AmerisourceBergen eyes foreign lands after Q1 results

By Dan Stanton

- Last updated on GMT

Related tags World courier Cost

AmerisourceBergen to expand overseas
AmerisourceBergen to expand overseas
AmerisourceBergen has announced upbeat Q1 results as contributions from Consulting Services and World Courier offsets ongoing cost issues in Drug Distribution.

Overall revenue for the first quarter of fiscal year 2013 was $21.5bn (16€bn) up 6% compared to last year, aided by World Courier – an AmerisourceBergen’s supply and distribution service acquired last year – which added $200m worth of revenue to the company.

World Courier (of which financial results have only been available in the last two quarters) is responsible for an additional $70m of AmerisourceBergen’s overall $672m gross profit for the quarter helping to explain the 3% rise on Q1 of 2012.

Chief Executive Officer Steven H. Collis, speaking on the company’s conference call, said the integration of World Courier had gone well (AmerisourceBergen purchased the firm for $520m​ in March 2012) and was confident of achieving “financial and operational objectives for the year.”

On the back of positive figures and an “increasingly global mindset”​ provided by World Courier and AmerisourceBergen’s consulting services, Collis said that the company plans to “build on the strength of manufacturer relationships [it has] in the U.S. and expand into other markets​.”

The statements are in line with policies announced following the acquisition of World Courrier​ and the acquisition in October 2011 of US-Based reimbursement support service TheraCom​.

AmerisourceBergen’s consulting services and World Courier pushed operating income up $11m, partially offsetting an increase in costs attributed to a higher cost structure within the company’s Drug Distribution Service area.

“The segment's operating expenses increased to approximately $13 million or 5%,”​ AmerisourceBergen’s Chief Financial Officer, Tim G. Guttman, told investors. “The majority of the increase is due to our Canadian drug distribution business.”

According to ISI analyst Ross Muken, the ongoing cost issues in AmerisourceBergen’s Canadian operations affected the majority of the company’s operating cost increase for the quarter. The difficulties facing the implementations of a large new retail contract is an area of expense which the firm is continuing to work on.

'Dreams of Californi-medi-cation’

In other news, AmerisourceBergen has won exclusive rights to supply pharmaceuticals to the State of California’s Department of General Services (DGS).

The contract will save the DGS nearly $18m by consolidating the purchase of all pharmaceuticals and other medically related products for prisons, state hospitals and public schools. AmerisourceBergen beat three other wholesalers to the deal which is set to expire in March 2016.

DSG spokesman Michael Liang told “The award was made to AmerisourceBergen after a scoring process demonstrated that this wholesaler could meet the criteria necessary to fulfill the needs of the participating State Agencies at the lowest cost to the State.”

AmerisourceBergen declined to comment on the agreement.

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