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AmerisourceBergen (ABC) Q3 Earnings & Revenues Top Estimates
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AmerisourceBergen Corporation reported third-quarter fiscal 2022 adjusted earnings per share (EPS) of $2.62, which beat the Zacks Consensus Estimate of $2.57 by 1.9%. The bottom line improved 21.3% year over year.
GAAP EPS in the quarter was $1.92, up 37.1% from the year-ago period.
Revenue Details
Revenues increased 12.5% to $60.1 billion in the reported quarter. The top line beat the Zacks Consensus Estimate by 1.5%.
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, courtesy of the June 2021 buyout of Alliance Healthcare. Consequently, starting from the second 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 $53.4 billion, reflecting an increase of 6% on a year-over-year basis on the back of an increase in specialty product sales coupled with overall market growth. Lower revenues from commercial COVID-19 treatments partially offset the upside.
Segmental operating income was $579.9 million, up 9.5% year over year. Higher gross profit (which included fees earned associated with the distribution of government-owned COVID-19 treatments and gross profit on sales to specialty physician practices) contributed to the upside.
International Healthcare Solutions
This segment includes Alliance Healthcare, World Courier, Innomar, Profarma and Profarma Specialty.
Revenues at this segment were $6.7 billion, up a whopping 120.3% year over year. The upside was mainly driven by the acquisition of Alliance Healthcare (June 2021).
Operating income in the segment was $176.3 million in the quarter, up 74.8% year over year, primarily due to the buyout of Alliance Healthcare.
AmerisourceBergen Corporation Price, Consensus and EPS Surprise
In the fiscal third quarter, AmerisourceBergen reported an adjusted gross profit of $2.1 billion, up 27% on a year-over-year basis. As a percentage of revenues, the adjusted gross margin was 3.4% in the quarter, up 39 basis points (bps).
The company reported an adjusted operating income of $756.2 million, up 19.9% year over year. As a percentage of revenues, the adjusted operating margin was 1.3% in the quarter, which expanded 8 bps from the year-ago quarter.
Financial Position
The company exited the quarter with cash and cash equivalents worth $3.03 billion, compared with $2.96 billion a quarter ago.
Cumulative net cash used in operating activities at the end of the fiscal third quarter totaled $1.54 billion compared with $1.67 billion in the prior-year quarter.
Dividend Update
During the quarter, AmerisourceBergen's board of directors declared a quarterly dividend of 46 cents per share, to be paid out on Aug 29, 2022, to shareholders at the close of business on Aug 15, 2022.
Fiscal 2022 Guidance
AmerisourceBergen has updated its fiscal 2022 outlook, highlighting a revised full-year earnings outlook to represent the stronger-than-anticipated performance of some of its businesses.
Adjusted EPS is now estimated to be $10.90-$11.10 (up from the previously guided range of 10.80-$11.05). The Zacks Consensus Estimate currently stands at $10.94.
The company continues to estimate 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, implying growth of 2-5%. Revenues at the International Healthcare solutions business are projected to be $26 billion to $27 billion.
Adjusted operating income is now projected to grow at least in the high-teens percent range (up from the previously guided high-teens percent range).
Operating income at the U.S. Healthcare Solutions segment is now anticipated between $2.44 billion and $2.48 billion (up from $2.42 billion and $2.48 billion), indicating growth of 8-10%.
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 $2.3 billion to $2.5 billion.
Summing Up
AmerisourceBergen exited the fiscal third quarter on a strong note, wherein both earnings and revenues beat the consensus mark. The company witnessed a robust segmental performance in the quarter under review. Expansion at both gross and operating margins is a positive.
Per management, AmerisourceBergen delivered a solid performance by continuing to play a crucial role in the healthcare system while maintaining execution throughout its business. Apart from this, the company's introduction of AB Health Ventures — a dedicated corporate venture capital fund — focused on investing in and collaborating with emerging healthcare startup companies that are involved in transforming healthcare for people and animals worldwide deserves mention.
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 and Stocks to Consider
Currently, AmerisourceBergen carries a Zacks Rank #3 (Hold).
Estimates for Lantheus have improved from earnings of $3.04 to $3.08 for 2022 and $3.33 to $3.62 for 2023 in the past 30 days. LNTH stock has surged 156.6% so far this year.
Lantheus delivered an earnings surprise of 77.82%, on average, in the last four quarters.
ShockWave Medical’s earnings per share estimates have improved from $1.84 to $2.02 for 2022 and from $2.82 to $2.95 for 2023 in the past 30 days. SWAV has declined 19.1% so far this year.
ShockWave Medical delivered an earnings surprise of 189.99%, on average, in the last four quarters.
Alkermes’ earnings per share estimates have improved from breakeven to 4 cents for 2022 and from 56 cents to 59 cents for 2023 in the past 30 days. ALKS has gained 19.6% so far this year.
Alkermes delivered an earnings surprise of 350.48%, on average, in the last four quarters.
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AmerisourceBergen (ABC) Q3 Earnings & Revenues Top Estimates
AmerisourceBergen Corporation reported third-quarter fiscal 2022 adjusted earnings per share (EPS) of $2.62, which beat the Zacks Consensus Estimate of $2.57 by 1.9%. The bottom line improved 21.3% year over year.
GAAP EPS in the quarter was $1.92, up 37.1% from the year-ago period.
Revenue Details
Revenues increased 12.5% to $60.1 billion in the reported quarter. The top line beat the Zacks Consensus Estimate by 1.5%.
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, courtesy of the June 2021 buyout of Alliance Healthcare. Consequently, starting from the second 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 $53.4 billion, reflecting an increase of 6% on a year-over-year basis on the back of an increase in specialty product sales coupled with overall market growth. Lower revenues from commercial COVID-19 treatments partially offset the upside.
Segmental operating income was $579.9 million, up 9.5% year over year. Higher gross profit (which included fees earned associated with the distribution of government-owned COVID-19 treatments and gross profit on sales to specialty physician practices) contributed to the upside.
International Healthcare Solutions
This segment includes Alliance Healthcare, World Courier, Innomar, Profarma and Profarma Specialty.
Revenues at this segment were $6.7 billion, up a whopping 120.3% year over year. The upside was mainly driven by the acquisition of Alliance Healthcare (June 2021).
Operating income in the segment was $176.3 million in the quarter, up 74.8% year over year, primarily due to the buyout of Alliance Healthcare.
AmerisourceBergen Corporation Price, Consensus and EPS Surprise
AmerisourceBergen Corporation price-consensus-eps-surprise-chart | AmerisourceBergen Corporation Quote
Margin Analysis
In the fiscal third quarter, AmerisourceBergen reported an adjusted gross profit of $2.1 billion, up 27% on a year-over-year basis. As a percentage of revenues, the adjusted gross margin was 3.4% in the quarter, up 39 basis points (bps).
The company reported an adjusted operating income of $756.2 million, up 19.9% year over year. As a percentage of revenues, the adjusted operating margin was 1.3% in the quarter, which expanded 8 bps from the year-ago quarter.
Financial Position
The company exited the quarter with cash and cash equivalents worth $3.03 billion, compared with $2.96 billion a quarter ago.
Cumulative net cash used in operating activities at the end of the fiscal third quarter totaled $1.54 billion compared with $1.67 billion in the prior-year quarter.
Dividend Update
During the quarter, AmerisourceBergen's board of directors declared a quarterly dividend of 46 cents per share, to be paid out on Aug 29, 2022, to shareholders at the close of business on Aug 15, 2022.
Fiscal 2022 Guidance
AmerisourceBergen has updated its fiscal 2022 outlook, highlighting a revised full-year earnings outlook to represent the stronger-than-anticipated performance of some of its businesses.
Adjusted EPS is now estimated to be $10.90-$11.10 (up from the previously guided range of 10.80-$11.05). The Zacks Consensus Estimate currently stands at $10.94.
The company continues to estimate 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, implying growth of 2-5%. Revenues at the International Healthcare solutions business are projected to be $26 billion to $27 billion.
Adjusted operating income is now projected to grow at least in the high-teens percent range (up from the previously guided high-teens percent range).
Operating income at the U.S. Healthcare Solutions segment is now anticipated between $2.44 billion and $2.48 billion (up from $2.42 billion and $2.48 billion), indicating growth of 8-10%.
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 $2.3 billion to $2.5 billion.
Summing Up
AmerisourceBergen exited the fiscal third quarter on a strong note, wherein both earnings and revenues beat the consensus mark. The company witnessed a robust segmental performance in the quarter under review. Expansion at both gross and operating margins is a positive.
Per management, AmerisourceBergen delivered a solid performance by continuing to play a crucial role in the healthcare system while maintaining execution throughout its business. Apart from this, the company's introduction of AB Health Ventures — a dedicated corporate venture capital fund — focused on investing in and collaborating with emerging healthcare startup companies that are involved in transforming healthcare for people and animals worldwide deserves mention.
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 and Stocks to Consider
Currently, AmerisourceBergen carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the pharma/biotech sector include Lantheus (LNTH - Free Report) , ShockWave Medical (SWAV - Free Report) and Alkermes (ALKS - Free Report) . While Lantheus and ShockWave Medical sport a Zacks Rank #1 (Strong Buy), Alkermes carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Estimates for Lantheus have improved from earnings of $3.04 to $3.08 for 2022 and $3.33 to $3.62 for 2023 in the past 30 days. LNTH stock has surged 156.6% so far this year.
Lantheus delivered an earnings surprise of 77.82%, on average, in the last four quarters.
ShockWave Medical’s earnings per share estimates have improved from $1.84 to $2.02 for 2022 and from $2.82 to $2.95 for 2023 in the past 30 days. SWAV has declined 19.1% so far this year.
ShockWave Medical delivered an earnings surprise of 189.99%, on average, in the last four quarters.
Alkermes’ earnings per share estimates have improved from breakeven to 4 cents for 2022 and from 56 cents to 59 cents for 2023 in the past 30 days. ALKS has gained 19.6% so far this year.
Alkermes delivered an earnings surprise of 350.48%, on average, in the last four quarters.