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AmerisourceBergen (ABC) Q4 Earnings & Revenues Top Estimates

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AmerisourceBergen Corporation (ABC - Free Report) reported fourth-quarter fiscal 2021 adjusted earnings per share (EPS) of $2.39, which surpassed the Zacks Consensus Estimate of $2.36 by 1.3%. The bottom line improved 26.5% year over year.

The better-than-expected bottom-line performance can be attributed to higher adjusted operating income. However, increase in interest expense and higher diluted share count partially offset the improvement.

GAAP EPS in the quarter under review was $2.08, against the year-ago quarter’s loss of $23.74.

For fiscal 2021, the company reported adjusted EPS of $9.26, up 17.2% from the previous period. The metric outpaced the consensus mark by 0.2%.

Revenue Details

Revenues increased 19.6% to $58.91 billion in the reported quarter. The top line beat the Zacks Consensus Estimate by 3.9%.

For fiscal 2021, the company reported revenues of $213.99 billion, up 12.7% from fiscal 2020. The top line beat the consensus mark by 1.4%.

Segmental Analysis

Pharmaceutical Distribution Segment

Revenues at this segment totaled $51.25 billion, reflecting an increase of 8.4% 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 $472.1 million, up 10.9% year over year. Solid performance across the company’s distribution businesses, which include higher sales of specialty products, contributed to the upside.

Other Segment

This segment includes AmerisourceBergen Consulting Services (ABCS), World Courier and MWI Veterinary Supply.

Revenues at this segment were $7.70 billion, up 286.8% 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 $223.3 million in the quarter, up 113.6% year over year primarily due to buyout of Alliance Healthcare.

Margin Analysis

In the quarter under review, AmerisourceBergen reported an adjusted gross profit of $2.01 billion, up 51.3% on a year-over-year basis. As a percentage of revenues, adjusted gross margin was 3.4% in the quarter, up 70 basis points (bps) a year-over-year basis.

The company reported an adjusted operating income of $694.1 million, up 31% 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 remaining flat on a sequential basis.

Cumulative net cash used in operating activities at the end of the fiscal fourth quarter totaled $2.67 billion compared with $2.21 billion in the prior-year quarter.

Dividend Update

In November, AmerisourceBergen’s board of directors declared a quarterly dividend of 46 cents per share, which is higher than its quarterly dividend rate of 44 cents per share.

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.

Fiscal 2022 Guidance

AmerisourceBergen issued its fiscal 2022 outlook, highlighting growth in both of its new reportable units.

Adjusted EPS is now estimated to be $10.50-$10.80. The Zacks Consensus Estimate currently stands at $10.62.

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 International Healthcare solutions business is projected to be around $26 billion to $27 billion.

Adjusted operating income is projected to grow in the mid-to high-teens percent range.

Operating income at the U.S. Healthcare Solutions segment is anticipated between $2.33 billion and $2.4 billion, reflecting growth of 3-6%.

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 around $2 billion to $2.5 billion.

Summing Up

AmerisourceBergen exited the fiscal fourth 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 fourth quarter, the company delivered robust growth in fiscal 2021 and undertook crucial steps to further boost its strategic positioning.

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 Thermo Fisher Scientific Inc. (TMO - Free Report) , West Pharmaceutical Services, Inc. (WST - Free Report) , and AngioDynamics, Inc. (ANGO - Free Report) . While both Thermo Fisher and AngioDynamics sport a Zacks Rank of 1 (Strong Buy), West Pharmaceutical carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Thermo Fisher reported third-quarter 2021 adjusted EPS of $5.76, which beat the Zacks Consensus Estimate by 23.3%. Third-quarter revenues of $9.33 billion outpaced the consensus mark by 12%.

West Pharmaceutical reported third-quarter 2021 adjusted EPS of $2.06, which surpassed the Zacks Consensus Estimate by 13.2%. Third-quarter revenues of $706.5 million outpaced the Zacks Consensus Estimate by 3.2%.

AngioDynamics reported first-quarter fiscal 2022 loss per share of 2 cents, narrower than the Zacks Consensus Estimate of a loss of 5 cents. Revenues of $76.9 million surpassed the Zacks Consensus Estimate by 8.4%.