AmerisourceBergen Reports Fiscal 2021 Fourth Quarter and Year End Results

Revenue of $58.9 Billion for the Fourth Quarter, a 19.6 Percent Year-Over-Year Increase
Fourth Quarter GAAP Diluted EPS of $2.08 and Adjusted Diluted EPS of $2.39
Revenue of $214.0 Billion for Fiscal Year 2021, a 12.7 Percent Year-Over-Year Increase
Fiscal Year 2021 GAAP Diluted EPS of $7.39 and Adjusted Diluted EPS of $9.26

CONSHOHOCKEN, Pa.--(BUSINESS WIRE)--AmerisourceBergen Corporation (NYSE:ABC) today reported that in its fiscal year 2021 fourth quarter ended September 30, 2021, revenue increased 19.6 percent to $58.9 billion. Revenue increased 12.7 percent to $214.0 billion for the fiscal year. On the basis of U.S. generally accepted accounting principles (GAAP), diluted earnings per share (EPS) was $2.08 for the September quarter of fiscal 2021, compared to $(23.74) in the prior year quarter. Adjusted diluted EPS, which is a non-GAAP measure that excludes items described below, increased 26.5 percent to $2.39 in the fiscal fourth quarter. For fiscal year 2021, adjusted diluted EPS increased 17.2 percent to $9.26.

“AmerisourceBergen delivered strong growth in our 2021 fiscal year and took key steps to further enhance our strategic positioning. The investments we have made in our business and team members support AmerisourceBergen's ability to help advance healthcare through our differentiated capabilities for manufacturers globally and solutions for healthcare providers locally," said Steven H. Collis, Chairman, President & Chief Executive Officer of AmerisourceBergen.

"I am proud of how we have lived our purpose with our customers, partners and team members throughout these challenging times for our communities. As we look to capitalize on a year of significant advancement, we are well positioned by our strong customer base, leadership in specialty, commitment to innovation and execution, and focus on corporate stewardship," Mr. Collis continued. "Our long-term, sustainable growth is powered by our talent and culture, and we are guided by our purpose of being united in our responsibility to create healthier futures."

Fourth Quarter Fiscal Year 2021 Summary Results

Below, AmerisourceBergen presents descriptive summaries of the Company’s GAAP and adjusted (non-GAAP) quarterly and fiscal year results. In the tables that follow, GAAP results and GAAP to non-GAAP reconciliations are presented. For more information related to non-GAAP financial measures, including adjustments made in the periods presented, please refer to the Supplemental Information Regarding non-GAAP Financial Measures following the tables.

Fourth Quarter GAAP Results

• Revenue: In the fourth quarter of fiscal 2021, revenue was $58.9 billion, up 19.6 percent compared to the same quarter in the previous fiscal year, reflecting an 8.4 percent increase in Pharmaceutical Distribution Services revenue and a 286.8 percent increase in revenue within Other primarily driven by the June 2021 acquisition of Alliance Healthcare.

• Gross Profit: Gross profit in the fiscal 2021 fourth quarter was $2.1 billion, a 53.6 percent increase compared to the same period in the previous fiscal year. Gross profit was favorably impacted by increases in gross profit in Other, which was primarily driven by the June 2021 Alliance Healthcare acquisition, and Pharmaceutical Distribution Services. Gross profit as a percentage of revenue was 3.51 percent, an increase of 77 basis points from the prior year quarter primarily driven by the June 2021 acquisition of Alliance Healthcare, an increase in sales of specialty products in Pharmaceutical Distribution Services, and growth in some of the Company's higher margin businesses.

• Operating Expenses: In the fourth quarter of fiscal 2021, operating expenses were $1.5 billion compared to $7.5 billion in the same period last fiscal year. The decrease in operating expenses was primarily due to the $6.6 billion legal expense accrual recorded in the prior year quarter and was partially offset by the operating expenses of Alliance Healthcare. Operating expenses as a percentage of revenue in the fiscal 2021 fourth quarter were 2.56 percent, compared to 15.15 percent for the same period in the previous fiscal year primarily due to the items mentioned above.

• Operating Income (Loss): In the fiscal 2021 fourth quarter, operating income (loss) was $0.6 billion versus $(6.1) billion in the prior year quarter. Operating income as a percentage of revenue was 0.95 percent in the fourth quarter of fiscal 2021, compared to (12.41) percent for the same period in the previous fiscal year as a result of the previously mentioned legal expense accrual.

• Interest Expense, Net: In the fiscal 2021 fourth quarter, net interest expense of $54.6 million was up 57.3 percent versus the prior year quarter primarily due to an increase in debt as a result of the June 2021 acquisition of Alliance Healthcare.

• Effective Tax Rate: The effective tax rate was 21.2 percent for the fourth quarter of fiscal 2021. This compares to 21.1 percent in the prior year quarter.

• Diluted Earnings Per Share: Diluted earnings per share was $2.08 in the fourth quarter of fiscal 2021 compared to $(23.74) in the previous fiscal year fourth quarter, which was negatively impacted by the legal expense accrual.

• Diluted Shares Outstanding: Diluted weighted average shares outstanding for the fourth quarter of fiscal 2021 were 210.8 million, a 3.3 percent increase versus the prior fiscal year fourth quarter resulting from the issuance of 2 million Company shares to Walgreens for the acquisition of Alliance Healthcare, stock option exercises, and restricted stock vesting.

Fourth Quarter Adjusted (non-GAAP) Results

• Revenue: No adjustments were made to the GAAP presentation of revenue. In the fourth quarter of fiscal 2021, revenue was $58.9 billion, up 19.6 percent compared to the same quarter in the previous fiscal year, reflecting an 8.4 percent increase in Pharmaceutical Distribution Services revenue and a 286.8 percent increase in revenue within Other primarily driven by the acquisition of Alliance Healthcare.

• Adjusted Gross Profit: Adjusted gross profit in the fiscal 2021 fourth quarter was $2.0 billion, which was up 51.3 percent compared to the same period in the previous fiscal year due to increases in gross profit in Other, which was primarily driven by the June 2021 Alliance Healthcare acquisition, and Pharmaceutical Distribution Services. Adjusted gross profit as a percentage of revenue was 3.40 percent in the fiscal 2021 fourth quarter, an increase of 71 basis points when compared to the prior year quarter primarily driven by the Alliance Healthcare acquisition, an increase in sales of specialty products in Pharmaceutical Distribution Services and growth in some of the Company's higher margin businesses.

• Adjusted Operating Expenses: In the fourth quarter of fiscal 2021, adjusted operating expenses were $1.3 billion, an increase of 64.9 percent compared to the same period in the previous fiscal year primarily due to the operating expenses of Alliance Healthcare and an increase in payroll-related operating costs to support the Company's current and future revenue growth. Adjusted operating expenses as a percentage of revenue in the fiscal 2021 fourth quarter was 2.23 percent, an increase of 61 basis points when compared to the prior year quarter primarily due to the acquisition of Alliance Healthcare.

• Adjusted Operating Income: In the fiscal 2021 fourth quarter, adjusted operating income of $694.1 million increased 31.0 percent from the prior year quarter due to a 113.6 percent increase in operating income within Other and a 10.9 percent increase in Pharmaceutical Distribution Services' operating income. Adjusted operating income as a percentage of revenue was 1.18 percent in the fiscal 2021 fourth quarter, an increase of 10 basis points when compared to the prior year quarter primarily due to the June 2021 Alliance Healthcare acquisition.

• Interest Expense, Net: No adjustments were made to the GAAP presentation of net interest expense. In the fiscal 2021 fourth quarter, net interest expense of $54.6 million was up 57.3 percent versus the prior year quarter primarily due to an increase in debt as a result of the June 2021 acquisition of Alliance Healthcare.

• Adjusted Effective Tax Rate: The adjusted effective tax rate was 20.3 percent for the fourth quarter of fiscal 2021 compared to 21.7 percent in the prior year quarter as a result of the Company's change in mix of domestic and international income in the respective quarters.

• Adjusted Diluted Earnings Per Share: Adjusted diluted earnings per share was up 26.5 percent to $2.39 in the fourth quarter of fiscal 2021 compared to $1.89 in the previous fiscal year fourth quarter, driven by the increase in adjusted operating income and partially offset by higher net interest expense and a higher diluted share count.

• Adjusted Diluted Shares Outstanding: Diluted weighted average shares outstanding for the fourth quarter of fiscal 2021 were 210.8 million, a 2.2 percent increase versus the prior fiscal year fourth quarter resulting from the issuance of 2 million Company shares to Walgreens for the acquisition of Alliance Healthcare, stock option exercises, and restricted stock vesting.

Segment Discussion

The Company's operations are comprised of the Pharmaceutical Distribution Services reportable segment and other operating segments that are not significant enough to require separate reportable segment disclosure and, therefore, have been included in Other for the purpose of the reportable segment presentation. Other consists of operating segments that focus on global commercialization services, animal health (MWI Animal Health or "MWI"), and international pharmaceutical wholesale and related service operations (Alliance Healthcare). The operating segments that focus on global commercialization services include AmerisourceBergen Consulting Services ("ABCS") and World Courier.

Pharmaceutical Distribution Services Segment

Pharmaceutical Distribution Services revenue was $51.2 billion, an increase of 8.4 percent compared to the same quarter in the prior fiscal year primarily due to increased sales of specialty products, including COVID-19 treatments, and overall market growth. Segment operating income of $472.1 million in the fourth quarter of fiscal 2021 was up 10.9 percent compared to the same period in the previous fiscal year as a result of strong performance across our distribution businesses, including increased sales of specialty products.

Other

Revenue in Other was $7.7 billion in the fourth quarter of fiscal 2021, an increase of 286.8 percent compared to the same period in the prior fiscal year primarily due to the acquisition of Alliance Healthcare and growth in the other operating segments: MWI, ABCS, and World Courier. Operating income in Other increased 113.6 percent to $223.3 million in the fourth quarter of fiscal 2021 due to the acquisition of Alliance Healthcare.

Fiscal Year 2021 Summary Results

Summary Fiscal Year GAAP Results

In fiscal year 2021, GAAP diluted EPS was $7.39 compared to a loss of $16.65 in the prior year. Revenue increased 12.7 percent from last fiscal year to $214.0 billion. Gross profit increased 33.7 percent to $6.9 billion primarily due to increases in gross profit within Other, including the impact of the June 2021 Alliance Healthcare acquisition, a $203.0 million LIFO credit in the current fiscal year, a $159.7 million increase in antitrust litigation settlements over the prior fiscal year and Pharmaceutical Distribution Services. Operating expenses decreased 55.6 percent primarily due to the legal expense accrual recorded in the prior fiscal year, partially offset by an increase in expenses as a result of the June 2021 acquisition of Alliance Healthcare. Operating income increased 145.8 percent due to lower operating expenses and higher gross profit. Diluted weighted average shares outstanding in fiscal 2021 were 208.5 million, up 1.8 percent from the prior fiscal year.

Summary Fiscal Year Adjusted (non-GAAP) Results

In fiscal year 2021, adjusted diluted EPS was $9.26, an increase of 17.2 percent over the prior fiscal year due to an increase in operating income, and was partially offset by higher interest expense and a higher diluted share count. Revenue increased 12.7 percent from last fiscal year to $214.0 billion. Adjusted gross profit increased by $1.4 billion, or 25.9 percent, from the prior fiscal year to $6.6 billion due to the increases in gross profit within Other, primarily due to the impact of the June 2021 Alliance Healthcare acquisition, and Pharmaceutical Distribution Services. Adjusted operating expenses increased 30.2 percent to $3.9 billion primarily due to the June 2021 acquisition of Alliance Healthcare. Adjusted operating income increased 20.1 percent to $2.6 billion due to the increase in gross profit associated with the June 2021 acquisition of Alliance Healthcare and increased sales of specialty products, including COVID-19 therapies, and was partially offset by higher operating expenses. Adjusted operating income margin increased 8 basis points from 1.16 percent to 1.24 percent. Adjusted diluted weighted average shares outstanding in fiscal 2021 was 208.5 million, up 0.9 percent from the prior fiscal year.

Recent Company Highlights & Milestones

• AmerisourceBergen opened its new global headquarters in Conshohocken, Pennsylvania. As a part of AmerisourceBergen’s efforts to promote sustainability, the company is actively pursuing a Leadership in Energy and Environmental Design (LEED) Silver certification for the headquarters. At the building's ribbon cutting ceremony, AmerisourceBergen leadership also announced the company had been recognized as a Great Place to Work® for a third year.
• AmerisourceBergen furthered its diversity, equity, and inclusion efforts with the rollout of new Employee Resource Groups and diverse candidate slate objectives. AmerisourceBergen also unveiled its leadership competency model that will strengthen efforts to support and develop talent. The competencies focus on key areas including diversity, equity, and inclusion, collaboration, innovation and executional excellence, and purpose.
• AmerisourceBergen hosted its second annual ThinkLive Trade virtual event, a three-day online summit geared toward brand, specialty, generic and consumer-product manufacturers. The event centered on challenges and considerations that manufacturers face when bringing products to market, and how AmerisourceBergen works with its partners to drive supply chain sophistication, maximize patient access, and move health forward.
• The AmerisourceBergen Foundation hosted more than 50 nonprofit partners and peers at its third annual Grantee and Nonprofit Partner Conference to share best practices, facilitate collaboration, and foster long-term relationships that create sustained change. The virtual event focused on developing strategies to address urgent needs in response to the COVID-19 pandemic as well as longstanding issues, including health equity and global access to healthcare.

Dividend Declaration

In November 2021, the Company's Board of Directors declared a quarterly dividend of $0.46 per common share, an increase in its quarterly dividend rate from $0.44 per common share. The quarterly dividend of $0.46 per common share will be payable November 29, 2021, to stockholders of record at the close of business on November 15, 2021.

New Reportable Segments

Recently, AmerisourceBergen undertook a strategic evaluation of its reporting structure to reflect its expanded international presence as a result of the June 2021 acquisition of Alliance Healthcare. As a result of this review, beginning in the first quarter of fiscal 2022, the Company has re-aligned its reporting structure under two reportable segments: U.S. Healthcare Solutions and International Healthcare Solutions. U.S. Healthcare Solutions will consist of the legacy Pharmaceutical Distribution Services reportable segment (excluding Profarma Distribuidora de Produtos Farmacêuticos S.A. ("Profarma")), MWI Animal Health, Xcenda, Lash Group, and ICS 3PL. International Healthcare Solutions will consist of Alliance Healthcare, World Courier, Innomar, and Profarma and Profarma Specialty. Profarma had previously been included in the Pharmaceutical Distribution Services reportable segment. Profarma Specialty had previously been reported in Other. Beginning in the first quarter of fiscal 2022, the Company will report its results under this new structure.

Fiscal Year 2022 Expectations

The Company does not provide forward-looking guidance on a GAAP basis as certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated. Please refer to the Supplemental Information Regarding Non-GAAP Financial Measures following the tables for additional information.

Fiscal Year 2022 Expectations on an Adjusted (non-GAAP) Basis

AmerisourceBergen has introduced its fiscal year 2022 financial guidance, which reflects growth in both of its new reportable segments. AmerisourceBergen does not include unidentified capital allocation opportunities into its forward-looking guidance. The Company expects:

• Revenue growth in the high-single digit to low-double digit percent range;
  • U.S. Healthcare Solutions revenue in the range of $207 to $212 billion, representing growth of 2% to 5%;
  • International Healthcare Solutions revenue of approximately $26 to $27 billion;
• Adjusted diluted earnings per share to be in the range of $10.50 to $10.80.

Additional expectations include:

• Adjusted operating income growth in the mid- to high-teens percent range;
  • U.S. Healthcare Solutions segment operating income to be in the range of $2.325 to $2.4 billion, representing growth of 3% to 6%;
  • International Healthcare solutions segment operating income to be in the range of $685 to $715 million;
• Interest expense growth to be in the mid-teens percent range;
• Adjusted effective tax rate to be approximately 21 percent to 22 percent;
• Adjusted free cash flow to be approximately $2 to $2.5 billion;
• Capital expenditures in the $500 million range; and
• Weighted average diluted shares are expected to be approximately 212 million for the fiscal year.

Conference Call & Slide Presentation

The Company will host a conference call to discuss the results at 8:30 a.m. ET on November 4, 2021. A slide presentation for investors has also been posted on the Company's website at investor.amerisourcebergen.com. Participating in the conference call will be:

• Steven H. Collis, Chairman, President & Chief Executive Officer
• James F. Cleary, Executive Vice President & Chief Financial Officer

The dial-in number for the live call will be (844) 808-6694. No access code is required. The live call will also be webcast via the Company’s website at investor.amerisourcebergen.com. Users are encouraged to log on to the webcast approximately 10 minutes in advance of the scheduled start time of the call.

Replays of the call will be made available via telephone and webcast. A replay of the webcast will be posted on investor.amerisourcebergen.com approximately two hours after the completion of the call and will remain available for 30 days. The telephone replay will also be available approximately two hours after the completion of the call and will remain available for seven days. To access the telephone replay from within the U.S., dial (877) 344-7529. From outside the U.S., dial +1 (412) 317-0088. The access code for the replay is 10160671.

Upcoming Investor Events

AmerisourceBergen management will be attending the following investor conference in the coming months:

• J.P. Morgan Healthcare Conference, January 10-13, 2022.

Please check the website for updates regarding the timing of the live presentation webcasts, if any, and for replay information.

About AmerisourceBergen

AmerisourceBergen fosters a positive impact on the health of people and communities around the world by advancing the development and delivery of pharmaceuticals and healthcare products. As a leading global healthcare company, with a foundation in pharmaceutical distribution and solutions for manufacturers, pharmacies and providers, we create unparalleled access, efficiency and reliability for human and animal health. Our 42,000 global team members power our purpose: We are united in our responsibility to create healthier futures. AmerisourceBergen is ranked #8 on the Fortune 500 with more than $200 billion in annual revenue. Learn more at investor.amerisourcebergen.com.

AmerisourceBergen's Cautionary Note Regarding Forward-Looking Statements

Certain of the statements contained in this press release are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the "Securities Exchange Act"). Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "project," "intend," "plan," "continue," "sustain," "synergy," "on track," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words, and similar expressions are intended to identify such forward-looking statements. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances and speak only as of the date hereof. These statements are not guarantees of future performance and are based on assumptions and estimates that could prove incorrect or could cause actual results to vary materially from those indicated. Among the factors that could cause actual results to differ materially from those projected, anticipated, or implied are the following: unfavorable trends in brand and generic pharmaceutical pricing, including in rate or frequency of price inflation or deflation; competition and industry consolidation of both customers and suppliers resulting in increasing pressure to reduce prices for our products and services; changes in the United States healthcare and regulatory environment, including changes that could impact prescription drug reimbursement under Medicare and Medicaid; increasing governmental regulations regarding the pharmaceutical supply channel; declining reimbursement rates for pharmaceuticals; continued federal and state government enforcement initiatives to detect and prevent suspicious orders of controlled substances and the diversion of controlled substances; continued prosecution or suit by federal, state and other governmental entities of alleged violations of laws and regulations regarding controlled substances, including due to failure to achieve a global resolution of the multi-district opioid litigation and other related state court litigation, and any related disputes, including shareholder derivative lawsuits; increased federal scrutiny and litigation, including qui tam litigation, for alleged violations of laws and regulations governing the marketing, sale, purchase and/or dispensing of pharmaceutical products or services, and associated reserves and costs; failure to comply with the Corporate Integrity Agreement; material adverse resolution of pending legal proceedings; the retention of key customer or supplier relationships under less favorable economics or the adverse resolution of any contract or other dispute with customers or suppliers; changes to customer or supplier payment terms, including as a result of the COVID-19 impact on such payment terms; the integration of the Alliance Healthcare businesses into the Company being more difficult, time consuming or costly than expected; the Company's or Alliance Healthcare's failure to achieve expected or targeted future financial and operating performance and results; the effects of disruption from the acquisition and related strategic transactions on the respective businesses of the Company and Alliance Healthcare and the fact that the acquisition and related strategic transactions may make it more difficult to establish or maintain relationships with employees, suppliers and other business partners; the acquisition of businesses, including the acquisition of the Alliance Healthcare businesses and related strategic transactions, that do not perform as expected, or that are difficult to integrate or control, or the inability to capture all of the anticipated synergies related thereto or to capture the anticipated synergies within the expected time period; risks associated with the strategic, long-term relationship between WBA and the Company, including with respect to the pharmaceutical distribution agreement and/or the global generic purchasing services arrangement; changes in tax laws or legislative initiatives that could adversely affect the Company's tax positions and/or the Company's tax liabilities or adverse resolution of challenges to the Company's tax positions; managing foreign expansion, including non-compliance with the U.

Bennett S. Murphy
Senior Vice President, Investor Relations
610-727-3693
bmurphy@amerisourcebergen.com