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AmerisourceBergen Corporation (ABC - Analyst Report) posted earnings (excluding employee severance, LIFO expense, warrants, litigation, restructuring and acquisition costs) of 77 cents per share in the fourth quarter of fiscal 2013 (ended Sep 30, 2013), a penny down from the year-ago quarter.

The Zacks Consensus Estimate stands at 74 cents per share. As per AmerisourceBergen, earnings per share came in at 79 cents, excluding LIFO and warrants expense. However, earnings plunged 71.4% on a reported basis.

Revenues grew 28.3% to $24.5 billion in the fourth quarter of fiscal 2013. The reported revenues surpassed the Zacks Consensus Estimate of $23.8 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 increased 29.0% to $24.1 billion during the fourth quarter. Within this segment, revenues from the ABDC business increased 34.0% primarily due to the on-boarding of the new distribution agreement with Walgreens (WAG - Analyst Report) and increased sales to a large pharmacy benefit management customer.

The ABSG unit performed well during the quarter with revenues increasing 12%. 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 $433.6 million, up 3.0% y/y.

Gross profit (adjusted) for the quarter edged up 1.1% to $721.5 million. Gross profit benefited from increased revenue growth and strong performance in generic pharmaceuticals but was partially offset by lower contributions from the Pharmaceutical Distribution segment.

Operating expenses (adjusted) during the quarter grew 2.0% to $402.9 million due to on-boarding of the contract with Walgreens and Alliance Boots.

Full Year Details

For fiscal 2013, earnings (excluding employee severance, LIFO expense, warrants, and litigation, restructuring and acquisition costs) came in at $3.14 per share, beating the Zacks Consensus Estimate of $3.08. Revenues in fiscal 2013 were up 12.7% to $87.9 million.

2014 Guidance

AmerisourceBergen now expects earnings from continuing operations to come in the range of $3.60 – $3.73 in fiscal 2014. The pre-earnings Zacks Consensus Estimate of $3.66 per share is well within the guidance. AmerisourceBergen expects revenues to grow in the range of 28% – 31%.

Our Take

We are encouraged by fourth quarter results and guidance for fiscal 2014. We believe the distribution deal with Walgreens will positively impact results in fiscal 2014.

AmerisourceBergen currently carries a Zacks Rank #3 (Hold). Currently, McKesson (MCK - Analyst Report) and Cardinal Health (CAH - Analyst Report) look attractive. Both carry a Zacks Rank #1 (Strong Buy).

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