AmerisourceBergen Corp. (ABC) posted fourth quarter earnings of 44 cents per share, beating the Zacks Consensus Estimate by 4 cents. Earnings increased 22% from the year-ago period. For the full year, earnings increased 17% to $1.69 per share, 3 cents above the Zacks Consensus Estimate. Performance was driven by strong revenues, lower operating expenses and share repurchases.
Total revenues for the quarter increased 9% to $18.7 billion. This was attributable to a 10% growth in AmerisourceBergen Drug Corp. revenues, which was driven primarily by new business and improved market growth and an 8% rise in specialty group sales. Generic revenues remained strong during the quarter, displaying above-market growth. For fiscal 2009, total revenues increased 2% to $71.8 billion.
Gross profit for the fourth quarter was $538.5 million, which reflected a 2% increase over the gross profit in the year-ago period. The improvement was driven by strong generic sales and increased contribution from fee-for-service agreements with brand-name pharmaceutical manufacturers. This was partially offset by customer mix and the re-pricing of a major customer contract on July 1, 2009.
Continued cost discipline, scale efficiencies and several other factors helped bring down fourth quarter operating expenses by $10.8 million from the year-ago period.
The company provided guidance for fiscal 2010, which was above expectations. AmerisourceBergen expects earnings in the range of $1.82 – $1.92 per share, up 8% to 14% from fiscal 2009, on revenue growth in the range of 5-7%.
Subject to approval from the Board of Directors and market conditions, the company intends to spend about $350 million in share repurchases in fiscal 2010. During fiscal 2009, AmerisourceBergen spent $450.4 million in share repurchases.
We believe the company is well-positioned for growth given the strong performance of its generics and specialty business. AmerisourceBergen boasts of a robust plasma and vaccine business with strong revenues expected to flow from it in the coming quarters as well.
We expect the company to continue to benefit from growth in the pharmaceutical industry, which is driven by factors like an aging population, increased use of generics, and introduction of new treatments. We currently have a Neutral recommendation on AmerisourceBergen.
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