ABC - Earnings call transcript Q1 2020

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Operator

Good morning, and welcome to the First Quarter 2020 AmerisourceBergen Earnings Conference Call. At participants will be in a listen-only mode. [Operator Instructions]

I would now like to turn the conference over to Bennett Murphy, Senior Vice President of Investor Relations. Please go ahead.

Bennett Murphy

you. Thank thank discuss joining quarter AmerisourceBergen’s and conference for results. all to call fiscal you morning, us for this Good XXXX first I of Senior Murphy, Relations. am Vice Bennett Investor President CEO, Steve CFO. and Chairman, are Vice today me Cleary, Executive joining President And and and Jim President Collis,

to we and measures accompany are investor.amerisourcebergen.com. on website are today’s also of call, financial We’ve Reconciliations today’s on our release at a press to be available today’s will On provided slide also non-GAAP in discussing measures. website. these GAAP release presentation posted press our investor

about this business adjusted we During not income call, will conference including, taxes. basis, financial make limited an forward-looking on income statements EPS, operating and our expectations to but and non-GAAP

uncertainty and Forward-looking change. expectations statements are based to management’s on current subject and are

of any we today’s assumptions, this discussion statements, a recent refer SEC including and update risks release call press be permission AmerisourceBergen without our key to forward-looking company. to XX-K. obligation filings, the the most our express and rebroadcast of and cannot no you assumes For

many the the ask for ask to as questions We remarks management. your by limit to you within that per to have get as to participant possible in one opportunity us hour. after order today’s You’ll participants questions

over With to that, the I’ll turn call Steve.

Steve Collis

was the quarter, the the and XX% Commercialization and quarter, am our We X% morning $XX previous delivered Distribution of the performance to Animal year Thank growth pleased for you, compared and year-over-year solid up first fiscal period. Pharmaceutical Bennett, today’s first & in EPS I diluted on fiscal Global billion delivering quarter. results. quarter good both Health first increase to to were to strong call. Today, everyone Revenues each an adjusted XXXX discuss for AmerisourceBergen’s Services across groups, $X.XX the

our the parties litigation, PharMEDium the prepare to complex on AmerisourceBergen while also continue trials. I and upcoming of and working a to moments take few opioid global details want more other resolution ongoing business. decision continuing exit opioid to results, first the the discuss towards quarter a to provide litigation we Before the for the of

parties We framework are merits as the resolution. see hopeful for the that of understand path the and a necessary global practical global

in to are global comment at to are the this with engage litigate, on we AmerisourceBergen to providing discussions we these continue deeply updates unable transparency we and shareholders framework As time. as to remains committed able. and related matters

consulting team. Moving PharMEDium onto review a year point this PharMEDium, at the financial to new firm seasoned business’ leadership begun expert a with detailed last strategic and how of had and we work engage CGMP we new comprehensive

As action pursuing we and while respecting stated was at other that a decisive on with both time, of phase that course and thoughtful our of and AmerisourceBergen our we for stakeholders. entered needs best distribute customers shareholders, the a focus

with sufficient we optimize Despite progress a worked successfully for posture, of face the including make the discussions Over order challenges, business. continued continued burden the the PharMEDium on we inability and issues, remediation of internally the forward, running consent decree reached progress, operational business, and move regulatory financial on ongoing the to the regulators challenges continued FDA an still agreement considerable business. on to remediating terms in to business focused this with the

appreciative the to Given of customers. associates and one shutdown The efforts. the our are on and we difficult it are these made to difficult we want PharMEDium all for thank their the we decision impact dedication decision business. a their We factors, of is and PharMEDium and has associates exit mindful

the As part provide will shutdown need. we of services impacted associates with the process, they and support

XXXX appropriate the the and its provide its customers, guidance Jim be forward longer on the believe but details later that disappointed is including business in will shareholders. financial also fiscal able AmerisourceBergen We’re no path serve exiting PharMEDium call. for will decisions to impact

to within pharmaceutical well unique positions U.S. strength quarter now strategy us market. and first continues Turning that our AmerisourceBergen the from results, benefit to our

unlock to core I provide consistently of healthcare executional delivering our to pharmaceutical for company’s serve. from of strengths our continues to value the our creating and their us expertise excellence regarding who and Additionally, work teams, stakeholders. to opportunities associates manufacturers, for differentiate want on capabilities and thank our our remain patients I’m and they unrivaled the peers. and their providers solutions, all proud alongside comprehensive talent, pursuit dedication, in relentless for to focus value ability

key Services, in distribution its our specialty be ongoing Within growth the volumes. and focus rheumatology. demographics to distribution overall customer experience addition is segment leader success in reflects and Pharmaceutical with particularly AmerisourceBergen areas utilization on and Distribution our specialty growth relationships resulting customer favorable the innovation and by within ophthalmology in in to market of our strength growing fueled increased specialty, continued expertise on and from deep oncology, in pharmaceutical organically the customer continues strong

to A differentiator advantage remains categories, practices. and customer continues differentiated value and deliver our suite oncology specialty physician other our key business, key as offerings partners. these AmerisourceBergen services practice our a such to in provide to of community In therapeutic competitive our physician for solutions segments, and GPO ION

to conditions with the time, need the As commercialization and right efficiency solutions, and success. analytics their in practice oncologists, see market the GPO signs same biosimilar believe positive U.S. more provides exist leading to the for for contracting the biosimilar ION continue community run that utilization. We practices early At for business we increasing profitably. they physicians

access for continue signs We that create affordability are and commercial see recognizing of potential legislators to patients. the better to plans biosimilars and

from position efficiency, capabilities biosimilar benefit increase contracting AmerisourceBergen state-of-the-art they to and to the with understand leading with sourcing capitalize ION as We’ve their customers of our combine These in and seek manufacturers key us products. market with value distribution scale to aligned positions ourselves position of market competitive utilization on elements biosimilars. specialty network, AmerisourceBergen’s strongly opportunities.

businesses and XX% approximately animal operating of pharmaceutical opportunities manufacturer Animal Services services is our to in Health well comprise health seize AmerisourceBergen’s positioned through Commercialization income. Global AmerisourceBergen also that group, market &

Our enhance deliver to outcomes and advance while largest by operational partnerships with leader global right in customer of access segment, and experience, is that innovation MWI, the solutions a services pharmaceutical supporting health business and our solutions and to data-driven commercialization patient support with animal strengthens efficiencies in capabilities the market strategic portfolio health strong therapy. adherence

adherence Lash economics For team on example, access and stay reimbursement are field extended maximize therapy. manufacturers services technology patient tech helping health to products, to consulting market reduce for enabled while Group’s and for barriers and are helping stay access patients solutions support start – the

business the transport trial treatments solutions highly manufacturers’ in pharmaceutical products trial cell to and is XX improve that innovative differentiated the and time logistics ability access unique therapies over global and in and for these World and patient leader countries, specialty at business to and pharmaceutical logistics commercialize temperature. in services. to and to trusted Essential a offerings expand. Courier, complex is services needs commercial its partner market therapies like Operating service right the trial This delivers this clinical clinical on manufacturers to gene grow innovative ability world. for the continues partners around unparalleled and

reliability offering and and cost-effective year. Cocoon Courier’s dependable is unprecedented container most industry’s providing this solution, refrigerated World business for the the driving example, strong momentum For

of technology excellence, complex further World our meet customers. improves Courier’s demand platform In Nova global to operational scaling addition, requirements the and

organization. deploy in-home purpose-driven new continue global ahead, patient-centric and Looking home area. will solutions to like leader patients’ areas services I’m trials, in virtually making healthcare and forward-thinking design Courier and possible role transport every in proud the of clinical in AmerisourceBergen’s therapeutic World treatments as

connected in to are We create futures united there our product. healthier a every that and always responsibility recognize patient to is

Pharmaceutical hundreds dollars and benefits the patients, Adherence all of stakeholders provides the are billions of most is annually. striving. medication should the while still systems, be form of lives for for efficient saving care healthcare and healthcare goal positive which adherence healthcare health

will access benefit the dialogue As additional system. costs creator design out an for of the and of efficiency and AmerisourceBergen enabler to sustainability in continue of and constructive pocket healthcare and around of engage raising patients efficiencies,

in key within the strong stewardship trends strategic specialty leadership and long-term supply well of services, As an healthcare base, remains market to pillars; market and Execution to customer positioned benefit positions distribution us evolving chain, our solutions, a and services AmerisourceBergen value. landscape. proven four create leader from innovative sustained and well in corporate

advance strategy. More business customers further on XXXX, in move will fiscal we culture patients differentiated execution delivering we the our and confident shareholders, ever, focused our remain into partners, and talent associates, and and to we our to they and continue long-term As than for our unique on strategy, value serve. dedicated growth execute

now you our in for first interest review results. again Jim? AmerisourceBergen. turn more quarter XXXX fiscal the over for Thank I of in-depth Jim your to a will call

Jim Cleary

rates Growth prior quarter, primarily remarks noted. My Steve, against Thanks, our focus financial made morning everyone. otherwise comparisons and adjusted year on non-GAAP results. today good the are December unless will and

a results, of to please GAAP refer discussion For our earnings our release.

strong had Animal group. with quarter solid Services we Pharmaceutical in our Steve As & mentioned, execution growth segment continued Commercialization Distribution and Health Global in a our

the moment I of our GAAP want asset strategic XXst exit PharMEDium detail discuss for business. Before December a took this results to we discuss January take charge morning, and in to the to I impairment greater decision that the as

updated future asset PharMEDium, have that the assets December determination lower value. should of GAAP cash for as the indicated carrying of estimated recoverability and We flows the long-lived XX undiscounted our assets impairment that assessment made First, the PharMEDium a

undiscounted using determine flow fair $XXX we calculate as cash and result, XX asset of PharMEDium’s assets million. estimates long-lived amount the value a As impairment December to be the of

the the cover PharMEDium business. to exit I’ll Second, decision

operations has the forward to is as easy, AmerisourceBergen we’ll As business. shareholders. PharMEDium to business a it not Steve was administrative the compounding but business. our said, the The and result, and path a to right undoubtedly the company exit related as decision And see for exit commercial sole decided

at Jersey was notably and the continuing month to decision New of regulatory number factors, challenges As Steve earlier noted, suspend PharMEDium’s decision its including on production operational based this facility. a

to charge. addition the quarter In impairment December

assets the January result of the million of the a million to exit of remaining the the expects in decision impair quarter. $XXX PharMEDium all company business, majority PharMEDium of the to intangible March the of tangible remaining in $XX and assets As

will exit, a the rate, not approximately claim $XXX estimate XXXX, income cash through we expect but a will in of fiscal XXXX tax our our and fiscal million tax and million. impact to ordinary will realize totaling to we adjusted rate. P&L $XXX result tax benefit Finally, This tax GAAP deduction that an GAAP as benefit

However, benefit realized. flows in it impact have cash on and the which years will a positive is the

our pertains fiscal the year, remainder will greater the results impact positive adjusted for on in on PharMEDium minutes. for of to which provide outlook XXXX, it As I will the few decision to detail our exit a non-GAAP a have

two quarter morning. I’ll our this areas first Turning now through results, main commentary provide in

our detail segment quarterly consolidated will and I First, adjusted performance.

primarily share lower XX% of Second, our increased three to and which income year-over-year guidance counts. income reflecting last the I XXXX the the a fiscal by unfavorable lower with increase net share year adjusted for fiscal finished Lower continued a removal taxes. strength will of $X.XX, comparison quarter remaining operating expense, bad interest debt by higher in an a diluted expense December Also, quarter of had our quarters XXXX. businesses, increase count and the of We couple was cover an the AmerisourceBergen’s of due EPS current offset benefits PharMEDium pennies.

Our $XX.X segments. increased to revenue X% billion, to operating million million. both Consolidated increased by Gross growth up X% revenue consolidated expenses strong $X.XX or was billion. $XXX in X% $XX driven profit

we than have is quarter to of fiscal easier called due XXXX, few that the balance a This an previously. reasons out comparison

the left yet not implemented XXXX. design calendar that for had we benefit was healthcare change First,

to Second, operational after of fiscal of XXXX our synergies quarter related much XXXX. captured fiscal Smith acquisition first were of HD the the

quarter Pharmaceutical better management most expected our Additionally, delivering basis expense operating in X% with down we one Consolidated margin notably $XXX point. the income Distribution than the the was across within up on executed operating Segment. business million

mentioned comparison to I capture. HD were healthcare and of timing expense items there related the some As earlier, Smith debt synergy favorable bad

are another results businesses quarter Our operating posted show solid income. financial of exception our PharMEDium as with in and and strength the growth business of well, through executing our of we to the continues

to exit quarter of first in decision XXXX year adjusted As for business the January to in remain was made PharMEDium, full XXXX loss operating will fiscal it our the pertains the fiscal since results. PharMEDium

$XX fiscal quarter was of The an adjusted quarter operating adjusted the XXXX. million compared in loss operating loss first first to from PharMEDium in of the $XX million

income interest operating net million. expense XX% $XX the below to decreased Moving line,

unfavorable therefore interest were are adoption reminder, that standard in certain as has accounting of new As previously for expense favorable leases for the lease operating XXXX and built-to-suit offsetting on a operating accounted the expenses operating being fiscal a resulting an at impact on accounted the leases, income. as line impact in finance leases

In average to interest cash addition balance. from we to the lower continue invested to higher interest related benefit expense, our income

in was up tax from taxes, income from year item. income discrete Moving the a adjusted now to XX% quarter, income XX.X% benefited prior tax which our state rate

million counts company’s while Our used of returning on return December decreased the Board our shareholders, capital increase million share $XXX diluted opportunistic X% share we shareholders announced quarter, repurchases shares. of the we a to to to dividend the of this of morning X%. approved topic that XXX.X to Directors In also capital

approach AmerisourceBergen ongoing has to commitment shareholders. evidenced dividends to share we have exhibited a capital balanced deployment repurchases as capital and and to our by returning increase,

cash guidance. free we and normal balance, we quarter, in flow on cash for cash and flow free in $XX flow business remain had million our the as December Regarding of cash the track adjusted free hitting experienced seasonality

$XXX flow Adjusted free was million. quarter in cash the

company provided or the to defines unpredictable in non-recurring of capital billion U.S. quarter cash excluding majority receipts activities, reminder, minus operating the offshore the significant held cash free with and net adjusted legal $X.X flow relating $X.X billion expenditures. was cash. by We as denominated cash ended payments cash was a or settlements, As which

consolidated our of review results. the completes This

benefit turn to specialty our billion of and $XX the specialty with to was Beginning services, Pharmaceutical channels in Distribution from in I will multiple of distribution the segment X% up results. growth revenue overall. segment strength as continued Now the our customers products segment continues

increased X% million. income operating $XXX segment Our to

group. and We specialty encouraged team’s for both execute ability services by in our down, value partners particularly our and continue to our physician be upstream to deliver

did well to existing mentioned segment transitioning as began favorable the earlier, no network of benefit of HD I distribution the the distribution in previous centers longer the compared the year-over-year bad year as to expense from fiscal quarter, XXXX. comparison our that second Smith debt we As quarter operating

Courier, the focus up XX% Consulting of Animal will solid X% on this MWI. & Services. to driven and by the Health, the by The AmerisourceBergen World the From year. Consulting growth billion X% $XXX Commercialization we was Commercialization Services businesses in MWI now World million quarter, group operating to segment, revenue that In is encouraged expectations driven standpoint, off start turn income in operating income growth are double-digit in I this other for Global including and and an group had by growth $X.X Courier. growth for business up a Global

differentiator The is Health & Animal AmerisourceBergen. Global for Commercialization group Services positive a

are leaders Fusion services overall fortify to As we look manufacturer Courier. in value proposition innovation and focused pharmaceutical Lash providing World being out we into like projects key the investing future, support on and NOVA we are to at at in our through strength

Additionally, customer focused MWI it’s execution partnerships to efficiency. strengthen enhance its relationships has and commercial continued further and to on

segment the review completes our of results. This

now Let guidance. XXXX me turn our to fiscal

implies range EPS this morning’s quarter the the PharMEDium a in which in increase. and $X.XX raising said of we which $X.XX opportunistic guidance the of guidance first represents EPS XX% $X.XX growth from range slightly fiscal press half X% company’s we of exit XXXX an repurchases release, to to our business, updated to continued As are $X.XX reflects performance, our to than strong less and the share of of

range. income operating reflect consolidated having Distribution Pharmaceutical of favorability PharMEDium to Regarding in income of income, overall business expect results expect losses now percent grow mid-single-digit balance our income range in for operating the the the continued the to Services the in now not We we strength and year. the mid-single-digit grow to in operating our adjusted the of year-over-year segment operating percent

million $XX and $XX have fiscal PharMEDium versus what adjusted adjusted year. the we result and the is operating fourth PharMEDium million we respective income comparison $XX loss XXXX As exit PharMEDium was in in our QX losses million. fiscal loss In PharMEDium The from respectively. of prior the recorded a Therefore, to quarters of results exiting PharMEDium from $XX $XX million solely XXXX of will second, business, total, of adjusted a million third operating in operating the XXXX in $X the operating recorded a million. fiscal which tailwind fiscal fiscal favorable quarters total XXXX

operating are not transparent we for financial key possible purposes. of being this of your reported we previously detail the of providing on revising additional be our as providing as non-GAAP impact Since part as adjusted the exit information PharMEDium focus results, our will and level modeling on

December repurchases, the now weighted purchases share the we to outstanding. year Regarding share given in the finish million XXX quarter, level of expect average shares around

generic original in-line Lastly, for pricing while are with we brand guidance did and both relatively specific not metrics, our broadly expectations year. the speaking, trending have

Regarding our EPS fiscal second expectations. quarter

the quarter expense at the quarter. XX% range the While we expect that On EPS we guidance, were noted the general an of in those year call growth that some to note not X% end in as growth in be I XXXX. and expect I quarterly positive items for to We EPS administrative our our growth second do expense will quarter. guidance second there low not year, likely operating items is our to provide that last quarter repeat that increase do benefited

to has of our this and where from In point no here. decisive, regarding remain strategic in to you have closing on review appropriate, PharMEDium, the is longer but is a change, both forward you’ve that path path been comes Despite unchanged. the the decision there AmerisourceBergen right thoughtful exit make business the our differentiators time a key been and decision

segment. We have in strong relationships customer each customer

innovative are Our focused services our and solutions on and partners. bringing to businesses execution

talent executing the on balanced through across AmerisourceBergen well notably stewardship to culture. and commercialization approach is specialty finally, capital and distribution is a We and business. corporate leadership services. purpose-driven our and emphasis allocation with have a focused very strategic value creating on specialty and thoughtful in key And markets, advancing AmerisourceBergen clear shareholder

value create stakeholders. are our to all of and undeniable our we is Our well positioned partners long-term value for proposition to

AmerisourceBergen. interest for in your Thank you

I the turn Q&A. our Now the start to operator call will to back

Operator

you. Thank

of We Sachs. question-and-answer will The now come first from will question begin the Jones Instructions] Robert [Operator session. Goldman

Robert Jones

just largest process focus sale PharMEDium, there about ramifications for FDA guess this maybe a on business potential change on I maybe could the you out I guidance or around PharMEDium, the was ramifications whether business Great. any pharmacy to the talk or discussions from the question. bit Thanks not exiting and little about thinking a just guess, with Steve pharma segment the there? about compounding first,

PharMEDium. change guidance the the from of take balance segment back, I of change guess a Jim math And provided gave pharma far as in far just outside to the then about through maybe and year other XQ? lot the impact as assumptions you quarter the you around any step detail PharMEDium XQ a did of of in your as the the as thinking

Steve Collis

start a the Yes, question. ABC, I Bob, think that script Obviously apologize I’ll way, for day everyone. And with Jim’s disappointing the was excellent. by PharMEDium I but to

we’ll and I think was would not quite do better we the quality the hope to think time. next endeavor Jim’s were comments of But what I excellent. sound

to we’ve challenges from can think deliver And difficult business the sort and just displayed to remediation continued we, You the to see would our challenges And it’s program put very this get lot we’ve with the of in and I changes the to of that the place. regulatory scale business. consistent perseverance ongoing it we’ve made have a financial like quality XXXB disclosures, customers. that AmerisourceBergen, to experience with

recently New on had We facility a that close. our this call Jersey announced

and business into this I it where that this year And sales is protect think to with reached and wanting of difficult we for very enter we had our lot think went decision we’ve And be business. process. to this other really given so, would profits attitude the a of a we think – with that shareholders I stakeholders. into perseverance an And our

and and we We implementation, decree communication the with work through regard FDA. And We collaboratively approached the the a decree them regulators consent close certainly stakeholder. have in stakeholder. closure. certainly think Throughout professionally as we with the been transparently we’ve and this as that consent with negotiation good them a will

Jim, you second the want answer question? of to the part

Jim Cleary

which detail second what represents remarks, our that our guidance, the had of particularly I’ve other you on in increase. the said as do part went Pharmaceutical understanding look were PharMEDium Bob, things increase exit it impact to during my relates sure. the to than business. Distribution And Yes, business of call, other half in slightly into my less PharMEDium, the in a I impacted at of guidance, guidance if the than prepared really as the lot guidance of question, with

range, so slightly the PharMEDium And those QX. $X.XX of you if top losses of excluding look benefit in guidance increase, QX through the less increase in guidance at the half the at the exit of end than the represents

so really that and the of that And the distribution business. good we rest in business seeing is quite pharma core means the are performing performance well

physician business, seeing pharma In we’re about, talked in services the strength seeing business. growth in good we’ve of our distribution. distribution As a volume lot we’re specialty particular, specialty

seeing volume X% that’s course balanced portfolio our growth of customers. We’re to due of

our relates feel really on our our & pharma it performance good we And Commercialization good and QX about, growth XX% at guidance. volumes Services the which so And happening also asked business Health business, but good of year in revenue course performance full in you that’s and distribution quarter. Animal to about the Global impact our

positively impacts Bob. our that so year guidance fiscal also, And

Robert Jones

Great. the comments. Appreciate all

Operator

Research. question Percher will next from of Eric The come Nephron

Eric Percher

clear hospitals this last relationship. years at with an two be over pretty I the to point you. this one that was hospital in PharMEDium, the don’t to expand it’s been Thank business. know effort Continuing And want particularly

focused other specialty? how ensure you on shutter and impact specialty to particularly the you those do on relationships respect business, sour it, do As help hospital impact have that that the with business see don’t you and any the you

Steve Collis

standard pointed the were never expectation as there’s we’ve legislation, to we you have. out to to that correctly, Hi, experience deliver it. very of we been since passage a far Obviously, since of the would And six CGMP I And by customer our course, years in the Eric. the lot XXXB And closure think unfortunately – largest. about we consistent high of AmerisourceBergen an thought a there of the to associates move really really company able reasons a immediately. for customers, Yes. and strong Memphis, and the was like

having there position, that leadership think, high I put on expectations So us. were very

we think talented a we tremendous some really really associates, of leadership team, we lot new outside associates, high the along to I new meet there’s and with dedicated bar. did And – some a powder there’s FDA doesn’t a read lot – of hard if something products badly, the like expectations as least if scale. It’s in tremendous as do at marketplace. the too. to there’s go – something far some consequences and But goes And experts, effort

ABC, we a which that our We we stakeholder for decision the value is So have this made purpose, portfolio. just have really our set. our into that business not fits

where Our the a market, in want are exceptional I it overall this system. efficient customers but provide where And we very with reliable disappointed, where think with in we to we have powder I where can’t service. the a of been again, in products think are health regulators, somewhat be reality are we business reflects the with understanding, economics we don’t

there. I So think about can say all that’s we

Eric Percher

Thank you.

Operator

will Lisa Gill The come next with question from JPMorgan.

Lisa Gill

specialty understand providers you’re how Good morning. would conversations curious are the any about reimbursement, sweet think Just with how this will taking your I’m helpful. thinking change marketplace a for fiscal actual anything Do Thank physician? you What the your us Clearly, community-based talk that to a and in lot color you question. you’re ABC, be XXXX? IPI of a about you can my you about about in help here thinking Steve, pricing? but spot there’s that. changes are around how just thinking is for

Steve Collis

is two in this a say concern I’d specialty. number

legitimate And community they’re community physician number are continue some actions obviously is Our And some And changes, sites I in serve in concern in and sophisticated. very you’d one be you’ve moderate making stakeholder, setting. think seen anticipation large, start, see change Manufacturers of the sure another when can there’ll in key inflation. that conversations. to reimbursement think the but very often, those they’re I changes. those conversations fact, these patients that marketplace

the inflation ASP on always because moderate B been reimbursement. fact, there’s In of products, Part the

it’ll there we if January, international as be time pricing it is transition so adjust. thoughtful that give So in I to reference discussed a that hope manufacturers will

lot quite is that The one believe. you as not high not a think factual. I actually as differentials the noise are of would price have

with people recognized. say and well, our sometimes go behind a up with payers and then systems, commercial things no And gets prices price there negotiated payer of to ASP the front And governments tend acquisition one are and single lot that thing wholesale always changes. cost that pickup there’s and aren’t as

So that’s one of in are the U.S. nuances system. different the that

officers complex that even engaged saw you I our of at passionate about can this, topic, level, So, Head I’m the Government in CFO very hear it. very the Affairs today.

Barry it. Services business up about very talking you with We’re heads is as can our Fortner, in practice Washington. ION, management. who Constantly, our Physician business, involved is imagine,

the to context that part reimbursement. going B Part and be in we are hope and changes and they So are sensible to the of of a logical discussion we look forward participating in any

Lisa Gill

still understand change. starting anticipated you that’s for around, I there’ll competitive if So And dynamic see maybe is it potential what so saying kind acquisition under already the ABC? of program? do some that incremental Is be to you’re pricing the opportunity case,

huge a potentially pricing, to there or program? market gain share we a is impact potential And for you a some see so, either around to of amount competitive don’t acquisition but maybe lose

Steve Collis

haven’t We make be on participating. to And to it was We’ve feel impossible that able I the customers provider, very was carry people to our course, of going evaluate tell suite great think being like of XXs way was bagging seen in just businesses, we’re efficient. so more on different program for didn’t white actually and with the commercial – modernization. And mainly Medicare our time, ABC was that it to and I be with back would we anticipation by cap try to the participate, payers, At us brought it’s the work. I And believe feasible XXXXs, to don’t implemented a bagging especially participate. would Bush administration. called economically we in ensure the numbers was worked. And just you, to work. no they it original programs, and cap there the the side, there brown

reimbursement that to So there responsibility some to that. on very would towards oncologists. solutions well the payers potential to a them the and these the work more current for If were with works with we program, encouragement programs. differentiated infusions. with system believe wastage to very would to it assisting financial we of regulators. We community provide some or look much more oncologists was to look with large the and having will carry of preparation with top We reimbursement what are the sort move be work aggregated there’s cap the And new

Lisa Gill

Thank Okay, it. you for the I appreciate great. color.

Operator

The Glen Guggenheim. next question Santangelo come of will from

Glen Santangelo

want Yes, just questions. all the the detail. guidance on thanks I appreciate the Jim, to question. follow-up for I

$XX You income single? would single, seems $XX in to suggest X% look that a to could be tailwind about I explain just over EPS that which like a understand up the mid seems from quarters fully impact. to operating about we mid perspective, the there’ll from low from tailwind, to if it which PharMEDium, million But eliminating three the million an guidance the seem change losses at from be next it your

quarter, reconcile bigger just assumptions your business there anything than want PharMEDium. understand, to I’m from seemed loss the stronger versus around to is changed to just that first because the with to a has trying – much try expected respect core I expected distribution to incorporate than which

reconcile those, great. if that’d could you be just So sort of

Jim Cleary

Yes.

a is year. we that year-over-year And you’re so And $XX PharMEDium indicated million will tailwind last versus that. cover I right,

strength half the last guidance. quarters, And as businesses. as that are we’ll the year-over-year we see And look of year. guidance, increase it’s benefit to I seeing kind at we of PharMEDium about the out compared said three the throughout taking to And last before, so that’s

Of that. But a digits, is that’s impacting so low- specialty of is increase about business. based. a throughout PharMEDium also guidance range, from course, we’re also. strength broad We’ve big guidance going to strength a talked physician pretty the part mid-single seeing throughout the we’re it’s but services, seeing our And businesses

during operating first and as you about I’ll talked thing low from benefited is One quarter growth mention, thing we’ve that expenses. quarter, first the the one

through continue don’t benefits, year-over-year we the the first Our expenses and to during operating year. X% of grew rest included the that quarter which some expect

cost And on And favorable we that so a XXXX, were debt was kind benefited from one which for and calendar that’s that the then change design Smith year-over-year. expense, first benefit year internal still synergies in our thing rest care the benefiting also the of to centers, experience related operational that consolidating which to quarter experience continue distribution so favorable doesn’t HD of year. the due health the on the

range, this because we growth quarter, year of the the had favorable the second the of second operating then repeat second expecting be year. quarter, the particularly we in in we’re XX% at end the quarter, EPS EPS quarter expense experience growth to lower last And we the to aren’t X% second growth to in said, expecting which

think that so And some I gives Glen. you color there additional

Glen Santangelo

you just Steve, to question helpful. all wanted the really on that’s Yes, balance I with follow-up And quick with X sheet.

the on three – in positive have balance of to debt. about your $XXX on As Based have two cash the this free in to next million you’re flow cash here be quarters. quarter, you cash assumptions, sheet going net

so that with And deployment all changed how in have has going of or with thoughts sheet we to forward? about PharMEDium kind any your think respect rearview just at the should mirror, – capital And the now wondering priorities? I’m balance

Steve Collis

We’ve No. deployment strategy. consistent capital a had very

I in And numbers. think that’s to dividend, year XXXX, flexibility. XX% of buybacks. like share financial approximate And XX% we $X fiscal was year, approximately we shareholders returned returned our billion last we which

And strong So the example. which we projects World talked because the our Cocoon growth first business. investments. Nova of the the we’re is about like Courier, and bullish in And option is for part the to about invest Fusion in of

investments good investment. the couple years distribution order network. making ABC are we in with those tremendous And were and of ago, So

that. very are business in examples good interested core We remain in investments. those of So

We are, doing. of our course, a of Ohio replenishment another center example is core are we investment that in good

first customers Unfortunately, the we’d priority. right team was that that’s a really really position quality then a So that support. sellers at the for sort we patients the had it’s management sort the if right of the been convinced and we and physicians think a fit with – And I we leadership and company a look asset – right market. our the acquisitions. found We with of of

ago not HD well. opportunities. billion out $X close us. There’s regional a what’s motivates asset the It’s two in It multiple about than we that really, required But of years to haven’t we to we acquired a it’s worked be significantly sort because side, on could we – that’s more this seen talking haven’t the Smith. – since paying really was that really probably seen opportunities we that, lot great think understand I so market. just our really

couple we investments interested be expansion That businesses, and Brazil services, MWR the could we solid in. we a invest where the we’re our can our business. We’ve where commercialization that think in management is of teams more behind. presences, very interested Canadian in made something have I

very are continue increased we this things, morning. then thoughtful we’ll we announced and those where be course dividend our to So of

about continue you’ll very see to So us be returns thoughtful shareholders.

sense. So hope that I makes

Glen Santangelo

much. you very Thank

Operator

Charles The from of next question Cowen. come will Rhyee

Charles Rhyee

sort growth taking question. a think you there. Yes. Hey, biosimilars I talked thanks Steve, the early of on and for about

more the side? biologics market for generics supply perhaps would If interchangeable last did we you guys, you expect shift with that because for starting big sort you create market will – and that particularly how the chain monitoring the in see look something you and adoption, are uptick look you or then like opportunity when – at towards be become much to of to And an big look at that here is thoughts biosimilars really of a back interchangeable. any like more the looks mimic data you biosimilar Are the on you – to, a data of at sort purchasing when particularly other insulin, the Neupogen. we bring power see if Neulasta if that year, a traditional have

Steve Collis

Charles, thanks.

though, numbers Just in general encouraging. biosimilar are the

a particularly oncology set important we XXXX, well to about think have trend I just market biosimilars The play for complex pharmacy adoption we exactly because in up small, role community presence chronic the say important is exceed the with in very still sort continues. are I a think play and neighbor what market an other our pharmacies we very customers But of ABC in think of end specialty that fiscal conditions has numbers but in. to talked at how markets. of good we those the place our are expectations. growth Diabetes would

So definitely, be we’d interested.

that I’m the really proud on has sourcing of I is of our think one ABC developed ways side.

here, We moved have invest – I’d say since over there. the lot up last so decade we resources a of really I or

We very for be injectable well people think side to in particularly positioning as that have long-term key manufacturing working, the adoption, are the side. I infusible the player competently very biosimilar really on and proficient and the on

to the So we it’s has like that what ABC and that expect. years. it couple of key very, you regard the also staying would and monitor close we next of one we for something seeing as very We opportunities as closely

Thanks the for Thanks. So question.

Operator

will question Stanley. with next at Morgan The Goldwasser come from Ricky

Ricky Goldwasser

morning. Yes. Hi. Good

question So and just guidance follow-up one PharMEDium. one on

segment? EBIT side, for the we pro if on be just exclude the PharMEDium like would So Pharmaceutical year. that forma pro What and basis, from Distribution So think forma PharMEDium about on losses last from a incurred of growth them kind them? we the you that’s the

the be about reported think XQ, the midpoint guidance if seems think that secondly, remainder line we the an you guidance toward what to for acceleration then your of the quarter. of kind XQ year, skewed And seems you in it to if the top first about from like

are you in for the rest the that incremental gaining I side, on customers? about Cigna? drives the more coming else from marketplace, on that growth quarter specialty you’re acceleration Or existing noted anything seeing seeing from the talked last you Is maybe the coming volume the So can that from? where year. that provide potential business color of it of we additional

Steve Collis

Yes.

distribution, in business, of And business. parts the specialty strong so seeing broad-based growth growth growth but we’re many in across the particularly seeing really broad-based

for is added volume scripts, our positive Global we’re income is seeing lower out But business. inherently Commercialization growth. called the particularly express it growing in X/X have that, which that we you as seeing it’s in And approximately growth dollars. Animal operating while being And revenue businesses. We Health we’re is and indicated and business, noted, good of margin to Services Cigna revenue growth our several

detail provided, on asked $XX growth, about And year-over-year PharMEDium. PharMEDium. and good in operating will we adjusted think is in that that, this adjusted impact be our our on Ricky loss. really then we’re adjusted million results the we’ve If loss million last prepared that exclude you remarks year looking $XX year, And if I does operating

excluding But specialty but business, distribution that it year-over-year, we various the if to million the $XX good throughout so look a growth is our particular, And tailwind businesses, business. business. are our seeing we throughout in

Operator

Steven The Barclays. next will question come Valiquette from of

Steven Valiquette

guys. morning Good Thanks.

the any decision on $X.X was for hurdle have question some I in ago their guess, value private the a on shutdown asset just I And billion still will like So another mind, versus the financial worth PharMEDium. the or hands a only four of the arguably marketplace that my feel in years today, sale buyer. in strategic maybe equity

transaction probably So PharMEDium net I’m that private $X. of today the is value guessing

cash tax What benefits, proceeds of you generally have would something the does shutting that gotten a benefits million I’m a decision that received in might outweigh is after-tax even benefits was conclude just in was that we down, sort should the transaction? probably the sales quickly just that any on is ABC or here I price sale financial received into to transaction? from want receiving you shutdown to cash well dig have to the understand just, of $XXX what speaking, tax $XXX hurdle it of better above trying Or sale low those versus $X. million

So little I to want understand better. just bit that a

Jim Cleary

continued the challenges, not the timetable, running operational financial achieving burden We felt business of which due remediation the to ongoing and issues, saleable regulatory that was extending continued business. continued challenges the was the to

we that, the appropriate down. It’s And path forward so the shut the due most business and to decision shareholders. for made to our AmerisourceBergen

recognize fiscal and of benefit our cash between million to our cash year As P&L, will that benefit year be million XXXX. time fiscal P&L. period. adjusted we It GAAP will have benefit $XXX XXXX but not tax do flow over a a we’ll will there to benefit you’ve noted, that $XXX That

Operator

next The will from George Hill come Deutsche question of Bank.

George Hill

And money you kind in sheet follow-up and whether to Steve some guys the settlement chest is of have I’ve quick to you to balance cash you Jim, the of guys that Good I feel need war can you occur expect outlook. work so of like point kind kind settlement? talk an bucket, opioid in or to flexibility I I on guys taking in the guess, people at about to got you opioid – morning anticipation the – not a Or feel question. on or appreciate do put of continued we guess, speak?

Steve Collis

No.

feel if We As I’ve at you XX-year it I settlement. capital announced, detailed don’t deployment the – them. are for chest an framework need look the at said, our was because was that war priorities all to

that’s for I long-term peers and of industry So the but our well. of characteristics not in only sort us our as think of the anticipation competitors

again, we’d – framework that’s interested framework, sort in. proposed So that be that’s of the that but the

crisis. transition long So that it’s providing health played it term, we a population benefit the of to sort management which services really – the for think of be has over this needed out also for consistent have support patient will

call So in a it to that. way, want if you

business couple terms, a not in relative dollars not our of It’s day is hundred absolute that no. – million need relative well. terms. cash So a to some out don’t we a in of It’s it all. as and the country. is feel sales. tremendous the In it a much, And in it’s It of seasonality lot at is

make mindful being So the our strong the of fair But again, that returns a in like external and in internal and we opportunities are shareholders we to position. cash marketplace. we

decision. first and So it’s I difficult difficult treating to have the I say call, close we we became with appreciate to – who I made are it’s in especially committed this the AmerisourceBergen. ago, to and think but this most your And must and team our tried business, with really respect since on that associates probably our that, dignity. very are, conscious nine a persevere of that almost years utmost this and with course, impact we transparency is been of the the we and and decision are we management has going customers quarter CEO interest

you’re leadership differentiators – long-term commercially, focused which of create on and in to key the incumbent have day. for we key creating all responsibility futures. but and its your key extremely Have services. it’s Culturally, is organization and growth about are the not and you AmerisourceBergen, purpose-driven good AmerisourceBergen, on think partnerships attention remain customer assure I value Gap] you, to thank for And and we us talk a we feels Bye. healthier stakeholders. And in I So a time our strong that strengths can markets morning. [Audio again, this relationships, unchanged

Operator

Thank you. The conference has now you attending today’s concluded. Thank for all presentation.

great You a your disconnect lines. may now day. Have

Cencora (COR) 30 Jan 202020 Q1 Earnings call transcript