AmerisourceBergen Corporation (ABC): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
AmerisourceBergen posted earnings of $1.01 per share in the third quarter of fiscal 2014 (ended Jun 30, 2014), which beat the Zacks Consensus Estimate of $0.92 and were above the year-ago figure of $0.78 per share. 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. 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. AmerisourceBergen had entered into a strategic agreement with Walgreen and Alliance Boots GmbH in fiscal 2013. Given the strong performance of the company so far in fiscal 2014, we believe AmerisourceBergen is all set to achieve its increased guidance. Hence, we maintain a Neutral recommendation on the stock.

Overview:

Chesterbrook, Pa.-based AmerisourceBergen Corporation is one of the world's largest pharmaceutical services companies. The company focuses on providing drug distribution and related services to reduce health care costs and improve patient outcomes. The company serves healthcare providers and pharmaceutical manufacturers in the pharmaceutical supply channel. AmerisourceBergen has operations in the US, Canada, UK and select global markets.

The company reports through two segments Pharmaceutical Distribution and Other.

The Pharmaceutical Distribution business includes the operations of AmerisourceBergen Drug Corporation (ABDC) and AmerisourceBergen Specialty Group (ABSG). Revenues from the Pharmaceutical Distribution segment increased 12.3% to $86.4 billion in fiscal 2013.

The ABSG division provides pharmaceutical distribution and other services mainly to physicians, who specialize in a variety of diseases, especially oncology, and to other health care providers, including dialysis clinics. ABSG also distributes vaccines, injectables, plasma and other blood products. Moreover, ABSG provides third party logistics and other services for biotech and pharmaceutical manufacturers.

The ABDC division is involved in the distribution of branded pharma drugs (including specialty pharmaceutical products) and generic drugs, over-the-counter healthcare products, home healthcare supplies and equipment and related services to a range of healthcare providers, which include acute care hospitals and health systems, independent and chain retail pharmacies, mail order pharmacies, medical clinics, long-term care and other alternate site pharmacies. Additionally, ABDC provides pharmacy management, staffing and other consulting services, scalable automated pharmacy dispensing equipment, medication and supply dispensing cabinets and supply management software to a broad range of retail and institutional healthcare providers along with delivering packaging solutions to institutional and retail healthcare providers.

The "Others" segment consists of the AmerisourceBergen Consulting Services (ABCS) and World Courier segments. This segment reported revenues of $1.8 billion in fiscal 2013, up almost 33.1% from fiscal 2012.

The ABCS business provides commercialization support services to pharmaceutical and biotech manufacturers. These include reimbursement support programs, outcomes research, contract field staffing, patient assistance and co-pay assistance programs, adherence programs, risk mitigation services, and other market access programs.

World Courier (acquired in May 2012) provides speciality transportation and logistics services to the biopharmaceutical industry in over 50 countries.

In order to streamline its operations, the company sold its Canadian pharmaceutical distribution business, AmerisourceBergen Canada Corporation (ABCC) to Kohl & Frisch Limited in Jun 2013. AmerisourceBergen Corporation retained its specialty business unit in Canada.

In May 2013, the company also sold AndersonBrecon its contract pharmaceutical packaging business clinical trials services business in the US and the UK to a conglomerate of an investor group led by Frazier Healthcare VI, L.P for approximately $308 million in cash. This business generated revenues of $230.9 million in fiscal 2012.

The company's fiscal year ends on Sep 30. Total revenues in fiscal 2013 came in at $87.9 billion.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: ABDC , ABC

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