) posted earnings (excluding employee severance, LIFO expense,
warrants, litigation, restructuring and acquisition costs) of
$1.06 per share in the second quarter of fiscal 2014 (ended
Mar 31, 2014), beating the Zacks Consensus Estimate of
$1.00 and above the year-ago figure of 89 cents per share.
However, earnings plunged 12.6% on a reported basis due to
expenses related to issuance of warrants to
) and Alliance Boots and employee severance, litigation and other
Revenues grew 38.6% to $28.5 billion in the second quarter of
fiscal 2014. The reported revenues surpassed the Zacks Consensus
Estimate of $28.2 billion.
Fiscal Second 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 "Other."
Revenues from the Pharmaceutical Distribution segment surged
39.0% to $27.9 billion during the fiscal second quarter. Within
this segment, revenues from the ABDC business increased 46.0%
primarily due to the on-boarding of the new branded
pharmaceuticals business from Walgreens and a 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 10%. 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 $572.5 million, up 11.0%
Gross profit (adjusted) for the quarter increased 16.6% to
$831.6 million. Gross profit benefited from increased revenue
growth and strong performance in generic pharmaceuticals in the
Operating expenses (adjusted) during the quarter grew 16.1% to
$415.0 million due to the on-boarding of the contract with
Walgreens and Alliance Boots.
2014 Guidance Increased
AmerisourceBergen now expects earnings from continuing
operations in the range of $3.64 - $3.74 in fiscal 2014, up from
the earlier estimate of $3.60-$3.73 and an increase of 13.0% -
17.0% from fiscal 2013. The pre-earnings Zacks Consensus Estimate
of $3.70 per share is well within the guidance.
AmerisourceBergen continues to expect revenues to grow in the
range of 30.0%-34.0%. 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 second quarter beat and subsequent
increase in annual earnings 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 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 fiscal 2014.
AmerisourceBergen currently carries a Zacks Rank #2
(Buy). Other stocks that look equally attractive in the
same sector include
), both carrying a Zacks Rank #2.
AMERISOURCEBRGN (ABC): Free Stock Analysis
CARDINAL HEALTH (CAH): Free Stock Analysis
MCKESSON CORP (MCK): Free Stock Analysis
WALGREEN CO (WAG): Free Stock Analysis Report
To read this article on Zacks.com click here.