01—Abstract
Summary
Summary of the 10-K filed November 28, 2007. Cited figures are marked; the original filing is the authoritative source.
AmerisourceBergen Corporation (COR) reported strong revenue growth in fiscal year 2007, driven by its Pharmaceutical Distribution segment, which accounts for the vast majority of its business.
The company saw a 9% increase in operating revenue to $61.7 billiona, largely due to performance in its AmerisourceBergen Drug Corporation (ABDC) and AmerisourceBergen Specialty Group (ABSG) divisions. ABSG, in particular, demonstrated robust growth, exceeding overall market expansion, primarily in its oncology-focused distribution and services. The company continued its strategic focus on optimizing its distribution and service businesses through both organic growth initiatives and targeted acquisitions, including the notable acquisition of Bellco Health for $181 million.
While the company faced some headwinds, such as increased bad debt expense and the impact of declining anemia drug sales on ABSG, its overall financial performance remained solid. The company also actively managed its capital structure, repurchasing a significant amount of its stock and increasing its quarterly dividend.
02—Key points
Key Highlights
- Operating revenue increased by 9% to $61.7 billion in fiscal year 2007, primarily driven by the Pharmaceutical Distribution segment.
- The AmerisourceBergen Specialty Group (ABSG) showed strong performance with a 23% increase in operating revenue, outperforming the broader market.
- The company completed several acquisitions, including Bellco Health for $181 million, to strengthen its market position and service offerings.
- AmerisourceBergen continued its facility consolidation efforts, completing the Optimiz® program which reduced its US distribution facilities from 51 to 26, leading to cost savings.
- The company repurchased $1.4 billion of its common stock during fiscal year 2007 and announced a new $850 million repurchase program.
- Despite a charge related to tetanus-diphtheria vaccine inventory and a loss from a legal matter concerning Bridge Medical, net income remained stable at $469.2 million.
- The company adjusted its dividend policy, increasing the quarterly cash dividend by 50% to $0.075 per share.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2007, Cencora, Inc. kept $0.01.
- Revenue$65.67B100.0%
- Cost of revenue−$63.45B96.6%
- Gross profit$2.22B3.4%
- Operating costs−$1.43B2.2%
- Operating income$788.7M1.2%
- Interest, other & tax−$319.6M0.5%
- Net income$469.2M0.7%
Where FY2007 revenue went
$65.67B- Cost of revenue: $63.45B, 97% of revenue
- Net income: $469.2M, 0.7% of revenue
- SG&A: $1.34B, 2.0% of revenue
Kept 0.7% as net incomeNet income $469.2M · 0.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2007filed November 28, 2007Financial Statements
| Revenue | $65.67B |
| Cost of Revenue | $63.45B |
| Gross Profit | $2.22B |
| SG&A Expenses | $1.34B |
| Operating Income | $788.74M |
| Net Income | $469.17M |
| EPS (Basic) | $1.27 |
| EPS (Diluted) | $1.25 |
| Shares Outstanding (Basic) | 370.36M |
| Shares Outstanding (Diluted) | 375.77M |
05—Questions
Frequently Asked Questions
What were the main drivers of AmerisourceBergen's revenue growth in fiscal year 2007?
The primary driver of revenue growth was the Pharmaceutical Distribution segment, which saw a 9% increase. This was largely fueled by strong performance in AmerisourceBergen Drug Corporation (ABDC) and particularly the AmerisourceBergen Specialty Group (ABSG), which experienced a 23% revenue increase due to its outperformance in the specialty pharmaceutical market, especially in oncology.
What significant acquisitions did AmerisourceBergen complete during fiscal year 2007?
In fiscal year 2007, AmerisourceBergen completed several acquisitions, including Health Advocates, Inc. (a provider of Medicare set-aside services), I.G.G. of America, Inc. (a specialty pharmacy), Access M.D., Inc. (a Canadian specialty pharma services company), and Xcenda LLC (a consulting business). Most notably, in October 2007, shortly after the fiscal year-end, the company acquired Bellco Health, a New York-based pharmaceutical distributor, for approximately $181 million.
What impact did government regulations and healthcare policy changes have on AmerisourceBergen's business?
The company noted that legislative and regulatory changes, such as the Deficit Reduction Act of 2005 impacting Medicaid reimbursement rates for generics, could potentially affect profitability. Additionally, changes in Medicare coverage policies for anemia drugs had a negative impact on ABSG's sales. The company also highlighted ongoing scrutiny and potential changes in healthcare delivery and reimbursement, which could impact its business.
How did AmerisourceBergen manage its capital resources and shareholder returns?
AmerisourceBergen actively managed its capital by repurchasing a significant amount of its common stock, spending $1.4 billion in fiscal year 2007. The company also demonstrated a commitment to returning capital to shareholders by increasing its quarterly cash dividend by 50% in November 2007. Its robust operating cash flow and available credit facilities provided sufficient resources for operations, capital expenditures, and share repurchases.
06—Continue