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AmerisourceBergen (ABC) Q2 Earnings & Revenues Top Estimates
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AmerisourceBergen Corporation reported second-quarter fiscal 2020 adjusted earnings per share (EPS) of $2.40 surpassing the Zacks Consensus Estimate of $2.28 by 5.3%. The bottom line also improved 13.7% year over year.
The better-than-expected bottom-line performance can be attributed to increase in adjusted operating income and lower share count.
Revenues improved 9.5% to $47.42 billion in the reported quarter. Further, the top line outpaced the Zacks Consensus Estimate by 3.2%.
Segmental Analysis
Pharmaceutical Distribution Segment
Revenues at this segment totaled $45.56 billion, improving 9.3% on a year-over-year basis. Consistent robust specialty product sales and increase in volume related to growth of some of its largest customers and overall market growth contributed to the improvement.
Segmental operating income was $563.1 million, up 8.9% year over year. Increase in gross profit drove 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 came in at $1.88 billion, up 12.7% year over year. This upside was driven by growth across all three operating segments — ¬MWI, ABCS and World Courier.
Operating income in the segment was $108.3 million in the quarter, up 8.4% year over year primarily on the back of the performance of MWI and ABCS.
Margin Analysis
In the quarter under review, AmerisourceBergen reported adjusted gross profit of $1.42 billion, up 7.5% on a year-over-year basis. As a percentage of revenues, adjusted gross margin was 2.9% in the quarter, down 5 bps from the year-ago quarter.
The company reported adjusted operating income of $671.7 million, up 8.9% year over year. As a percentage of revenues, adjusted operating margin was 1.4% in the quarter, which remained flat from the prior-year quarter.
Fiscal 2020 Guidance Updated
AmerisourceBergen has updated fiscal year 2020 outlook, reflecting its sustained strong performance, prudent share buybacks in the quarter under review and potential impact of COVID-19 in the second half of the fiscal year.
Adjusted EPS is now estimated in the range of $7.35-$7.65 (down from the previously guided range of $7.55-$7.80). The Zacks Consensus Estimate is currently pegged at $7.30.
The company estimates revenue growth in the low-to-mid-single digit percent range (down from the previously guided range of mid-to-high-single digit percent range).
Adjusted operating income is now projected to grow in the low-to-mid-single digit percent range (widened from the previously guided mid-single-digit percent range).
Adjusted operating expenses is projected to increase in the low-single digit percent range (down from the previously guided mid-single digit percent range).
Operating income at Pharmaceutical Distribution Services segment is now anticipated to improve in the low-to-mid-single digit percent range (widened from the mid-single digit percent range).
Further, the company now anticipates weighted average diluted shares to range between 206 million and 207 million (down from the prior estimate of 208 million).
Nonetheless, the company has reaffirmed all the other previously communicated aspects of its fiscal 2020 guidance and assumptions, which are as follows:
For the Other segment the metric is estimated to grow in the high-single digit percent range.
Adjusted free cash flow is estimated to be around $1.5 billion.
The company anticipates adjusted effective tax rate in the range of 21-22%.
Summing Up
AmerisourceBergen exited the fiscal second 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 amount in profits since quite some time. Its specialty distribution business also continues to contribute significantly to the top line.
During the fiscal second quarter, AmerisourceBergen introduced additional offerings to specialty physician practices through IPN solutions. Further, the company announced it is going to continue its strategic relationship with American Oncology Network, LLC, which is high-growth medical oncology provider focusing on supporting the long-term viability of oncology treatment in community-based settings.
Meanwhile, company faces other headwinds like conversion of branded drugs and lower price generics. Cut-throat competition in the MedTech space adds to woes.
Zacks Rank
Currently, AmerisourceBergen carries a Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks in the broader medical space are Aphria Inc. , Biogen Inc. (BIIB - Free Report) and Eli Lilly and Company (LLY - Free Report) .
Aphria reported third-quarter fiscal 2020 adjusted EPS of 2 cents, beating the Zacks Consensus Estimate of a loss of 4 cents. Net revenues of $64.4 million surpassed the consensus mark by 14.6%. The company carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Biogen currently carries a Zacks Rank #2. It reported first-quarter 2020 adjusted EPS of $9.14, surpassing the Zacks Consensus Estimate by 18.1%. Revenues of $3.53 billion outpaced the consensus mark by 3.2%.
Eli Lilly reported first-quarter 2020 EPS of $1.75, outpacing the Zacks Consensus Estimate by 12.9%. Revenues of $145.3 million surpassed the consensus estimate by 6.3%. The company currently sports a Zacks Rank #1.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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AmerisourceBergen (ABC) Q2 Earnings & Revenues Top Estimates
AmerisourceBergen Corporation reported second-quarter fiscal 2020 adjusted earnings per share (EPS) of $2.40 surpassing the Zacks Consensus Estimate of $2.28 by 5.3%. The bottom line also improved 13.7% year over year.
The better-than-expected bottom-line performance can be attributed to increase in adjusted operating income and lower share count.
Revenues improved 9.5% to $47.42 billion in the reported quarter. Further, the top line outpaced the Zacks Consensus Estimate by 3.2%.
Segmental Analysis
Pharmaceutical Distribution Segment
Revenues at this segment totaled $45.56 billion, improving 9.3% on a year-over-year basis. Consistent robust specialty product sales and increase in volume related to growth of some of its largest customers and overall market growth contributed to the improvement.
Segmental operating income was $563.1 million, up 8.9% year over year. Increase in gross profit drove 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 came in at $1.88 billion, up 12.7% year over year. This upside was driven by growth across all three operating segments — ¬MWI, ABCS and World Courier.
Operating income in the segment was $108.3 million in the quarter, up 8.4% year over year primarily on the back of the performance of MWI and ABCS.
Margin Analysis
In the quarter under review, AmerisourceBergen reported adjusted gross profit of $1.42 billion, up 7.5% on a year-over-year basis. As a percentage of revenues, adjusted gross margin was 2.9% in the quarter, down 5 bps from the year-ago quarter.
The company reported adjusted operating income of $671.7 million, up 8.9% year over year. As a percentage of revenues, adjusted operating margin was 1.4% in the quarter, which remained flat from the prior-year quarter.
Fiscal 2020 Guidance Updated
AmerisourceBergen has updated fiscal year 2020 outlook, reflecting its sustained strong performance, prudent share buybacks in the quarter under review and potential impact of COVID-19 in the second half of the fiscal year.
Adjusted EPS is now estimated in the range of $7.35-$7.65 (down from the previously guided range of $7.55-$7.80). The Zacks Consensus Estimate is currently pegged at $7.30.
The company estimates revenue growth in the low-to-mid-single digit percent range (down from the previously guided range of mid-to-high-single digit percent range).
Adjusted operating income is now projected to grow in the low-to-mid-single digit percent range (widened from the previously guided mid-single-digit percent range).
Adjusted operating expenses is projected to increase in the low-single digit percent range (down from the previously guided mid-single digit percent range).
Operating income at Pharmaceutical Distribution Services segment is now anticipated to improve in the low-to-mid-single digit percent range (widened from the mid-single digit percent range).
Further, the company now anticipates weighted average diluted shares to range between 206 million and 207 million (down from the prior estimate of 208 million).
Nonetheless, the company has reaffirmed all the other previously communicated aspects of its fiscal 2020 guidance and assumptions, which are as follows:
For the Other segment the metric is estimated to grow in the high-single digit percent range.
Adjusted free cash flow is estimated to be around $1.5 billion.
The company anticipates adjusted effective tax rate in the range of 21-22%.
Summing Up
AmerisourceBergen exited the fiscal second 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 amount in profits since quite some time. Its specialty distribution business also continues to contribute significantly to the top line.
During the fiscal second quarter, AmerisourceBergen introduced additional offerings to specialty physician practices through IPN solutions. Further, the company announced it is going to continue its strategic relationship with American Oncology Network, LLC, which is high-growth medical oncology provider focusing on supporting the long-term viability of oncology treatment in community-based settings.
Meanwhile, company faces other headwinds like conversion of branded drugs and lower price generics. Cut-throat competition in the MedTech space adds to woes.
Zacks Rank
Currently, AmerisourceBergen carries a Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks in the broader medical space are Aphria Inc. , Biogen Inc. (BIIB - Free Report) and Eli Lilly and Company (LLY - Free Report) .
Aphria reported third-quarter fiscal 2020 adjusted EPS of 2 cents, beating the Zacks Consensus Estimate of a loss of 4 cents. Net revenues of $64.4 million surpassed the consensus mark by 14.6%. The company carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Biogen currently carries a Zacks Rank #2. It reported first-quarter 2020 adjusted EPS of $9.14, surpassing the Zacks Consensus Estimate by 18.1%. Revenues of $3.53 billion outpaced the consensus mark by 3.2%.
Eli Lilly reported first-quarter 2020 EPS of $1.75, outpacing the Zacks Consensus Estimate by 12.9%. Revenues of $145.3 million surpassed the consensus estimate by 6.3%. The company currently sports a Zacks Rank #1.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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