Pharmaceutical services provider AmerisourceBergen Corp. (ABC) Tuesday reported higher profit for the first quarter, helped by double-digit growth in revenues on strong generic pharmaceuticals sales as well as improved margins. Encouraged by the "exceptional performance", the company lifted its earnings per share forecast for fiscal 2010.
The Valley Forge, Pennsylvania-based company reported first-quarter net income of $151.31 million or $0.52 per share, compared to $111.06 million or $0.36 per share in the prior year.
Income from continuing operations increased to $151.31 million or $0.52 per share from $112.53 million or $0.36 per share reported last year. In the previous year quarter, the company recorded $1.47 million loss from discontinued operations.
On average, 18 analysts polled by Thomson Reuters expected the company to earn $0.46 per share for the quarter. Analysts' estimates typically exclude special items. Last month, the company had said that it expects first-quarter earnings to exceed analysts' then consensus estimate of $0.43 per share.
For the previous quarter, the company's net income was $130.15 million or $0.44 per share.
Revenue for the quarter increased 11.5% to $19.34 billion from last year's $17.34 billion. Wall Street had a consensus quarterly revenue estimate of $19.16 billion. Total revenue for the previous quarter was $18.72 billion.
Revenue from AmerisourceBergen Drug Corp. increased 12.9% during the quarter, while AmerisourceBergen Specialty Group revenue was up 7.7%.
Gross profit in the just concluded quarter increased 15% to $563.4 million, due primarily to increased revenue and the impact of recent generic pharmaceutical launches, especially in the company's Specialty Group. Gross margin increased 8 basis points to 2.91% in the latest quarter.
Operating income for the quarter increased to $262.38 million from $197.88 million reported last year. Operating margin improved 22 basis points from last year to 1.36% in the latest quarter.
David Yost, AmerisourceBergen's President and Chief Executive Officer, said, ''In the December quarter, we delivered exceptional performance across all our businesses, reflecting strong revenue growth, successful generic drug launches, and continued expense and working capital discipline. Revenue in the quarter was up 11.5%, with approximately half of the growth coming from new business we acquired last year.''
Average shares outstanding for the first quarter of fiscal year 2010 were 291.3 million, down nearly 19 million from the previous year, due primarily to share repurchases, net of option exercises.
Looking ahead, the company raised its forecast for 2010 earnings to a range of $1.89 to $1.98 per share from its earlier range of $1.82 to $1.92 per share. For 2009, earnings per share from continuing operations was $1.69.
Wall Street expects the company to report 2010 earnings of $1.87-$2.10 per share with a consensus of $1.94 per share.
The company now sees revenue growth of 7%-8% and operating margin expansion in the low to mid single digit basis point range.
AmerisourceBergen continues to expect free cash flow in the range of $500 million to $575 million, including capital expenditures in the $140 million range and repurchase of about $350 million of its common shares in fiscal 2010.
Among others in the industry, McKesson Corporation (MCK) is scheduled to report third-quarter results after the close of market today. Analysts expect earnings of $1.19 per share on revenues of $27.67 billion for the quarter.
ABC closed Monday's regular trade at $27.11, up from the previous close of $26.66, on 5.29 million shares.
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