AmerisourceBergen (ABC) Beats Q4 Earnings, Issues FY18 View

AmerisourceBergen Corporation (NYSE:ABC) posted adjusted earnings of $1.33 per share in the fourth quarter of fiscal 2017, beating the Zacks Consensus Estimate by a penny and increasing 2.3% on a year-over-year basis. The upside was primarily driven by strong growth in the company’s Consulting Services, MWI Animal Health and World Courier businesses.

Revenues improved almost 4.2% to $39.1 billion in the reported quarter. However, revenues lagged the Zacks Consensus Estimate of $40.1 billion.

FY17 at a Glance

In fiscal 2017, AmerisourceBergen reported adjusted earnings of $5.88 per share, up 4.6% year over year. Revenues increased 4.3% to $153.1 billion on a year-over-year basis.

Major Highlights

In the fourth quarter, AmerisourceBergen collaborated with Blue Cross Blue Shield Association, Pfizer (NYSE:PFE) , Prime Therapeutics and Walgreens Boots Alliance (NASDAQ:WBA) to combat the opioid abuse crisis in the United States. The companies aim to expand the availability of safe medication disposal kiosks to Walgreens stores, particularly in areas where the opioid epidemic has hit communities.

In the reported quarter, AmerisourceBergen initiated product shipments to Walgreens’ retail pharmacies.

Added to this, AmerisourceBergen launched an online, interactive cell and gene therapy resource that provides insights for patients facing challenges pertaining to treatment procedures.

Segmental Analysis

Pharmaceutical Distribution Segment: The Pharmaceutical Distribution Services segment historically included AmerisourceBergen Drug Corporation (“ABDC”) and AmerisourceBergen Specialty Group (“ABSG”). In the reported quarter, revenues at the segment were $37.7 billion, up 3.9% on a year-over-year basis. ABDC revenues were up 4.2%, primarily on the back of solid organic sales growth.

The ABSG unit performed impressively during the quarter, with revenues rising 10.3% year over year. The increase can be attributed to strong oncology product sales and solid performance by the third-party logistics business.

Other Segment: This segment includes AmerisourceBergen Consulting Services (“ABCS”), World Courier and MWI Veterinary Supply. Revenues at the segment came in at $1.5 billion, up 12.2% on a year-over-year basis.

Margin Details

In the fourth quarter, AmerisourceBergen registered gross profit of $1.1 billion, up 4.4% on a year-over-year basis. As a percentage of revenues, gross margin in the fourth quarter was 2.8%, flat year over year.

Operating expenses in the fourth quarter were $626 million, reflecting an increase of 6.8% year over year. As a percentage of revenues, operating margin expanded 4 basis points (bps) to 1.6% in the quarter.

Guidance

AmerisourceBergen issued guidance for fiscal 2018. The company expects adjusted earnings per share for fiscal 2018 in the band of $5.90 to $6.15. Revenue growth for the fiscal is expected in the range of 7% to 9%.

AmerisourceBergen expects adjusted operating expenses to increase in the range of 4% to 6%, while adjusted operating income growth is estimated in the band of 3% to 5%;

Meanwhile, operating income growth at the pharmaceutical distribution services segment is anticipated in the range of 3% to 5%.

Peer Release

PetMed Express, Inc.’s (NASDAQ:PETS) adjusted earnings per share of 43 cents in the second quarter of fiscal 2018 were up 79.2% from the year-ago quarter. Also, earnings surpassed the Zacks Consensus Estimate by 43.3%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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