Delaware | 1-16671 | 23-3079390 | ||
(State or other jurisdiction of | (Commission File Number) | (IRS Employer | ||
incorporation) | Identification No.) | |||
1300 Morris Drive | ||||
Chesterbrook, PA 19087 | ||||
(Address of principal executive offices, including Zip Code) |
Title of each class | Trading Symbol(s) | Name of exchange on which registered |
Common stock | ABC | New York Stock Exchange (NYSE) |
Exhibit Number | Description of Exhibit | |
99.1 |
AMERISOURCEBERGEN CORPORATION | |||
Date: | May 2, 2019 | By: | /s/ James F. Cleary |
Name: | James F. Cleary | ||
Title: | Executive Vice President & Chief Financial Officer |
![]() | |
![]() | AmerisourceBergen Corporation |
P.O. Box 959 | |
Valley Forge, PA 19482 |
GAAP | Adjusted (Non-GAAP) | |
Revenue | $43.3B | $43.3B |
Gross Profit | $1.4B | $1.3B |
Operating Expenses | $1,377M | $702M |
Operating Income | $48M | $617M |
Interest Expense, Net | $43M | $43M |
Effective Tax Rate | (49.5)% | 21.5% |
Net Income Attributable to ABC | $27M | $449M |
Diluted Earnings Per Share | $0.13 | $2.11 |
Diluted Shares Outstanding | 213M | 213M |
• | Revenue: In the second quarter of fiscal 2019, revenue was $43.3 billion, up 5.6 percent compared to the same quarter in the previous fiscal year, reflecting a 5.6 percent increase in Pharmaceutical Distribution Services revenue and a 4.5 percent increase in revenue within Other. Revenue growth is primarily due to the revenue growth of our Pharmaceutical Distribution Services segment. The increase in revenue growth of our Pharmaceutical Distribution Services segment is primarily due to the growth of some of its largest customers, continued strong specialty product sales, and overall market growth. |
• | Gross Profit: Gross profit in the fiscal 2019 second quarter was $1.4 billion, a 13.5 percent increase compared to the same period in the previous fiscal year. Gross profit in the current year quarter was favorably impacted by gains from antitrust litigation settlements and a LIFO credit, and a 4.3 percent increase in Pharmaceutical Distribution Services' gross profit. Pharmaceutical Distribution Services benefited from an increase in revenue, offset in part by PharMEDium's pharmaceutical compounding operations as it shipped fewer units due to the continued implementation of certain remedial measures at its operational locations. Gross profit as a percentage of revenue was 3.29 percent, an increase of 23 basis points from the prior year quarter. |
• | Operating Expenses: In the second quarter of fiscal 2019, operating expenses were $1,377.2 million, compared to $774.3 million in the same period last fiscal year. The significant increase in operating expenses was primarily due to the $570.0 million impairment of PharMEDium's long-lived assets in the quarter. Operating expenses as a percentage of revenue in the fiscal 2019 second quarter was 3.18 percent, compared to 1.89 percent for the same period in the previous fiscal year. |
• | Operating Income: In the fiscal 2019 second quarter, operating income was $47.6 million versus $481.4 million in the prior year quarter. The decrease in operating income was primarily due to the $570.0 million impairment of PharMEDium's long-lived assets, offset in part by an increase in gross profit. Operating income as a percentage of revenue decreased 106 basis points to 0.11 percent in the fiscal 2019 second quarter, compared to the previous fiscal year's second quarter. |
• | Interest Expense, Net: In the fiscal 2019 second quarter, net interest expense of $43.3 million was down 11.0 percent versus the prior year quarter. The decrease from the prior year quarter was primarily due to an increase in interest income. |
• | Effective Tax Rate: The effective tax rate was (49.5) percent for the second quarter of fiscal 2019 and 21.9 percent in the prior year quarter. The effective tax rate in the quarter was primarily impacted by the $570.0 million impairment of PharMEDium's long-lived assets. |
• | Diluted Earnings Per Share: Diluted earnings per share was $0.13 in the second quarter of fiscal 2019 compared to $1.29 in the previous fiscal year’s second quarter. This significant decrease was primarily due to the PharMEDium impairment. |
• | Diluted Shares Outstanding: Diluted weighted average shares outstanding for the second quarter of fiscal 2019 were 212.6 million, a 4.4 percent decline versus the prior fiscal year second quarter, due to share repurchases, net of stock option exercises. |
• | Revenue: No adjustments were made to the GAAP presentation of revenue. In the second quarter of fiscal 2019, revenue was $43.3 billion, up 5.6 percent compared to the same quarter in the previous fiscal year, reflecting a 5.6 percent increase in Pharmaceutical Distribution Services revenue and a 4.5 percent increase in revenue within Other. Revenue growth is primarily due to the revenue growth of our Pharmaceutical Distribution Services segment. The increase in revenue growth of our Pharmaceutical Distribution Services segment is primarily due to the growth of some of its largest customers, continued strong specialty product sales, and overall market growth. |
• | Adjusted Gross Profit: Adjusted gross profit in the fiscal 2019 second quarter was $1.3 billion, which was up 3.2 percent compared to the same period in the previous year, primarily due to the increase in adjusted gross profit in Pharmaceutical Distribution Services, which was partially offset due to fewer units being shipped by PharMEDium due to the continued implementation of remedial measures at its operational facilities. Adjusted gross profit as a percentage of revenue was 3.04 percent, a decrease of 7 basis points from the prior year quarter. |
• | Adjusted Operating Expenses: In the second quarter of fiscal 2019, adjusted operating expenses were $701.6 million, an increase of 1.5 percent compared to the same period in the last fiscal year, due to an increase in Pharmaceutical Distribution Services segment's expenses, which was partially offset by a decrease in operating expenses in Other. Adjusted operating expenses as a percentage of revenue in the fiscal 2019 second quarter was 1.62 percent, compared to 1.69 percent for the same period in the previous fiscal year. |
• | Adjusted Operating Income: In the fiscal 2019 second quarter, adjusted operating income of $616.7 million increased 5.2 percent from the prior year period due to an increase in operating income within Pharmaceutical Distribution Services which included a favorable impact from Brazil, offset in part by the fewer units being shipped by PharMEDium. Adjusted operating income as a percentage of revenue decreased 1 basis point to 1.42 percent in the fiscal 2019 second quarter compared to the previous fiscal year’s second quarter. |
• | Interest Expense, Net: No adjustments were made to the GAAP presentation of net interest expense. In the fiscal 2019 second quarter, net interest expense of $43.3 million was down 11.0 percent versus the prior year quarter, primarily due to an increase in interest income. |
• | Adjusted Effective Tax Rate: The adjusted effective tax rate was 21.5 percent for the second quarter of fiscal 2019 and was 20.7 percent in the previous fiscal year’s second quarter. |
• | Adjusted Diluted Earnings Per Share: Adjusted diluted earnings per share was up 8.8 percent to $2.11 in the second quarter of fiscal 2019 compared to $1.94 in the previous fiscal year’s second quarter, driven by the increase in adjusted operating income and a lower share count. |
• | Diluted Shares Outstanding: No adjustments were made to the GAAP presentation of diluted shares outstanding. Diluted weighted average shares outstanding for the second quarter of fiscal 2019 were 212.6 million, a 4.4 percent decline versus the prior fiscal year second quarter, due to share repurchases, net of stock option exercises. |
• | The Healthcare Distribution Alliance honored AmerisourceBergen with the Distribution Management Award for its work on the upcoming Drug Supply Chain Security Act (DSCSA) serialization requirements on verifying serialized pharmaceutical products. |
• | AmerisourceBergen received a perfect score of 100 on the 2019 Corporate Equality Index, the nation’s premier benchmarking survey and report on corporate policies and practices related to LGBTQ workplace equality, administered by the Human Rights Campaign Foundation. |
• | AmerisourceBergen opened its newest office located in Carrollton, Texas, and reinforced its commitment to attract and retain unmatched talent in the Texas community. As a part of AmerisourceBergen’s efforts to promote sustainability and employee wellbeing, the new 300,000 sq. ft. facility is actively pursuing a Leadership in Energy and Environmental Design (LEED) Silver certification. |
• | Lash Group, AmerisourceBergen's patient support services business, and AllazoHealth, an artificial intelligence and predictive analytics company focused on ensuring optimal patient outcomes, announced a partnership that will enhance patient adherence and engagement programs through targeted and personalized recommendations that will empower at-risk patients to ultimately make healthier choices. |
• | The AmerisourceBergen Foundation, through its Opioid Resource Grant Program, awarded more than 30 organizations demonstrating community leadership with grants to provide critically needed youth, provider and community education around preventing and addressing prescription medication misuse. |
• | The AmerisourceBergen Foundation announced a $150,000 donation to Southeastern Guide Dogs, a nonprofit focused on transforming lives by creating and nurturing extraordinary partnerships between people and dogs. With the support of this multi-year grant, Southeastern Guide Dogs will be able to increase placements of guide and companion dogs with visually impaired teenagers and children, as well as families of fallen service members and with child advocate professionals in courtrooms. |
• | AmerisourceBergen was named a Philly.com Top Workplace for the 7th year in a row. |
• | Adjusted Diluted EPS range raised to $6.70 to $6.90, up from the previous range of $6.65 to $6.85. |
• | Weighted average diluted shares are now expected to be approximately 214 million, down from the previous expectation of approximately 215 million. |
Three Months Ended March 31, 2019 | % of Revenue | Three Months Ended March 31, 2018 | % of Revenue | % Change | ||||||||||
Revenue | $ | 43,319,602 | $ | 41,033,858 | 5.6% | |||||||||
Cost of goods sold | 41,894,846 | 39,778,175 | 5.3% | |||||||||||
Gross profit 1 | 1,424,756 | 3.29% | 1,255,683 | 3.06% | 13.5% | |||||||||
Operating expenses: | ||||||||||||||
Distribution, selling, and administrative | 628,036 | 1.45% | 617,426 | 1.50% | 1.7% | |||||||||
Depreciation and amortization | 123,766 | 0.29% | 119,388 | 0.29% | 3.7% | |||||||||
Employee severance, litigation, and other 2 | 55,389 | 37,449 | ||||||||||||
Impairment of long-lived assets 3 | 570,000 | — | ||||||||||||
Total operating expenses | 1,377,191 | 3.18% | 774,263 | 1.89% | 77.9% | |||||||||
Operating income | 47,565 | 0.11% | 481,420 | 1.17% | (90.1)% | |||||||||
Other (income) loss 4 | (14,494 | ) | 29,123 | |||||||||||
Interest expense, net | 43,275 | 48,637 | (11.0)% | |||||||||||
Loss on consolidation of equity investments | — | 42,328 | ||||||||||||
Income before income taxes | 18,784 | 0.04% | 361,332 | 0.88% | (94.8)% | |||||||||
Income tax (benefit) expense | (9,289 | ) | 79,172 | |||||||||||
Net income | 28,073 | 0.06% | 282,160 | 0.69% | (90.1)% | |||||||||
Net (income) loss attributable to noncontrolling interest | (938 | ) | 5,295 | |||||||||||
Net income attributable to AmerisourceBergen Corporation | $ | 27,135 | 0.06% | $ | 287,455 | 0.70% | (90.6)% | |||||||
Earnings per share: | ||||||||||||||
Basic | $ | 0.13 | $ | 1.31 | (90.1)% | |||||||||
Diluted | $ | 0.13 | $ | 1.29 | (89.9)% | |||||||||
Weighted average common shares outstanding: | ||||||||||||||
Basic | 210,934 | 219,200 | (3.8)% | |||||||||||
Diluted | 212,563 | 222,303 | (4.4)% |
1 | Includes a $66.8 million LIFO credit, a $52.0 million gain from antitrust litigation settlements, and $12.3 million of PharMEDium remediation costs in the three months ended March 31, 2019. Includes $22.5 million of PharMEDium remediation costs and a $0.3 million gain from antitrust litigation settlements in the three months ended March 31, 2018. |
2 | Includes $14.0 million of employee severance, $13.8 million of litigation costs primarily related to opioid lawsuits and investigations, and $27.5 million of other costs in connection with acquisition-related deal and integration costs, business transformation efforts, and other restructuring initiatives in the three months ended March 31, 2019. Includes $20.8 million of employee severance, $7.6 million of litigation costs primarily related to opioid lawsuits and investigations, and $9.0 million of other costs in connection with acquisition-related deal and integration costs, business transformation efforts, and other restructuring initiatives in the three months ended March 31, 2018. |
3 | Impairment of finite-lived intangible assets and property and equipment relating to PharMEDium. |
4 | Includes a $13.7 million gain on the sale of an equity investment in the three months ended March 31, 2019. Includes a $30.0 million impairment on a non-customer note receivable in the three months ended March 31, 2018. |
Six Months Ended March 31, 2019 | % of Revenue | Six Months Ended March 31, 2018 | % of Revenue | % Change | ||||||||||
Revenue | $ | 88,712,054 | $ | 81,500,190 | 8.8% | |||||||||
Cost of goods sold | 85,989,718 | 79,131,855 | 8.7% | |||||||||||
Gross profit 1 | 2,722,336 | 3.07% | 2,368,335 | 2.91% | 14.9% | |||||||||
Operating expenses: | ||||||||||||||
Distribution, selling, and administrative | 1,284,621 | 1.45% | 1,175,948 | 1.44% | 9.2% | |||||||||
Depreciation and amortization | 246,266 | 0.28% | 224,524 | 0.28% | 9.7% | |||||||||
Employee severance, litigation, and other 2 | 96,061 | 67,470 | ||||||||||||
Impairment of long-lived assets 3 | 570,000 | — | ||||||||||||
Total operating expenses | 2,196,948 | 2.48% | 1,467,942 | 1.80% | 49.7% | |||||||||
Operating income | 525,388 | 0.59% | 900,393 | 1.10% | (41.6)% | |||||||||
Other (income) loss 4 | (11,397 | ) | 29,447 | |||||||||||
Interest expense, net | 85,445 | 84,501 | 1.1% | |||||||||||
Loss on consolidation of equity investments | — | 42,328 | ||||||||||||
Loss on early retirement of debt | — | 23,766 | ||||||||||||
Income before income taxes | 451,340 | 0.51% | 720,351 | 0.88% | (37.3)% | |||||||||
Income tax expense (benefit) | 31,514 | (423,662 | ) | |||||||||||
Net income | 419,826 | 0.47% | 1,144,013 | 1.40% | (63.3)% | |||||||||
Net loss attributable to noncontrolling interest | 961 | 5,295 | ||||||||||||
Net income attributable to AmerisourceBergen Corporation | $ | 420,787 | 0.47% | $ | 1,149,308 | 1.41% | (63.4)% | |||||||
Earnings per share: | ||||||||||||||
Basic | $ | 1.99 | $ | 5.25 | (62.1)% | |||||||||
Diluted | $ | 1.97 | $ | 5.19 | (62.0)% | |||||||||
Weighted average common shares outstanding: | ||||||||||||||
Basic | 211,503 | 218,763 | (3.3)% | |||||||||||
Diluted | 213,275 | 221,565 | (3.7)% |
1 | Includes a $139.3 million gain from antitrust litigation settlements, a $69.8 million LIFO credit, $30.2 million of PharMEDium remediation costs, and a $22.0 million reversal of a prior period assessment relating to the New York Opioid Stewardship Act in the six months ended March 31, 2019. Includes $22.5 million of PharMEDium remediation costs and a $0.3 million gain from antitrust litigation settlements in the six months ended March 31, 2018. |
2 | Includes $18.8 million of employee severance, $28.4 million of litigation costs primarily related to opioid lawsuits and investigations, and $48.9 million of other costs in connection with acquisition-related deal and integration costs, business transformation efforts, and other restructuring initiatives in the six months ended March 31, 2019. Includes $28.4 million of employee severance, $10.4 million of litigation costs primarily related to opioid lawsuits, investigations, and initiatives, and $28.6 million of other costs in connection with acquisition-related deal and integration costs, business transformation efforts, and other restructuring initiatives in the six months ended March 31, 2018. |
3 | Impairment of finite-lived intangible assets and property and equipment relating to PharMEDium. |
4 | Includes a $13.7 million gain on the sale of an equity investment in the six months ended March 31, 2019. Includes a $30.0 million impairment on a non-customer note receivable in the six months ended March 31, 2018. |
Three Months Ended March 31, 2019 | |||||||||||||||||||||||||||||||||
Gross Profit | Operating Expenses | Operating Income | Income Before Income Taxes | Income Tax (Benefit) Expense | Net Income Attributable to Noncontrolling Interest | Net Income Attributable to ABC | Diluted Earnings Per Share | ||||||||||||||||||||||||||
GAAP | $ | 1,424,756 | $ | 1,377,191 | $ | 47,565 | $ | 18,784 | $ | (9,289 | ) | $ | (938 | ) | $ | 27,135 | $ | 0.13 | |||||||||||||||
Gain from antitrust litigation settlements | (51,976 | ) | — | (51,976 | ) | (51,976 | ) | (16,980 | ) | — | (34,996 | ) | (0.16 | ) | |||||||||||||||||||
LIFO credit | (66,805 | ) | — | (66,805 | ) | (66,805 | ) | (17,137 | ) | — | (49,668 | ) | (0.23 | ) | |||||||||||||||||||
PharMEDium remediation costs | 12,334 | (3,563 | ) | 15,897 | 15,897 | 4,927 | — | 10,970 | 0.05 | ||||||||||||||||||||||||
New York State Opioid Stewardship Act | — | — | — | — | (944 | ) | — | 944 | — | ||||||||||||||||||||||||
Acquisition-related intangibles amortization | — | (46,594 | ) | 46,594 | 46,594 | 13,800 | (437 | ) | 32,357 | 0.15 | |||||||||||||||||||||||
Employee severance, litigation, and other | — | (55,389 | ) | 55,389 | 55,389 | 7,474 | — | 47,915 | 0.23 | ||||||||||||||||||||||||
Impairment of long-lived assets | — | (570,000 | ) | 570,000 | 570,000 | 145,103 | — | 424,897 | 2.00 | ||||||||||||||||||||||||
Gain on sale of an equity investment | — | — | — | (13,692 | ) | (3,485 | ) | — | (10,207 | ) | (0.05 | ) | |||||||||||||||||||||
Adjusted Non-GAAP | $ | 1,318,309 | $ | 701,645 | $ | 616,664 | $ | 574,191 | $ | 123,469 | $ | (1,375 | ) | $ | 449,347 | $ | 2.11 | 1 | |||||||||||||||
Adjusted Non-GAAP % change vs. prior year period | 3.2 | % | 1.5 | % | 5.2 | % | 6.6 | % | 10.9 | % | 4.0 | % | 8.8 | % |
Percentages of Revenue: | GAAP | Adjusted Non-GAAP | ||
Gross profit | 3.29% | 3.04% | ||
Operating expenses | 3.18% | 1.62% | ||
Operating income | 0.11% | 1.42% |
1 | The sum of the components does not equal the total due to rounding. |
Three Months Ended March 31, 2018 | ||||||||||||||||||||||||||||||||
Gross Profit | Operating Expenses | Operating Income | Income Before Income Taxes | Income Tax Expense | Net Loss Attributable to Noncontrolling Interest | Net Income Attributable to ABC | Diluted Earnings Per Share | |||||||||||||||||||||||||
GAAP | $ | 1,255,683 | $ | 774,263 | $ | 481,420 | $ | 361,332 | $ | 79,172 | $ | 5,295 | $ | 287,455 | $ | 1.29 | ||||||||||||||||
Gain from antitrust litigation settlements | (338 | ) | — | (338 | ) | (338 | ) | (97 | ) | — | (241 | ) | — | |||||||||||||||||||
PharMEDium remediation costs | 22,506 | — | 22,506 | 22,506 | 6,478 | — | 16,028 | 0.07 | ||||||||||||||||||||||||
Acquisition-related intangibles amortization | — | (45,295 | ) | 45,295 | 45,325 | 13,882 | (669 | ) | 30,774 | 0.14 | ||||||||||||||||||||||
Employee severance, litigation, and other | — | (37,449 | ) | 37,449 | 37,449 | 11,420 | — | 26,029 | 0.12 | |||||||||||||||||||||||
Loss on consolidation of equity investments | — | — | — | 42,328 | — | — | 42,328 | 0.19 | ||||||||||||||||||||||||
Impairment on non-customer note receivable | — | — | — | 30,000 | — | — | 30,000 | 0.13 | ||||||||||||||||||||||||
Loss on early retirement of debt | — | — | — | — | 507 | — | (507 | ) | — | |||||||||||||||||||||||
Adjusted Non-GAAP | $ | 1,277,851 | $ | 691,519 | $ | 586,332 | $ | 538,602 | $ | 111,362 | $ | 4,626 | $ | 431,866 | $ | 1.94 |
Percentages of Revenue: | GAAP | Adjusted Non-GAAP | ||
Gross profit | 3.06% | 3.11% | ||
Operating expenses | 1.89% | 1.69% | ||
Operating income | 1.17% | 1.43% |
Six Months Ended March 31, 2019 | ||||||||||||||||||||||||||||||||
Gross Profit | Operating Expenses | Operating Income | Income Before Income Taxes | Income Tax Expense | Net Loss Attributable to Noncontrolling Interest | Net Income Attributable to ABC | Diluted Earnings Per Share | |||||||||||||||||||||||||
GAAP | $ | 2,722,336 | $ | 2,196,948 | $ | 525,388 | $ | 451,340 | $ | 31,514 | $ | 961 | $ | 420,787 | $ | 1.97 | ||||||||||||||||
Gain from antitrust litigation settlements | (139,255 | ) | — | (139,255 | ) | (139,255 | ) | (35,450 | ) | — | (103,805 | ) | (0.49 | ) | ||||||||||||||||||
LIFO credit | (69,834 | ) | — | (69,834 | ) | (69,834 | ) | (17,778 | ) | — | (52,056 | ) | (0.24 | ) | ||||||||||||||||||
PharMEDium remediation costs | 30,245 | (6,147 | ) | 36,392 | 36,392 | 9,264 | — | 27,128 | 0.13 | |||||||||||||||||||||||
New York State Opioid Stewardship Act | (22,000 | ) | — | (22,000 | ) | (22,000 | ) | (5,600 | ) | — | (16,400 | ) | (0.08 | ) | ||||||||||||||||||
Acquisition-related intangibles amortization | — | (91,746 | ) | 91,746 | 91,746 | 23,355 | (943 | ) | 67,448 | 0.32 | ||||||||||||||||||||||
Employee severance, litigation, and other | — | (96,061 | ) | 96,061 | 96,061 | 24,454 | — | 71,607 | 0.34 | |||||||||||||||||||||||
Impairment of long-lived assets | — | (570,000 | ) | 570,000 | 570,000 | 145,103 | — | 424,897 | 1.99 | |||||||||||||||||||||||
Gain on sale of an equity investment | — | — | — | (13,692 | ) | (3,485 | ) | — | (10,207 | ) | (0.05 | ) | ||||||||||||||||||||
Tax reform 1 | — | — | — | — | 36,997 | — | (36,997 | ) | (0.17 | ) | ||||||||||||||||||||||
Adjusted Non-GAAP | $ | 2,521,492 | $ | 1,432,994 | $ | 1,088,498 | $ | 1,000,758 | $ | 208,374 | $ | 18 | $ | 792,402 | $ | 3.72 | ||||||||||||||||
Adjusted Non-GAAP % change vs. prior year period | 5.5 | % | 8.9 | % | 1.3 | % | 1.0 | % | (5.7 | )% | 2.3 | % | 6.6 | % |
Percentages of Revenue: | GAAP | Adjusted Non-GAAP | ||
Gross profit | 3.07% | 2.84% | ||
Operating expenses | 2.48% | 1.62% | ||
Operating income | 0.59% | 1.23% |
1 | Includes a measurement period adjustment to the one-time transition tax on historical foreign earnings and profits through December 31, 2017. |
Six Months Ended March 31, 2018 | |||||||||||||||||||||||||||||||||
Gross Profit | Operating Expenses | Operating Income | Income Before Income Taxes | Income Tax (Benefit) Expense | Net Loss Attributable to Noncontrolling Interest | Net Income Attributable to ABC | Diluted Earnings Per Share | ||||||||||||||||||||||||||
GAAP | $ | 2,368,335 | $ | 1,467,942 | $ | 900,393 | $ | 720,351 | $ | (423,662 | ) | $ | 5,295 | $ | 1,149,308 | $ | 5.19 | ||||||||||||||||
Gain from antitrust litigation settlements | (338 | ) | — | (338 | ) | (338 | ) | (97 | ) | — | (241 | ) | — | ||||||||||||||||||||
PharMEDium remediation costs | 22,506 | — | 22,506 | 22,506 | 6,478 | — | 16,028 | 0.07 | |||||||||||||||||||||||||
Acquisition-related intangibles amortization | — | (84,351 | ) | 84,351 | 84,476 | 24,317 | (669 | ) | 59,490 | 0.27 | |||||||||||||||||||||||
Employee severance, litigation and other | — | (67,470 | ) | 67,470 | 67,470 | 19,421 | — | 48,049 | 0.22 | ||||||||||||||||||||||||
Loss on consolidation of equity investments | — | — | — | 42,328 | — | — | 42,328 | 0.19 | |||||||||||||||||||||||||
Impairment on non-customer note receivable | — | — | — | 30,000 | — | — | 30,000 | 0.14 | |||||||||||||||||||||||||
Loss on early retirement of debt | — | — | — | 23,766 | 6,841 | — | 16,925 | 0.08 | |||||||||||||||||||||||||
Tax Reform 1 | — | — | — | — | 587,595 | — | (587,595 | ) | (2.65 | ) | |||||||||||||||||||||||
Adjusted Non-GAAP | $ | 2,390,503 | $ | 1,316,121 | $ | 1,074,382 | $ | 990,559 | $ | 220,893 | $ | 4,626 | $ | 774,292 | $ | 3.49 | 2 |
Percentages of Revenue: | GAAP | Adjusted Non-GAAP | ||
Gross profit | 2.91% | 2.93% | ||
Operating expenses | 1.80% | 1.61% | ||
Operating income | 1.10% | 1.32% |
1 | Represents the impact of applying a lower U.S. federal income tax rate to the Company's net deferred tax liabilities as of December 31, 2017, offset in part by a one-time transition tax on historical foreign earnings and profits through December 31, 2017. |
2 | The sum of the components does not equal the total due to rounding. |
Three Months Ended March 31, | ||||||||||
Revenue | 2019 | 2018 | % Change | |||||||
Pharmaceutical Distribution Services | $ | 41,676,164 | $ | 39,453,353 | 5.6% | |||||
Other | 1,665,429 | 1,594,378 | 4.5% | |||||||
Intersegment eliminations | (21,991 | ) | (13,873 | ) | ||||||
Revenue | $ | 43,319,602 | $ | 41,033,858 | 5.6% |
Three Months Ended March 31, | ||||||||||
Operating income | 2019 | 2018 | % Change | |||||||
Pharmaceutical Distribution Services | $ | 517,034 | $ | 489,106 | 5.7% | |||||
Other | 99,879 | 97,055 | 2.9% | |||||||
Intersegment eliminations | (249 | ) | 171 | |||||||
Total segment operating income | 616,664 | 586,332 | 5.2% | |||||||
Gain from antitrust litigation settlements | 51,976 | 338 | ||||||||
LIFO credit | 66,805 | — | ||||||||
PharMEDium remediation costs | (15,897 | ) | (22,506 | ) | ||||||
Acquisition-related intangibles amortization | (46,594 | ) | (45,295 | ) | ||||||
Employee severance, litigation, and other | (55,389 | ) | (37,449 | ) | ||||||
Impairment of long-lived assets | (570,000 | ) | — | |||||||
Operating income | $ | 47,565 | $ | 481,420 | ||||||
Percentages of revenue: | ||||||||||
Pharmaceutical Distribution Services | ||||||||||
Gross profit | 2.38% | 2.41% | ||||||||
Operating expenses | 1.14% | 1.17% | ||||||||
Operating income | 1.24% | 1.24% | ||||||||
Other | ||||||||||
Gross profit | 19.60% | 20.48% | ||||||||
Operating expenses | 13.60% | 14.39% | ||||||||
Operating income | 6.00% | 6.09% | ||||||||
AmerisourceBergen Corporation (GAAP) | ||||||||||
Gross profit | 3.29% | 3.06% | ||||||||
Operating expenses | 3.18% | 1.89% | ||||||||
Operating income | 0.11% | 1.17% | ||||||||
AmerisourceBergen Corporation (Non-GAAP) | ||||||||||
Adjusted gross profit | 3.04% | 3.11% | ||||||||
Adjusted operating expenses | 1.62% | 1.69% | ||||||||
Adjusted operating income | 1.42% | 1.43% |
Six Months Ended March 31, | ||||||||||
Revenue | 2019 | 2018 | % Change | |||||||
Pharmaceutical Distribution Services | $ | 85,420,545 | $ | 78,391,051 | 9.0% | |||||
Other | 3,336,367 | 3,139,329 | 6.3% | |||||||
Intersegment eliminations | (44,858 | ) | (30,190 | ) | ||||||
Revenue | $ | 88,712,054 | $ | 81,500,190 | 8.8% |
Six Months Ended March 31, | ||||||||||
Operating income | 2019 | 2018 | % Change | |||||||
Pharmaceutical Distribution Services | $ | 890,241 | $ | 877,288 | 1.5% | |||||
Other | 198,813 | 197,330 | 0.8% | |||||||
Intersegment eliminations | (556 | ) | (236 | ) | ||||||
Total segment operating income | 1,088,498 | 1,074,382 | 1.3% | |||||||
Gain from antitrust litigation settlements | 139,255 | 338 | ||||||||
LIFO credit | 69,834 | — | ||||||||
PharMEDium remediation costs | (36,392 | ) | (22,506 | ) | ||||||
New York State Opioid Stewardship Act | 22,000 | — | ||||||||
Acquisition-related intangibles amortization | (91,746 | ) | (84,351 | ) | ||||||
Employee severance, litigation, and other | (96,061 | ) | (67,470 | ) | ||||||
Impairment of long-lived assets | (570,000 | ) | — | |||||||
Operating income | $ | 525,388 | $ | 900,393 | ||||||
Percentages of revenue: | ||||||||||
Pharmaceutical Distribution Services | ||||||||||
Gross profit | 2.19% | 2.22% | ||||||||
Operating expenses | 1.15% | 1.11% | ||||||||
Operating income | 1.04% | 1.12% | ||||||||
Other | ||||||||||
Gross profit | 19.53% | 20.61% | ||||||||
Operating expenses | 13.57% | 14.32% | ||||||||
Operating income | 5.96% | 6.29% | ||||||||
AmerisourceBergen Corporation (GAAP) | ||||||||||
Gross profit | 3.07% | 2.91% | ||||||||
Operating expenses | 2.48% | 1.80% | ||||||||
Operating income | 0.59% | 1.10% | ||||||||
AmerisourceBergen Corporation (Non-GAAP) | ||||||||||
Adjusted gross profit | 2.84% | 2.93% | ||||||||
Adjusted operating expenses | 1.62% | 1.61% | ||||||||
Adjusted operating income | 1.23% | 1.32% |
March 31, | September 30, | ||||||
2019 | 2018 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 2,875,750 | $ | 2,492,516 | |||
Accounts receivable, net | 12,222,271 | 11,314,226 | |||||
Inventories | 11,373,730 | 11,918,508 | |||||
Right to recover asset 1 | 977,860 | — | |||||
Prepaid expenses and other | 172,572 | 169,122 | |||||
Total current assets | 27,622,183 | 25,894,372 | |||||
Property and equipment, net | 1,858,867 | 1,892,424 | |||||
Goodwill and other intangible assets | 9,055,678 | 9,612,100 | |||||
Other long-term assets | 273,582 | 270,942 | |||||
Total assets | $ | 38,810,310 | $ | 37,669,838 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 28,189,390 | $ | 26,836,873 | |||
Other current liabilities | 1,022,509 | 1,032,814 | |||||
Total current liabilities | 29,211,899 | 27,869,687 | |||||
Long-term debt | 4,009,500 | 4,158,532 | |||||
Accrued income taxes | 273,662 | 299,600 | |||||
Deferred income taxes | 1,857,201 | 1,829,410 | |||||
Other long-term liabilities | 419,717 | 462,648 | |||||
Total equity | 3,038,331 | 3,049,961 | |||||
Total liabilities and equity | $ | 38,810,310 | $ | 37,669,838 |
Six Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Operating Activities: | |||||||
Net income | $ | 419,826 | $ | 1,144,013 | |||
Adjustments to reconcile net income to net cash provided by (used in) operating activities 1, 2 | 820,403 | (414,709 | ) | ||||
Changes in operating assets and liabilities, excluding the effects of acquisitions: | |||||||
Accounts receivable | (880,805 | ) | (590,386 | ) | |||
Inventories | (420,190 | ) | (805,164 | ) | |||
Accounts payable | 1,350,728 | 384,378 | |||||
Other 3 | (186,630 | ) | 204,626 | ||||
Net cash provided by (used in) operating activities | 1,103,332 | (77,242 | ) | ||||
Investing Activities: | |||||||
Capital expenditures | (161,488 | ) | (168,816 | ) | |||
Cost of acquired companies, net of cash acquired | (52,398 | ) | (777,085 | ) | |||
Other | 2,659 | 10,479 | |||||
Net cash used in investing activities | (211,227 | ) | (935,422 | ) | |||
Financing Activities: | |||||||
Net (repayments) borrowings 4 | (16,017 | ) | 820,724 | ||||
Payment of premium on early retirement of debt | — | (22,348 | ) | ||||
Purchases of common stock 5 | (347,959 | ) | (60,208 | ) | |||
Exercises of stock options | 37,590 | 115,236 | |||||
Cash dividends on common stock | (170,428 | ) | (167,533 | ) | |||
Other | (12,057 | ) | (16,963 | ) | |||
Net cash (used in) provided by financing activities | (508,871 | ) | 668,908 | ||||
Increase (decrease) in cash and cash equivalents | 383,234 | (343,756 | ) | ||||
Cash and cash equivalents at beginning of period | 2,492,516 | 2,435,115 | |||||
Cash and cash equivalents at end of period | $ | 2,875,750 | $ | 2,091,359 |
1 | Adjustments include a LIFO credit of $69.8 million and an impairment of long-lived assets of $570.0 million for the six months ended March 31, 2019. |
2 | Includes a $798.4 million benefit for deferred income taxes for the six months ended March 31, 2018, primarily as a result of applying a lower U.S. federal income tax rate to the Company's net deferred tax liabilities as of December 31, 2017 in connection with tax reform. |
• | Adjusted gross profit and adjusted gross profit margin: Adjusted gross profit is a non-GAAP financial measure that excludes the gain from antitrust litigation settlements, certain PharMEDium remediation costs, LIFO expense (credit), and costs (credit) related to the New York State Opioid Stewardship Act. Gain from antitrust litigation settlements and LIFO expense (credit) are excluded because the Company cannot control the amounts recognized or timing of these items. PharMEDium remediation costs are excluded because they are unpredictable expenses. The costs (credit) related to the New York State Opioid Stewardship Act are excluded because they are unusual, non-recurring and non-cash. Adjusted gross profit margin is the ratio of adjusted gross profit to total revenue. Management believes that these non-GAAP financial measures are useful to investors as a supplemental measure of the Company’s ongoing operating performance. The gain from antitrust litigation settlements relates to the settlement of lawsuits that have been filed against brand pharmaceutical manufacturers alleging that the manufacturer, by itself or in concert with others, took improper actions to delay or prevent generic drugs from entering the market. The PharMEDium remediation costs relate to costs incurred in connection with suspended production activities following U.S. Food and Drug Administration inspections. LIFO expense (credit) is affected by changes in inventory quantities, product mix, and manufacturer pricing practices, which may be impacted by market and other external influences. The New York State Opioid Stewardship Act, which went into effect on July 1, 2018, established an annual $100 million fund and requires manufacturers, distributors, and importers to ratably share the assessment based upon opioids sold or distributed to or within New York state. In December 2018, the New York State Opioid Stewardship Act was ruled unconstitutional by the U.S. District for the Southern District of New York. |
• | Adjusted operating expenses and adjusted operating expense margin: Adjusted operating expenses is a non-GAAP financial measure that excludes acquisition-related intangibles amortization, employee severance, litigation, and other, certain PharMEDium remediation costs, and impairment of long-lived assets. Adjusted operating expense margin is the ratio of adjusted operating expenses to total revenue. Acquisition-related intangibles amortization is excluded because it is a non-cash item and does not reflect the operating performance of the acquired companies. We exclude employee severance amounts that relate to unpredictable and/or non-recurring business restructuring. We exclude the amount of litigation settlements and other expenses, as well as PharMEDium remediation costs and the impairment of long-lived assets, that are unusual, non-operating, unpredictable, non-recurring or non-cash in nature because we believe these exclusions facilitate the analysis of our ongoing operational performance. |
• | Adjusted operating income and adjusted operating income margin: Adjusted operating income is a non-GAAP financial measure that excludes the same items that are described above and excluded from adjusted gross profit and adjusted operating expenses. Adjusted operating income margin is the ratio of adjusted operating income to total revenue. Management believes that these non-GAAP financial measures are useful to investors as a supplemental way to evaluate the Company’s performance because the adjustments are unusual, non-operating, unpredictable, non-recurring or non-cash in nature. |
• | Adjusted income before income taxes: Adjusted income before income taxes is a non-GAAP financial measure that excludes the same items that are described above and excluded from adjusted operating income. In addition, the gain on sale of an equity investment in fiscal 2019, the loss on consolidation of equity investments in fiscal 2018, the impairment on non-customer note receivable in fiscal 2018, and the loss on the early retirement of debt in fiscal 2018 are also excluded from adjusted income before income taxes because these amounts are unusual, non-operating, or non-recurring. Management believes that this non-GAAP financial measure is useful to investors because it facilitates the calculation of the Company’s adjusted effective tax rate. |
• | Adjusted effective tax rate: Adjusted effective tax rate is a non-GAAP financial measure that is determined by dividing adjusted income tax expense/benefit by adjusted income before income taxes. Management believes that this non-GAAP financial measure is useful to investors because it presents an effective tax rate that does not reflect unusual, non-operating, unpredictable, non-recurring, or non-cash amounts or items that are outside the control of the Company. |
• | Adjusted income tax expense (benefit): Adjusted income tax expense is a non-GAAP financial measure that excludes the income tax expense (benefit) associated with the same items that are described above and excluded from adjusted income before income taxes. In addition, the one-time U.S. tax reform ("Tax Reform") adjustments are excluded from adjusted income tax expense. Tax Reform includes a benefit, and any measurement period adjustments, from applying a lower U.S. federal income tax rate to the Company's net deferred tax liabilities as of December 31, 2017, offset in part by a one-time transition tax on historical foreign earnings and profits through December 31, 2017. Management believes that this non-GAAP financial measure is useful to investors as a supplemental way to evaluate the Company’s performance because the adjustments are unusual, non-operating, unpredictable, non-recurring or non-cash in nature. |
• | Adjusted net income (loss) attributable to noncontrolling interest: Adjusted net income attributable to noncontrolling interest excludes the non-controlling interest portion of acquisition-related intangibles amortization. Management believes that this non-GAAP financial measure is useful to investors because it facilitates the calculation of adjusted net income attributable to ABC. |
• | Adjusted net income attributable to ABC: Adjusted net income attributable to ABC is a non-GAAP financial measure that excludes the same items that are described above. Management believes that this non-GAAP financial measure is useful to investors as a supplemental way to evaluate the Company's performance because the adjustments are unusual, non-operating, unpredictable, non-recurring or non-cash in nature. |
• | Adjusted diluted earnings per share: Adjusted diluted earnings per share excludes the per share impact of adjustments including gain from antitrust litigation settlements; LIFO expense (credit); PharMEDium remediation costs; costs (credit) related to the New York State Opioid Stewardship Act; acquisition-related intangibles amortization; employee severance, litigation, and other; gain on sale of an equity investment; impairment of long-lived assets; the loss on consolidation of equity investments; the impairment on non-customer note receivable; and the loss on early retirement of debt; in each case net of the tax effect calculated using the applicable effective tax rate for those items. In addition, the per share impact of Tax Reform is excluded from adjusted diluted earnings per share. Management believes that this non-GAAP financial measure is useful to investors because it eliminates the per share impact of the items that are outside the control of the Company or that we consider to not be indicative of our ongoing operating performance due to their inherent unusual, non-operating, unpredictable, non-recurring, or non-cash nature. |