AmerisourceBergen Management Discusses Q3 2012 Results - Earnings Call Transcript

AmerisourceBergen (ABC)

Q3 2012 Earnings Call

July 26, 2012 11:00 am ET


Barbara A. Brungess - Vice President of Corporate & Investor Relations

Steven H. Collis - Chief Executive Officer, President, Director and Chairman of Executive Committee

Tim G. Guttman - Chief Financial Officer and Senior Vice President


Thomas Gallucci - Lazard Capital Markets LLC, Research Division

Lawrence C. Marsh - Barclays Capital, Research Division

Robert P. Jones - Goldman Sachs Group Inc., Research Division

Glen J. Santangelo - Crédit Suisse AG, Research Division

Robert M. Willoughby - BofA Merrill Lynch, Research Division

Eric W. Coldwell - Robert W. Baird & Co. Incorporated, Research Division

Lisa C. Gill - JP Morgan Chase & Co, Research Division

John W. Ransom - Raymond James & Associates, Inc., Research Division

Ricky Goldwasser - Morgan Stanley, Research Division



Ladies and gentlemen, thank you for standing by. Welcome to the ABC Third Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the conference over to our host, Barbara Brungess. Please go ahead.

Barbara A. Brungess

Thank you, Mary. Good morning, everyone, and welcome to AmerisourceBergen's Earnings Conference Call covering our fiscal 2002 -- 2012 third quarter results. I am Barbara Brungess, Vice President of Corporate and Investor Relations, and joining me today are Steve Collis, AmerisourceBergen's President and CEO; and Tim Guttman, Senior Vice President and CFO. During the conference call today, we will make some forward-looking statements about our business prospects and financial expectations. We remind you that there are many risk factors that could cause our actual results to differ materially from our current expectations. For a discussion of some key risk factors, we refer you to our SEC filings, including our 10-K report for fiscal 2011. Also, AmerisourceBergen assumes no obligation to update the matters discussed in this conference call, and this call cannot be rebroadcast without the expressed permission of the company. As always, those connected by telephone will have an opportunity to ask questions after our opening remarks.

Now here is Steve Collis to begin our comments.

Steven H. Collis

Thank you, Barbara, and good morning, everyone. I am pleased to report that AmerisourceBergen once again overcame a challenging year-over-year comparison and delivered solid quarterly results. In the June quarter, our revenues were down 2% to $19.8 billion, but our GAAP earnings per share were up 8% to $0.71. We made excellent progress integrating recent acquisitions including World Courier, which closed in early May. Our strong cash generation and high-quality balance sheet continue to provide us with outstanding financial flexibility, and give us the ability to fund our strategic initiatives, grow our business and return funds to shareholders. Through 9 months, we are well positioned to meet objectives for the full year.

Our diverse revenue base continues to position us well to benefit from organic growth across the entire spectrum of pharmaceutical care, and our customer mix helps drive benefits from the historic influx of generics. Even as generics mitigate the top line dollar growth in our industry, IMS Health's compounded annual sales growth in the U.S. in the range of 1% to 4%, and 4% to 6% worldwide through 2016. In addition, continued scrutiny of health care expenses and cost-containment efforts underway by the U.S. Federal government and commercial payers demand continues improvement in efficiency, productivity and effectiveness across all aspects of health care.

One of the hallmarks of the U.S. market in particular is the quality of the relationship wholesalers have with pharmaceutical manufacturers. Over the last several years, AmerisourceBergen has significantly strengthened our relationship with pharmaceutical manufacturers, and we continue to put an emphasis on looking for meaningful ways to provide additional services across the supply channel in order to help manufacturers meet the challenges of today's changing health care landscape. This is the strategic rationale for the material acquisitions we have made in the past 12 months. As we sit here today, we believe that both the TheraCom and World Courier acquisitions have significantly enhanced our spectrum of services at the supply channel. Moreover, they have brought a cadre of valuable new customers, employees and capabilities, which have exceeded our pre-closing expectations.

As our provider customers face similar challenges regarding cost containment and reimbursement for services provided to patients and new challenges such as accountable care organization, they also increasingly turn to AmerisourceBergen for help in making their health care practices run as efficiently and effectively as possible. Our provided customers deliver world-class patient care on navigating a complex wave of reimbursement. And we believe they deserve fair compensation for the professional services they provide. AmerisourceBergen continues to be an active participant in policy discussions in Washington with the objective of helping legislators understand our industry and our importance to the health care system.

AmerisourceBergen associates remain focus on meeting objectives for the year both in terms of our financial performance and in delivering outstanding service to our customers. I take great pride in the enthusiasm and dedication of our team, and I'm honored to work besides them everyday. They meet challenges with creativity and determination, and they tirelessly seek new ways to meet the needs of the diverse markets we serve through collaborative innovation and by maximizing efficiency.

As we noted in our press release, we believe it was prudent to separate our manufacture services business from pharmaceutical distribution for financial reporting purposes. We believe that disclosing this additional level of detail will increase investor understanding of our business and further improve the overall transparency of our financial reporting. Tim will cover the financials for the 2 segments, and I will now cover some of the key trends in our business units during the quarter.

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