) posted earnings (excluding employee severance, LIFO expense,
warrants, litigation, restructuring and acquisition costs) of 80
cents per share in the third quarter of fiscal 2013 (ended Jun
30, 2013), compared to 76 cents in the year-ago quarter.
The Zacks Consensus Estimate stands at 74 cents per share. As
per AmerisourceBergen, earnings came in at 73 cents, excluding
LIFO and warrants expense.
Revenues grew 13.3% to $21.9 billion in the third quarter of
fiscal 2013. The reported revenues surpassed the Zacks Consensus
Estimate of $21.3 billion.
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
increased 13.2% to $21.5 billion during the reported quarter.
Revenues from the ABDC business increased 16% primarily due to
the implementation of a new contract with
Express Script, Inc.
) effective Oct 2012, partially offset by lower level of generic
We note that AmerisourceBergen signed a three-year supply
agreement with Express Script in Oct 2012 wherein the former will
primarily supply branded pharmaceuticals to the latter.
The ABSG unit performed well during the quarter with revenues
increasing 5%. Results of the segment were driven by solid
performance in blood products, vaccine and physician office
distribution business. However, the oncology business performed
We remind investors that AmerisourceBergen expected a slowdown
in the oncology business due to a decline in reimbursement
Revenues from the Other segment were $466.7 million, up 17.4%
y/y. The increase in revenues was due to contribution from an
incremental month of World Courier business as compared to the
Gross profit for the quarter increased 2.5% to $684.5 million.
Gross profit was boosted by contributions from an incremental
month of World Courier business but was partially offset by lower
contributions from the Pharmaceutical Distribution segment.
Operating expenses (excluding employee severance and
acquisition costs) during the quarter grew 14.1% to $392.0
million due to inclusion of the World Courier business and
transaction costs related to the deal signed with
) and Alliance Boots.
AmerisourceBergen bought back shares worth $401 million in the
first nine months of fiscal 2013. We note that the company had
planned to repurchase shares worth at least $400 million in 2013.
We believe that the buyback program highlights the company's
commitment to return value to shareholders.
Earnings Outlook Narrowed, Revs Maintained
AmerisourceBergen now expects earnings from continuing operations
to come in the range of $3.06 - $3.11 in fiscal 2013 compared to
the previous guidance of $3.04 - $3.14 per share. The
pre-earnings Zacks Consensus Estimate of $3.06 per share was
towards the lower end of management's updated guidance.
Nevertheless, AmerisourceBergen expects revenues to grow in
the range of 11% - 13%.
Although earnings beat expectations, we were disappointed by
AmerisourceBergen currently carries a Zacks Rank #3 (Hold).
CVS Caremark Corp.
) looks well placed with a Zacks Rank #2 (Buy).
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