It has been about a month since the last earnings report for AmerisourceBergen . Shares have added about 5.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is AmerisourceBergen due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
AmerisourceBergen Q1 Earnings Lag Estimates, Revenues Beat
AmerisourceBergen Corporation reported first-quarter fiscal 2022 adjusted earnings per share of $2.58, which missed the Zacks Consensus Estimate of $2.59 by 0.4%. The bottom line, however, improved 18.3% year over year.
GAAP earnings per share in the quarter was $2.13 compared with the year-ago quarter’s figure of $1.81.
Revenue Details
Revenues increased 13.5% to $59.63 billion in the reported quarter. The top line beat the Zacks Consensus Estimate by 0.6%.
Segment Realignment Update
It is worth mentioning that AmerisourceBergen made a strategic evaluation of its reporting structure in order to represent its expanded international presence because of the June 2021 buyout of Alliance Healthcare. Consequently, starting from the first quarter of fiscal 2022, the company has realigned its reporting structure under two reportable segments — U.S. Healthcare Solutions and International Healthcare Solutions.
Segmental Analysis
U.S. Healthcare Solutions
Revenues at this segment totaled $52.98 billion, reflecting an increase of 2.7% on a year-over-year basis on the back of an increase in specialty product sales coupled with overall market growth and strength in MWI Animal Health business. Lower revenues from COVID-19 therapies partially offset the upside.
Segmental operating income was $569.1 million, up 0.6% year over year. Higher gross profit contributed to the upside. This improvement was largely offset by a rise in operating expenses.
International Healthcare Solutions
This segment includes Alliance Healthcare, World Courier, Innomar, Profarma and Profarma Specialty.
Revenues at this segment were $6.65 billion, up 604.2% year over year. The upside was mainly driven by the acquisition of Alliance Healthcare (June 2021).
Operating income in the segment was $180.1 million in the quarter, up 253.1% year over year primarily due to the buyout of Alliance Healthcare.
Margin Analysis
In the fiscal first quarter, AmerisourceBergen reported an adjusted gross profit of $2.02 billion, up 41.3% on a year-over-year basis. As a percentage of revenues, adjusted gross margin was 3.4% in the quarter, up 66 basis points (bps).
The company reported an adjusted operating income of $749.1 million, up 21.4% year over year. As a percentage of revenues, adjusted operating margin was 1.3% in the quarter, which expanded 9 bps from the year-ago quarter.
Financial Position
The company exited the quarter with cash and cash equivalents worth $3.17 billion, compared with $2.55 billion a quarter ago.
Net cash used in operating activities at the end of the fiscal first quarter totaled $863.4 million compared with $903.1 million in the prior-year quarter.
Dividend Update
During the quarter, AmerisourceBergen’s board of directors declared a quarterly dividend of 46 cents per share, payable Feb 28, 2022, to shareholders at the close of business on Feb 14, 2022.
Fiscal 2022 Guidance
AmerisourceBergen has updated its fiscal 2022 outlook, highlighting revised full-year expectations from COVID therapy distribution and higher interest expense.
Adjusted earnings per share is now estimated to be $10.60-$10.90 (up from the previously guided range of $10.50-$10.80). The Zacks Consensus Estimate currently stands at $10.69.
The company estimates revenue growth in the high-single-digit to low-double-digit percent range.
With respect to the U.S. Healthcare Solutions segment, revenues are expected in the band of $207 billion to $212 billion, representing growth of 2-5%. Revenues at the International Healthcare solutions business are projected to be $26 billion to $27 billion.
Adjusted operating income is projected to grow in the high-teens percent range (up from the previously guided mid-to high-teens percent range).
Operating income at the U.S. Healthcare Solutions segment is anticipated between $2.38 billion and $2.45 billion (up from $2.33 billion and $2.4 billion), reflecting growth of 5-9%.
For the International Healthcare solutions segment, the metric is estimated to grow in the range of $685 million to $715 million.
Adjusted free cash flow is estimated to be $2 billion to $2.5 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
Currently, AmerisourceBergen has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise AmerisourceBergen has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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AmerisourceBergen (ABC) Up 5.5% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for AmerisourceBergen . Shares have added about 5.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is AmerisourceBergen due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
AmerisourceBergen Q1 Earnings Lag Estimates, Revenues Beat
AmerisourceBergen Corporation reported first-quarter fiscal 2022 adjusted earnings per share of $2.58, which missed the Zacks Consensus Estimate of $2.59 by 0.4%. The bottom line, however, improved 18.3% year over year.
GAAP earnings per share in the quarter was $2.13 compared with the year-ago quarter’s figure of $1.81.
Revenue Details
Revenues increased 13.5% to $59.63 billion in the reported quarter. The top line beat the Zacks Consensus Estimate by 0.6%.
Segment Realignment Update
It is worth mentioning that AmerisourceBergen made a strategic evaluation of its reporting structure in order to represent its expanded international presence because of the June 2021 buyout of Alliance Healthcare. Consequently, starting from the first quarter of fiscal 2022, the company has realigned its reporting structure under two reportable segments — U.S. Healthcare Solutions and International Healthcare Solutions.
Segmental Analysis
U.S. Healthcare Solutions
Revenues at this segment totaled $52.98 billion, reflecting an increase of 2.7% on a year-over-year basis on the back of an increase in specialty product sales coupled with overall market growth and strength in MWI Animal Health business. Lower revenues from COVID-19 therapies partially offset the upside.
Segmental operating income was $569.1 million, up 0.6% year over year. Higher gross profit contributed to the upside. This improvement was largely offset by a rise in operating expenses.
International Healthcare Solutions
This segment includes Alliance Healthcare, World Courier, Innomar, Profarma and Profarma Specialty.
Revenues at this segment were $6.65 billion, up 604.2% year over year. The upside was mainly driven by the acquisition of Alliance Healthcare (June 2021).
Operating income in the segment was $180.1 million in the quarter, up 253.1% year over year primarily due to the buyout of Alliance Healthcare.
Margin Analysis
In the fiscal first quarter, AmerisourceBergen reported an adjusted gross profit of $2.02 billion, up 41.3% on a year-over-year basis. As a percentage of revenues, adjusted gross margin was 3.4% in the quarter, up 66 basis points (bps).
The company reported an adjusted operating income of $749.1 million, up 21.4% year over year. As a percentage of revenues, adjusted operating margin was 1.3% in the quarter, which expanded 9 bps from the year-ago quarter.
Financial Position
The company exited the quarter with cash and cash equivalents worth $3.17 billion, compared with $2.55 billion a quarter ago.
Net cash used in operating activities at the end of the fiscal first quarter totaled $863.4 million compared with $903.1 million in the prior-year quarter.
Dividend Update
During the quarter, AmerisourceBergen’s board of directors declared a quarterly dividend of 46 cents per share, payable Feb 28, 2022, to shareholders at the close of business on Feb 14, 2022.
Fiscal 2022 Guidance
AmerisourceBergen has updated its fiscal 2022 outlook, highlighting revised full-year expectations from COVID therapy distribution and higher interest expense.
Adjusted earnings per share is now estimated to be $10.60-$10.90 (up from the previously guided range of $10.50-$10.80). The Zacks Consensus Estimate currently stands at $10.69.
The company estimates revenue growth in the high-single-digit to low-double-digit percent range.
With respect to the U.S. Healthcare Solutions segment, revenues are expected in the band of $207 billion to $212 billion, representing growth of 2-5%. Revenues at the International Healthcare solutions business are projected to be $26 billion to $27 billion.
Adjusted operating income is projected to grow in the high-teens percent range (up from the previously guided mid-to high-teens percent range).
Operating income at the U.S. Healthcare Solutions segment is anticipated between $2.38 billion and $2.45 billion (up from $2.33 billion and $2.4 billion), reflecting growth of 5-9%.
For the International Healthcare solutions segment, the metric is estimated to grow in the range of $685 million to $715 million.
Adjusted free cash flow is estimated to be $2 billion to $2.5 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
Currently, AmerisourceBergen has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise AmerisourceBergen has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.