AmerisourceBergen (ABC) Q3 Earnings & Revenues Top Estimates
AmerisourceBergen Corporation ABC delivered third-quarter fiscal 2019 adjusted earnings per share (EPS) of $1.76 surpassing the Zacks Consensus Estimate of $1.63 by 7.9%. The figure also improved 14.3% 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 4.9% to $45.24 billion in the reported quarter. Moreover, the figure beat the Zacks Consensus Estimate by 0.01%.
Segmental Analysis
Pharmaceutical Distribution Segment
Revenues at this segment totaled $43.53 billion, improved 4.7% on a year-over-year basis. Overall market growth, 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 $411.7 million, up 4.9% 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 $1.73 billion, up 8.6% year over year. This upside was driven by ABCS's growth in Canadian operations and MWI.
Operating income in the segment was $95.1 million in the quarter, up 15.6% year over year primarily on the back of the results at MWI.
Margin Analysis
In the quarter under review, AmerisourceBergen reported adjusted gross profit of $1.2 billion, up 4.9% on a year-over-year basis. As a percentage of revenues, adjusted gross margin was 2.7% in the quarter, which remained flat year over year.
AmerisourceBergen reported adjusted operating income of $506.7 million, up 6.8% year over year. As a percentage of revenues, adjusted operating income was 1.1% in the quarter, up 2 basis points year over year.
Guidance Revised
Adjusted EPS is now estimated in the range of $7.00-$7.10 (up from the previously guided range of $6.70-$6.90). The Zacks Consensus Estimate is currently pegged at $6.86, which is within the guided range.
Adjusted operating income is projected to grow in the range of 3-4% (up from low-single digit percent range).
Operating income at Pharmaceutical Distribution Services segment is expected to grow in the band of 2-3% (down from low-single digit percent range).
Further, the company anticipates weighted average diluted shares to be about 212 million, down from the previous estimate of around 214 million.
Notably, per management, all the other previously announced aspects of the company’s fiscal year 2019 financial guidance and assumptions remain intact.
Bottom Line
AmerisourceBergen exited the fiscal third quarter on a strong note, wherein both the bottom and the top line 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. Additionally, the company’s Global Commercialization Services and Animal Health unit witnessed a strong third quarter. A raised EPS guidance for 2019 instills investors’ optimism in the stock.
These apart, the company entered into a long-term strategic relationship with OneOncology – a national partnership of community oncologists in the United States. Additionally, Innomar Strategies, the Canadian operations business unit of the company, added Chronically Simple to its digital solutions portfolio. Notably, Chronically Simple is a secure web-based service and mobile application that has been developed to meet the complex needs of patients with chronic illnesses and ongoing health challenges. We believe these developments to have impacted the company’s results.
Meanwhile, sluggish performances by the company’s PharMEDium and Lash units have been a headwind over the last couple of quarters. The 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 which posted solid results this earning season are Stryker Corporation SYK, Baxter International Inc. BAX and Intuitive Surgical, Inc. ISRG.
Stryker delivered third-quarter 2019 adjusted earnings per share of $1.98, beating the Zacks Consensus Estimate by 2.6%. Revenues of $3.65 billion surpassed the Zacks Consensus Estimate by 1.4%. The company carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Baxter delivered third-quarter 2019 adjusted earnings of 89 cents per share, which surpassed the Zacks Consensus Estimate of 81 cents by 9.9%. Revenues of $2.84 billion outpaced the Zacks Consensus Estimate of $2.79 billion by 1.9%. The company carries a Zacks Rank #2.
Intuitive Surgical reported third-quarter 2019 adjusted earnings per share of $3.25, which beat the Zacks Consensus Estimate of $2.85. Revenues were $1.1 billion, surpassing the Zacks Consensus Estimate of $1.03 billion. The company sports a Zacks Rank #1.
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