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AmerisourceBergen Corp (NYSE:ABC)
Q2 2021 Earnings Call
May 6, 2021, 5:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to AmerisourceBergen's Second Quarter Fiscal Year 2021 Earnings Conference Call. Today, all participants will be in a listen-only mode. [Operator Instructions] I would now like to turn the conference over to Mr. Bennett Murphy, Head of Investor Relations.

Please go ahead sir.

Bennett Murphy -- Senior Vice President, Investor Relations

Thank you. Good morning, and thank you all for joining us for this conference call to discuss AmerisourceBergen's fiscal 2021 second quarter results. I am Bennett Murphy, Senior Vice President, Investor Relations. Joining me today are Steve Collis, Chairman, President and CEO and Jim Clearly Executive, Vice President and CFO. On today's call, we will discussing non-GAAP financial measures. Reconciliations of these measures to GAAP are provided in today's press release and are also available on our website at investor.amerisourcebergen.com. We have also posted a slide presentation to accompany today's press release on our investor website.

During this conference call, we will make forward-looking statements about our business and financial expectations on an adjusted non-GAAP basis including, but not limited to EPS, operating income and income taxes. Forward looking statements are based on management's current expectations and are subject to uncertainty and change. For a discussion of [Indecipherable] and assumptions we refer you to today's press release and our SEC filings, including our most recent Form 10-K. AmerisourceBergen assumes no obligation to update any forward-looking statements and this call cannot be rebroadcast without the express permission of the company. [Indecipherable] we ask that you limit your questions to one per participant in order for us to get to as many participants as possible within the hour.

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

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

Thank you Ben, and good morning to everyone joining us today. It's hard to believe that one year ago on this call, I really sort of [Indecipherable] AmerisourceBergen was responding to the global COVID-19 pandemic. There were many uncertainties how COVID 19 will impact our lives, our families and our communities. Thought about purpose of being united in our responsibility to create healthier futures AmerisourceBergen acted decisively to protect and support our associates maintain business continuity and help our customers navigate increase complexity. Our people and businesses proved resilience and the equal distribution industry demonstrated its vital role as a key pillar healthcare system. I remain incredibly proud and how adapted and innovated to support our farmers be and facilitate patient access powered by and culture enables infrastructure and technology AmerisourceBergen is providing value-added data driven solutions to empower our partners with channel awareness and solutions importantly every channel capability enables us to continue to support on innovation and response, both in the US and increasingly, a role that's how is important for our people community and our highlights and by service, while creating value for all our stakeholders. Turning now to our quarterly financial results.

As we announced earlier this AmerisourceBergen delivered year-over-year growth for the second quarter of fiscal 2021, revenues were $49 billion, representing growth of 4% from the same period last year and adjusted EPS grew 5% year-over-year. These results were driven by strong customer relationships, leadership in specialty in May of services and solutions and our purpose driven culture [Indecipherable] in our responsibility to create healthier futures. [Indecipherable] COVID-19 support growth. In the US, we continue to distribute behind viral and antibody therapies is health systems across the country.

Through our work with the Strategic National Stockpile we are supporting government preparedness for current and future potential pharmaceutical needs members of our [Indecipherable] in their communities as we facilitate their participation in the federal retail pharmacy program. The efforts are especially important in the nationwide inoculation movement because they allow as highly trusted medical professionals into communities enables them to quickly efficiently and served out of our reach priority populations. Outside the United States we continue [Indecipherable] in Canada, for example, business is working partnership with FedEx to distribute the COVID-19 back on behalf of the Canadian government.

As I mentioned earlier AmerisourceBergen is focused on providing value-added services and [Indecipherable] customer-centric solutions and that's should only be amplified throughout the COVID-19 pandemic. Our associates are facilitating an efficient and resilient of launching to ensure patients have access to the critical medications [Indecipherable] pharmaceutical innovation, we are providing key commercialization and distribution solutions for our partners to help and adapt to the current dynamic environment we are leveraging our leadership in specialty distribution and services to further enhance our differentiated value proposition for our apartments. This includes expanding our robust suite of capability and data and [Indecipherable]solutions to service the our position as a partner of choice and supporting pharmaceutical innovation and access.

Just this prior week, we are able to leverage the full breadth [Indecipherable] and efficient execution to be a solution provider for having and private partners. Working with the US government our manufacturer partner, we are able to facilitate the transportation of anti-vital therapies to India. I am most [Indecipherable] and humbled that we were able to [Indecipherable] in this time of need around the world. [Indecipherable] business a key global [Indecipherable] continues to support innovation and manufacturers and going logistical important world his expertise and definitely turnaround and I the posture as our partnership is to perform more clinical trial products through our industry leading patient capabilities given challenges facing the patients and traditional think wholesale well period I'm parallel logistical services combined with partnerships and a flow-based services and proven invaluable in clinical trials.

Moving forward our teams have been adaptable created and that provide solutions sort of better outcomes. The community and patients partners our MWI Animal Health business also continued strong performance this quarter. Thanks to strong manufacturer and provider relations as well as its ability to facilitate health for both companion and production animals to support the continued growth of the game that we are business and further, operational efficiency we recently our second new state-of-art and what distribution is going to be this triggered certainly most of the animal health distribution network and enhances our service space.

But these will be in area and Animal Health revised baseline AmerisourceBergen's continued ability to provide differentiated value to our customers and markets and deliver on our is of being united in our responsibility to create healthier futures is it the hands possibility execute on our core growth strategies first, we remain focused on our customers all the three channels with our portfolio of key anchor customers across each segment of our business. This customer base enabled us to lead with market leaders and facilitate patient experience wherever a prescription is needed. We in page continue to strengthen our fleet correlations and hard-centric solutions globally.

Second, we will continue to go the holiday concessions we have the strongest portfolio of customer relationships and added services in the industry. Which enabled us to expand our pharmaceutical innovation expanding our capabilities in specialty to support about I partners and downstream customers make important area of focus Marisol we continue to focus on delivering paid into our service and developing innovative approaches to best service our customers by embracing technology data and analytics, we provide solution-oriented value added innovations all our customers to grow this time strategies because we have customers for all we brought oil.

We see today, you can prescription pharmacy for outcomes globally Officer market access and supporting pharmaceutical innovation providing better services that facilitate commercialization as well as enterprise solutions to the sort of a patient access on top of our unparalleled scale against the teams I will give therapies, both small and large patient populations. This approach enables sponsorships and I'm potential new so since remain key conferences and our focus, I know there is equity and increase as well as investments in our people and culture have long been pivotal in advancing these growth strategies and position AmerisourceBergen for long-term success.

Our strategy and culture foundational to reinforcing our legacy of strong corporate stewardship. Refinances on bridge people and ensuring the continued financial health. Our businesses by creating long-term value for all our stakeholders to ensure that the value we create sustainable we are [Indecipherable] our overall growth strategy. Our environmental strategy focuses on adapting to changing block advancing our resilient and responsible supply chain we are the energy, our infrastructure and technology to create an efficient and secure pharmaceutical supply chain it also allows us to reduce waste our carbon footprint and prepare for [Indecipherable] events. For example we have the customers seek creative packaging and transportation efficiencies that result in significant process, costs and the environmental improvements.

We also are understand our climate related physical risks and have [Indecipherable] to ensure we can continue to deliver lifesaving medications. On the social saw our strategy is centered around corporate responsibility and focused on [Indecipherable] in our people and communities, inspire team members and also helping communities. We continue [Indecipherable] as we have throughout the pandemic to ensure we [Indecipherable] our associates families additional bonuses [Indecipherable] resources and benefit benefits as part of our strong benefit been programs now including extended paid or Italy second line associates.

We have additional important measures such as enhanced cleaning protocols. So it was patients and providing PPE the long-term we have on our talent and culture. I'm based in the development of our people. Finding investments in of the model and programs supported by low learning technology I don't think about this environment. For example, this is obvious operating laws there is an increase of growth rates. The encouraging probably the operation should create and you all the it's and executing to prepare for the future with creative results on us. And the action base to rapidly adapt I'm having landscape throughout all our services of their compensation we empower them to reach back to renewables.

We have also launched a new enterprise sales model offers a modern and clearly experience Page also consistent to what we expect and development. Our dealers well, I mean our people strategy with our business strategy we create. But as you've now and for the long term. Another way we spotted team members the Supervisory diversity equity and ensuring that voices and perspectives. We and I remain purpose of instruments, how will face Belgium and we encourage our associates to participating in Employee Resource Groups in the past 12 months, we have introduced and participation BRG's is from 8% so I mean, the impact we have and strengthen our focus on the part of it is diversity, but it's an collaborative data driven and but approach to ensure that there is all our supplier partners and a lot of this function of GSV efforts and this Marisol empowers our associates to participate in deep conversations that help shape the future the for example, our associates of cash and on social injustice and AmerisourceBergen Foundation an elevated the impact our managing the nation Tier 1 ratio, focused on the others to be inclusion and developments I am proud of the donation and these days in the first.

We believe but in quality is a fundamental and that it is important to support social injustice Health equity has also be raised over the past year as one of the social issues facing and here I want to highlight that are our Pharmacy Elevate Provider Network on doing healthy communities as has been helping providers well establish relationships make communities about equity on a daily basis. They have major role ensuring positive outcomes incredible work bonds of the national COVID 19 banks major to reach all parts of the country and efficiency and that was also the foundation recently made is a base subordinating build a to support 90 bags education and awareness and average remove barriers to bottled healthcare experience, improve the health of our communities. We are grateful and proud. We have the opportunity support healthy communities.

The US I think we're independent pharmacies finally, regarding an element of our EFC strategy is embracing our culture all transparency ethics and integrity which informed a different thing that we do and which ensures the highest standards of governance our commitment to do the right thing. It's called in resource expenses and principles by balancing environmental social and governance initiatives AmerisourceBergen to Greg I'll give futures around the world. This is not only the right thing to do. It was enabled us to further enhance the value we create all of Amerisource Bergen stakeholders in closing, we remain confident in how ability to provide differentiated value to our leverage our leadership in specialty distribution lot of our innovative market and benefit from our focus on strong corporate citizenship. Looking ahead, we have strong confidence in our business.

Our focus on closing the acquisition of the long, which will expand our distribution capabilities into key markets and further strengthen our global variable manufacturing services we look forward to building upon our strong tenant base, the onboarding of the line healthy there. Fantastic. Management team and we are excited to begin the next evolution of enhancing our ability to provide innovative and global health institutions we are well positioned to create long-term stakeholder value and remain united in our responsibility to create healthier futures

Now I will turn the all other Jim for a more in-depth review of our results. Jim?

James F. Cleary -- Executive Vice President and Chief Financial Officer

Thanks Steve and good morning everyone. And Steve mentioned [Indecipherable] over a year has passed since [Indecipherable] the COVID-19 pandemic and AmerisourceBergen's response reflecting on the past year I have been moved by the diligence our teams have shown is supporting our partners during these complex times. Our associates have moved our purpose being united in our responsibility to create healthier futures and they are the foundation performance I am appreciative of the hard work of our associates over the past year and I am proud AmerisourceBergen continues to focus on cultivating advancing our talent and culture. While the pandemic presented a new challenges on long-term commitment to investing in our businesses allowed us to successfully manage through [Indecipherable] and demonstrate the strength and resilience of our business model.

As I said on the call this time last year we have been able to leverage significantly internal resources and capabilities to meet the evolving needs of our up spring and downstream partners as we sit here today with our eyes on the future, AmerisourceBergen is continuing to invest internally in our businesses and talent to ensure that AmerisourceBergen is not only delivering strong results this fiscal year, but will continue to do so over the long term for the differentiated value from our innovative services and solutions.

Turning now to discuss our second quarter results, I will review our adjusted quarterly consolidated results, our segment performance and the updated elements of our fiscal 2021 guidance including the increased storage EPS guidance. I will note that is financial guidance does not include any contribution from the proposed alliance healthcare acquisition announced in January 2021. My remarks today will focus on our adjusted non-GAAP financial results unless otherwise stated for the and comparisons are made against the prior year March quarter.

For a detailed discussion of our GAAP results, please refer to our earnings release. We finished the quarter with adjusted [Indecipherable] EPS $2.53 an increase of 5% primarily due to solid operating income growth across our businesses to reflect our continued strong performance, we are raising the bottom end of our full fiscal year EPS bringing it to a range of $8.45% to $8.60 up from a range of $8.40 to $8.60. Our consolidated revenue was $49.2 billion, up 4% 4% driven by revenue growth in both the Pharmaceutical Distribution Services segment and other which includes our Global commercialization services and animal health group of businesses.

Consolidated gross profit increased 7% to one 1.5 billion by increases in gross profit in each operating segment. In this quarter, gross profit margin increased 9 basis points from the prior year quarter. This gross margin improvement is due to continued growth and [Indecipherable] buyers including COVID-19 therapies and growth in some of our higher margin businesses such as World Courier and MWI Animal Health. Regarding consolidated operating expenses, operating expenses from 8% year-over-year due to a number of payroll related costs to operate in the current environment and investments in internal initiatives being made throughout fiscal 2021 with a focus on continuing to differentiate our value proposition for future growth.

We are narrowing our operating expense guidance for the year from growth in the mid to high single-digit range to growth in the high single digits. As a reminder, last year in the second half of fiscal 2020 benefited from an opex tailwind from lower corporate administrative costs, notably lower travel and lower healthcare expenses. Turning now to consolidated operating income, our operating income was $707 million 5% compared to the prior year quarter. This increase was driven by increased gross profit in both the Pharmaceutical Distribution Services segment and our Global Commercialization and animal health businesses, which I will discuss in more detail when I review segment level performance.

Operating income margins grew 2 basis points to 1.44% as a result of the continued strong performance by our higher margin businesses. Net interest expense was $35 million, roughly flat year-over-year. During the quarter we issued $2.5 billion of new debt [Indecipherable] closing the Alliance Healthcare acquisition and new debt is comprised of approximately $1.5 billion of senior notes due in 2023 which has a coupon of 0.737% and $1 billion of senior notes due in 23/1, which have a coupon of 2.7%.

So, we do not [Indecipherable] interest expense. I will note that due to the interest and fees associated with the debt raise net interest expense will likely be up roughly 15% for the full fiscal year. Our updated fiscal 2021 adjusted EPS guidance includes this incremental interest expense but does not include Alliance Healthcare operating income, which of course would be included in our future consolidated P&L after the transaction closes. Moving now to our effective income tax rate second quarter, our tax rate was 21.9% up from 21.5% in the second quarter as of 2020.

Our diluted share count was 207.3 million shares, roughly flat compared to last year's share count. We now expect our average share count for the fiscal year to be approximately 207 million to 200. 8 million shares up from approximately 207 million shares. The revised guidance range will adversely impact of dilution from stock comp and does not require [Indecipherable] share count impact of the 2 million shares that we will deliver at the close of the Alliance Healthcare transaction.

As you begin to revisit your model, I will remind you that when we announced to be an Alliance acquisition we noted that we would immediately get period of deleveraging following the transaction close, accordingly and through share repurchases we are committed to paying down over $2 billion in total debt over the next few years to ensure AmerisourceBergen maintain its strong investment grade credit ratings. Turning now to adjusted free cash flow, our adjusted free cash flow year-to-date was $298 million keeping us on track with our adjusted free cash flow guidance of approximately $1.5 billion for the fiscal year.

Regarding our cash balance, we ended the quarter with $6.6 billion in cash, including approximately 2.5 billion of proceeds from the issuance of the senior notes that I just discussed. This completes the review of our consolidated results. Now, we'll turn to our segment results. First, regarding the Pharmaceutical Distribution Services segments it's important to keep in context the environments last year in the month of March. Last year, we experienced increased pharmaceutical demand as many of our customers increased their repurchases at the onset of COVID-19 resulting in higher revenue and gross profit, consolidated levels of sales, in the prior-year period does have an impact on year-over-year growth rate comparisons for the quarter.

This year, Pharmaceutical Distribution Services segment revenue was $47.1 billion, up 3% for the quarter driven by increased sales of specialty products including COVID-19 therapies. The growth rate may have been negatively impacted by being 2 less business days in the current year March quarter compared to the prior year period. Segment operating income increased about 5% to $589 million with operating income margin, up 1 basis point to 1.25% with our continued solid performance related to sales from specialty products, including COVID-19 therapies and for our ION Solutions business which continues to be a differentiator.

As a reminder, the cash debt reserve that we reversed in the fourth quarter in fiscal 2020 was originally recorded in the second quarter. The reserve and subsequent reversal both happened in fiscal 2020, therefore resulting in a tailwind to the current quarter operating income growth and will be a headwind on operating income growth in the fourth quarter, but will have no impact when comparing to full fiscal 2021 with fiscal 2020. Now I will turn to other which includes businesses that focus on Global Commercialization Services and Animal Health including [Indecipherable] AmerisourceBergen Consulting and MWI. In the quarter, total revenue was $2.1 billion up 12% driven by growth across the three operating segments, particularly for World Courier.

Operating income for the group was up 14% to $123 million primarily due to the continued growth in performance of World Courier and MWI carriers to in-patient capabilities differentiated business and has gained meaningful traction in the market as clinical trials have begun utilizing the whole study additionally, our traditional commercial offerings and industry expertise and voluntary or continue to be by many partners resulting in higher volume and weights and the global logistics continue to be complex endeavor maintained its strong growth trajectory.

Particularly in the companion animal market pet ownership has been on the rise for paying closer attention to their our investments across our businesses, including a new and a lot distribution center and then analytics technologies have allowed us to remain in class provider and offer innovative services and solutions to our partners as a result of exceptional performance in strong business fundamentals in Other we are raising our operating income guidance for the group for mid to high single-digit growth to low double-digit growth for the fiscal year. I will note that this new guidance range of low double-digit growth [Indecipherable] two year compound annual growth rate and the high single digits. Helped by the continued performance of World Courier and MWI. Turning now to touch on the third quarter to provide some color and reminders if you look at your models.

Given the continued strong performance across our business and the favorable comparison to last year, we expect revenue and gross profit to be strong and the operating expense growth rate to remain elevated, below the operating income line we expect EPS to be only up slightly in the third quarter due to three main factors, first higher tax rate year-over-year as we lap discrete items and the third quarter of fiscal 2020, second higher interest expense due to the debt raise and third, higher share counts.

The share repurchases on hold is the result of the Alliance Health transaction yet. We expect share count to continue to move up to the stock comp. At this point, the year we are happy to have been able to raise our EPS guidance and debt driven by the strong performance we are seeing across our business the new EPS range represents growth of 7% to 9% versus 20 and clearly driven by a strong operating income growth expected in both the Pharmaceutical Distribution Services segment and our Global Commercialization Services and Animal Health per conclude my prepared remarks this morning. I will provide a brief update on the Alliance Healthcare transaction. We continue to make progress toward closing the transaction and continue to have valuable discussions and the leadership and teams Alliance in preparation for closing we remain on track to. So the acquisition by the end of our fiscal year with the possibility closing based on third quarter as a reminder, we expect the acquisition to generate high teens percent increasing to GPS and the first 12 months post close this acquisition as an important strategic and financial into the future as it will enhance our scale and margin profile. Free cash flow generation and build on our global pharmaceutical manufacturing services and distribution capabilities.

Another is well positioned to create long-term value. Our commercial partners, our key differentiators, a strong customer relationships. Leadership in specialty and our commitment to innovation we are also continuing to build our corporate this initiatives to ensure that value create benefits. All of our stakeholders. Executive those sponsor of RV industry and started by this quarter's release Annual Global Sustainability and Corporate Responsibility Report, which Alliance when sustainability frameworks including to start see GI and in UN's Sustainable Development Goals for the first time several Epicel in the mines Tcfe and World Economic Forum frameworks and is present and our own sustainability microsite as a member of the these standards advisory AmerisourceBergen's meaning yes Chief reporting this feature and the case study our recent workshop I encourage everyone to visit the monetary side and continuing to provide updates on our CSG I would for next and by take a moment an important reason acknowledgment the CEO seat covers and AmerisourceBergen receipts and Gabriel P anti-destination LDL presented at the American in some award to Steve and AmerisourceBergen our commitment to finding a and the world. Based on where we are is installing recognition of and AmerisourceBergen living any closing AmerisourceBergen remains a message.

Our business I sort of give and will continue in same our businesses people and communities to serve all our stakeholders. We are building our explains enhancing our differentiation in the marketplace and positioning our business for long-term growth. The value creation driven by our purpose of the united in our responsibility to create healthier futures.

Thank you for your interest in AmerisourceBergen, now we'll return the call over to the operator to start our Q&A. Operator?

Questions and Answers:

Operator

We will now begin the question-and-answer session. [Operator Instructions] Today's first question comes from Glen Santangelo with Guggenheim.

Glen Santangelo -- Guggenheim -- Analyst

Yeah thanks. Good morning and congrats and thank you for taking my question. Steven and Jim, I'm guessing you've heard by now, but earlier this earning season, we've received varied reports from different companies with respect to changes in generic pricing. Could you maybe comment on what you've been seeing in your generics business both in terms of pricing and the supply chain any notable changes worth calling out and thanks in advance. Hello?

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

(Technical Issues) are trending relatively in line with our original expectations for the year. With regard to generic deflation. Yes, about the overall deflation rates are relatively in line with the last couple of years. There are currently a few specific pockets of pressure, but overall the rate is still relatively in line with our expectations for the year supply and demand dynamics remain balanced and for the balance of the year, we expect overall deflation to be generally consistent with year-to-date.

And then on the generic cells Glen debt markets continues to be competitive by with no significant update. The next question comes from Eric Coldwell with Baird.

Eric Coldwell -- Baird -- Analyst

Hey, thanks very much and unfortunately I joined a little bit late, but I thought I heard you mentioned something about two less selling days. I was hoping to get a little more specificity on that, what that was, in relation to and a selling day and distribution is obviously a tremendous amount of money if that's what that was, in relation to, so I'm just curious if that was one of the factors in the revenue update versus the Street, which was a bit higher.

James F. Cleary -- Executive Vice President and Chief Financial Officer

Yeah, let me comment on that -- I mean those of us who have been distribution for a long time, which includes about everyone on the call and exposed to a selling days are sort of the things that we tend to [Indecipherable] two less selling days this quarter for AmerisourceBergen versus the same quarter last year. One was simply due to the calendar, the other was due to the fact this year we not operating part of distribution centers on MLK which we felt was important, and so that was why we had a second, less selling day during the quarter. And selling days -- will probably have some impact on the revenues during the quarter, I would say, overall we feel quite good about the revenue growth during the quarter we're comping against the quarter last year where there was a real uptake in revenue during the month of March during the onset

And so, we work at least with the revenue growth during the quarter end, that we were comping against revenue growth quarter last year and that's also [Indecipherable] keeping our revenue growth guidance the same, which is strong in the high single-digit percent range for the fiscal year.

Operator

The next question comes from Lisa Gill with JPMorgan.

Lisa Gill -- JPMorgan -- Analyst

Good morning and thank you for taking my question. Jim, I just wanted to go back to your comments around the higher interest cost, tax cost and share count. So, by my math, it looks like those three things combined would be somewhere in the neighborhood of close to $0.10, am I doing the math correctly? When we think about the fact that you raised your numbers today, but that lower end by $0.05 was there -- if everything else were equal would there been another incremental upside to your numbers and the guidance?

James F. Cleary -- Executive Vice President and Chief Financial Officer

Yeah. Thank you very much for the question. You know, obviously we don't give quarterly guidance, but we thought it was important to give that color and what we've indicated is that we're expecting for our adjusted EPS to be up only slightly during the third quarter and I think really the key thing is we're expecting revenues to continue to be strong, the GPs to continue to be strong and we're expecting very solid operating income growth. So it's really well the line items that are driving it; the higher tax rate year-over-year because we had discrete tax item that benefit the third quarter of last year. We have the higher interest expense during the third quarter because we've done the Alliance acquisition financing before closing the acquisition. So, we have the interest expense related to it in our guidance, but of course, we won't have to [Indecipherable] operating income in our guidance until we close the deal and then we have some sort of the higher share count also, and so [Indecipherable] things that are driving what I said in the third quarter, but I think from an operating standpoint, -- and in our guidance is we expect the business to continue to perform well and we have operating income guidance overall [Indecipherable] in high single-digit percent growth rates.

Operator

The next question comes from Robert Jones with Goldman Sachs.

Robert Jones -- Goldman Sachs -- Analyst

Hey, thanks for the question, I guess Jim, maybe just to follow up on that. You talked about 3Q EPS being up slightly. Just to be clear is that mostly below the line that would maybe have that EPS growth looking a little bit more subdued. And then, last quarter you called out the treatment benefit in the quarter. Specifically, I was wondering if you'd be willing to share that specific contribution for this quarter as well. Thanks.

James F. Cleary -- Executive Vice President and Chief Financial Officer

Yes. So, there are two things, I'll address both of those. The first one was that the detail we did on the third quarter. Yes all of those -- all the things [Indecipherable] adjusted EPS should to be only slightly in the quarter, they are below the line, [Indecipherable] and we are expecting solid sales and operating income growth in our operating income guidance once again for the year as high single-digit percent growth.

And on the COVID treatment benefit during this quarter, it was roughly half -- is large and half is impactful and our second quarter as it was during the first quarter of our fiscal year and so while we still have a positive impact it was only about half as much during the second quarter and we do expect it continue to decline over the balance of the fiscal year.

Operator

The next question comes from Ricky Goldwasser with Morgan Stanley.

Ricky Goldwasser -- Morgan Stanley -- Analyst

Yeah, hi, good morning. I wanted to focus on pharma segment, you reported about 3.5% revenue growth and 4.5% operating income growth. So, as prescriptions pick up to a more normalized level. Should we see more leverage flowing through to the bottom line and along these lines, what are you seeing in terms of utilization trends in April, in early May. Thank you.

James F. Cleary -- Executive Vice President and Chief Financial Officer

Yeah. With regard to utilization, broadly speaking, our sales resilience across our businesses during the pandemic, we guiding to last the onset of the COVID-19 pandemic. Of course, there's been a lot of external noise around, which has been a significant driver of our business. That being said, moving forward, the spread data will compare against past year they had very low coal cost as Lou season as there is some lower for ventilators and diagnostic activity, but we're optimistic now. As we look to the bottom. Current situation in the balance of the year that with vaccines and lower of COVID-19 in many parts of the country before we speculate these diagnostic procedures and getting referrals positions to pre-conditions.

Operator

The next question comes from Eric Percher with Nephron Research.

Eric Percher -- Nephron Research -- Analyst

Thank you. Your comment on supporting farm innovation and commercialization struck a chord and I'm thinking that relative to bringing [Phonetic] specialty customers upstream and World Courier having a expanded role, is it time to consider the value proposition of working with the CRO, a little bit more intently than it was worth a couple of years ago and even if not a large scale combination, are there areas in oncology regulatory affairs to could fit well with the business?

Bennett Murphy -- Senior Vice President, Investor Relations

Yes, hi Eric so we varied our [Indecipherable] commercialization Services and helping our helping with particularly specialty physician was market challenges, which would include patient accruals and helping [Indecipherable] post and then we expect that they will be full resumption of innovation in clinical trials obviously the FDA [Indecipherable] very focused on the pandemic in getting those therapies approved. So we think we always do stand willing to serve, but we can feel our portfolio is very adequately position and we don't have any specific needs holds right now and have had a history with our physician customers on analytics and data mining. So we feel we like we're well positioned, but it's important to keep in mind the benefits that could come from using community on [Indecipherable] in clinical trial accrual so very important.

Operator

The next question comes from Charles Rhyee with Cowen.

Charles Rhyee -- Cowen -- Analyst

Yeah thanks for taking the question. James, I wanted to talk about a follow up with the question from Lisa when you talked about the puts and takes on the rest of the guidance here and some of the offsets. I think you talked about a higher expense related to the Alliance financing et cetera. But given that -- in the other segment, you raised the guidance there World Courier seems to be doing quite well here, can you talk a little bit more about the trends that you're seeing here and in the rest of Fiscal 21 and I guess with World Courier built this great infrastructure. Have you guys thought about adding more capabilities to support pharma manufacturers in the clinical trial process itself. Would you be -- can you see yourself adding more different capabilities besides, maybe the logistics piece. Thanks.

James F. Cleary -- Executive Vice President and Chief Financial Officer

Yes. Sure and I think the first part of your question was about the some of the moving pieces in guidance in general and then second part more specifically on World Courier and I think one of the key thing is that we are seeing positive trends and across our businesses, particularly in our higher margin businesses. We're also seeing really strong execution across our businesses, both in pharmaceuticals, distribution and admin commercialization and animal health businesses. And so some of these, to have positive trends continued very good performance in specialty physician services, we're seeing strong performance also in health systems. And then as you called out in Other, we're seeing strong growth, as well as the world carrier business and the MWI businesses and we expect to see positive trends on there in those businesses, for the rest of the year and beyond these overall positive trends there are a number of moving pieces that we talked about in the prepared remarks and on this call.

We're beginning to lap some significant year-over-year growth rates related to biosimilar utilization, and so the operating income from biosimilars will continue to grow, but probably sustained on a percentage growth rates that we saw as utilization was really increasing during the last three quarters of last year in the first quarter of this fiscal year. Our guidance as I said, assume that non-COVID therapy sales what we more in the second half, than more in the first half and of course we're very proud of what we're doing there and it is clear that we do feel that of course utilization with COVID therapies we do feel will be lower in the second half and then [Indecipherable] part of the fiscal year, the very low expense growth at the back half of last year we had in the back half of last year we had less than 1% operating expense growth so we're lapping that operating expense growth.

We also have a 6-month of interest associated with the Alliance Healthcare transaction and so those are some of the things that are impacting our guidance, but overall we feel very good about the positive trends and execution across our businesses and Steve is there anything you'd like to add there?

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

No, I just want to say that we've owned World Courier for eight years or so now and I think it's continued to surprise the management team and our board and how reslient and innovative they are. We've talked a lot of parts clinical trial at home. But we keep on finding the new ways for this business to be importantly stakeholders. I think [Indecipherable] we were able to facilitate shipments of important anti-infective product for India really using the capability of World Courier because it is such a high capability, high target this area that we continue to find new uses. I also do believe that part of our facility is looking at a combination of World Courier and Alliance Healthcare, in different markets, just having more and more presence I do believe of course there's going to be another strong add to the characterics for World Courier's opportunities in the future. Next question, please?

Operator

The next question is from Steven Valiquette with Barclays.

Steven Valiquette -- Barclays -- Analyst

Thanks, good morning guys. Jim, it seems that the first 10 or 15 grants around the first generic pricing question might have been cut off a little bit [Indecipherable] you mention the pressure on generic pricing on the buy side size, I yes, I was just curious whether or not the dynamics in relation to that, such that one of the pockets will convert or is that just a permanent reduction [Indecipherable] guidance range and the other quick question, just given the COVID spike in India [Indecipherable] global export, is there any early signal that often generic suppliers in India that there could be disruption to supply engineering to be US is that something on your radar screen or are you not really worried about that.

James F. Cleary -- Executive Vice President and Chief Financial Officer

Yeah, what I will do is I will handle the first part and then Steve will take the second part of that and obviously it's a really important question and [Indecipherable] questions so let me kind of go through the answer again because obviously it's such an important topic and [Indecipherable] so while we don't have specific guidance, broadly speaking, both brand generic pricing are trending relatively in line with our original expectations for the year. Overall, as inflation rates are relatively in line with that last couple of years regarding generic deflation.

As I said, as you know there has been few products specific pockets and pressure, but overall, the rate is still relatively in line with our expectations for the year, the supply and demand dynamics remain balanced and for the balanced and for the balance of the year, we expect overall deflation to be generally consistent with year-to-date and with that, I'll turn it over to Steve.

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

Yes, as far as [Indecipherable] obviously heartbreaking of course most of the media's attention will be focused on the high outbreak areas and we've seen this time unfortunately play out [Indecipherable] just point you a few a few mitigating factors here. First of all, we believe that manufacturers have had some business continuity planning and the expectation that there [Indecipherable] prepared for this. So we don't see any very large interruptions in the supply chain cargo [Indecipherable] to be transported as usual operations continue.

China is currently functioning is also very important normal level which is especially important for raw materials and AmerisourceBergen history office processes. I would agree, power supply chain, we can. I hope to solutions in almost all situations. So we, feel equation we should get all very cognizant and emphathetic with what's going on. We are just tremendously proud as an organization about the work we were able to do just this meet this very unique in India, so will support [Indecipherable] and corporate brands as well.

Steven Valiquette -- Barclays -- Analyst

Okay, all right. Thanks.

Operator

The next question comes from Kevin Caliendo with UBS.

Kevin Caliendo -- UBS -- Analyst

Great, thanks for taking my call. You mentioned you're going to start to lap some of the COVID therapies and also some of the biosimilar benefit, we're seeing biosimilar uptake continue to increase every month. So, I'm wondering why that's still wouldn't be a little bit of a tailwind for you guys and if you could in any way, shape or form sort of size the benefit you've gotten from biosimilars? I know you've already sort of given us some heads up around the COVID therapy sales. But, if we could also include biosimilars will be really helpful as we think about modeling going forward.

James F. Cleary -- Executive Vice President and Chief Financial Officer

Yeah, with regards biosimilars we absolutely believe in our guidance that they will continue to run -- well continue to grow the operating income dollars from biosimilar. So we do expect to have continued meaningful growth there. The point that we were making the growth percentage rate will not be as high as it was last year when biosimilar utilization was growing from a much smaller base, but we absolutely continue to expect, the operating income dollars from biosimilar to continue to grow in our specialty business and we specifically sized the dollar figure, but has been a meaningful contributor to on dollar growth and gross profit percentage improvement.

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

Yes. We continue to see positive trends in biosimilars [Indecipherable] health systems and we began to see significant utilization in biosimilars in the second quarter. The in house systems in oncology where in some therapy we're seeing 40% utilization for biosimilars so very important -- also as we mentioned before to create room other specialties that hadn't been as President adoption not being quite discrete on quality. When it comes to community and when it comes to specialty and James to be on the cutting edge. So we know, we believe that this trend will be oncology will continue into those specialties as well. So, we think customers are and will continue to be very important for our future. With that [Indecipherable] one more question please?

Operator

The next question is from George Hill with Deutsche Bank. Hey, good morning, guys and thanks for sneaking me in. I guess Jim, if I could just have to follow-up, kind of, as it relates to volumes. I was wondering if you could talk about the outperformance of specialty versus kind of the regular way business in the quarter, you mentioned the two fewer days in the quarter, which I think explains a lot of the revenue numbers coming in a little bit below Street expectations, but I'd kind of love to hear commentary around how things like oncology performed during the quarter?

James F. Cleary -- Executive Vice President and Chief Financial Officer

Yeah, I'd be happy to address that. We saw continued strong performance in our specialty physician services business and oncology supply and in other parts of the business, including our ION GPO. We also saw very strong performance, as we noted during the quarter during health systems, but I will say, if we look overall, the company we have really strong performance and execution across many of our businesses and focusing in on the revenue growth rate during this quarter of course, once again we were comping against quarter last year, where there was a real surge in business during the month of March during the onset of COVID.

So, we were quite pleased by our performance during the March quarter and the trends that we're seeing for the balance of the year, which is included in our, in our guidance.

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

Okay. I am going to wrap up by just thanking everyone for their attention today, in preparing for this call I was consulting with Bennett and his people and they were telling me how many more companies you're [Indecipherable] covering as we really appreciate your attention as we focus on a tremendous future ahead for AmerisourceBergen. As we said, many time never has our purpose been more clear during this pandemic and I'm incredibly proud of the role that our industries played and we played in that industry. We're very confident in our business and value proposition, we're looking forward in the months ahead closing the Alliance transaction, which is a key development in AmerisourceBergen's history and we're looking forward to our 20 year anniversary coming up late this fiscal year and to broadening our distribution and global footprint as we are united in our responsibility to create healthier futures. Thank you for your time today.

Operator

[Operator Closing Remarks]

Duration: 61 minutes

Call participants:

Bennett Murphy -- Senior Vice President, Investor Relations

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

James F. Cleary -- Executive Vice President and Chief Financial Officer

Glen Santangelo -- Guggenheim -- Analyst

Eric Coldwell -- Baird -- Analyst

Lisa Gill -- JPMorgan -- Analyst

Robert Jones -- Goldman Sachs -- Analyst

Ricky Goldwasser -- Morgan Stanley -- Analyst

Eric Percher -- Nephron Research -- Analyst

Charles Rhyee -- Cowen -- Analyst

Steven Valiquette -- Barclays -- Analyst

Kevin Caliendo -- UBS -- Analyst

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