AmerisourceBergen Reports Fiscal 2023 Second Quarter Results

CONSHOHOCKEN, PA — AmerisourceBergen Corporation (NYSE: ABC) recently reported that in its fiscal year 2023 second quarter ended March 31, 2023, revenue increased 9.9 percent year-over-year to $63.5 billion. On the basis of U.S. generally accepted accounting principles (GAAP), diluted earnings per share (EPS) was $2.13 for the second quarter of fiscal 2023 compared to $2.59 in the prior year second quarter. Adjusted diluted EPS, which is a non-GAAP financial measure that excludes items described below, increased 8.7 percent to $3.50 in the fiscal second quarter from $3.22 in the prior year second quarter.

AmerisourceBergen is updating its outlook for fiscal year 2023. The Company does not provide forward-looking guidance on a GAAP basis, as discussed below in Fiscal Year 2023 Expectations. Adjusted diluted EPS guidance has been raised from the previous range of $11.50 to $11.75 to a range of $11.70 to $11.90.

“In our second quarter, AmerisourceBergen continued executing to deliver strong financial performance while advancing our strategic priorities and pursuing thoughtful capital deployment, like our recently announced agreement to invest in OneOncology. The fundamental strength and resilience of our business continue to allow us to capitalize on opportunities provided by our capabilities, while focusing on efficiency and advancing innovation across our footprint,” said Steven H. Collis, Chairman, President & Chief Executive Officer of AmerisourceBergen.

“As we move into the second half of our fiscal year, we are pleased to raise our full year financial outlook,” Mr. Collis continued. “Our results and the increase in our full-year outlook continue to demonstrate the value of our pharmaceutical-centric strategy, key strategic partnerships, leadership in specialty and global commercialization services.”

Second Quarter Fiscal Year 2023 Summary Results

Below, AmerisourceBergen presents descriptive summaries of the Company’s GAAP and adjusted (non-GAAP) quarterly results. In the tables that follow, GAAP results and GAAP to non-GAAP reconciliations are presented. For more information related to non-GAAP financial measures, including adjustments made in the periods presented, refer to the “Supplemental Information Regarding Non-GAAP Financial Measures” within the Company’s original disclosure.

Second Quarter GAAP Results

• Revenue: In the second quarter of fiscal 2023, revenue was $63.5 billion, up 9.9 percent compared to the same quarter in the previous fiscal year, reflecting an 11.3 percent increase in revenue within U.S. Healthcare Solutions. International Healthcare Solutions revenue declined 0.2 percent primarily resulting from the June 2022 divestiture of the Company’s Brazil specialty business and unfavorable foreign currency exchange rates in the current year quarter in comparison to the prior year quarter.

• Gross Profit: Gross profit in the second quarter of fiscal 2023 was $2.3 billion, a 2.7 percent increase compared to the same period in the previous fiscal year due to an increase in gross profit in both reportable segments. The increase in gross profit was offset in part by a LIFO expense in the current year period versus a LIFO credit in the previous fiscal year period. Gross profit as a percentage of revenue was 3.62 percent, a decrease of 25 basis points from the prior year quarter.

• Operating Expenses: In the second quarter of fiscal 2023, operating expenses were $1.7 billion, a 19.2 percent increase compared to the same period in the previous fiscal year, primarily driven by increases in distribution, selling, and administrative expenses, restructuring and other expenses, and depreciation and amortization expenses compared to the prior year quarter.

• Operating Income: In the second quarter of fiscal 2023, operating income was $560.5 million, a 28.2 percent decrease compared to the same period in the previous fiscal year due to the increase in operating expenses, offset in part by the increase in gross profit. Operating income as a percentage of revenue was 0.88 percent in the second quarter of fiscal 2023, a decline of 47 basis points when compared to the prior year quarter.

• Interest Expense, Net: In the second quarter of fiscal 2023, net interest expense of $64.1 million increased 21.2 percent versus the prior year quarter primarily due to increases in borrowings and interest rates associated with variable-rate debt, offset in part by an increase in interest income as a result of higher investment interest rates.

• Effective Tax Rate: The effective tax rate was 16.4 percent for the second quarter of fiscal 2023, reflecting the mix of the Company’s domestic and international income and discrete tax benefits. This compares to 23.7 percent in the prior year quarter, which reflected discrete tax expenses.

• Diluted Earnings Per Share: Diluted earnings per share was $2.13 in the second quarter of fiscal 2023, a 17.8 percent decrease compared to $2.59 in the previous fiscal year’s second quarter.

• Diluted Shares Outstanding: Diluted weighted average shares outstanding for the second quarter of fiscal 2023 were 204.3 million, a decrease of 7.7 million shares, or 3.6 percent versus the prior fiscal year second quarter primarily as a result of share repurchases.

Second Quarter Adjusted (non-GAAP) Results

• Revenue: No adjustments were made to the GAAP presentation of revenue. In the second quarter of fiscal 2023, revenue was $63.5 billion, up 9.9 percent compared to the same quarter in the previous fiscal year, reflecting an 11.3 percent increase in revenue within U.S. Healthcare Solutions. International Healthcare Solutions revenue declined 0.2 percent primarily resulting from the June 2022 divestiture of the Company’s Brazil specialty business and unfavorable foreign currency exchange rates in the current year quarter in comparison to the prior year quarter. On a constant currency basis, revenue was up 11.4 percent, reflecting 11.9 percent constant currency growth in International Healthcare Solutions revenue.

• Adjusted Gross Profit: Adjusted gross profit in the second quarter of fiscal 2023 was $2.4 billion, a 6.2 percent increase compared to the same period in the previous fiscal year due to an increase in gross profit in both reportable segments. Adjusted gross profit as a percentage of revenue was 3.71 percent in the fiscal 2023 second quarter, a decrease of 13 basis points from the prior year quarter.

• Adjusted Operating Expenses: In the second quarter of fiscal 2023, adjusted operating expenses were $1.4 billion, a 9.4 percent increase, driven by an increase in distribution, selling, and administrative expenses compared to the prior year quarter primarily to support revenue growth in U.S. Healthcare Solutions and reflecting inflationary impacts on certain operating expenses.

• Adjusted Operating Income: In the second quarter of fiscal 2023, adjusted operating income was $932.1 million, a 1.7 percent increase compared to the same period in the prior fiscal year, driven by a 3.6 percent increase in U.S. Healthcare Solutions, offset in part by a 5.9 percent decline in International Healthcare Solutions due to unfavorable foreign currency exchange rates in the current year quarter in comparison to the prior year quarter. On a constant currency basis, adjusted operating income increased 4.4 percent compared to the prior year quarter. On a constant currency basis, International Healthcare Solutions segment operating income increased 7.3 percent. Adjusted operating income as a percentage of revenue was 1.47 percent in the fiscal 2023 second quarter, a decrease of 12 basis points when compared to the prior year quarter.

• Interest Expense, Net: No adjustments were made to the GAAP presentation of net interest expense. In the second quarter of fiscal 2023, net interest expense of $64.1 million increased 21.2 percent versus the prior year quarter primarily due to increases in borrowings and interest rates associated with variable-rate debt, offset in part by an increase in interest income as a result of higher investment interest rates.

• Adjusted Effective Tax Rate: The adjusted effective tax rate was 19.0 percent for the second quarter of fiscal 2023 compared to 21.0 percent in the prior year quarter.

• Adjusted Diluted Earnings Per Share: Adjusted diluted earnings per share was $3.50 in the second quarter of fiscal 2023, an 8.7 percent increase compared to $3.22 in the previous fiscal year’s second quarter. On a constant currency basis, adjusted diluted earnings per share increased 11.2 percent compared to the prior year quarter.

• Diluted Shares Outstanding: No adjustments were made to the GAAP presentation of diluted shares outstanding. Diluted weighted average shares outstanding for the second quarter of fiscal 2023 were 204.3 million, a decrease of 7.7 million shares, or 3.6 percent versus the prior fiscal year second quarter primarily as a result of share repurchases.

Segment Discussion

The Company is organized geographically based upon the products and services it provides to its customers under two reportable segments: U.S. Healthcare Solutions and International Healthcare Solutions.

U.S. Healthcare Solutions

U.S. Healthcare Solutions revenue was $56.7 billion in the second quarter of fiscal 2023, an increase of 11.3 percent compared to the same quarter in the prior fiscal year due to overall market growth primarily driven by unit volume growth, including increased sales to the Company’s two largest customers and increased sales of specialty products to physician practices and health systems, offset in part by a decline in sales of commercial COVID-19 treatments. Segment operating income of $756.1 million in the second quarter of fiscal 2023 was up 3.6 percent compared to the same period in the previous fiscal year as a result of an increase in gross profit, offset in part by the increase in operating expenses, which included inflationary impacts on certain operating expenses.

International Healthcare Solutions

Revenue in International Healthcare Solutions was $6.8 billion in the second quarter of fiscal 2023, a decrease of 0.2 percent from the previous fiscal year’s second quarter. Segment operating income in the second quarter of fiscal 2023 was $176.0 million, a decrease of 5.9 percent. The period over period declines were due to the June 2022 divestiture of the Company’s Brazil specialty business and unfavorable foreign currency exchange rates in the current year quarter in comparison to the prior year quarter. On a constant currency basis, International Healthcare Solutions revenue and operating income increased by 11.9 percent and 7.3 percent, respectively.

Recent Company Highlights & Milestones

• AmerisourceBergen and TPG announced an agreement to acquire OneOncology, a network of leading oncology practices. AmerisourceBergen’s minority investment will allow it to further deepen its relationship with community oncologists and expand on its solutions in specialty.

• AmerisourceBergen launched its Cell and Gene Therapy Integration Hub, a platform-agnostic system that can be integrated with biopharma and provider-facing platforms to facilitate real-time data exchange and help orchestrate services across the treatment development and patient journey.

• World Courier is deploying real-time location monitoring on all of its multi-use packages, enabling increased visibility into the precise location of shipments in transit globally. The technology will enhance the ability to proactively monitor shipments, anticipate potential risks and intervene, if needed, to ensure the secure and timely distribution of products.

• The AmerisourceBergen Foundation contributed to non-profit partners to support disaster response efforts in Türkiye following earthquakes in February.

Fiscal Year 2023 Expectations

The Company does not provide forward-looking guidance on a GAAP basis as certain financial information, the probable significance of which cannot be determined, is not available or cannot be reasonably estimated. Refer to the Supplemental Information Regarding Non-GAAP Financial Measures within the Company’s original disclosure.

Fiscal Year 2023 Expectations on an Adjusted (non-GAAP) Basis

AmerisourceBergen is now updating its fiscal year 2023 financial guidance to primarily reflect stronger core growth in the U.S. Healthcare Solutions segment. The Company now expects:

• Revenue growth to be in the range of 6 to 8 percent, up from the previous range of 5 to 7 percent;

• U.S. Healthcare Solutions revenue growth to be in the range of 7 to 8 percent, narrowed from the previous range of 6 to 8 percent;

• International Healthcare Solutions revenue to be in the range of a 3 percent decline to flat, up from the previous range of a 1 to 5 percent decline;

• Adjusted Diluted Earnings Per Share to be in the range of $11.70 to $11.90, representing growth of 6 to 8 percent, raised from the previous range of $11.50 to $11.75;

• On a constant currency basis, adjusted diluted earnings per share growth to be in the range of 8 to 10 percent, raised from the previous range of 6 to 9 percent;

• Excluding contributions related to COVID-19, adjusted diluted earnings per share growth to be in the range of 11 to 13 percent, raised from the previous range of 9 to 11 percent; and

• On a constant currency basis excluding contributions related to COVID-19, adjusted diluted earnings per share growth to be in the range of 13 to 15 percent, raised from the previous range of 11 to 13 percent.

Additional expectations now include:

• Adjusted consolidated operating income growth to be in the range of 2 to 4 percent, up from the previous range of 0 to 3 percent. Excluding contributions related to COVID-19, adjusted consolidated operating income growth in the range of 5 to 7 percent, up from the previous range of 4 to 6 percent;

• U.S. Healthcare Solutions segment operating income growth to be in the range of 3 percent to 5 percent, up from the previous range of 1 percent to 4 percent. Expectations for segment operating income growth excluding COVID-19 contributions have been raised to growth of 6 to 8 percent, up from the previous range of 5 to 7 percent;

• Weighted average diluted shares to be approximately 205 million shares for the fiscal year, lowered from the previous range of approximately 206 million shares; and

• For additional details regarding updated guidance expectations on a constant currency, ex-COVID and ex-merger and divestiture basis, refer to the Company’s slide presentation for investors.

All other previously communicated aspects of the Company’s fiscal year 2023 consolidated financial guidance and assumptions remain the same.

Dividend Declaration

The Company’s Board of Directors declared a quarterly cash dividend of $0.485 per common share, payable May 30, 2023, to stockholders of record at the close of business on May 12, 2023.

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