10-QPeriod: Q1 FY2007

Cencora, Inc. Quarterly Report for Q1 Ended Dec 31, 2006

Filed February 7, 2007For Securities:COR

Summary

AmerisourceBergen Corporation (COR) reported solid revenue growth for the quarter ended December 31, 2006, with total revenue increasing by 16% year-over-year to $16.7 billion. This growth was primarily driven by the Pharmaceutical Distribution segment, particularly the AmerisourceBergen Drug Corporation (ABDC) and AmerisourceBergen Specialty Group (ABSG) operating segments. The company also completed several strategic acquisitions during the quarter, including Health Advocates, Inc., I.G.G. of America, Inc., and Access M.D., Inc., aimed at expanding its specialty pharmaceutical services and geographic reach. Net income from continuing operations grew by 25% to $122.2 million, translating to diluted earnings per share from continuing operations of $0.63, a significant increase from $0.47 in the prior year. The company also repurchased a substantial amount of its common stock and increased its quarterly dividend, reflecting confidence in its financial position and commitment to shareholder returns. Management anticipates moderating revenue growth in fiscal year 2007 compared to the reported quarter, due to contract non-renewals and anniversaries of prior acquisitions.

Key Highlights

  • 1Total revenue increased by 16% to $16.7 billion for the quarter ended December 31, 2006, driven by strong performance in the Pharmaceutical Distribution segment.
  • 2Net income from continuing operations rose by 25% to $122.2 million, with diluted EPS from continuing operations improving to $0.63 from $0.47 year-over-year.
  • 3The company completed three strategic acquisitions in October and November 2006, bolstering its specialty pharmaceutical services and expanding into Canada.
  • 4Operating income saw a significant increase of 25% to $208.9 million, reflecting improved gross profit and operating expense margins.
  • 5AmerisourceBergen repurchased $325.6 million of its common stock during the quarter and announced a $750 million share repurchase program.
  • 6The company declared a quarterly dividend of $0.05 per share, a 100% increase from the previous quarter's dividend.
  • 7Management projects a moderation in revenue growth for fiscal year 2007, with an expected range of 9% to 11%.

Frequently Asked Questions

Revenue growth was primarily driven by the Pharmaceutical Distribution segment, specifically the AmerisourceBergen Drug Corporation (ABDC) and AmerisourceBergen Specialty Group (ABSG) operating segments. Acquisitions completed in October and November 2006 also contributed to the increase.

Profitability improved significantly. Net income from continuing operations increased by 25% to $122.2 million, and diluted earnings per share from continuing operations grew to $0.63 from $0.47 in the same quarter of the prior year. Operating income also increased by 25% to $208.9 million.

Management anticipates a moderation in revenue growth for fiscal year 2007, projecting a range of 9% to 11%. This is attributed to factors such as the non-renewal of a contract with a large customer and the anniversarying of prior-year acquisitions.

The company completed three acquisitions: Health Advocates, Inc. (now PMSI MSA Services, Inc.) for Medicare set-aside cost containment services, I.G.G. of America, Inc. (IgG) for specialty pharmacy and infusion services, and Access M.D., Inc. (AMD), a Canadian company providing specialty pharmaceutical services.