Revenues of $47.4 billion for the Second
Quarter, a 9.5% Percent Increase Year-Over-Year Second Quarter GAAP
Diluted EPS of $4.64 and Adjusted Diluted EPS of $2.40 Adjusted
Diluted EPS Guidance Range Revised to $7.35 to $7.65 for Fiscal
2020
AmerisourceBergen Corporation (NYSE:ABC) today reported that in
its fiscal year 2020 second quarter ended March 31, 2020, revenue
increased 9.5 percent to $47.4 billion. On the basis of U.S.
generally accepted accounting principles (GAAP), diluted earnings
per share (EPS) was $4.64 for the March quarter of fiscal 2020,
compared to $0.13 in the prior year quarter. Adjusted diluted EPS,
which is a non-GAAP measure that excludes items described below,
increased 13.7 percent to $2.40 in the fiscal second quarter.
The Company revised its adjusted diluted EPS guidance for fiscal
2020 to a range of $7.35 to $7.65, from $7.55 to $7.80 previously.
The Company does not provide forward-looking guidance on a GAAP
basis, as discussed below in Fiscal Year 2020 Expectations.
"While we are pleased to report another quarter of strong
revenue and adjusted diluted EPS growth in the second quarter of
fiscal 2020, we are even prouder of the impressive work being done
across our company to ensure continued patient access to
pharmaceuticals in the midst of the COVID-19 pandemic," said Steven
H. Collis, Chairman, President and Chief Executive Officer of
AmerisourceBergen.
AmerisourceBergen’s protocols to protect and support the health
and wellness of its associates have been enhanced during the
COVID-19 pandemic and the Company has business continuity plans in
place that are designed to help ensure the continued operation of
critical business functions.
"I have been inspired by the actions of our associates to be
innovative and solution-oriented to meet the complex needs of our
upstream and downstream partners," Mr. Collis continued.
"AmerisourceBergen's diligence, actions and thoughtfulness in
navigating this pandemic have been guided by our purpose of being
united in our responsibility to create healthier futures and have
proven vital for all our stakeholders."
Second Quarter Fiscal Year 2020 Summary
Results
GAAP
Adjusted (Non-GAAP)
Revenue
$47.4B
$47.4B
Gross Profit
$1.4B
$1.4B
Operating Expenses
$1,079M
$745M
Operating Income
$310M
$672M
Interest Expense, Net
$34M
$34M
Effective Tax Rate
(251.6)%
21.5%
Net Income Attributable to ABC
$960M
$497M
Diluted Earnings Per Share
$4.64
$2.40
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 2020, revenue was $47.4 billion, up 9.5 percent compared to
the same quarter in the previous fiscal year, reflecting a 9.3
percent increase in Pharmaceutical Distribution Services revenue
and a 12.7 percent increase in revenue within Other.
- Gross Profit: Gross profit in the
fiscal 2020 second quarter was $1.4 billion, a 2.6 percent decrease
compared to the same period in the previous fiscal year. Gross
profit in the current year quarter was unfavorably impacted by LIFO
expense in comparison to a LIFO credit in the prior year period and
significantly lower gains from antitrust litigation settlements,
offset in part by increases in gross profit in Pharmaceutical
Distribution Services and Other. Gross profit as a percentage of
revenue was 2.93 percent, a decrease of 36 basis points from the
prior year quarter.
- Operating Expenses: In the second
quarter of fiscal 2020, operating expenses were $1,078.6 million,
compared to $1,377.2 million in the same period last fiscal year.
The decrease in operating expenses was primarily due to the $223.7
million impairment of PharMEDium's assets compared to a $570.0
million impairment of PharMEDium's assets in the same period in the
previous fiscal year. Operating expenses as a percentage of revenue
in the fiscal 2020 second quarter was 2.27 percent, compared to
3.18 percent for the same period in the previous fiscal year.
- Operating Income: In the fiscal
2020 second quarter, operating income increased to $309.5 million
from $47.6 million in the prior year quarter due to the decrease in
operating expenses. Operating income as a percentage of revenue was
0.65 percent in the second quarter of fiscal 2020, compared to 0.11
percent for the same period in the previous fiscal year.
- Interest Expense, Net: In the
fiscal 2020 second quarter, net interest expense of $34.4 million
was down 20.5 percent versus the prior year quarter primarily due
to certain build-to-suit leases now being accounted for as
operating leases, resulting from the adoption of the new lease
accounting standard.
- Effective Tax Rate: The effective
tax rate was (251.6) percent for the second quarter of fiscal 2020.
The effective tax rate in the quarter was primarily impacted by tax
benefits associated with the Company's decision to permanently exit
the PharMEDium compounding business. The prior year's second
quarter effective tax rate of (49.5) percent was favorably impacted
by the $570.0 million impairment of PharMEDium's assets.
- Diluted Earnings Per Share:
Diluted earnings per share was $4.64 in the second quarter of
fiscal 2020 compared to $0.13 in the previous fiscal year’s second
quarter. This increase was primarily due to the discrete income tax
benefits recognized in the current year period.
- Diluted Shares Outstanding:
Diluted weighted average shares outstanding for the second quarter
of fiscal 2020 were 207.1 million, a 2.6 percent decline versus the
prior fiscal year second quarter primarily due to share
repurchases.
Second Quarter Adjusted (non-GAAP)
Results
The comments below compare adjusted results, which exclude: gain
from antitrust litigation settlements; LIFO expense/credit;
PharMEDium remediation and shutdown costs; New York State Opioid
Stewardship Act; contingent consideration adjustment;
acquisition-related intangibles amortization; employee severance,
litigation, and other; impairment of PharMEDium's assets; certain
discrete tax benefits; and a gain on the sale of an equity
investment.
- Revenue: No adjustments were made
to the GAAP presentation of revenue. In the second quarter of
fiscal 2020, revenue was $47.4 billion, up 9.5 percent compared to
the same quarter in the previous fiscal year, reflecting a 9.3
percent increase in Pharmaceutical Distribution Services revenue
and a 12.7 percent increase in revenue within Other.
- Adjusted Gross Profit: Adjusted
gross profit in the fiscal 2020 second quarter was $1.4 billion,
which was up 7.5 percent compared to the same period in the
previous year, due to the increases in gross profit in
Pharmaceutical Distribution Services and Other. Adjusted gross
profit as a percentage of revenue was 2.99 percent in the fiscal
2020 second quarter, a decrease of 5 basis points from the prior
year quarter.
- Adjusted Operating Expenses: In
the second quarter of fiscal 2020, adjusted operating expenses were
$745.2 million, an increase of 6.2 percent compared to the same
period in the previous fiscal year primarily due to an increase in
costs to support revenue growth primarily in Other, offset in part
by lower depreciation due to the completion of the integration of
H. D. Smith. Adjusted operating expenses as a percentage of revenue
in the fiscal 2020 second quarter was 1.57 percent, compared to
1.62 percent for the same period in the previous fiscal year.
- Adjusted Operating Income: In the
fiscal 2020 second quarter, adjusted operating income of $671.7
million increased 8.9 percent from the prior year period due to an
8.9 percent increase in operating income within Pharmaceutical
Distribution Services and an 8.4 percent increase in operating
income within Other. Adjusted operating income as a percentage of
revenue was 1.42 percent in the fiscal 2020 second quarter,
unchanged from the previous fiscal year’s second quarter.
- Interest Expense, Net: No
adjustments were made to the GAAP presentation of net interest
expense. In the fiscal 2020 second quarter, net interest expense of
$34.4 million was down 20.5 percent versus the prior year quarter
primarily due to certain build-to-suit leases now being accounted
for as operating leases, resulting from the adoption of the new
lease accounting standard.
- Adjusted Effective Tax Rate: The
adjusted effective tax rate was 21.5 percent for the second quarter
of fiscal 2020, same as the previous fiscal year’s second
quarter.
- Adjusted Diluted Earnings Per
Share: Adjusted diluted earnings per share was up 13.7
percent to $2.40 in the second quarter of fiscal 2020 compared to
$2.11 in the previous fiscal year’s second quarter, driven
primarily by the increase in adjusted operating income and a lower
number of diluted shares outstanding.
- 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 2020 were 207.1 million, a 2.6 percent
decline versus the prior fiscal year second quarter primarily due
to share repurchases.
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 $45.6 billion,
an increase of 9.3 percent compared to the same quarter in the
prior fiscal year primarily due to organic growth of some of its
largest customers, increased specialty product sales and overall
market growth. Segment operating income of $563.1 million in the
second quarter of fiscal 2020 was up 8.9 percent compared to the
same period in the previous fiscal year, primarily due to the
increase in gross profit resulting from the growth in revenue.
Other
Revenue in Other was $1.9 billion in the second quarter of
fiscal 2020, an increase of 12.7 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 8.4 percent to $108.3 million in the second
quarter of fiscal 2020. This increase was primarily due to the
performance of MWI and World Courier.
Recent Company Highlights &
Milestones
- AmerisourceBergen published its 2019 Corporate Citizenship
Report, detailing the impact of its robust sustainability and
community efforts across 150 campuses in 50 countries and its focus
on sustainable operations, inspired associates and healthy
communities. For the second year in a row, selected information
within the 2019 Report was assured by ERM Certification and
Verification Services.
- The AmerisourceBergen Foundation has made grant donations that
will be deployed to regional, national and global organizations
focused on combating the economic, psychosocial and health
challenges resulting from the COVID-19 pandemic.
- MWI Animal Health announced a series of technology tools that
will enable veterinarian practices to virtually engage with their
clients, which has become critically important during the COVID-19
pandemic.
- AmerisourceBergen launched additional offerings to specialty
physician practices through IPN Solutions. Now, practices will have
access to an expanded suite of solutions, which include enhanced
business insights, revenue cycle management services, valuable
clinical research opportunities and more offerings that integrate
with existing practice technologies.
- AmerisourceBergen announced that it is continuing its strategic
relationship with the American Oncology Network, LLC (AON), a
high-growth medical oncology provider with a focus on supporting
the long-term viability of oncology treatment in community-based
settings. AmerisourceBergen will support AON in its effort to
accelerate key strategic priorities to scale its integrated
value-based care delivery model nationwide.
Fiscal Year 2020
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 2020 Expectations on an
Adjusted (non-GAAP) Basis
AmerisourceBergen has updated its fiscal year 2020 financial
guidance to reflect the Company’s continued strong performance and
opportunistic share repurchases in the second quarter and
incorporate potential impacts of COVID-19 in the second half of the
fiscal year. The Company now expects:
- Revenue growth in the low- to mid-single digit percent range,
down from the mid- to high- single digit percent range; and
- Adjusted Diluted EPS to be in the range of $7.35 to $7.65, down
from the previous range of $7.55 to $7.80.
Additional expectations now include:
- Adjusted operating expenses to increase in the low-single digit
percent range, down from the mid-single digit percent range;
- Adjusted operating income growth in the low- to mid-single
digit percent range, widened from the mid-single digit percent
range;
- Pharmaceutical Distribution Services segment operating income
growth in the low- to mid-single digit percent range, widened from
mid-single digit percent range;
- Other, which is comprised of businesses focused on Global
Commercialization Services & Animal Health, operating income
decline in the low-single digit percent range, revised from growth
in the high-single digit percent range; and
- Weighted average diluted shares are now expected to be between
206 million to 207 million, down from the previous expectation of
approximately 208 million for the fiscal year.
All other previously communicated aspects of the Company's
fiscal year 2020 financial guidance and assumptions remain the
same.
Dividend Declaration
The Company's Board of Directors declared a quarterly cash
dividend of $0.42 per common share, payable June 1, 2020, to
stockholders of record at the close of business on May 18,
2020.
New Share Repurchase
Authorization
In May 2020, AmerisourceBergen's Board of Directors authorized a
new share repurchase program allowing the Company to purchase up to
$500 million of its outstanding shares of common stock, subject to
market conditions. As of March 31, 2020, the Company had $68.8
million remaining under the share repurchase program authorized in
October 2018.
Conference Call & Slide
Presentation
The Company will host a conference call to discuss the results
at 8:30 a.m. ET on May 7, 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 (866) 270-1533.
From outside the United States, dial (412) 317-0797. 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 (855) 669-9658. From outside
the United States and Canada, dial (412) 317-0088. The access code
for the replay is 10142230.
Upcoming Investor Events
AmerisourceBergen management will be participating in the
following investor conference in the coming months:
- Goldman Sachs 41st Annual Global Healthcare Conference, June
9-11.
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
$175 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.
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," "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 and pharmaceutical compounding;
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; risks
associated with the strategic, long-term relationship between
Walgreens Boots Alliance, Inc. and the Company, including
principally with respect to the pharmaceutical distribution
agreement and/or the global generic purchasing services
arrangement; 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; regulatory or enforcement action in
connection with our former compounded sterile preparations (CSP)
business or the related consent decree; 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; the loss,
bankruptcy or insolvency of a major supplier, including as a result
of COVID-19; 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; 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 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 acquisition of businesses
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; 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, 2019 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,
2020
% of Revenue
Three Months Ended March 31,
2019
% of Revenue
% Change
Revenue
$
47,417,639
$
43,319,602
9.5%
Cost of goods sold
46,029,532
41,894,846
9.9%
Gross profit 1
1,388,107
2.93%
1,424,756
3.29%
(2.6)%
Operating expenses:
Distribution, selling, and administrative
2
693,413
1.46%
628,036
1.45%
10.4%
Depreciation and amortization
93,795
0.20%
123,766
0.29%
(24.2)%
Employee severance, litigation, and other
3
67,732
55,389
Impairment of PharMEDium assets
223,652
570,000
Total operating expenses
1,078,592
2.27%
1,377,191
3.18%
(21.7)%
Operating income
309,515
0.65%
47,565
0.11%
550.7%
Other income 4
(1,109
)
(14,494
)
Interest expense, net
34,421
43,275
(20.5)%
Income before income taxes
276,203
0.58%
18,784
0.04%
1,370.4%
Income tax benefit 5
(694,908
)
(9,289
)
Net income
971,111
2.05%
28,073
0.06%
3,359.2%
Net income attributable to noncontrolling
interest
(10,834
)
(938
)
Net income attributable to
AmerisourceBergen Corporation
$
960,277
2.03%
$
27,135
0.06%
3,438.9%
Earnings per share:
Basic
$
4.68
$
0.13
3,500.0%
Diluted
$
4.64
$
0.13
3,469.2%
Weighted average common shares
outstanding:
Basic
205,370
210,934
(2.6)%
Diluted
207,062
212,563
(2.6)%
________________________________________
1
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. Includes a $66.8 million LIFO credit, a $52.0
million gain from antitrust litigation settlements, and $12.3
million of PharMEDium remediation costs in the three months ended
March 31, 2019.
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 $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. Includes $14.0 million of employee severance, $13.8 million
of litigation costs related to legal fees in connection with opioid
lawsuits and investigations, and $27.5 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, 2019.
4
Includes a $13.7 million gain on the sale
of an equity investment in the three months ended March 31,
2019.
5
Includes $741.0 million of discrete tax
benefits primarily attributable to the income tax deductions
resulting from the 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,
2020
% of Revenue
Six Months Ended March 31,
2019
% of Revenue
% Change
Revenue
$
95,282,381
$
88,712,054
7.4%
Cost of goods sold
92,663,060
85,989,718
7.8%
Gross profit 1
2,619,321
2.75%
2,722,336
3.07%
(3.8)%
Operating expenses:
Distribution, selling, and administrative
2
1,379,366
1.45%
1,284,621
1.45%
7.4%
Depreciation and amortization
198,310
0.21%
246,266
0.28%
(19.5)%
Employee severance, litigation, and other
3
107,041
96,061
Impairment of PharMEDium assets
361,652
570,000
Total operating expenses
2,046,369
2.15%
2,196,948
2.48%
(6.9)%
Operating income
572,952
0.60%
525,388
0.59%
9.1%
Other loss (income) 4
1,733
(11,397
)
Interest expense, net
65,428
85,445
(23.4)%
Income before income taxes
505,791
0.53%
451,340
0.51%
12.1%
Income tax (benefit) expense 5
(651,888
)
31,514
Net income
1,157,679
1.21%
419,826
0.47%
175.8%
Net (income) loss attributable to
noncontrolling interest
(9,762
)
961
Net income attributable to
AmerisourceBergen Corporation
$
1,147,917
1.20%
$
420,787
0.47%
172.8%
Earnings per share:
Basic
$
5.58
$
1.99
180.4%
Diluted
$
5.54
$
1.97
181.2%
Weighted average common shares
outstanding:
Basic
205,693
211,503
(2.7)%
Diluted
207,293
213,275
(2.8)%
________________________________________
1
Includes a $37.1 million LIFO expense, an
$8.5 million gain from antitrust litigation settlements, and $12.1
million of PharMEDium remediation and shutdown costs in the six
months ended March 31, 2020. Includes a $139.3 million gain from
antitrust litigation settlements, a $69.8 million LIFO credit,
$30.2 million of PharMEDium remediation costs, and a $22.0 million
reversal of a prior period assessment relating to the New York
State Opioid Stewardship Act in the six months ended March 31,
2019.
2
Includes $36.5 million of PharMEDium
remediation and 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 six
months ended March 31, 2020.
3
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.
Includes $18.8 million of employee severance, $28.4 million of
litigation costs related to legal fees in connection with opioid
lawsuits and investigations, and $48.9 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, 2019.
4
Includes a $13.7 million gain on the sale
of an equity investment in the six months ended March 31, 2019.
5
Includes $741.0 million of discrete tax
benefits primarily attributable to the income tax deductions
resulting from the 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,
2020
Gross Profit
Operating Expenses
Operating Income
Income Before Income
Taxes
Income Tax (Benefit)
Expense
Net Income Attributable to
Noncontrolling Interest
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
Adjusted Non-GAAP % change vs. prior year
quarter
7.5
%
6.2
%
8.9
%
11.2
%
11.1
%
10.7
%
13.7
%
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
Includes $741.0 million of discrete tax
benefits primarily attributable to the income tax deductions
resulting from the 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)
Three months ended March 31,
2019
Gross Profit
Operating Expenses
Operating Income
Income Before Income
Taxes
Income Tax (Benefit)
Expense
Net Income Attributable to
Noncontrolling Interest
Net Income Attributable to
ABC
Diluted Earnings Per
Share
GAAP
$
1,424,756
$
1,377,191
$
47,565
$
18,784
$
(9,289
)
$
(938
)
$
27,135
$
0.13
Gain from antitrust litigation
settlements
(51,976
)
—
(51,976
)
(51,976
)
(16,980
)
—
(34,996
)
(0.16
)
LIFO credit
(66,805
)
—
(66,805
)
(66,805
)
(17,137
)
—
(49,668
)
(0.23
)
PharMEDium remediation costs
12,334
(3,563
)
15,897
15,897
4,927
—
10,970
0.05
New York State Opioid Stewardship Act
—
—
—
—
(944
)
—
944
—
Acquisition-related intangibles
amortization
—
(46,594
)
46,594
46,594
13,800
(437
)
32,357
0.15
Employee severance, litigation, and
other
—
(55,389
)
55,389
55,389
7,474
—
47,915
0.23
Impairment of PharMEDium assets
—
(570,000
)
570,000
570,000
145,103
—
424,897
2.00
Gain on sale of an equity investment
—
—
—
(13,692
)
(3,485
)
—
(10,207
)
(0.05
)
Adjusted Non-GAAP
$
1,318,309
$
701,645
$
616,664
$
574,191
$
123,469
$
(1,375
)
$
449,347
$
2.11
1
Percentages of Revenue:
GAAP
Adjusted Non-GAAP
Gross profit
3.29%
3.04%
Operating expenses
3.18%
1.62%
Operating income
0.11%
1.42%
________________________________________
1
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 Interest
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
Adjusted Non-GAAP % change vs. prior year
period
5.5
%
4.2
%
7.2
%
9.9
%
12.3
%
8.9
%
11.8
%
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
Includes $741.0 million of discrete tax
benefits primarily attributable to the income tax deductions
resulting from the 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,
2019
Gross Profit
Operating Expenses
Operating Income
Income Before Income
Taxes
Income Tax Expense
Net Loss Attributable to
Noncontrolling Interest
Net Income Attributable to
ABC
Diluted Earnings Per
Share
GAAP
$
2,722,336
$
2,196,948
$
525,388
$
451,340
$
31,514
$
961
$
420,787
$
1.97
Gain from antitrust litigation
settlements
(139,255
)
—
(139,255
)
(139,255
)
(35,450
)
—
(103,805
)
(0.49
)
LIFO credit
(69,834
)
—
(69,834
)
(69,834
)
(17,778
)
—
(52,056
)
(0.24
)
PharMEDium remediation costs
30,245
(6,147
)
36,392
36,392
9,264
—
27,128
0.13
New York State Opioid Stewardship Act
(22,000
)
—
(22,000
)
(22,000
)
(5,600
)
—
(16,400
)
(0.08
)
Acquisition-related intangibles
amortization
—
(91,746
)
91,746
91,746
23,355
(943
)
67,448
0.32
Employee severance, litigation, and
other
—
(96,061
)
96,061
96,061
24,454
—
71,607
0.34
Impairment of PharMEDium assets
—
(570,000
)
570,000
570,000
145,103
—
424,897
1.99
Gain on sale of an equity investment
—
—
—
(13,692
)
(3,485
)
—
(10,207
)
(0.05
)
Tax reform 1
—
—
—
—
36,997
—
(36,997
)
(0.17
)
Adjusted Non-GAAP
$
2,521,492
$
1,432,994
$
1,088,498
$
1,000,758
$
208,374
$
18
$
792,402
$
3.72
Percentages of Revenue:
GAAP
Adjusted Non-GAAP
Gross profit
3.07%
2.84%
Operating expenses
2.48%
1.62%
Operating income
0.59%
1.23%
________________________________________
1
Includes a measurement period adjustment
of the one-time transition tax on historical foreign earnings and
profits through December 31, 2017.
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
2020
2019
% Change
Pharmaceutical Distribution Services
$
45,562,670
$
41,676,164
9.3%
Other
1,876,593
1,665,429
12.7%
Intersegment eliminations
(21,624
)
(21,991
)
Revenue
$
47,417,639
$
43,319,602
9.5%
Three months ended March
31,
Operating income
2020
2019
% Change
Pharmaceutical Distribution Services
$
563,097
$
517,034
8.9%
Other
108,260
99,879
8.4%
Intersegment eliminations
328
(249
)
Total segment operating income
671,685
616,664
8.9%
Gain from antitrust litigation
settlements
54
51,976
LIFO (expense) credit
(23,853
)
66,805
PharMEDium shutdown and remediation
costs
(32,470
)
(15,897
)
Acquisition-related intangibles
amortization
(26,670
)
(46,594
)
Employee severance, litigation, and
other
(67,732
)
(55,389
)
Impairment of PharMEDium assets
(223,652
)
(570,000
)
Contingent consideration adjustment
12,153
—
Operating income
$
309,515
$
47,565
Percentages of revenue:
Pharmaceutical Distribution Services
Gross profit
2.32%
2.38%
Operating expenses
1.08%
1.14%
Operating income
1.24%
1.24%
Other
Gross profit
19.15%
19.60%
Operating expenses
13.38%
13.60%
Operating income
5.77%
6.00%
AmerisourceBergen Corporation (GAAP)
Gross profit
2.93%
3.29%
Operating expenses
2.27%
3.18%
Operating income
0.65%
0.11%
AmerisourceBergen Corporation
(Non-GAAP)
Adjusted gross profit
2.99%
3.04%
Adjusted operating expenses
1.57%
1.62%
Adjusted operating income
1.42%
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
2020
2019
% Change
Pharmaceutical Distribution Services
$
91,599,498
$
85,420,545
7.2%
Other
3,723,577
3,336,367
11.6%
Intersegment eliminations
(40,694
)
(44,858
)
Revenue
$
95,282,381
$
88,712,054
7.4%
Six Months Ended March
31,
Operating income
2020
2019
% Change
Pharmaceutical Distribution Services
$
954,791
$
890,241
7.3%
Other
212,739
198,813
7.0%
Intersegment eliminations
(579
)
(556
)
Total segment operating income
1,166,951
1,088,498
7.2%
Gain from antitrust litigation
settlements
8,546
139,255
LIFO (expense) credit
(37,134
)
69,834
PharMEDium shutdown and remediation
costs
(48,635
)
(36,392
)
New York State Opioid Stewardship Act
—
22,000
Acquisition-related intangibles
amortization
(60,236
)
(91,746
)
Employee severance, litigation, and
other
(107,041
)
(96,061
)
Impairment of PharMEDium assets
(361,652
)
(570,000
)
Contingent consideration adjustment
12,153
—
Operating income
$
572,952
$
525,388
Percentages of revenue:
Pharmaceutical Distribution Services
Gross profit
2.13%
2.19%
Operating expenses
1.09%
1.15%
Operating income
1.04%
1.04%
Other
Gross profit
19.08%
19.53%
Operating expenses
13.37%
13.57%
Operating income
5.71%
5.96%
AmerisourceBergen Corporation (GAAP)
Gross profit
2.75%
3.07%
Operating expenses
2.15%
2.48%
Operating income
0.60%
0.59%
AmerisourceBergen Corporation
(Non-GAAP)
Adjusted gross profit
2.79%
2.84%
Adjusted operating expenses
1.57%
1.62%
Adjusted operating income
1.22%
1.23%
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,
2020
2019
ASSETS
Current assets:
Cash and cash equivalents
$
3,691,938
$
3,374,194
Accounts receivable, net
14,210,170
12,386,879
Inventories
11,102,566
11,060,254
Right to recover asset
1,301,108
1,147,483
Income tax receivable
699,494
5,859
Prepaid expenses and other
175,374
157,385
Total current assets
31,180,650
28,132,054
Property and equipment, net
1,421,768
1,770,516
Goodwill and other intangible assets
8,639,581
9,000,343
Other long-term assets
800,263
269,067
Total assets
$
42,042,262
$
39,171,980
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
30,719,987
$
28,385,074
Other current liabilities
868,996
1,057,208
Short-term debt
522,807
139,012
Total current liabilities
32,111,790
29,581,294
Long-term debt
3,622,387
4,033,880
Accrued income taxes
279,403
284,075
Deferred income taxes
1,843,910
1,860,195
Other long-term liabilities
479,659
419,330
Total equity
3,705,113
2,993,206
Total liabilities and equity
$
42,042,262
$
39,171,980
AMERISOURCEBERGEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended March
31,
2020
2019
Operating Activities:
Net income
$
1,157,679
$
419,826
Adjustments to reconcile net income to net
cash provided by operating activities 1
643,981
820,403
Changes in operating assets and
liabilities, excluding the effects of acquisitions:
Accounts receivable
(2,052,216
)
(880,805
)
Inventories
(152,359
)
(420,190
)
Accounts payable
2,395,847
1,350,728
Other 2
(997,225
)
(186,630
)
Net cash provided by operating
activities
995,707
1,103,332
Investing Activities:
Capital expenditures
(144,382
)
(161,488
)
Cost of equity investments and acquired
companies, net of cash acquired
(30,580
)
(52,398
)
Other
7,162
2,659
Net cash used in investing activities
(167,800
)
(211,227
)
Financing Activities:
Net borrowings (repayments)
947
(16,017
)
Purchases of common stock 3
(407,152
)
(347,959
)
Exercises of stock options
76,757
37,590
Cash dividends on common stock
(170,541
)
(170,428
)
Other
(10,174
)
(12,057
)
Net cash used in financing activities
(510,163
)
(508,871
)
Increase in cash and cash equivalents
317,744
383,234
Cash and cash equivalents at beginning of
period
3,374,194
2,492,516
Cash and cash equivalents at end of
period
$
3,691,938
$
2,875,750
________________________________________
1
Includes a LIFO expense of $37.1 million
and an impairment of PharMEDium assets of $361.7 million in the six
months ended March 31, 2020. Includes a LIFO credit of $69.8
million and an impairment of PharMEDium assets of $570.0 million in
the six months ended March 31, 2019.
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
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. Purchases of
common stock in the six months ended March 31, 2019 includes $24.0
million of September 2018 purchases that cash settled in October
2018.
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), certain PharMEDium remediation costs, certain PharMEDium
shutdown costs, and the (credit) related to the New York State
Opioid Stewardship Act (the "NYS Opioid Act"). 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 are unpredictable expenses. The (credit) related to the NYS
Opioid Act and PharMEDium shutdown costs are excluded because they
are unusual and non-recurring and, in the case of the NYS Opioid
Act, also non-cash. 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 are 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. The NYS Opioid Act, which went into effect on July 1,
2018, established an annual $100 million fund and requires
manufacturers, distributors, and importers to ratably share the
assessment based upon opioids sold or distributed to or within New
York state. In December 2018, the NYS Opioid Act was ruled
unconstitutional by the U.S. District Court for the Southern
District of New York.
- 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
remediation costs, certain PharMEDium shutdown costs, impairment of
PharMEDium's 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 remediation costs, PharMEDium shutdown costs, a
contingent consideration adjustment and the impairment of
PharMEDium's 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 gain on sale of an equity investment in
fiscal 2019 is excluded from adjusted income before income taxes
because it was 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. In
addition, the final U.S. tax reform measurement period adjustment
to the one-time transition tax liability on historical foreign
earnings and profits through December 31, 2017 ("Tax Reform") is
excluded from adjusted income tax expense for the six months ended
March 31, 2019. 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
interest: Adjusted net income/loss attributable to noncontrolling
interest 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 remediation costs; PharMEDium shutdown costs; the
(credit) related to the NYS Opioid Act; acquisition-related
intangibles amortization; employee severance, litigation, and
other; a contingent consideration adjustment; gain on sale of an
equity investment; and impairment of PharMEDium's assets; 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 Tax Reform is excluded from adjusted diluted earnings per
share for the six months ended March 31, 2019 and 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 are also
excluded from adjusted diluted earnings per share for the three and
six months ended March 31, 2020. 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 has provided non-GAAP fiscal year 2020
guidance for diluted earnings per share, operating expense,
operating income, and effective income tax rate that 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 provided fiscal year 2020 adjusted free
cash flow guidance. For fiscal year 2020, 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, 2020 adjusted free cash flow of $909.4
million consisted of net cash provided by operating activities of
$995.7 million, plus $66.7 million in cash payments made relating
to unfavorable legal settlements, minus $8.5 million in cash
payments received related to favorable legal settlements, and minus
capital expenditures of $144.4 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/20200507005132/en/
Bennett S. Murphy Senior Vice President, Investor
Relations 610-209-5691
bmurphy@amerisourcebergen.com
AmerisourceBergen (NYSE:ABC)
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