![]() Welcome Investor Day December 11, 2007 Exhibit 99.2 |
![]() Dave Yost President & Chief Executive Officer |
![]() 3 Comment Regarding Forward Looking Statements This presentation may contain certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may vary materially from the expectations contained in the forward-looking statements. The following factors, among others, could cause actual results to differ materially from those described in any forward-looking statements: competitive pressures; the loss of one or more key customer or supplier relationships; customer defaults or insolvencies; changes in customer mix; supplier defaults or insolvencies; changes in pharmaceutical manufacturers' pricing and distribution policies or practices; adverse resolution of any contract or other disputes with customers (including departments and agencies of the U.S. Government) or suppliers; regulatory changes (including increased government regulation of the pharmaceutical supply channel); government enforcement initiatives (including (i) the imposition of increased obligations upon pharmaceutical distributors to detect and prevent suspicious orders of controlled substances, (ii) the commencement of further administrative actions by the U. S. Drug Enforcement Administration seeking to suspend or revoke the license of any of the Company’s distribution facilities to distribute controlled substances, (iii) the commencement of any enforcement actions by any U.S. Attorney alleging violation of laws and regulations regarding diversion of controlled substances and suspicious order monitoring, or (iv) the commencement of any administrative actions by the board of pharmacy of any state seeking to suspend, revoke or otherwise restrict the ability of any of the Company’s distribution facilities or businesses to distribute or dispense pharmaceuticals in such state); changes in U.S. government policies (including reimbursement changes arising from federal legislation, including the Medicare Modernization Act and the Deficit Reduction Act of 2005); changes in regulatory or clinical medical guidelines and/or reimbursement practices for the pharmaceuticals we distribute, including erythropoiesis- stimulating agents (ESAs) used to treat anemia patients; price inflation in branded pharmaceuticals and price deflation in generics; the inability of the Company to successfully complete any transaction that the Company may wish to pursue from time to time; fluctuations in market interest rates; operational or control issues arising from the Company’s outsourcing of information technology activities; success of integration, restructuring or systems initiatives; fluctuations in the U.S. dollar - Canadian dollar exchange rate and other foreign exchange rates; economic, business, competitive and/or regulatory developments in Canada, the United Kingdom and elsewhere outside of the United States; acquisition of businesses that do not perform as we expect or that are difficult for us to integrate or control; any operating problems and/or cost overruns that may be associated with the implementation of an enterprise resource planning system; changes in tax legislation or adverse resolution of challenges to our tax positions; and other economic, business, competitive, legal, tax, regulatory and/or operational factors affecting the business of the Company generally. Certain additional factors that management believes could cause actual outcomes and results to differ materially from those described in forward-looking statements are set forth (i) in Item 1A (Risk Factors) in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2007 and elsewhere in that report and (ii) in other reports filed by the Company pursuant to the Securities Exchange Act of 1934. |
![]() 4 Focused on Growing Pharmaceutical Channel – Demographics – New Bio-Tech, Specialty Products – Generics Positioned in Channel for Growth – Customer mix favors generics – Specialty/biotech strength – Completed Distribution Network Steady As We Grow |
![]() 5 Right Investments for Future Growth Acquisitions ERP Business Transformation Future Looks Bright Steady As We Grow |
![]() 6 Dave Yost President & 33 Chief Executive Officer Terry Haas Executive Vice President, 20 Chief Integration Officer Steve Collis Executive Vice President 13 & President ABSG Mike DiCandilo Executive Vice President 17 & Chief Financial Officer Today’s Speakers Years Years ABC ABC |
![]() 7 GAAP Diluted EPS from Continuing Operations Steady As We Grow $1.06 $1.57 $1.95 $2.06 $1.37 $2.26 $2.63 FY01 FY02 FY03 FY04 FY05 FY06 FY07 |
![]() 8 Focused Organization Steady As We Grow AmerisourceBergen ABC Drug Corporation ABC Specialty Group ABPG PMSI Bellco |
![]() 9 Anchored in Distribution Differentiated with Services ABDC Retail Institutional PMSI PBM Mail/Rx MS&E ABPG AHP Anderson Brecon Steady As We Grow Bellco ABSG Oncology ASD Besse Lash ICS Xcenda MSA |
![]() 10 Primary Growth Drivers Steady As We Grow Specialty Drugs Oncology Physician administered Services – Manufacturers – Physicians Generics Growing Market Customer mix advantage Differentiated offer Services – Manufacturers – Dispensers Global Opportunities |
![]() 11 AMP Anemia Drugs—ESAs Political Climate – Presidential Election – Importation New Block Buster Products Slower Industry Growth Steady As We Grow Industry Issues |
![]() 12 Steady As We Grow Medicaid reimbursement formula for Generics Controversy: Definition/Market price availability Effective date: January 31, 2008 Potential Remedies – Increased dispensing fees in states – Federal legislative action (change/delay) – CMS redefinition – Legal remedy Independents/Retail Chains: Resilient! AMP (Average Manufacturer's Price) |
![]() 13 Current impact: Oncology FDA “black box” warning Issues: – CMS (July)- no payment in patients with hemoglobin > 10 gm/deciliter – Increased blood transfusions – Debate continues Anniversary Impact Summer 2008 Steady As We Grow Anemia Drugs—ESAs |
![]() 14 Steady As We Grow … Generics |
![]() 15 Servicing Manufacturers & Providers Steady As We Grow Generic Manufacturers Market access Speed to market Data exchange Healthcare Providers Quick availability Best value generics Support Programs Sold as part of portfolio |
![]() 16 Top 3 Patent Expirations – Altace $0.9 Billion – Fosamax $1.9 Billion – Risperdal $2.4 Billion Unexpected Product Conversions – ie. Plavix Unexpected Timing – ie. Topamax Generic Opportunity CY2008 Steady As We Grow |
![]() 17 1. Two players in 6-month exclusivity period 2. Limited players with hard-to-make drug 3. One player in 6-month exclusivity period 4. Multiple players in easy-to-make drug ABC Generic Opportunity Steady As We Grow |
![]() 18 Generic Profitability Steady As We Grow Selling Price Gross Margin Gross Profit Dollars Handling Costs Accounts Payable Receivable Working Capital Returns on Capital Generic $20 15%+ $3.00+ Same Negotiable $20 Lower Higher Brand Name $100 3% $3.00 Same 30 days $100 Higher Lower |
![]() 19 Continued Compliance Activities – Bellco’s Generic Telemarketing – Contract Requirements Emerging Market Sourcing – Increasing sourcing in FY 2007 & FY 2008 Supply Chain Data Exchange Generic Leverage Steady As We Grow |
![]() 20 ABC will be the leading distributor of branded pharmaceuticals and related services ABC will be the leading distributor of generic pharmaceuticals and related services ABC will be the packager of choice for pharmaceutical manufacturers ABC will be the leading distributor of specialty pharmaceutical products and related services Related Services = Key Differentiator ABC Strategic Focus |
![]() 21 Trent Asenda Rep-Pharm Health Advocates Bellco Health NMCR IgG America AMD Xcenda FY 06 , FY 07, FY 08 YTD Acquisitions Brecon Acquisition Strategy ABC will be the leading wholesale distributor of generic pharmaceuticals and related services ABC will be the leading wholesale distributor of branded pharmaceuticals and related services ABC will be the leading distributor of specialty pharmaceutical products and related services ABC will be the packager of choice for pharmaceutical manufacturers |
![]() 22 Steady As We Grow … AmerisourceBergen Drug Corporation |
![]() 23 Manufacturers – Distribution – Receivables – Speed to Market – Data Services Retail Healthcare Providers Institutional Healthcare Providers ABDC Customers Steady As We Grow |
![]() 24 Retail Chain Healthcare Providers – Regional Drugstore Chains – Food/Drug Combination – National Drugstore Chains Smaller Community Providers – Community Independent Pharmacies – Apothecary Shops Retail Customers Steady As We Grow |
![]() 25 Independents are sizable More than $84 billion in revenue marketplace $3.6 million in sales per pharmacy annually 41% of retail prescriptions annually Average independent owns 1.7 pharmacies Services to patients 91% provide nutrition counseling 86% deliver to homes 79% do compounding Community Independents Steady As We Grow |
![]() 26 Good Neighbor Pharmacy ® : 2,800 stores GNP Provider Network ™ : 5,000 stores – 3 rd Largest Diabetes Shoppe ® : 1,000 stores Private Label Products: 700 SKUs PRxO ® Generics: 5,700 SKUs Patient management programs Business Coaching Promotional Programs Retail Services Steady As We Grow |
![]() 27 Hospital Systems Dialysis Clinics PBMs & other Mail Order Facilities Nursing Home Pharmacies Dept. of Defense/ other Gov’t Agencies Institutional Customers Steady As We Grow |
![]() 28 CareRx – Improving pharmaceutical clinical care SupplyRx – Improving supply chain performance CommunityRx – Improving pharmaceutical community care Institutional Services Steady As We Grow |
![]() 29 ABDC Improved Model Steady As We Grow Number DCs Purchasing Paradigm Inventory Cost Per Warehouse Line Focus Now/2007 26 Fee for Service 27 days Lower Transformation Then/2001 56 Buy & Hold 53 days Low Optimiz ® |
![]() 30 Steady As We Grow … The Leaders that Make It Happen |
![]() Terry Haas Executive Vice President and Chief Integration Officer |
![]() 32 Integration Office Responsibilities • Implement a Business Transformation Program patterned after the successful Optimiz ® Program • Integrate recent Bellco Drug acquisition into AmerisourceBergen • Drug Distribution Network Optimization |
![]() ![]() ![]() ![]() 33 ABDC Optimiz Program DC Consolidations DC Consolidations PkMS PkMS Implementations Implementations¹ 1 Greenfield Builds Greenfield Builds Engineered Engineered Standards Standards Implementations Implementations² 2 DC Reworks DC Reworks 32 20 6 14 7 Transportation Outsourcing Transportation Outsourcing 25 Completed 1 More than 95% of all customer volume will be managed and processed using PkMS by end of FY08 2 More than 80% of all warehouse activity will be covered under engineered standards program by end of FY08 |
![]() 34 Bellco Drug Integration • Founded in 1955 • Fiscal 2007 sales of $2.1 billion • 3 facilities • 270 employees • 1,500 retail and institutional pharmacy customers • 1,950 free-standing dialysis center customers • 4,100 ship-to locations with a national footprint |
![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() 35 Bellco Drug Integration Web-based clinical data collection, reporting & bench- marking technology platform Full-line, full- service drug wholesaler focused on metro NY/NJ Leading national generic telesales organization Established national dialysis distributor Nation’s largest dedicated dialysis GPO with 44% market share |
![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() 36 Bellco Drug Integration Strategic go-to- market plans for each Bellco entity integrated with ABC Operational execution of go-to-market plans Deal Close 10/1/07 Integration Office & Integration Plans established Key Associate Retention & Succession Planning Developed combined Metro NY Area market strategy Validated synergies across all Bellco entities Generic Procurement Cut-Over from to PRxOGen 12/11/07 |
![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() 37 ABC Business Transformation What it Is • ERP enabled Business Transformation • Targeted at end-to-end business processes outside of distribution centers • Extension of the Optimiz program to other parts of the business • Creation of a robust and scalable business platform • Efficiency and ease of doing business focused • Catalyst for growth What it Is Not A software implementation targeting marginal process improvement |
![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() 38 ERP Enabled ABC Business Transformation Program Focus Develop and deploy enhanced capabilities in all areas of ABC’s business and infrastructure ABC Customers Suppliers |
![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() 39 ABC Business Transformation Program Focus • IT processes and infrastructure • Back office processes • Business unit integration / coordination • Suppliers • Customers Self Service • Acquisition integration • Partner connectivity • Transforming data to information • Marketable information assets Operational Efficiencies driven by Best Practices Ease of Doing Business Engine for Growth Step Function Change for Business Intelligence ERP Enabled ERP Enabled ERP Enabled ERP Enabled ABC ABC Customers Customers Suppliers Suppliers ABC ABC Customers Customers Suppliers Suppliers |
![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() 40 ABC Business Transformation Expected Outcomes IT Cost IT Cost IT Complexity IT Complexity IT Flexibility IT Flexibility Data Quality Data Quality Informatics Opportunities Informatics Opportunities Market Flexibility Market Flexibility Track & Trace Readiness Track & Trace Readiness Customer Experience Customer Experience Supplier Experience Supplier Experience Process Connectivity Process Connectivity Business Unit Integration Business Unit Integration Asset Efficiency Asset Efficiency Associate Productivity Associate Productivity Resource Requirements Resource Requirements ERP Enabled ERP Enabled ERP Enabled ERP Enabled ABC ABC Customers Customers Suppliers Suppliers ABC ABC Customers Customers Suppliers Suppliers |
![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() 41 ABC Business Transformation Phase 1 Planning & Requirements Phase 2 Software Selection Phase 3 Implementation • Process Improvement/ Business Requirements • Software Requirements • Organizational Implications • Business Case Finalization • RFP • Supplier Selection • Negotiation • Solution Design • Configuration, Development, Testing • End User Training • Benefit Tracking • Phased Implementations • Benefit Tracking Organizational Change Management Program Management Technical Architecture Phase 4 Wave Deployment Our Approach – Doing It Right Current Phase ERP Enabled ERP Enabled ERP Enabled ERP Enabled ABC ABC Customers Customers Suppliers Suppliers ABC ABC Customers Customers Suppliers Suppliers |
![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() 42 ABC Business Transformation Results Expected to Mirror Optimiz Program ERP Enabled ERP Enabled ERP Enabled ERP Enabled ABC ABC Customers Customers Suppliers Suppliers ABC ABC Customers Customers Suppliers Suppliers 3-5 year time frame Finalizing business case Within long term guidance Benefits back-end loaded |
![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() 43 ABC Business Transformation Enhancing ABC’s proven ability to deliver value to customers, suppliers, and shareholders through continuous improvement initiatives Utilizing the same approach and disciplines developed for the Optimiz Program Resources from the Optimiz Program redeployed and already in full-time Business Transformation roles Broad and deep organizational leadership and commitment to deliver expected results Key Takeaways ERP Enabled ERP Enabled ERP Enabled ERP Enabled ABC ABC Customers Customers Suppliers Suppliers ABC ABC Customers Customers Suppliers Suppliers |
![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() 44 ERP Enabled ABC Business Transformation Program Focus Develop and deploy enhanced capabilities in all areas of ABC’s business and infrastructure ABC Customers Suppliers |
![]() Steve Collis Executive Vice President & President, AmerisourceBergen Specialty Group (ABSG) |
![]() 46 Specialty Group Distribution & Services to Physicians Specialty Product Distribution & Services Biotech Commercialization Services 2,600 associates Steady As We Grow • Oncology • Infusion services • Outsourced logistics • Plasma-derivative products • Biotech products • Nursing support • Reimbursement mgt Market Leadership |
![]() 47 Steady As We Grow Integrated Offerings |
![]() 48 Oncology Revenue as a Share of $12 Billion Specialty Business Oncology Revenue Non-oncology Revenue Steady As We Grow |
![]() 49 Rapidly Growing Oncology Market Oncology treatments to exceed $45 billion in U.S in 2008 Global oncology market is to grow at twice the pace of overall pharmaceutical market 32% of 2006 FDA new drugs submissions Steady As We Grow |
![]() 50 Oncology Market Share Leader Steady As We Grow All Competitors Market Share of Key Oncology Products ( 40%) Specialty Group Market Share of Key Oncology Products ( 60%) Source: ABC estimates |
![]() 51 Largest U.S. Oncology Distributor and Physician Services Organization 4,600+ Community-Based Oncologists – More than half of all community-based oncologists in the United States Large Practice Program (LPP) – 156 practices and growing – $3+ billion in chemotherapy sales in FY07 – LPP larger than any other oncology GPO Steady As We Grow |
![]() 52 New Specialty Distribution Center in Dothan, AL Expanding to Meet Growth Steady As We Grow |
![]() 53 Anemia Market Challenge ESA (Aranesp ® and Procrit ® ) usage guidelines revised downward by CMS Degree to which commercial payers follow CMS yet to play out Epogen ® appears to be less impacted Government affairs work continues through SBDA Steady As We Grow |
![]() 54 Dialysis/Nephrology Second Largest ABSG Distribution Business With Bellco, ABC has large market share in Dialysis ASD Healthcare (distribution) and INN (GPO) Combine with Bellco Unit – ASD Healthcare/INN serve pre-dialysis and chronic kidney disease market, Bellco businesses focus exclusively on dialysis – AMD – Distribution – DPA – GPO – CORA - Informatics Steady As We Grow |
![]() 55 Distribution Achievements Besse Medical • Largest Market Share in Ophthalmology • $1+ Billion Revenue in FY2007 ASD Healthcare • Amerinet’s 2007 Supplier Performance Award • Launched Version 2 of Cubixx, specialty pharmaceutical product consignment cabinet Steady As We Grow |
![]() 56 Distribution Achievements ICS • Captured Largest Market Share For Large Biotech’s Controlled Distribution • Customized Distribution for an MS Therapy Biologic with Mandated FDA RiskMap to Monitor Product Access • Strong Revenue Growth Steady As We Grow |
![]() 57 Pharma & Specialty Services Xcenda Portfolio Focused on Consulting – Leading pharmacoeconomic and health outcomes consulting company – More than 130 professionals (PhD, PharmD, MPH) linking the clinical and economic value of treatments for pharma and biotech companies – Integrates Lash Group consulting and Managed Care Network (MCN) with Xcenda’s existing services to create a more complete service offering Steady As We Grow |
![]() 58 Pharma & Specialty Services Lash Group’s Current Focus – Reimbursement support – Patient management services – Integrated services that combine capabilities with other Specialty Group companies, including US Bioservices IT integration to support cost efficiencies, as well as new, innovative service models, such as Fast Track program Steady As We Grow |
![]() 59 Integrated Services – Fast Track ABSG Fast Track SP Referral ABSG Fast Track SP Referral Specialty Group Fast Track Specialty Pharmacy Referral Referral to central hub to expedite patient start Nursing Services Reimbursement & PAP to seamlessly address exceptions • Automated BV • Coordinated dispense Combines expertise of Lash Group and US Bioservices Steady As We Grow |
![]() 60 New Informatics Platform Capitalizes on elements no competitor can match: – Specialty segment market underserved – Volume of data on how products are sold, distributed, administered and reimbursed – Ability to deploy resources from across business units to create integrated solutions for manufacturers, physicians, and managed care companies Steady As We Grow |
![]() 61 New Informatics Platform Solutions will provide unprecedented market insight into how and why a product is used – Helps manufacturers with product decisions – Allows provider organizations to track product usage against patient treatment data – Provides practice-level data via Practice Analyzer, embedded in physician network member practices Steady As We Grow |
![]() 62 ION Practice Analyzer Uses practice’s EMR, lab and practice management systems to track cost-effectiveness and adherence to therapy guidelines Saves practice valuable time by automating data extraction and performing calculations based upon a patient’s data Enables analysis of the patient’s dosages and treatment course for an informed medical decision Feedback from pharma indicates that data will be unlike anything in the industry today Steady As We Grow |
![]() 63 ABSG Summary Specialty Group delivers comprehensive solutions of market-leading quality VALUE Multiple options for customers to achieve their desired end result ALTERNATIVES Scalable, flexible infrastructure adds real value to solutions TECHNOLOGY Tangible benefits result from portfolio of companies SYNERGIES #1 or #2 in all markets SCALE Covers virtually all specialty and biotech categories RELATIONSHIPS Reach into channel via multiple platforms CHANNEL |
![]() Mike DiCandilo Executive Vice President & Chief Financial Officer |
![]() 65 Steady As We Grow … AmerisourceBergen Packaging Group (ABPG) |
![]() 66 ABPG Capabilities Three operating companies 13 facilities totaling 1.5 Million sq ft 1,600 employees Over 150 packaging lines Strong regulatory compliance profiles 22 product launches in FY07 Preferred supplier to top global brand manufacturers and preferred relationships with large segment of generics manufacturers Steady As We Grow |
![]() 67 ABPG Growth Drivers Large pharmaceutical manufacturers rationalizing supply chain Packaging economics favor outsourcing Packaging is a key product differentiator Providers asking for special packaging to reduce costs/help patients Steady As We Grow |
![]() 68 APBG Business Units Anderson Packaging American Health Packaging Brecon Pharmaceuticals Continue to grow by capitalizing on manufacturer outsourcing trend Add proprietary package formats Add complementary packaging capabilities Key Customers: Large Branded Mid-size / Small / Virtual Branded Specialty / Biotech Evolving to more specialized services Partner to market / differentiate products Coordinate with ABDC marketing programs Key Customers: Large Generic Mid-size / Small Generic Pharmacies One of the top pharmaceutical contract packagers in the UK, serving Europe Clinical trial and commercial packaging Platform for European expansion Key Customers: Large Branded Mid-size / Small / Virtual Branded Specialty / Biotech |
![]() 69 Recently Launched |
![]() 70 ABPG Take Aways Packager of choice for global pharma A leading international pharmaceutical packaging service provider Industry leading franchise in patient compliance packaging and other unique formats specific to local markets Excellence in regulatory, quality, execution, innovation and continuous improvement. |
![]() 71 Steady As We Grow … PMSI |
![]() 72 PMSI Business Overview Largest U.S. provider of pharmacy and specialty managed care products and services for the workers’ compensation and catastrophically injured population 30 plus years of industry leadership, knowledge, and experience PMSI (Rx Mail Fulfillment) MS&E (Medical Services and Equipment) MSA (Medicare Set Aside Services) Tmesys (PBM) PMSI Steady As We Grow |
![]() 73 PMSI Top Customers Steady As We Grow • Hartford • CNA • AIG • Liberty Mutual P&C Insurance Carriers • Broadspire • ESIS Third Party Administrators • State Fund of CA (SCIF) • State Fund of AZ State & Local Government/Employers • PMA • Farmers • Southwest Airlines • Specialty Risk Services (SRS) • Gallagher Bassett |
![]() 74 Workers Compensation Market PMSI has market leading position in pharmacy and specialty managed care services Favorable industry trends – Growing mid-single digits Fragmented industry, opportunity for market share expansion – Smaller competitors financially challenged and under-funded Attractive financial metrics – Strong operating margins – sustainable range from 7% to 9% – Low committed capital requirements Steady As We Grow |
![]() 75 Challenges Impacting Recent PMSI Performance Recent customer losses – Attractive market drew new players – New players leveraged technology Pricing compression – New market entrants attempting to garner share – Regulatory pressure on reimbursements Significant investment in people and technology to address infrastructure & customer issues and restore growth Steady As We Grow |
![]() 76 Turn-Around Efforts Firmly Underway Transition to new mgt team completed Q1’07 Reorganized sales and customer relationship management functions (account services) Successfully integrated Health Advocates Several key technology enhancement initiatives underway – Optifil pharmacy automation; MailRx, mail processing software; CRM; Vital-Point, web portal Initiated major cost cutting program Q1 FY 2008 – Expected annual savings of $9 Million Steady As We Grow |
![]() 77 Key PMSI Takeaways Legacy issues impacting performance will continue in FY 2008 – Expect operating profit and revenue to be flat to down vs. FY 2007 Significant investments in people and technology are underway – New management team made solid progress in FY 2007 – Expect full impact to materialize in FY 2009 – Target operating margins of 7% to 9% Favorable market trends & market-leading position |
![]() 78 Steady As We Grow … Financial Review |
![]() 79 EPS growth of 15% Revenue growth with market Operating margin expansion ROIC > WACC Free cash flow approximates net income Minimum 30% of free cash returned to shareholders Steady As We Grow Long Term Financial Goals |
![]() 80 Diluted EPS from continuing operations of $2.63, up 16% / $2.54 ex items, up 18% Record operating revenue of $61.7 billion, up 9% Pharmaceutical Distribution Operating Income grew 14%, up 5 bps ROIC > WACC Free cash flow 232% of net income Returns to shareholders >100% of free cash flow Met or Exceeded Long-Term Goals Steady As We Grow Fiscal Year 2007 Results |
![]() 81 Fiscal Year 2007 Baseline EPS* *EPS from continuing operations. Note certain totals will not add due to rounding. $2.46 $(0.08) $(0.09) $2.63 FY07 $0.60 $(0.01) $(0.03) $0.63 Q4 $0.58 $(0.02) $(0.09) $0.69 Q3 $0.65 $(0.02) $0.00 $0.68 Q2 $0.62 $(0.03) $0.02 $0.63 Q1 Total LTC Special Items Reported Steady As We Grow + + = |
![]() 82 Steady As We Grow Fiscal Year 2008 Targets Diluted EPS of $2.77-$2.95, up 13-20% over baseline Operating revenue growth of 5% to 7% Operating margin expansion – single digit basis points ROIC > WACC Free cash flow of $450 to $525 Million – Includes CapEx of $125 Million Repurchase $400 Million to $500 Million of shares – Interest expense up significantly – Average shares down 10% Meets or Exceeds Long-Term Goals |
![]() 83 Fiscal Year 2008 Targets Revenue Growth and Operating Margin by Business Unit Total Revenue Growth 5% - 7% Pharmaceutical Distribution % of Total Segment Revenue Revenue Growth ABDC ABSG Bellco ABPG 100% 4% - 6% -5% - 0% N/A 10% - 15% Other 76% - 80% 17% - 19% 3% 1/2% PMSI Flat to Down Operating Margin Range 1.10% - 1.15% 1.70% - 1.80% 0.45% - 0.50% 10% - 12% 5% - 6% Steady As We Grow |
![]() 84 1Q FY 2008 Guidance $0.62 EPS – Comparable to ’07 Revenue growth below 5%-7% annual range – Difficult Anemia Drug Comparison – OTN Acquisition by a Competitor – CVS/PharmaCare Jan ’07 Termination Price Increase shift 1Q 2Q Light Flu season Fewer Generic Launches than 1QFY07 Steady As We Grow |
![]() 85 What’s Available? $1.1 billion of cash and short-term investments @ 9/30/07 ($700 million available) Free Cash Flow of $450-$525 million expected for FY08 Total available for investment $1.1-$1.2 billion, excluding additional borrowing capacity Where to deploy? Bellco $181 million $697 million available under share repurchase program at 9/30/07 $400-$500 million expected to be repurchased in FY08 Dividend increased 50% to approximately $50 million $400-$500 million available for further investment Significant Financial Flexibility Fiscal 2008 Capital Deployment Steady As We Grow |
![]() 86 Steady As We Grow •Focused on Growing Pharmaceutical Channel •Positioned in Channel for Growth •Right Investments for Future Growth |
![]() 87 Question & Answer Steady As We Grow |