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Here's What You'll Want to Know About AmerisourceBergen's Third-Quarter Earnings Beat

By Keith Speights – Aug 1, 2019 at 3:00PM

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The drug wholesaler kept its 2019 momentum going with solid revenue and earnings growth.

AmerisourceBergen (ABC 2.19%) might not seem like the most exciting stock around, but it's beating the S&P 500 index so far this year. And when the company reported its second-quarter results in May, it posted solid year-over-year revenue and adjusted earnings growth.

The company announced its fiscal year 2019 third-quarter results before the market opened on Thursday. Those results made investors pretty happy. Here are the highlights from AmerisourceBergen's Q3 update.

Dollar sign made out of pills

Image source: Getty Images.

By the numbers

AmerisourceBergen's revenue jumped nearly 5% year over year to $45.2 billion. This narrowly topped the average Wall Street analyst estimate of $45.1 billion.

How did AmerisourceBergen's bottom line look in the Q3? The company reported net income of $302 million, or $1.43 per share, under generally accepted accounting principles (GAAP), compared to $276 million, or $1.25 per share, in the same period in 2018. 

The company's adjusted net income in the third quarter was $1.76 per share. This reflected a significant improvement over AmerisourceBergen's net income of $1.54 per share in the prior-year period. It was also much better than the consensus analyst adjusted earnings estimate of $1.62 per share.

Behind the numbers

AmerisourceBergen's revenue has been climbing consistently over the past few quarters. This trend continued in Q3 thanks to strength in both of the company's business segments.

Pharmaceutical distribution services sales rose nearly 5% to $43.5 billion. This increase was driven largely by continued strong specialty product sales, higher volume related to the growth of some of its largest customers, and overall market growth.

The company's "other" segment's sales jumped 8.6% year over year to $1.7 billion. This growth stemmed mainly from higher revenue in the MWI Veterinary Supply business and increased sales for AmerisourceBergen's Canadian operations.

GAAP earnings rose in Q3 due to the company's increase in operating income, lower share count, and lower net interest expense. Non-GAAP adjusted earnings looked even better primarily as a result of adjustments for employee severance, litigation, and other expenses.

Other highlights from AmerisourceBergen's fiscal third quarter included:

  • The appointment of Leslie Donato as executive vice president and chief strategy officer
  • The beginning of a long-term strategic relationship with U.S. national community oncologist partner OneOncology
  • Inclusion in the 2019 DiversityInc list of "Noteworthy" companies for the third year in a row

Looking ahead

The company boosted its full-year 2019 guidance. AmerisourceBergen now projects non-GAAP earnings per share (EPS) between $7 and $7.10, up from its previous forecast range of $6.70 to $6.90. This improved outlook includes an expectation that the pharmaceutical distribution services segment will generate operating income growth between 2% and 3%.

CEO Steve Collis stated: "As we move toward the end of fiscal 2019, our focus remains on serving our manufacturer and provider customers more efficiently and effectively. AmerisourceBergen's strategy, execution, and purpose position the Company to continue creating long-term value for all of our stakeholders."

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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