) posted earnings (excluding employee severance, LIFO expense,
warrants, litigation, restructuring and acquisition costs) of $1.01
per share in the third quarter of fiscal 2014 (ended Jun 30,
2014), which beat the Zacks Consensus Estimate of 92 cents and were
above the year-ago figure of 78 cents per share.
AmerisourceBergen Corporation - Earnings
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However, earnings plunged 122.2% on a reported basis due to
expenses related to issuance of warrants to
) and Alliance Boots.
Revenues grew 38.5% to $30.3 billion in the third quarter of
fiscal 2014. Reported revenues easily surpassed the Zacks Consensus
Estimate of $29.2 billion.
Fiscal Third Quarter in Detail
The company reports results of the AmerisourceBergen Drug Corp.
(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 the Other segment.
Revenues from the Pharmaceutical Distribution segment surged
39.0% to $29.8 billion during fiscal third quarter. Within this
segment, revenues from the ABDC business increased 45.0% primarily
due to the onboarding of the new branded pharmaceuticals business
from Walgreens and a substantial portion of their generic
pharmaceuticals business along with increased branded
pharmaceutical sales to other large customers.
The ABSG unit also performed well during the quarter with
revenues increasing 13% y/y. Results of the segment were driven by
solid performance in blood products, vaccine and physician office
Revenues from the Other segment were $620.3 million, up 13.0%
Gross profit (adjusted) for the quarter increased 21.2% y/y to
$822.7 million. Gross profit benefited from strong revenue growth
and strong performance of generic pharmaceuticals in the ABDC
Operating expenses (adjusted) during the quarter grew 17.2% to
$429.2 million due to the onboarding of the new business from
2014 Guidance Increased
AmerisourceBergen now expects earnings from continuing
operations in the range of $3.89-$3.94 per share in fiscal 2014, up
from the earlier estimate of $3.64-$3.74 and an increase of
21.0%-23.0% from fiscal 2013. The pre-earnings Zacks Consensus
Estimate of $3.72 per share is way short of the low end of the new
AmerisourceBergen now expects revenues to grow around 35.0% y/y,
up from the earlier projected range of 30.0%-34.0%. Operating
margins, however, are expected to decline in high teens basis
points due to the onboarding of a new lower margin business and
growth in brand pharmaceutical business with some large
We are encouraged by the solid third quarter results, which beat
the Zacks Consensus Estimate on both fronts driven by the
onboarding of substantial new business. The subsequent
increase in guidance was impressive as well. Given the strong
performance of the company so far in fiscal 2014, we believe
AmerisourceBergen is all set to achieve its increased
We remind investors that AmerisourceBergen entered into a
strategic agreement with Walgreen and Alliance Boots GmbH in fiscal
2013. The agreement includes a 10-year pharmaceutical distribution
contract with Walgreens and access to generic drugs and related
pharmaceutical products through the Walgreens & Alliance Boots
Development joint venture. We believe the distribution deal with
Walgreens will positively impact results in the upcoming
AmerisourceBergen currently carries a Zacks Rank #2 (Buy).
Other stocks that look equally attractive in the broader healthcare
), both carrying a Zacks Rank #2.
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