|AmerisourceBergen CEO Steven Collis|
Drug distributor AmerisourceBergen ($ABC) has again reported big quarterly increases in sales and profits as a relationship forged with Walgreens ($WAG) in 2013 continues to pay off big time. And without saying it directly, the company pointed to the phenomenal success of Gilead Sciences' ($GILD) hep C drugs, Sovaldi and Harvoni, as also playing a part in its earnings jump, saying its revenues were powered in part by sales of drugs for treating hepatitis C.
The company Wednesday said that its revenue in the quarter ended Dec. 31 was $33.6 billion, up 15.1%, with $33 billion of that coming from its pharmaceutical distribution unit. The rest is generated by things like consulting services. Sales in its pharma distribution were up 15%, "due primarily to the onboarding of the new Walgreens generic pharmaceuticals business, strong sales of products that treat hepatitis C" and growth in some other areas, the company said.
CFO Tim Guttman said in the company's earnings call that sales of hep C drugs accounted for 5% of the drug operation's 15% growth, according to a transcript of the call from Seeking Alpha. And CEO Steven Collis said he didn't expect that to back off for a couple more quarters a sales momentum for new hep C therapies continues.
Gilead Sciences' Sovaldi has been reaping in billions of dollars in sales in just one year on the market and is now being joined by its combo drug Harvoni, which is expected to sell billions more. A competing hep C treatment from AbbVie ($ABBV) was approved in December.
It is the 10-year deal it struck with Walgreen and its partner Alliance Boots in 2013 that has been steadily improving the company's top and bottom lines. The drug distributor started handling branded drugs for the two chains last year and began picking up their generic drug distribution this year. Walgreens and Alliance Boots also worked the deal so they will take a minority stake in AmerisourceBergen, starting with 7%. Walgreens paid $6.7 billion in 2012 for nearly half of Alliance Boots.
The supply chain specialist told investors Wednesday to expect the revenue and earnings improvements to continue this year. It projected adjusted diluted earnings per share from continuing operations to be up 12% to 15% to $4.45 to $4.55 a share. That is a 15% jump over its prior guidance of $4.36 to $4.50 a share. It said it expects revenue to be up 10% to 11% and adjusted operating income to grow 9% to 11%.
Part of that growth is expected to be driven by adding veterinary drug distributor MWI Veterinary Supply ($MWIV) to the fold, said Collis. The company earlier this month announced a it would pay $2.5 billion, or $190 a share, for the Idaho-based company, which distributes drugs and equipment to vet clinics in both the U.S. and the U.K. "We continue to expect the transaction to close in the March quarter, and we are very excited about the opportunities that lie ahead in our core businesses and with MWI in the remainder of this fiscal year and beyond," Collis said.
- here's the release
- read a transcript here