10-QPeriod: Q2 FY2004

Cencora, Inc. Quarterly Report for Q2 Ended Mar 31, 2004

Filed May 12, 2004For Securities:COR

Summary

AmerisourceBergen Corporation (COR) reported solid financial performance for the quarter ended March 31, 2004, with a 10% increase in operating revenue to $12.3 billion. Net income rose 22% year-over-year to $142.2 million, translating to diluted earnings per share of $1.23, a 19% increase. The company's Pharmaceutical Distribution segment continues to be the primary growth driver, with revenue up 10%, though gross profit margins slightly compressed due to customer mix changes and competitive pricing. The PharMerica segment showed flat revenue but improved operating income due to strong expense management. Despite facing some headwinds, including the loss of a major contract with the Department of Veterans Affairs (VA) and the impending loss of the AdvancePCS business, AmerisourceBergen has demonstrated resilience. The company is actively managing its cost structure and exploring strategic acquisitions, such as MedSelect, Inc., to enhance its service offerings. Management remains focused on operational efficiencies and integration synergies from past mergers, which are contributing to flat or improved operating income margins despite gross margin pressures. The company also has significant liquidity and capital resources available.

Key Highlights

  • 1Operating revenue increased 10% to $12.3 billion for the quarter ended March 31, 2004.
  • 2Net income grew 22% to $142.2 million, with diluted EPS rising 19% to $1.23.
  • 3The Pharmaceutical Distribution segment revenue increased 10%, driven by growth in institutional customers.
  • 4Gross profit margin slightly decreased from 5.18% to 4.72% year-over-year due to customer mix and pricing pressures.
  • 5Distribution, selling, and administrative expenses as a percentage of revenue decreased, indicating effective cost management.
  • 6The company has substantial liquidity with $1.987 billion in additional availability under its revolving credit facility and receivables securitization facility.
  • 7AmerisourceBergen announced significant subsequent events including the acquisition of Imedex, Inc. and the redemption of certain debt instruments.

Frequently Asked Questions

AmerisourceBergen reported a strong quarter with a 10% increase in operating revenue to $12.3 billion and a 22% rise in net income to $142.2 million. Diluted earnings per share increased by 19% to $1.23.

The Pharmaceutical Distribution segment drove revenue growth, up 10%, primarily due to an increase in institutional customers. However, gross profit margins experienced some pressure due to changes in customer mix and competitive pricing. The company also faces challenges from the loss of the VA contract and potential loss of the AdvancePCS business.

AmerisourceBergen demonstrated effective cost management, with distribution, selling, and administrative expenses decreasing as a percentage of revenue. The company maintains strong liquidity, with significant availability under its credit facilities and receivables securitization program, ensuring sufficient capital for operations, integration, and acquisitions.

The company completed the acquisition of Imedex, Inc. shortly after the quarter end and plans to redeem certain debt instruments. Management anticipates continued focus on operational efficiencies and merger integration. The company did note a $0.40 reduction in its fiscal 2004 diluted EPS forecast due to the loss of the VA contract.