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AmerisourceBergen (ABC) Q4 Earnings & Revenues Beat Estimates

Zacks Equity Research

AmerisourceBergen Corporation ABC reported fourth-quarter fiscal 2019 adjusted earnings per share (EPS) of $1.61 surpassing the Zacks Consensus Estimate of $1.58 by 1.9%. The figure also improved 11% year over year.

The better-than-expected bottom-line performance can be attributed to increase in adjusted operating income, lower share count and reduced net interest expense.

Revenues improved 5.4% to $45.64 billion in the reported quarter. Moreover, the figure beat the Zacks Consensus Estimate by 0.7%.

FY19 at a Glance

For fiscal 2019, the company reported adjusted earnings of $7.09 per share, up 9.2% from the year-ago period. The metric exceeded the Zacks Consensus Estimate of $7.05 per share.

Revenues totaled $179.56 billion, up 6.9% year over year, which beat the Zacks Consensus Estimate of $179.37 billion.

AmerisourceBergen Corporation Price, Consensus and EPS Surprise

 

AmerisourceBergen Corporation Price, Consensus and EPS Surprise

AmerisourceBergen Corporation price-consensus-eps-surprise-chart | AmerisourceBergen Corporation Quote

Segmental Analysis

Pharmaceutical Distribution Segment

Revenues at this segment totaled $43.87 billion, improved 5.1% on a year-over-year basis. Consistent robust specialty product sales and increase in volume related to growth of some of its largest customers contributed to the improvement.

Segmental operating income was $369.3 million, up 3.5% year over year. Increase in gross profit drove the upside. However, an increase in operating expenses partially offset the uptick.

Other Segment

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

Revenues at this segment came in at $1.79 billion, up 12.6% year over year. This upside was driven by ABCS's growth in Canadian operations and MWI.

Operating income in the segment was $86.7 million in the quarter, up 14.9% year over year primarily on the back of the results at MWI, World Courier and ABCS’s Lash Consulting Services.

Margin Analysis

In the quarter under review, AmerisourceBergen reported adjusted gross profit of $1.25 billion, up 6.9% on a year-over-year basis. As a percentage of revenues, adjusted gross margin was 2.7% in the quarter, which remained marginally flat year over year.

AmerisourceBergen reported adjusted operating income of $456.1 million, up 5.5% year over year. As a percentage of revenues, adjusted operating margin was 1% in the quarter, which remained flat from the prior-year quarter.
 
Fiscal 2020 Guidance

The company estimates revenue growth in the mid-to-high single digit percent range.

Adjusted EPS is now estimated in the range of $7.30-$7.60. The Zacks Consensus Estimate is currently pegged at $7.57, which is within management’s guided range.

Adjusted operating income is projected to grow in the low-to-mid single digit percent range.

Operating income at Pharmaceutical Distribution Services segment is expected to improve in the low-to-mid single digit percent range. For the Other segment the metric is estimated to grow in the high-single digit percent range.

Adjusted operating expenses is projected to increase in the mid-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%.

Further, the company anticipates weighted average diluted shares to range between 209 million and 210 million.

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 huge profits since quite some time. Its specialty distribution business also continues to contribute significantly to the top line. A strong fiscal 2020 outlook instills investors’ optimism in the stock.

UPS announced its drone logistics partnership with AmerisourceBergen. The collaboration will deploy the UPS Flight Forward drone airline to transport certain pharmaceuticals, supplies and records to qualifying medical campuses, which are served by AmerisourceBergen throughout the United States, and then extend its use to other sites of care.

Meanwhile, company faces other headwinds like conversion of branded drugs and lower price generics. Cutthroat competition in the MedTech space adds to woes.

Zacks Rank

Currently, AmerisourceBergen carries a Zacks Rank #3 (Hold).
 
Earnings of Other MedTech Majors at a Glance

Some better-ranked stocks that reported solid results this earning season are Edwards Lifesciences EW, Thermo Fisher Scientific Inc. TMO and ResMed Inc. RMD, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Edwards Lifesciences delivered fourth-quarter 2019 adjusted EPS of $1.41, outpacing the Zacks Consensus Estimate by 15.6%. Fourth-quarter net sales of $1.09 billion surpassed the Zacks Consensus Estimate by 5.5%.

Thermo Fisher delivered fourth-quarter 2019 adjusted EPS of $2.94, which surpassed the Zacks Consensus Estimate by 2.1%. Revenues of $6.27 billion outpaced the Zacks Consensus Estimate by 1.3%.

ResMed reported fourth-quarter 2019 adjusted EPS of 93 cents, which beat the Zacks Consensus Estimate of 87 cents by 6.9%. Revenues were $681.1 million, surpassing the Zacks Consensus Estimate by 3.6%.

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Thermo Fisher Scientific Inc. (TMO) : Free Stock Analysis Report
 
Edwards Lifesciences Corporation (EW) : Free Stock Analysis Report
 
ResMed Inc. (RMD) : Free Stock Analysis Report
 
AmerisourceBergen Corporation (ABC) : Free Stock Analysis Report
 
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