) posted earnings (excluding employee severance, LIFO expense,
warrants, litigation, restructuring and acquisition costs) of 80
cents per share in the first quarter of fiscal 2014 (ended
Dec 31, 2013), beating the Zacks Consensus Estimate by a
penny and the year-ago figure of 73 cents per share.
However, earnings plunged 71.6% on a reported basis due to
expenses related to issuance of warrants to
) and Alliance Boots.
Revenues grew 38.5% to $29.2 billion in the first quarter of
fiscal 2014. The reported revenues surpassed the Zacks Consensus
Estimate of $27.3 billion.
Fiscal First Quarter in Detail
Following the acquisition of the World Courier Group in 2012,
AmerisourceBergen made some adjustments in its reporting format.
The company decided to report results of the AmerisourceBergen
Drug Corporation (ABDC) and AmerisourceBergen Specialty Group
(ABSG) units under the Pharmaceutical Distribution segment.
Results of the World Courier Group and AmerisourceBergen
Consulting Services (ABCS) have been clubbed under "Other."
Revenues from the Pharmaceutical Distribution segment surged
39.0% to $28.6 billion during the fiscal first quarter. Within
this segment, revenues from the ABDC business increased 46.0%
primarily due to the on-boarding of the new distribution
agreement with Walgreens and increased sales to a large pharmacy
benefit management customer.
The ABSG unit also performed well during the quarter with
revenues increasing 8%. Results of the segment were driven by
solid performance in third party logistics, blood products,
vaccine and physician office distribution business.
Revenues from the Other segment were $604.1 million, up 20.0%
Gross profit (adjusted) for the quarter increased 11.6% to
$724.8 million. Gross profit benefited from increased revenue
growth and strong performance in generic pharmaceuticals in the
Operating expenses (adjusted) during the quarter grew 13.8% to
$402.1 million due to the on-boarding of the contract with
Walgreens and Alliance Boots.
2014 Guidance Updated
AmerisourceBergen continues to expect earnings from continuing
operations in the range of $3.60 - $3.73 in fiscal 2014, up 12.0%
- 16.0% from 2013. The pre-earnings Zacks Consensus Estimate of
$3.69 per share is well within the guidance. AmerisourceBergen
now expects revenues to grow in the range of 30.0% - 34.0%, up
from the earlier expectations of 28% - 31%. Operating margins,
however, is expected to decline by 20-23 basis points due to the
on boarding of significant new lower margin business.
We are encouraged by the first quarter beat and increase in
fiscal 2014 revenue guidance. We remind investors that
AmerisourceBergen has entered into a strategic agreement with
Walgreen and Alliance Boots GmbH in fiscal 2013.
The agreement includes a ten-year pharmaceutical distribution
contract with Walgreen and access to generic drugs and related
pharmaceutical products through the Walgreens Boots Alliance
Development joint venture. We believe the distribution deal with
Walgreens will positively impact results in fiscal 2014.
Shares were up in pre-market trading. AmerisourceBergen
currently carries a Zacks Rank #3 (Hold). Some
better-ranked stocks in the same sector include
Align Technology Inc
). Both carry a Zacks Rank #1 (Strong Buy).
AMERISOURCEBRGN (ABC): Free Stock Analysis
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