AmerisourceBergen Reports Fiscal 2022 Third Quarter Results

Revenues of $60.1 billion for the Third Quarter, a 12.5 Percent Increase Year-Over-Year
Third Quarter GAAP Diluted EPS of $1.92 and Adjusted Diluted EPS of $2.62
Adjusted Diluted EPS Guidance Range Raised to $10.90 to $11.10 for Fiscal 2022

CONSHOHOCKEN, Pa.--(BUSINESS WIRE)--AmerisourceBergen Corporation (NYSE: ABC) today reported that in its fiscal year 2022 third quarter ended June 30, 2022, revenue increased 12.5 percent year-over-year to $60.1 billion. On the basis of U.S. generally accepted accounting principles (GAAP), diluted earnings per share (EPS) was $1.92 for the June quarter of fiscal 2022 compared to $1.40 in the prior year quarter. Adjusted diluted EPS, which is a non-GAAP measure that excludes items described below, increased 21.3 percent to $2.62 in the fiscal third quarter from $2.16 in the prior year quarter.

AmerisourceBergen is updating its outlook for fiscal year 2022. The Company does not provide forward-looking guidance on a GAAP basis, as discussed below in Fiscal Year 2022 Expectations. Adjusted diluted EPS guidance has been raised from the previous range of $10.80 to $11.05 to a range of $10.90 to $11.10.

"AmerisourceBergen delivered another quarter of strong results, and we have raised our full year outlook, driven by our team members' continued strong execution, our differentiated solutions, and the resilience of our businesses," said Steven H. Collis, Chairman, President & Chief Executive Officer of AmerisourceBergen.

"As a global healthcare solutions leader, driven by our 42,000 team members, we continue to deliver on our strategic imperatives and further strengthen our value proposition to our upstream and downstream partners," Mr. Collis continued. "We remain guided by our purpose of being united in our responsibility to create healthier futures - and inspired by the importance of our role at the core of the global pharmaceutical supply chain, supporting pharmaceutical innovation and facilitating access to critical medications around the world."

Third Quarter Fiscal Year 2022 Summary Results

Below, AmerisourceBergen presents descriptive summaries of the Company’s GAAP and adjusted (non-GAAP) quarterly 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.

Third Quarter GAAP Results

• Revenue: In the third quarter of fiscal 2022, revenue was $60.1 billion, up 12.5 percent compared to the same quarter in the previous fiscal year, reflecting a 120.3 percent increase in revenue within International Healthcare Solutions, which was primarily driven by the June 2021 acquisition of Alliance Healthcare, and a 6.0 percent increase in U.S. Healthcare Solutions revenue.

• Gross Profit: Gross profit in the third quarter of fiscal 2022 was $2.0 billion, a 6.7 percent increase compared to the same period in the previous fiscal year primarily due to an increase in gross profit in International Healthcare Solutions, which was largely driven by the June 2021 acquisition of Alliance Healthcare, and an increase in gross profit in U.S. Healthcare Solutions. The increase in gross profit was partially offset by a decrease in gains related to antitrust litigation settlements, a LIFO expense in the current year period versus a LIFO credit in the previous fiscal year period, and the Turkey foreign exchange remeasurement expense due to its economy now being considered highly inflationary in the current year quarter. Gross profit as a percentage of revenue was 3.36 percent, a decrease of 18 basis points from the prior year quarter.

• Operating Expenses: In the third quarter of fiscal 2022, operating expenses were $1.5 billion, a 20.6 percent increase compared to the same period in the previous fiscal year, primarily as a result of increases in distribution, selling, and administrative expenses and depreciation and amortization expense compared to the prior year quarter, largely due to the June 2021 acquisition of Alliance Healthcare, and a goodwill impairment charge related to Profarma in the current year quarter. The increase in operating expenses was partially offset by a reduction of opioid legal settlement accruals as the prior year quarter included a $124.3 million expense accrual.

• Operating Income: In the third quarter of fiscal 2022, operating income was $487.3 million, a 21.5 percent decrease compared to the same period in the previous fiscal year due to the increase in operating expenses and partially offset by higher gross profit. Operating income as a percentage of revenue was 0.81 percent in the third quarter of fiscal 2022, a decrease of 35 basis points when compared to the prior year quarter.

• Interest Expense, Net: In the third quarter of fiscal 2022, net interest expense of $52.9 million was up 3.0 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 23.7 percent for the third quarter of fiscal 2022. This compares to 48.5 percent in the prior year quarter, which was negatively impacted by tax reform in the United Kingdom.

• Diluted Earnings Per Share: Diluted earnings per share was $1.92 in the third quarter of fiscal 2022, a 37.1 percent increase compared to $1.40 in the previous fiscal year’s third quarter. The increase was primarily due to the lower effective tax rate, offset in part by the decline in operating income.

• Diluted Shares Outstanding: Diluted weighted average shares outstanding for the third quarter of fiscal 2022 were 211.7 million, an increase of 2.8 million shares, or 1.4 percent versus the prior fiscal year third quarter resulting from stock option exercises, restricted stock vesting, and the June 2021 issuance of 2 million shares of the Company's common stock to Walgreens Boots Alliance, Inc. ("WBA") in connection with the acquisition of Alliance Healthcare, partially offset by share repurchases.

Third Quarter Adjusted (non-GAAP) Results

• Revenue: No adjustments were made to the GAAP presentation of revenue. In the third quarter of fiscal 2022, revenue was $60.1 billion, up 12.5 percent compared to the same quarter in the previous fiscal year, reflecting a 120.3 percent increase in revenue within International Healthcare Solutions, which was primarily driven by the June 2021 acquisition of Alliance Healthcare, and a 6.0 percent increase in U.S. Healthcare Solutions revenue.

• Adjusted Gross Profit: Adjusted gross profit in the third quarter of fiscal 2022 was $2.1 billion, a 27.0 percent increase compared to the same period in the previous fiscal year due to increases in gross profit in International Healthcare Solutions, which was primarily driven by the June 2021 acquisition of Alliance Healthcare, and U.S. Healthcare Solutions. Adjusted gross profit as a percentage of revenue was 3.44 percent in the fiscal 2022 third quarter, an increase of 39 basis points when compared to the prior year quarter primarily driven by the June 2021 acquisition of Alliance Healthcare and fees earned from the distribution of government-owned COVID-19 treatments.

• Adjusted Operating Expenses: In the third quarter of fiscal 2022, adjusted operating expenses were $1.3 billion, a 31.5 percent increase, primarily as a result of increases in distribution, selling, and administrative expenses and depreciation expense compared to the prior year quarter primarily due to the June 2021 acquisition of Alliance Healthcare.

• Adjusted Operating Income: In the third quarter of fiscal 2022, adjusted operating income was $756.2 million, a 19.9 percent increase compared to the same period in the prior fiscal year. The increase was due to a 74.8 percent increase in operating income within International Healthcare Solutions and a 9.5 percent increase in U.S. Healthcare Solutions' operating income. Adjusted operating income as a percentage of revenue was 1.26 percent in the fiscal 2022 third quarter, an increase of 8 basis points when compared to the prior year quarter primarily due to the June 2021 Alliance Healthcare acquisition and fees earned from the distribution of government-owned COVID-19 treatments.

• Interest Expense, Net: No adjustments were made to the GAAP presentation of net interest expense. In the third quarter of fiscal 2022, net interest expense of $52.9 million was up 3.0 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 20.2 percent for the third quarter of fiscal 2022 compared to 21.0 percent in the prior year quarter.

• Adjusted Diluted Earnings Per Share: Adjusted diluted earnings per share was $2.62 in the third quarter of fiscal 2022, a 21.3 percent increase compared to $2.16 in the previous fiscal year’s third quarter.

• Diluted Shares Outstanding: No adjustments were made to the GAAP presentation of diluted shares outstanding. Diluted weighted average shares outstanding for the third quarter of fiscal 2022 were 211.7 million, an increase of 2.8 million shares, or 1.4 percent versus the prior fiscal year third quarter resulting from stock option exercises, restricted stock vesting, and the June 2021 issuance of 2 million shares of the Company's common stock to WBA in connection with the acquisition of Alliance Healthcare, partially offset by share repurchases.

Segment Discussion

The Company is organized geographically based upon the products and services it provides to its customers. In the first quarter of fiscal 2022, the Company re-aligned its reporting structure under two reportable segments: U.S. Healthcare Solutions and International Healthcare Solutions. U.S. Healthcare Solutions consists of the legacy Pharmaceutical Distribution Services reportable segment (excluding Profarma), MWI Animal Health, Xcenda, Lash Group, and ICS 3PL. International Healthcare Solutions consists of Alliance Healthcare, World Courier, Innomar, Profarma, and Profarma Specialty (until it was divested in June 2022). The Company’s previously reported segment results have been revised to conform to its re-aligned reporting structure.

U.S. Healthcare Solutions

U.S. Healthcare Solutions revenue was $53.4 billion in the third quarter of fiscal 2022, an increase of 6.0 percent compared to the same quarter in the prior fiscal year primarily due to overall market growth and increased sales to specialty physician practices, and partially offset by a decline in sales of commercial COVID-19 treatments. Segment operating income of $579.9 million in the third quarter of fiscal 2022 was up 9.5 percent compared to the same period in the previous fiscal year as a result of an increase in gross profit, including fees earned from the distribution of government-owned COVID-19 treatments and gross profit on sales to specialty physician practices.

International Healthcare Solutions

Revenue in International Healthcare Solutions was $6.7 billion in the third quarter of fiscal 2022, an increase from the previous fiscal year’s third quarter of 120.3 percent, primarily due to the June 2021 acquisition of Alliance Healthcare. Segment operating income in the third quarter of fiscal 2022 was $176.3 million, an increase of 74.8 percent, primarily due to the June 2021 acquisition of Alliance Healthcare and strong operating performance at World Courier.

Recent Company Highlights & Milestones

• On June 1, 2022, AmerisourceBergen hosted an investor day event during which management discussed the company's purpose, strategic imperatives, ESG commitments and long-term financial growth outlook.
• Good Neighbor Pharmacy, AmerisourceBergen’s national independent pharmacy network, announced that it was ranked “Highest in Customer Satisfaction with Chain Drug Store Pharmacies” in the J.D. Power 2022 U.S. Pharmacy Study. This marks the eleventh time that Good Neighbor Pharmacy has earned the achievement in the last 13 years and the network's sixth consecutive win.
• Good Neighbor Pharmacy celebrated its fortieth anniversary and hosted ThoughtSpot, its annual conference and tradeshow. Nearly 5,000 independent pharmacy owners and advocates participated in the event, which included continuing education sessions and certification programs, networking events and business resources.
• AmerisourceBergen launched Clinical Trial Navigator, a solution suite that assists with biopharmaceutical clinical trial recruitment within community-based specialty practices. Clinical Trial Navigator unites oncology practices and their patients with trials through digital selection, patient identification and enrollment tools.
• Americares, in partnership with the Healthcare Distribution Alliance, presented its annual Power of Partnership Award to AmerisourceBergen in recognition of the Company's commitment to increasing access to healthcare around the world. AmerisourceBergen and the AmerisourceBergen Foundation have supported Americares since 1997, providing both product donations and financial contributions to support the organization’s ongoing health programs in the U.S. and its emergency response and recovery efforts worldwide.
• The AmerisourceBergen Foundation committed funds to the United Nations Foundation's Shot@Life campaign to support vaccine equity, protecting the world's most vulnerable children from devastating diseases. The funding will be used towards vaccine inventions in marginalized populations and will specifically support vaccine delivery, transportation logistics and community engagement.
• AmerisourceBergen published its first Diversity, Equity and Inclusion Summary Report, which captures progress and provides transparency on core Diversity, Equity and Inclusion measurements for workforce diversity. The report aligns with the Company's Diversity, Equity and Inclusion strategy focused on people, culture, progress and community.

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 or 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 is now updating its fiscal year 2022 financial guidance to reflect the stronger than expected performance of several of its businesses and a lower average diluted share count. The company's previously communicated expectations for COVID contributions remain generally unchanged, with the June quarter contribution being in line with expectations. The Company now expects:

• Adjusted Diluted Earnings Per Share to be in the range of $10.90 to $11.10, raised from the previous range of $10.80 to $11.05.

Additional expectations now include:

• U.S. Healthcare Solutions operating income to be in the range of $2.44 billion to $2.48 billion, representing growth of 8% to 10%, raising the lower end of the previous range of $2.42 billion to $2.48 billion;
• Weighted average diluted shares to be in the range of 211 million to 211.5 million shares for the fiscal year, lowered from the previous range of approximately 212 million shares;
• Adjusted free cash flow to be in the range of $2.3 billion to $2.5 billion, raising the lower end of the previous range of $2.0 billion to $2.5 billion.

All other previously communicated aspects of the Company's fiscal year 2022 financial guidance and assumptions remain the same.

Dividend Declaration

The Company's Board of Directors declared a quarterly cash dividend of $0.46 per common share, payable August 29, 2022, to stockholders of record at the close of business on August 15, 2022.

Opioid Litigation

On June 27, 2022, AmerisourceBergen and the two other national pharmaceutical distributors entered into an agreement with the State of Oklahoma and participating subdivisions to resolve opioid-related claims, consistent with Oklahoma's allocations under the comprehensive settlement agreement to settle the vast majority of opioid lawsuits filed by state and local governmental entities. The agreement includes certain contingencies, including attaining the required rate of subdivision participation by September 23, 2022. The Oklahoma settlement agreement brings the number of States with whom the Company has recently settled opioid-related claims to 48 of 49 eligible states.

On July 31, 2022, the Company and the two other distributors reached an agreement to pay up to $400 million in a settlement with West Virginia subdivisions (excluding Cabell County and City of Huntington) to resolve opioid-related claims. The Company’s 31.0% share of the $400 million settlement amount is a component of its overall $6.4 billion total liability accrual. The agreement is subject to certain contingencies, including the rate of subdivision participation.

Conference Call & Slide Presentation

The Company will host a conference call to discuss the results at 8:30 a.m. ET on August 3, 2022. 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) 200-6205. From outside the United States and Canada, dial +1 (929) 526-1599. The access code for the call will be 620948. 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 one hour after the completion of the call and will remain available for one year. The telephone replay will also be available approximately one hour after the completion of the call and will remain available for seven days. To access the telephone replay from within the U.S. and Canada, dial (866) 813-9403. From outside the United States and Canada, dial +44 (204) 525-0658. The access code for the replay is 958171.

Upcoming Investor Events

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

• Baird Healthcare Conference, September 13, 2022; and
• Morgan Stanley Healthcare Conference, September 14, 2022.

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 #10 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, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (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: the effect of and uncertainties related to the ongoing COVID-19 pandemic (including any government responses thereto) and any continued recovery from the impact of the COVID-19 pandemic; our ability to achieve and maintain profitability in the future; our ability to respond to general economic conditions, including elevated levels of inflation; our ability to manage our growth effectively and our expectations regarding the development and expansion of our business; the impact on our business of the regulatory environment and complexities with compliance; 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 and declining reimbursement rates for pharmaceuticals; increasing governmental regulations regarding the pharmaceutical supply channel; 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 and state governmental entities and other parties (including third-party payors, hospitals, hospital groups and individuals) of alleged violations of laws and regulations regarding controlled substances, 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; the outcome of any legal or governmental proceedings that may be instituted against us, including 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 Walgreens Boots Alliance, Inc.

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