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AmerisourceBergen (ABC) Q3 Earnings and Revenues Top Estimates
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AmerisourceBergen Corporation reported third-quarter fiscal 2021 adjusted earnings per share (EPS) of $2.16 surpassing the Zacks Consensus Estimate of $2.01 by 7.5%. The bottom line improved 16.8% year over year.
The better-than-expected bottom-line performance can be attributed to higher adjusted operating income. However, increase interest expense, higher diluted share count and effective tax rate partially offset the improvement.
GAAP EPS in the quarter under review was $1.40, down 0.7% from the year-ago quarter.
Revenue Details
Revenues increased 17.7% to $53.41 billion in the reported quarter. The top line beat the Zacks Consensus Estimate by 3.6%.
Segmental Analysis
Pharmaceutical Distribution Segment
Revenues at this segment totaled $49.31 billion, reflecting an increase of 13.2% on a year-over-year basis on the back of increase in specialty product sales, including COVID-19 treatments coupled with overall market growth.
Segmental operating income was $483.9 million, up 13.4% year over year. Solid performance across the company’s distribution businesses, which include higher sales of specialty products, contributed to the upside.
AmerisourceBergen Corporation Price, Consensus and EPS Surprise
This segment includes AmerisourceBergen Consulting Services (ABCS), World Courier and MWI Veterinary Supply.
Revenues at this segment were $4.13 billion, up 128% year over year. The upside was driven by growth across all three operating segments and the acquisition of Alliance Healthcare.
Operating income in the segment was $146.9 million in the quarter, up 77.2% year over year primarily due to buyout of Alliance Healthcare as well as growth in World Courier and MWI.
Margin Analysis
In the quarter under review, AmerisourceBergen reported adjusted gross profit of $1.63 billion, up 32% on a year-over-year basis. As a percentage of revenues, adjusted gross margin was 3.1% in the quarter, up 40 basis points (bps) a year-over-year basis.
The company reported adjusted operating income of $630.6 million, up 24.3% year over year. As a percentage of revenues, adjusted operating margin was 1.2% in the quarter, which expanded 10 bps from the year-ago quarter.
Financial Position
The company exited the quarter with cash and cash equivalents worth $2.55 billion compared with $6.64 billion on a sequential basis.
Cumulative net cash used in operating activities at the end of the fiscal third quarter totaled $1.66 billion compared with $907.8 million in the prior-year quarter.
Fiscal 2021 Guidance Updated
AmerisourceBergen has updated its fiscal 2021 outlook, highlighting sustained solid performance across its businesses.
Adjusted EPS is now estimated to be $9.15-$9.30 (up from the prior-guided range of $8.90-$9.10). The Zacks Consensus Estimate currently stands at $8.96.
The company continues to estimate revenue growth in the high-single-digit percent range. Adjusted operating income is now projected to be around $2.6 billion (up from the high-single-digit percent range).
Operating income at Pharmaceutical Distribution Services segment is now anticipated to improve in low-double digit percentage (up from the previous estimate of high-single-digit percent range). For the Other segment, the metric is estimated to grow in the range of $610 million to $620 million (up from the prior projection of low-double digit percent range).
Adjusted free cash flow is estimated to be around $1.7 billion (up from the prior estimate of $1.5 billion).
The company anticipates adjusted effective tax rate to be 21-22%.
Adjusted operating expenses is projected to be around $3.9 billion (up from growth in the high-single digit percent range).
Summing Up
AmerisourceBergen exited the fiscal third quarter on a strong note, wherein both earnings and revenues beat the consensus mark. The company continues to gain from its Pharmaceutical segment and World Courier business, which have been generating substantial profits for quite some time. Also, expansion in both gross and operating margins is a positive.
Per management, during the third quarter, the company remained committed toward capitalizing on its differentiated, pharmaceutical-centric value proposition and was able to execute on its key strategic initiatives, which included closing the buyout of Alliance Healthcare.
However, the company faces other headwinds like conversion of branded drugs and lower price generics. Cut-throat competition in the MedTech space remains a concern.
Zacks Rank
Currently, AmerisourceBergen carries a Zacks Rank #3 (Hold).
Earnings of Other MedTech Majors at a Glance
Some better-ranked stocks in the broader medical space that have already announced their quarterly results are Encompass Health Corporation (EHC - Free Report) , West Pharmaceutical Services, Inc. (WST - Free Report) and Chemed Corporation (CHE - Free Report) . While both Encompass Health and West Pharmaceutical sport a Zacks Rank #1 (Strong Buy), Chemed carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Encompass Health reported second-quarter 2021 adjusted EPS of $1.17, which beat the Zacks Consensus Estimate by 15.8%. Second-quarter revenues of $1.3 billion outpaced the consensus mark by 1.5%.
West Pharmaceutical reported second-quarter 2021 adjusted EPS of $2.46, which surpassed the Zacks Consensus Estimate by 41.4%. Second-quarter revenues of $723.6 million outpaced the Zacks Consensus Estimate by 8.7%.
Chemed reported second-quarter 2021 adjusted EPS of $4.60, surpassing the Zacks Consensus Estimate by 3.4%. Revenues of $532.3 million exceeded the Zacks Consensus Estimate by 0.8%.
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AmerisourceBergen (ABC) Q3 Earnings and Revenues Top Estimates
AmerisourceBergen Corporation reported third-quarter fiscal 2021 adjusted earnings per share (EPS) of $2.16 surpassing the Zacks Consensus Estimate of $2.01 by 7.5%. The bottom line improved 16.8% year over year.
The better-than-expected bottom-line performance can be attributed to higher adjusted operating income. However, increase interest expense, higher diluted share count and effective tax rate partially offset the improvement.
GAAP EPS in the quarter under review was $1.40, down 0.7% from the year-ago quarter.
Revenue Details
Revenues increased 17.7% to $53.41 billion in the reported quarter. The top line beat the Zacks Consensus Estimate by 3.6%.
Segmental Analysis
Pharmaceutical Distribution Segment
Revenues at this segment totaled $49.31 billion, reflecting an increase of 13.2% on a year-over-year basis on the back of increase in specialty product sales, including COVID-19 treatments coupled with overall market growth.
Segmental operating income was $483.9 million, up 13.4% year over year. Solid performance across the company’s distribution businesses, which include higher sales of specialty products, contributed to the upside.
AmerisourceBergen Corporation Price, Consensus and EPS Surprise
AmerisourceBergen Corporation price-consensus-eps-surprise-chart | AmerisourceBergen Corporation Quote
Other Segment
This segment includes AmerisourceBergen Consulting Services (ABCS), World Courier and MWI Veterinary Supply.
Revenues at this segment were $4.13 billion, up 128% year over year. The upside was driven by growth across all three operating segments and the acquisition of Alliance Healthcare.
Operating income in the segment was $146.9 million in the quarter, up 77.2% year over year primarily due to buyout of Alliance Healthcare as well as growth in World Courier and MWI.
Margin Analysis
In the quarter under review, AmerisourceBergen reported adjusted gross profit of $1.63 billion, up 32% on a year-over-year basis. As a percentage of revenues, adjusted gross margin was 3.1% in the quarter, up 40 basis points (bps) a year-over-year basis.
The company reported adjusted operating income of $630.6 million, up 24.3% year over year. As a percentage of revenues, adjusted operating margin was 1.2% in the quarter, which expanded 10 bps from the year-ago quarter.
Financial Position
The company exited the quarter with cash and cash equivalents worth $2.55 billion compared with $6.64 billion on a sequential basis.
Cumulative net cash used in operating activities at the end of the fiscal third quarter totaled $1.66 billion compared with $907.8 million in the prior-year quarter.
Fiscal 2021 Guidance Updated
AmerisourceBergen has updated its fiscal 2021 outlook, highlighting sustained solid performance across its businesses.
Adjusted EPS is now estimated to be $9.15-$9.30 (up from the prior-guided range of $8.90-$9.10). The Zacks Consensus Estimate currently stands at $8.96.
The company continues to estimate revenue growth in the high-single-digit percent range.
Adjusted operating income is now projected to be around $2.6 billion (up from the high-single-digit percent range).
Operating income at Pharmaceutical Distribution Services segment is now anticipated to improve in low-double digit percentage (up from the previous estimate of high-single-digit percent range).
For the Other segment, the metric is estimated to grow in the range of $610 million to $620 million (up from the prior projection of low-double digit percent range).
Adjusted free cash flow is estimated to be around $1.7 billion (up from the prior estimate of $1.5 billion).
The company anticipates adjusted effective tax rate to be 21-22%.
Adjusted operating expenses is projected to be around $3.9 billion (up from growth in the high-single digit percent range).
Summing Up
AmerisourceBergen exited the fiscal third quarter on a strong note, wherein both earnings and revenues beat the consensus mark. The company continues to gain from its Pharmaceutical segment and World Courier business, which have been generating substantial profits for quite some time. Also, expansion in both gross and operating margins is a positive.
Per management, during the third quarter, the company remained committed toward capitalizing on its differentiated, pharmaceutical-centric value proposition and was able to execute on its key strategic initiatives, which included closing the buyout of Alliance Healthcare.
However, the company faces other headwinds like conversion of branded drugs and lower price generics. Cut-throat competition in the MedTech space remains a concern.
Zacks Rank
Currently, AmerisourceBergen carries a Zacks Rank #3 (Hold).
Earnings of Other MedTech Majors at a Glance
Some better-ranked stocks in the broader medical space that have already announced their quarterly results are Encompass Health Corporation (EHC - Free Report) , West Pharmaceutical Services, Inc. (WST - Free Report) and Chemed Corporation (CHE - Free Report) . While both Encompass Health and West Pharmaceutical sport a Zacks Rank #1 (Strong Buy), Chemed carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Encompass Health reported second-quarter 2021 adjusted EPS of $1.17, which beat the Zacks Consensus Estimate by 15.8%. Second-quarter revenues of $1.3 billion outpaced the consensus mark by 1.5%.
West Pharmaceutical reported second-quarter 2021 adjusted EPS of $2.46, which surpassed the Zacks Consensus Estimate by 41.4%. Second-quarter revenues of $723.6 million outpaced the Zacks Consensus Estimate by 8.7%.
Chemed reported second-quarter 2021 adjusted EPS of $4.60, surpassing the Zacks Consensus Estimate by 3.4%. Revenues of $532.3 million exceeded the Zacks Consensus Estimate by 0.8%.