8-KEarnings & ResultsFinancial EventsOther Events+1

Cencora, Inc. 8-K Report, Financial Results (Jul 24, 2008)

Filed July 24, 2008For Securities:COR

Summary

AmerisourceBergen Corporation (now Cencora, Inc.) filed an 8-K on July 24, 2008, primarily to report on its financial and operational results for the fiscal quarter ended June 30, 2008, and to announce a significant business divestiture. The company provided updated guidance for its fiscal year 2008 diluted earnings per share (EPS) from continuing operations, raising the expectation to a range of $2.81 to $2.89, up from the prior range of $2.77 to $2.87. This upward revision signals improved performance expectations. Crucially, the filing details the sale of its PMSI workers' compensation business to H.I.G. Capital, LLC for approximately $40 million, with potential for an additional $10 million contingent payment. In connection with this sale, AmerisourceBergen recorded a substantial non-cash impairment charge of $222 million as of June 30, 2008. This charge primarily relates to goodwill ($199 million) and the estimated loss on the sale itself ($23 million). The PMSI business has been classified as a discontinued operation, with its results, including the impairment charge, reported accordingly for all periods presented.

Key Highlights

  • 1AmerisourceBergen raised its fiscal year 2008 diluted EPS guidance from continuing operations to a range of $2.81 - $2.89.
  • 2The company expects to be at the lower end of its raised annual EPS guidance.
  • 3AmerisourceBergen announced an increase in its operating margin expansion assumption for the pharmaceutical distribution segment.
  • 4The company is selling its PMSI workers' compensation business to H.I.G. Capital, LLC for approximately $40 million, plus a potential $10 million contingency.
  • 5A significant non-cash impairment charge of $222 million was recorded as of June 30, 2008, related to the PMSI business.
  • 6The impairment charge includes $199 million for goodwill and $23 million for the estimated loss on sale.
  • 7The PMSI workers' compensation business has been reclassified as a discontinued operation.

Frequently Asked Questions

The main financial news is AmerisourceBergen's upward revision of its fiscal year 2008 diluted earnings per share (EPS) guidance from continuing operations to $2.81-$2.89, and the announcement of a $222 million non-cash impairment charge related to the sale of its PMSI workers' compensation business.

AmerisourceBergen is selling its PMSI workers' compensation business to H.I.G. Capital, LLC. The sale is for approximately $40 million, with a potential additional $10 million contingent payment. The transaction is expected to close by the end of September 2008.

The $222 million non-cash impairment charge was recorded to reduce the carrying value of the PMSI workers' compensation business to its estimated fair value, in anticipation of its sale. This charge includes $199 million for PMSI's goodwill and $23 million for the estimated loss on the sale itself.

The PMSI workers' compensation business has been reclassified as a discontinued operation as of June 30, 2008. This means its results, including the $222 million impairment charge, are reported separately from continuing operations in the financial statements for all current and prior periods presented.