AmerisourceBergen keeps up momentum gained from Walgreens deal

AmerisourceBergen CEO Steven Collis

Drug distributor AmerisourceBergen ($ABC), which forged an alliance with Walgreens ($WAG) two years ago, continues to surprise Wall Street with its performance.

The $33 billion in revenues in the most recent quarter was a 14.8% jump while gross profits were up 25% from the year ago period. While the company reported an operating loss of $364 million, investment analysts Zacks says that its adjusted diluted earnings per share of $1.45 far exceeded the Zacks projection of $1.18 per share. "AmerisourceBergen has a pretty good earnings track record with the company delivering positive earnings surprises in each of the last four quarters with an average surprise of 9.8%," Zacks noted.

The company attributed most of the growth in its pharmaceutical distribution business, which makes up the bulk of its revenues, to the Walgreens deal continuing to play out. Sales in that category were up 14%. The 10-year deal it struck with Walgreens and its partner Alliance Boots in 2013 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.

CEO Steven Collis said that the company in the quarter completed its $2.5 billion acquisition of the international animal health distribution company, MWI Veterinary Supply. The company adjusted its earnings forecast for the year as a result. It said it expects adjusted diluted earnings per share from continuing operations in the range of $4.85 to $4.95, a 22% to 25% increase over fiscal 2014, and a bump over the company's earlier guidance of $4.53 to $4.63.

- here's the earnings release

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