On the AmerisourceBergen Q3 Fiscal '23 Earnings Call, Bennett Murphy, Senior VP and Head of Investor Relations and Treasury, welcomed everyone and introduced Steve Collis, Chairman, President, and CEO, and Jim Cleary, Executive Vice President and CFO. Murphy also informed the participants that the call would discuss non-GAAP financial measures and that forward-looking statements would be made about the business and financial expectations. Murphy asked that each participant limit their questions to one per person in order to give everyone an opportunity to ask questions. Finally, Murphy handed the call over to Steve Collis.

AmerisourceBergen is continuing to see strong performance in fiscal 2023, with 11% revenue and adjusted EPS growth. The company is leveraging its commercial and organizational strengths to find ways to collaborate better with customers, focusing on four key areas: community providers, specialty medicine and services, global access and opportunity, and customer partnerships. They offer a range of solutions to community providers, such as marketing and contracting support, and have recently introduced an oncology support program in Europe.

AmerisourceBergen has made an investment in OneOncology to expand their support of community oncologists. This investment has enabled them to deepen their ties to community oncologists and provide enhanced value to their partners. They are also focused on specialty medicine and services to differentiate themselves to pharmaceutical manufacturer partners and advance medical care and health in their communities.

AmerisourceBergen offers global access and support for pharmaceutical manufacturers, particularly in the cell and gene space, by providing integrated logistics and patient support services. They recently announced their support for the commercialization of a gene therapy, and plan to invest in developing technologies and solutions to increase their value to partners. They are also focused on providing insights to ensure the supply chain operates efficiently.

AmerisourceBergen manages nearly $1 billion worth of orders daily across tens of thousands of products and has recently announced a partnership with ParcelShield to provide real-time packaging and tracking updates. They have also implemented the Test to Treat initiative to increase accessibility to COVID treatments, and have partnered with SteadyMD to pilot a telehealth solution for community pharmacies to expand the number of tests to treat services they can offer. These initiatives are meant to fortify customer partnerships and support their customers' growth.

AmerisourceBergen will become Cencora on August 30th 2023 and will trade as COR. This new identity will allow them to showcase their breadth and depth of solutions to customers and partners. The company is committed to creating an inclusive culture and has taken steps to ensure their team members feel empowered and welcome. They have also signed the CEO Disability Inclusion Letter and were recognized as a Best Place to Work for Disability Inclusion.

AmerisourceBergen is committed to creating an inclusive and equitable work environment and is proud to promote a workplace that supports and empowers all backgrounds, abilities, and genders. They have had a successful third quarter and have strategically invested capital and repurchased shares to return capital to shareholders. Jim Cleary will now provide a more in-depth look at the third quarter results and updated guidance for the final quarter of the fiscal 2023 year.

AmerisourceBergen reported an 11% increase in adjusted diluted EPS for the third quarter, driven by revenue and gross profit growth in both segments. Consolidated revenue was $66.9 billion, up 11.5%, and gross profit was $2.2 billion, up 8%. Operating expenses were $1.4 billion, up 7.6%, while operating income was $822 million, up 9%. The increase in revenue and gross profit was due to growth in sales of products labeled for diabetes and weight loss in the GLP-1 class, while the decline in gross profit margin was due to lower contribution from COVID treatments and volume growth in GLP-1s.

In the third quarter, net interest expense was $58 million, a 9.5% increase from the prior year quarter. The effective income tax rate was 21.5%, and the diluted share count was 204.4 million shares, a 3.5% decrease. The US Healthcare Solutions segment revenue was $59.9 billion, up 12% for the quarter with broad-based growth across customers. Adjusted free cash flow for the nine months ended June 30th was $1.5 billion, and is expected to be at least $2 billion for the fiscal year.

The US Healthcare Solutions segment operating income increased by 9.5% to $635 million due to good pharmaceutical utilization trends, an easier expense comparison, and efficiency initiatives. The International Healthcare Solutions segment revenue was $7.0 billion, up 5.6% on a reported basis or up 12.4% on a constant-currency basis due to growth in all businesses and the inclusion of PharmaLex. Operating income was a $187 million, up 6% on a reported basis or 7% on a constant-currency basis, driven by solid performance in the global logistics business.

The company is raising their consolidated revenue guidance to 8% growth and narrowing their consolidated operating income guidance to 3-4% growth. The US Healthcare Solutions segment is expected to have revenue growth of 9% and operating income growth of 4-5%, with 7-8% growth excluding COVID-19 treatment distribution contributions. International Healthcare Solutions segment is now expecting 1-4% as-reported revenue growth due to favorable currency movements.

In the third quarter, COVID-19 treatments contributed $0.06 to the company's consolidated EPS. The company is raising their full year diluted EPS guidance from $11.70 to $11.90 to a new range of $11.85 to $11.95, representing growth of 7% to 8%. In the fourth quarter of fiscal 2022, the company had $0.17 of contribution from distributing COVID treatments, however this year they expect only $0.01 or $0.02 of COVID treatment contributions. This year, the dollar is at historically strong levels versus most major currencies, creating a tailwind in the International Healthcare Solutions segment on an as-reported basis.

The company has increased its as-reported operating income guidance for the International Healthcare Solutions segment while maintaining its constant-currency operating income guidance for that segment. The company expects minimal contributions related to COVID treatment distribution in fiscal 2024, and will provide full guidance in November. The company has also completed business impact assessments across its locations to ensure it can continue operations in the face of natural disasters and climate change, and was recognized by Forbes for its low carbon economy initiatives and sustainability practices.

Jim Cleary is pleased with the company's performance in the quarter, as their OpEx growth was slower than their gross profit growth. He is looking forward to the company's next chapter as Cencora, and is confident that their team will continue to drive growth for stakeholders. He then turns the call over to the operator to open the line for questions.

The speaker discusses how the company was able to achieve their 8.0% gross profit growth and 7.6% OpEx growth during the quarter, which was mainly due to their focus on aligning internal capabilities to customers' needs and creating a more efficient organizational structure. They also lapped inflationary pressure from the previous quarter. The speaker then addresses a question about the progression of margin in the US distribution component of the business, including exclusive distribution relationships, growth in GLP-1s, and biosimilars.

AmerisourceBergen experienced 11.5% revenue growth in the quarter, but this was largely driven by GLP-1s, which are minimally profitable. The company has also benefited from exclusive cell and gene relationships, as well as biosimilars, which have provided growth and margin opportunities. Recently, there has been some moderation of generic deflation in certain pockets, which could become a tailwind for the company. In the US segment, the gross profit margin decline during the quarter was 13 basis points.

AmerisourceBergen does not discount their products in the branded and oral category, even though it is a significant product category. They do, however, act as a liaison to help Good Neighbor Pharmacies and the Elevate Network with profitability and reimbursement stability.

Jim Cleary was pleased with the company's results during the quarter and raised or narrowed the guidance for the fiscal year. He expressed confidence in the long-term guidance of 5-8% organic operating income growth and double digit compound annual growth rate for adjusted EPS.

Steve Collis explains the strategy and services Cencora provides to pharmaceutical manufacturers, including commercial support, the cell and gene therapy hub, and OneOncology. He also mentions that Cencora is in the middle of its fiscal year planning process and will provide guidance for the upcoming fiscal year on the November call. Finally, he emphasizes that the services they provide are material to Cencora's future.

AmerisourceBergen has a differentiated value proposition due to their strong portfolio of distribution capabilities and key strategic relationships. They specialize in specialty distribution, particularly in oncology, and are looking into expanding to other areas such as urology, rheumatology, ophthalmology, and neurology. They also have GPO capabilities and have invested in commercialization services. They have been a leader in this area since 1998, providing a suite of solutions to support their partners throughout the commercialization journey.

AmerisourceBergen is creating services to address the complex needs of new therapies, such as cell and gene therapies, including kitting, tracking outcomes, and other distribution and storage solutions. These services are designed to provide efficient and effective access to the market for manufacturers and patients. Jim Cleary then addresses the question of International segment margin improvement, noting that there has been some benefit from price in the World Courier business.

Steve Collis, the CEO of AmerisourceBergen, comments on the payment terms for their biopharma clients and how their contracts are not seeing any changes despite the current interest rate environment. He also notes that there is a tighter funding environment for biopharma manufacturers and startup innovative products, but there are signs of optimism.

Jim Cleary discusses how AmerisourceBergen monitors and manages their working capital, ROIC, and free cash flow closely in order to ensure long term value. He also notes that competitive pricing in the generic market has been moderating deflation in certain pockets, but it is too early to call it a trend.

Steve Collis discussed the impact of the disruption of the Pfizer plant earlier in the month on sterile injectable pricing margins and supply. He mentioned that AmerisourceBergen had worked closely with Pfizer and had a distribution center close by the impacted manufacturer plant, but that nothing had been reported yet. He expressed confidence that their supply chain team would be able to manage the situation and that the disruption would not be material to the company.

Steve Collis explains that the growth of GLP-1s has changed the generic mix and compliance hurdles in independent channels, and could potentially be adjusted for. He notes that the market is competitive and stable, and that the company stays in close contact with its customers, providing resources such as telehealth attributes and venture capital funds. He also mentions that the growth of this product category is headline-grabbing and more sustainable than the hepatitis drugs, and that it will be discussed at the upcoming retail trade show.

Steve Collis of AmerisourceBergen reported on the company's last quarter and announced that they will be changing their name to Cencora. He emphasized that their purpose, mission, and values will remain the same, and that they will continue to provide pharmaceutical-centric solutions to their partners and customers. He thanked those present for their time and attention and concluded the event.

This summary was generated with AI and may contain some inaccuracies.