AmerisourceBergen Corporation (ABC) posted earnings (excluding employee severance, warrants, litigation and acquisition costs) of 87 cents per share in the second quarter of fiscal 2013, missing the Zacks Consensus Estimate of 88 cents. Earnings were up 7% year over year in the reported quarter aided by lower share count.
Revenues grew 4.1% to $20.5 billion in the second quarter of fiscal 2013. However, reported revenues missed the Zacks Consensus Estimate of $21.4 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, which accounted for 98% of total revenue, increased 3% to $20.1 billion during the reported quarter.
The ABSG unit performed well during the quarter with revenues increasing 4%. Results of the segment were boosted by growth in third party logistics, blood products, and vaccine and physician office distribution business. Revenues from the ABDC segment also increased 4% primarily due to increased sales volume resulting from the implementation of a new contract with Express Script, Inc. (ESRX) effective Oct 2012. The growth was partially offset by the loss of a food and drug retail group purchasing organization customer.
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.
Revenues from the Other segment were $435.4 million, including significant contributions from the recent acquisition of World Courier. The year-ago quarter did not include the World Courier contribution.
Gross profit for the quarter climbed 5.5% to $717.0 million. Gross profit was boosted by AmerisourceBergen’s recent acquisitions and gains from antitrust litigation settlements.
Operating expenses (excluding employee severance and acquisition costs) during the quarter grew 21.2% to $366.9 million due to inclusion of the World Courier business.
Meanwhile, in order to streamline its operations, AmerisourceBergen decided to sell its Canadian pharmaceutical distribution business in Mar 2013, which was facing tough market conditions. Hence, the company restated its fiscal 2012 figures to incorporate the pending sale.