previous fiscal year, primarily due to the increase in gross profit, the exit of the PharMEDium compounding business, and modest expense growth.
Other
Revenue in Other was $2.0 billion in the fourth quarter of fiscal 2020, an increase of 10.8 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 20.5 percent to $104.5 million in the fourth quarter of fiscal 2020 primarily due to an increase at World Courier.
Fiscal Year 2020 Summary Results
| GAAP | Adjusted (non-GAAP) | |
| Revenue | $189.9B | $189.9B |
| Gross Profit | $5.2B | $5.2B |
| Operating Expenses | $10.3B | $3.0B |
| Operating (Loss) Income | $(5.1)B | $2.2B |
| Interest Expense, Net | $138M | $138M |
| Effective Tax Rate | 35.8% | 20.8% |
| Net (Loss) Income Attributable to ABC | $(3.4)B | $1.6B |
| Diluted Earnings Per Share | $(16.65) | $7.90 |
| Diluted Shares Outstanding | 204.8M | 206.6M |
Summary Fiscal Year GAAP Results
In fiscal year 2020, GAAP diluted EPS was $(16.65), compared to $4.04 in the prior year. Revenue of $189.9 billion was up 5.7 percent over the last fiscal year. Gross profit increased 1.0 percent to $5.2 billion primarily due to increases in gross profit within Pharmaceutical Distribution Services and Other and was partially offset by lower gains from antitrust litigation settlements and a LIFO expense in the current year versus a LIFO credit in the prior year. Operating expenses increased 156.5 percent and operating income decreased 561.8 percent over the prior fiscal year primarily due to the expense accrual in connection with opioid lawsuits. Diluted weighted average shares outstanding in fiscal 2020 were 204.8 million, down 3.3 percent from the prior fiscal year.
Summary Fiscal Year Adjusted (non-GAAP) Results
In fiscal year 2020, adjusted diluted EPS was $7.90, an increase of 11.4 percent over the prior fiscal year primarily due to an increase in operating income, and a decrease in adjusted diluted weighted average shares outstanding. Revenue increased 5.7 percent from last fiscal year to $189.9 billion. Adjusted gross profit increased by $221.1 million, or 4.4 percent, from the prior fiscal year to $5.2 billion due to the increases in gross profit within Pharmaceutical Distribution Services and Other. Adjusted operating income increased 7.5 percent due to an increase in gross profit and a favorable comparison due to the exit of the PharMEDium compounding business, and modest expense growth. Adjusted operating income margin increased 2 basis points from 1.14 percent to 1.16 percent. Adjusted diluted weighted average shares outstanding in fiscal 2020 were 206.6 million, down 2.5 percent from the prior fiscal year.
Recent Company Highlights & Milestones
- AmerisourceBergen was selected by the Department of Health and Human Services to store, manage, and distribute pharmaceuticals for the Strategic National Stockpile.
- Good Neighbor Pharmacy, AmerisourceBergen's national independent pharmacy network, hosted ThoughtSpot, its annual conference and tradeshow. Thousands of independent pharmacists participated in ThoughtSpot 2020 which included a virtual general session and keynote address, more than 40 on-demand continuing education sessions, and a selection of live webinars hosted on AmerisourceBergen's new virtual event platform.
- AmerisourceBergen hosted its first-ever ThinkLive Trade virtual event, a three-day online summit geared toward brand, specialty and generic manufacturers. The event addressed current industry challenges and how AmerisourceBergen will collaborate with partners, manufacturers and customers to drive supply chain sophistication and optimize the development and delivery of pharmaceuticals and healthcare products in the future.
- The AmerisourceBergen Foundation, a separate not-for-profit charitable giving organization, has continued making grants to organizations that promote social justice, health access and equity, and organizations that are providing relief to those impacted by the pandemic, Hurricane Sally, and wildfires throughout the West Coast.
Dividend Declaration
The Company's Board of Directors declared a quarterly dividend of $0.44 per common share, a 5% increase in its quarterly dividend rate from $0.42 per common share. The quarterly dividend of $0.44 per common share will be payable November 30, 2020, to stockholders of record at the close of business on November 16, 2020.
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 and 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 introduced its fiscal year 2021 financial guidance, which reflects growth in both Pharmaceutical Distribution Services and businesses focused on Global Commercialization Services & Animal Health. AmerisourceBergen does not include unidentified capital allocation opportunities into its forward-looking guidance. The Company expects:
- Revenue growth in the mid-single digit percent range; and
- Adjusted diluted earnings per share to be in the range of $8.20 to $8.45.
Additional expectations include:
- Adjusted operating expenses to increase in the mid-single digit percent range;
- Adjusted operating income growth in the mid-single digit percent range;
- Pharmaceutical Distribution Services segment operating income growth in the mid-single digit percent range;
- Other, which is comprised of businesses focused on Global Commercialization Services & Animal Health, operating income growth in the mid-single digit percent range;
- Adjusted effective tax rate to be approximately 21 percent to 22 percent;
- Adjusted free cash flow to be approximately $1.5 billion;
- Capital expenditures in the $400 million range; and
- Weighted average diluted shares are expected to be between 206 million to 207 million for the fiscal year.
Conference Call & Slide Presentation
The Company will host a conference call to discuss the results at 8:00 a.m. ET on November 5, 2020. 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. 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 two hours after the completion of the call and will remain available for 30 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 U.S., dial (877) 344-7529. From outside the U.S., dial +1 (412) 317-0088. The access code for the replay is 10148255.
Upcoming Investor Events
AmerisourceBergen management will be attending the following investor conference in the coming months:
- J.P. Morgan Healthcare Conference, January 10-14.
Please check the website for updates regarding the timing of the live presentation webcasts, if any, and for replay information.
About AmerisourceBergen
AmerisourceBergen provides pharmaceutical products, value-driving services and business solutions that improve access to care. Tens of thousands of healthcare providers, veterinary practices and livestock producers trust us as their partner in the pharmaceutical supply chain. Global manufacturers depend on us for services that drive commercial success for their products. Through our daily work—and powered by our 22,000 associates—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. The company is headquartered in Valley Forge, Pa. and has a presence in 50+ countries. Learn more at investor.amerisourcebergen.com.
