AmerisourceBergen Corporation ABC posted earnings (excluding one-time items) of $1.30 per share in the fourth quarter of fiscal 2016 (ended Sep 30, 2016), beating the Zacks Consensus Estimate of $1.22 by 6.5% and up 11.1% from $1.17 earned in the year-ago quarter.
Moreover, revenues improved 5.9% to $37.6 billion in the reported quarter. However, reported revenues were marginally below the Zacks Consensus Estimate of $37.8 billion.
Quarter in Detail
In the reported quarter, revenues at the Pharmaceutical Distribution segment (including AmerisourceBergen Drug Corp. (ABDC) and AmerisourceBergen Specialty Group (ABSG)) increased 5.9% to $36 billion. Within the segment, ABDC revenues were up 5% primarily on the back of solid organic sales growth, including sales to Walgreens Boots Alliance.
The ABSG unit also performed impressively during the quarter, with revenues surging 15.2% year over year on the back of a strong performance of the oncology business (including an increase in sales to community oncologists), along with growth in the blood product, vaccine and physician office distribution businesses.
Revenues at the Other segment (AmerisourceBergen Consulting Services (ABCS), World Courier and MWI Veterinary Supply) came in at $1.6 billion, up 4.9%.
In the fourth quarter of fiscal 2016, operating expenses were $586.3 million, down 3.1% year over year. The decrease in operating expenses was primarily due to certain expense reduction initiatives, partially offset by the addition of PharMEDium and additional costs to support revenue growth.
In reported quarter, operating income of $464.2 million was up 1.6% due to the decline in operating expenses, partially offset by lower gross profit. Operating income, as a percentage of revenues, contracted 5 basis points to 1.24% in the quarter.
AmerisourceBergen also announced that its board of directors has authorized a new $1 billion regular share repurchase program which, together with the available capacity under the existing regular share repurchase program, will allow the company to purchase up to $1.1 billion in shares of its common stock, subject to market conditions. The company had 220.1 million shares outstanding as of Sep 30, 2016.
Fiscal 2016 Results
AmerisourceBergen reported adjusted earnings of $5.62 per share in fiscal 2016, above the Zacks Consensus Estimate of $5.54.
Full-year earnings also increased 13.8% year over year. Moreover, revenues climbed 8% to $146.8 billion year over year.
Fiscal 2017 Guidance Updated
AmerisourceBergen has lowered its earnings and revenue growth expectations for fiscal 2017 due to the uncertainty surrounding drug pricing trends at present.
The company expects fiscal 2017 revenue growth in the range of 6.5% to 8%. In the third-quarter conference call, the company revealed expectations of slightly better revenue growth than the overall market levels.
The company expects adjusted diluted earnings per share for fiscal 2017 in the range of $5.63 to $5.88. Previously, the company had expected earnings growth of 4–6%. In the first quarter of fiscal 2017, the bottom line is expected to register a year-over-year decline of a few cents. Also in the March quarter the company expects earnings growth to be flat. Overall, the company expects a stronger performance in the second half of fiscal 2017 compared with the first half.
AMERISOURCEBRGN Price, Consensus and EPS Surprise
AMERISOURCEBRGN Price, Consensus and EPS Surprise | AMERISOURCEBRGN Quote
Zacks Rank & Key Picks
AmerisourceBergen currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the health care sector include Anika Therapeutics Inc. ANIK, Geron Corporation GERN and Exelixis, Inc. EXEL. While Anika and Geron sport a Zacks Rank #1 (Strong Buy), Exelixis carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Anika’s earnings estimates have increased from $1.96 to $2.06 for 2016 and from $2.03 to $2.09 for 2017 over the last 60 days. The company has posted a positive earnings surprise in all of the four trailing quarters with an average beat of 33.1%. Its share price has increased 14.9% year to date.
Geron has posted a positive earnings surprise in all of the four trailing quarters with an average beat of 20.8%.
Exelixis’ loss estimates have narrowed from 71 cents to 61 cents for 2016 and from 16 cents to a gain of 4 cents for 2017 over the last 60 days. The company has posted a positive earnings surprise twice in the four trailing quarters with an average beat of 9.1%. Its share price has surged 94.7% year to date.
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