AmerisourceBergen falls to 3Q loss on PMSI sale
VALLEY FORGE, Pa.—Drug distributor AmerisourceBergen Corp. on Thursday posted a fiscal third-quarter loss on a charge associated with the the sale of its struggling PMSI workers' compensation business.
However, the company's adjusted earnings topped analyst expectations, and it raised its earnings outlook for the year.
AmerisourceBergen sold PMSI to H.I.G. Capital LLC for about $40 million, and took a one-time charge of $222 million, or $1.37 per share, as a result. That left the company with a loss of $108 million, or 67 cents per share.
The company had tried to sell PMSI in the past, but took it off the market in April after not receiving an offer it found satisfactory. The unit had faced customer losses, a decline in reimbursements and higher operating costs.
"We were very disappointed with PMSI's performance in this quarter, and after re-evaluating our alternatives, we decided to sell the PMSI workers' compensation business in order to focus our full attention on our pharmaceutical distribution and related businesses," said President and Chief Executive R. David Yost.
In April, AmerisourceBergen said it expected business at PMSI to improve in the second half and get better in fiscal 2009.
Excluding the $222 million charge and other one-time expenses, the company earned $112.8 million, or 70 cents per share, from continuing operations. That was a decrease of 15 percent from the same quarter a year earlier, when it earned $129.9 million, or 69 cents per share. Without PMSI, the company earned $125.8 million, or 67 cents per share, a year ago.
Revenue grew 10 percent, to $18 billion from $16.3 billion.
Analysts expected a smaller profit of 66 cents per share on $17.63 billion in revenue, according to Thomson Financial. Analyst estimates usually exclude one-time costs.
Although net income were lower, adjusted profit increased on a per-share basis because of the company's stock repurchases. The company's share count fell to 159.5 million at the end of the quarter, from 185.2 million a year ago.
PMSI was separate from AmerisourceBergen's main drug distribution business. The company said revenue for AmerisourceBergen Drug Corp. increased by 8 percent, and revenue for Bellco Health grew 3 percent. Revenue from the Specialty Group business rose 4 percent.
The company raised its fiscal 2008 profit forecast as a result, with the midpoint of its outlook now above analyst expectations.
