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AmerisourceBergen (ABC) Beats on Q2 Earnings, Ups '23 EPS View
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AmerisourceBergen Corporation reported second-quarter fiscal 2023 adjusted earnings per share (EPS) of $3.50, which beat the Zacks Consensus Estimate of $3.29 by 6.4%. The bottom line improved 8.7% year over year.
GAAP EPS was $2.13, down 17.8% from that reported in the year-ago period.
Revenue Details
Revenues totaled $63.46 billion, up 9.9% year over year. The top line beat the Zacks Consensus Estimate by 4.4%.
Segmental Analysis
U.S. Healthcare Solutions
Revenues at this segment totaled $56.7 billion, up 11.3% on a year-over-year basis. This improvement was due to overall market growth and an increased specialty product sales. Lower revenues from commercial COVID-19 treatments partially offset the upside.
Segmental operating income came in at $756.1 million, up 3.6% year over year. Higher gross profit (which included fees earned from the distribution of government-owned COVID-19 treatments and gross profit on sales to specialty physician practices) contributed to the upside, largely offset by inflationary impacts on certain operating expenses.
International Healthcare Solutions
This segment includes Alliance Healthcare, World Courier, Innomar and Profarma Specialty.
Revenues totaled $6.8 billion, down 0.2% year over year.
Operating income came in at $176 million, down 5.9% from that recorded in the year-ago quarter.
The decline in revenues and income was due to divestiture of the Brazil specialty business in June 2022 and unfavorable foreign currency exchange rate. Revenues and operating income improved 11.9% and 7.3%, respectively, at constant currency (cc).
AmerisourceBergen Corporation Price, Consensus and EPS Surprise
AmerisourceBergen reported an adjusted gross profit of $2.4 billion, up 6.2% on a year-over-year basis. As a percentage of revenues, the adjusted gross margin was 3.7%, down 13 basis points (bps) year over year.
The company recorded an adjusted operating income of $932.1 million, up 1.7% year over year. The metric was up 4.4% at cc. As a percentage of revenues, the adjusted operating margin was 1.5%, which contracted 12 bps from the year-ago quarter.
Financial Position
ABC exited the fiscal second quarter with cash and cash equivalents worth $1.54 billion compared with $1.69 billion in the first-quarter fiscal 2023.
Cumulative net cash used in operating activities totaled $1.34 billion compared with $1.13 billion in the prior-year period.
Dividend Update
During the quarter, AmerisourceBergen's board of directors declared a quarterly dividend of 48.5 cents per share, payable on May 30, to shareholders of record at the close of business on May 12, 2023.
Fiscal 2023 Guidance
The company raised its 2023 outlook for earnings to reflect stronger core growth in its U.S. Healthcare Solutions segment.
Adjusted EPS is now estimated in the range of $11.70-$11.95, indicating growth of 6-8% from the previous year. The Zacks Consensus Estimate is currently pegged at $11.63 per share. Previously, the company expected adjusted EPS in the band of $11.50-$11.75.
Revenue growth is now projected at 6-8% compared with the previous guidance of 5-7%. The top line at the U.S. Healthcare Solutions segment is expected to grow 7-8% compared with the previous guided range of 6-8%. Revenues at the International Healthcare solutions business are projected to be flat to down 3% versus a decline of 1-5%.
Adjusted EPS is estimated to improve 8-10% at cc, up from the previous guidance of 6-9%. Excluding contributions related to COVID-19 and currency fluctuations, the figure is projected to increase 13-15% compared with the previous expectation of 11-13%.
Adjusted operating income is expected to gain 2-4% versus 0-3% previously. Operating income at the U.S. Healthcare Solutions segment is now anticipated to grow 3-5% compared with previous expectation of 1-4%. For the International Healthcare Solutions segment, the company's guidance for the metric has been unchanged at a 3% decline to 1% growth.
Summing Up
AmerisourceBergen exited the fiscal second-quarter on a strong note, wherein both earnings and revenues beat the consensus mark. The company witnessed a strong segmental performance due to growth in all markets and strong demand for specialty products.
Per management, AmerisourceBergen delivered a solid performance by playing a crucial role in the healthcare system while maintaining efficiency throughout its business. The company remains focused on its strategic priorities and thoughtful capital deployment to deliver long-term growth.
ABC recently acquired a minority stake in a network of leading oncology practices, OneOncology, which is likely to further deepen its relationship with community oncologists and expand its specialty solutions. Meanwhile, it launched its Cell and Gene Therapy Integration Hub to facilitate real-time data exchange for biopharma and provider-facing platforms. The deployment of real-time location monitoring on all of World Courier’s multi-use packages will likely enable secure and timely distribution of products. These developments are likely to boost AmerisourceBergen’s prospects.
However, the company faces headwinds like conversion of branded drugs and lower-price generics. Cut-throat competition in the MedTech space remains a concern.
Zacks Rank
AmerisourceBergen currently carries a Zacks Rank #3 (Hold).
Intuitive Surgical reported first-quarter 2023 adjusted EPS of $1.23, which beat the Zacks Consensus Estimate of $1.19. Revenues of $1.7 billion outpaced the consensus mark by 6.9%.
Intuitive Surgical has a long-term estimated growth rate of 13%. ISRG’s earnings surpassed estimates in two of the trailing four quarters and missed the same twice, the average surprise being 1.86%.
Chemed reported first-quarter 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 0.2%. Revenues of $560 million outpaced the consensus mark by 2.6%.
Chemed has a long-term estimated growth rate of 8.8%. CHE’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.12%.
Edwards Lifesciences reported first-quarter 2023 adjusted earnings of 62 cents per share, which beat the Zacks Consensus Estimate by 1.6%. Revenues of $1.46 billion surpassed the Zacks Consensus Estimate by 4.7%.
Edwards Lifesciences has a long-term estimated growth rate of 6.8%. EW’s earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 1.69%.
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AmerisourceBergen (ABC) Beats on Q2 Earnings, Ups '23 EPS View
AmerisourceBergen Corporation reported second-quarter fiscal 2023 adjusted earnings per share (EPS) of $3.50, which beat the Zacks Consensus Estimate of $3.29 by 6.4%. The bottom line improved 8.7% year over year.
GAAP EPS was $2.13, down 17.8% from that reported in the year-ago period.
Revenue Details
Revenues totaled $63.46 billion, up 9.9% year over year. The top line beat the Zacks Consensus Estimate by 4.4%.
Segmental Analysis
U.S. Healthcare Solutions
Revenues at this segment totaled $56.7 billion, up 11.3% on a year-over-year basis. This improvement was due to overall market growth and an increased specialty product sales. Lower revenues from commercial COVID-19 treatments partially offset the upside.
Segmental operating income came in at $756.1 million, up 3.6% year over year. Higher gross profit (which included fees earned from the distribution of government-owned COVID-19 treatments and gross profit on sales to specialty physician practices) contributed to the upside, largely offset by inflationary impacts on certain operating expenses.
International Healthcare Solutions
This segment includes Alliance Healthcare, World Courier, Innomar and Profarma Specialty.
Revenues totaled $6.8 billion, down 0.2% year over year.
Operating income came in at $176 million, down 5.9% from that recorded in the year-ago quarter.
The decline in revenues and income was due to divestiture of the Brazil specialty business in June 2022 and unfavorable foreign currency exchange rate. Revenues and operating income improved 11.9% and 7.3%, respectively, at constant currency (cc).
AmerisourceBergen Corporation Price, Consensus and EPS Surprise
AmerisourceBergen Corporation price-consensus-eps-surprise-chart | AmerisourceBergen Corporation Quote
Margin Analysis
AmerisourceBergen reported an adjusted gross profit of $2.4 billion, up 6.2% on a year-over-year basis. As a percentage of revenues, the adjusted gross margin was 3.7%, down 13 basis points (bps) year over year.
The company recorded an adjusted operating income of $932.1 million, up 1.7% year over year. The metric was up 4.4% at cc. As a percentage of revenues, the adjusted operating margin was 1.5%, which contracted 12 bps from the year-ago quarter.
Financial Position
ABC exited the fiscal second quarter with cash and cash equivalents worth $1.54 billion compared with $1.69 billion in the first-quarter fiscal 2023.
Cumulative net cash used in operating activities totaled $1.34 billion compared with $1.13 billion in the prior-year period.
Dividend Update
During the quarter, AmerisourceBergen's board of directors declared a quarterly dividend of 48.5 cents per share, payable on May 30, to shareholders of record at the close of business on May 12, 2023.
Fiscal 2023 Guidance
The company raised its 2023 outlook for earnings to reflect stronger core growth in its U.S. Healthcare Solutions segment.
Adjusted EPS is now estimated in the range of $11.70-$11.95, indicating growth of 6-8% from the previous year. The Zacks Consensus Estimate is currently pegged at $11.63 per share. Previously, the company expected adjusted EPS in the band of $11.50-$11.75.
Revenue growth is now projected at 6-8% compared with the previous guidance of 5-7%. The top line at the U.S. Healthcare Solutions segment is expected to grow 7-8% compared with the previous guided range of 6-8%. Revenues at the International Healthcare solutions business are projected to be flat to down 3% versus a decline of 1-5%.
Adjusted EPS is estimated to improve 8-10% at cc, up from the previous guidance of 6-9%. Excluding contributions related to COVID-19 and currency fluctuations, the figure is projected to increase 13-15% compared with the previous expectation of 11-13%.
Adjusted operating income is expected to gain 2-4% versus 0-3% previously. Operating income at the U.S. Healthcare Solutions segment is now anticipated to grow 3-5% compared with previous expectation of 1-4%. For the International Healthcare Solutions segment, the company's guidance for the metric has been unchanged at a 3% decline to 1% growth.
Summing Up
AmerisourceBergen exited the fiscal second-quarter on a strong note, wherein both earnings and revenues beat the consensus mark. The company witnessed a strong segmental performance due to growth in all markets and strong demand for specialty products.
Per management, AmerisourceBergen delivered a solid performance by playing a crucial role in the healthcare system while maintaining efficiency throughout its business. The company remains focused on its strategic priorities and thoughtful capital deployment to deliver long-term growth.
ABC recently acquired a minority stake in a network of leading oncology practices, OneOncology, which is likely to further deepen its relationship with community oncologists and expand its specialty solutions. Meanwhile, it launched its Cell and Gene Therapy Integration Hub to facilitate real-time data exchange for biopharma and provider-facing platforms. The deployment of real-time location monitoring on all of World Courier’s multi-use packages will likely enable secure and timely distribution of products. These developments are likely to boost AmerisourceBergen’s prospects.
However, the company faces headwinds like conversion of branded drugs and lower-price generics. Cut-throat competition in the MedTech space remains a concern.
Zacks Rank
AmerisourceBergen currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some other stocks in the broader medical space that have announced their quarterly results are Intuitive Surgical (ISRG - Free Report) , Chemed (CHE - Free Report) and Edwards Lifesciences (EW - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Intuitive Surgical reported first-quarter 2023 adjusted EPS of $1.23, which beat the Zacks Consensus Estimate of $1.19. Revenues of $1.7 billion outpaced the consensus mark by 6.9%.
Intuitive Surgical has a long-term estimated growth rate of 13%. ISRG’s earnings surpassed estimates in two of the trailing four quarters and missed the same twice, the average surprise being 1.86%.
Chemed reported first-quarter 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 0.2%. Revenues of $560 million outpaced the consensus mark by 2.6%.
Chemed has a long-term estimated growth rate of 8.8%. CHE’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.12%.
Edwards Lifesciences reported first-quarter 2023 adjusted earnings of 62 cents per share, which beat the Zacks Consensus Estimate by 1.6%. Revenues of $1.46 billion surpassed the Zacks Consensus Estimate by 4.7%.
Edwards Lifesciences has a long-term estimated growth rate of 6.8%. EW’s earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 1.69%.