10-QPeriod: Q2 FY2009

Cencora, Inc. Quarterly Report for Q2 Ended Mar 31, 2009

Filed May 8, 2009For Securities:COR

Summary

AmerisourceBergen Corporation (COR) reported its first quarter results for fiscal year 2009, ending March 31, 2009. Total revenue for the quarter was $17.31 billion, a slight decrease of 2.5% year-over-year. This decline was primarily attributed to the loss of a significant contract with a national retail drug chain and fewer business days in the quarter. Despite the revenue dip, gross profit increased by 2.8% to $552.5 million, driven by strong performance in generic programs and increased contributions from fee-for-service agreements. Operating income also saw a healthy increase of 5.6% to $248.3 million. Net income for the quarter was $143.4 million, resulting in diluted earnings per share of $0.94. The company continued its share repurchase program, demonstrating a commitment to returning capital to shareholders. Management highlighted ongoing efforts in business transformation and cost efficiency. While acknowledging broader economic uncertainties, the company projects continued revenue growth for fiscal year 2009, supported by the specialty group and a gradual recovery in the distribution segment.

Financial Highlights

28 data points
Beta

Revenue

$17.31B

3.2% Gross Margin

Net Income

$143.39M

0.8% Net Margin

EPS (Diluted)

$0.47

Cash & Equivalents

$655.33M

Free Cash Flow

$310.54M

Financial Statements
Beta
Revenue$17.31B
Cost of Revenue$16.76B
Gross Profit$552.47M
SG&A Expenses$279.21M
Operating Income$248.27M
Net Income$143.39M
EPS (Basic)$0.47
EPS (Diluted)$0.47
Shares Outstanding (Basic)302.45M
Shares Outstanding (Diluted)304.58M

Key Highlights

  • 1Total revenue for the quarter ended March 31, 2009, was $17.31 billion, a 2.5% decrease compared to the prior year quarter, largely due to a lost contract with a national retail drug chain.
  • 2Gross profit increased by 2.8% to $552.5 million, with gross profit as a percentage of total revenue improving to 3.19% from 3.03% in the prior year, driven by strong generic programs and fee-for-service agreements.
  • 3Operating income rose by 5.6% to $248.3 million, reflecting improved gross profit margins and relatively stable operating expenses.
  • 4Net income was $143.4 million, or $0.94 per diluted share, an increase from $0.82 per diluted share in the prior year quarter.
  • 5The company continued its share repurchase program, buying back shares for $179.9 million during the first six months of the fiscal year, indicating a focus on shareholder returns.
  • 6The company projects total revenue growth between 1% and 3% for fiscal year 2009, with expected growth in the specialty group (5-7%) and a more modest increase in the distribution segment (0-2%).
  • 7Significant legal matters, including the New York Attorney General subpoena and the Bergen Brunswig matter, are ongoing but management does not believe they will have a material adverse effect on the company's financial condition.

Frequently Asked Questions

Total revenue decreased by 2.5% to $17.31 billion. This was primarily due to the loss of business with a national retail drug chain customer (effective July 1, 2008) and the impact of having one less business day in the quarter compared to the prior year. Excluding these factors, total revenue would have increased by approximately 3%.

Despite a revenue decrease, gross profit increased by 2.8% to $552.5 million. This improvement was driven by the strong performance and profitability of the company's generic programs, increased contributions from fee-for-service agreements, and growth in the Specialty Group (ABSG). Operating expenses remained relatively flat, leading to a 5.6% increase in operating income.

AmerisourceBergen expects total revenue growth between 1% and 3% for fiscal year 2009. This outlook is supported by expected growth in its Specialty Group (5% to 7%) and a more moderate growth rate in its Drug Corporation (ABDC) segment (0% to 2%). The company anticipates improved revenue growth in the second half of fiscal 2009 due to anniversarying the lost national retail drug chain business and the addition of new customers.

The company continues to actively repurchase its common stock. During the first six months of fiscal 2009, it repurchased approximately $179.9 million worth of shares. Additionally, the company increased its quarterly dividend by 33% in November 2008, demonstrating a commitment to shareholder returns.