AmerisourceBergen Corporation

Ladies and gentlemen, thank you for standing by, and welcome to the ABC earnings call. At this time, all participants are in listen-only mode. Later, we'll conduct a question-and-answer session. Instructions will be given at that time. If you should require assistance during today's call, please press star, then zero. As a reminder, today's call is being recorded. Now, I turn the conference over to your host, Jim Cleary. Please go ahead.

Thank you. Good morning, and thank you all for joining us for this conference call to discuss AmerisourceBergen's Fiscal 19 Second Quarter Financial Results. I am Ben Murphy, Vice President, Investor Relations, and joining me today are Steve Collis, Chairman, President, and CEO, and Jim Cleary, Executive Vice President and CFO. On today's call, we will be discussing non-GAAP financial measures. Reconciliations of these measures to GAAP are provided in today's press release and are also available on our website at investor.america.com. We've also posted a slide presentation to accompany today's press release. on our investor website. During this conference call, we will make forward-looking statements about our business and financial expectations on an adjusted, non-GAAP basis, including but not limited to EPS, operating income, and income taxes. Forward-looking statements are based on management's current expectations and are subject to uncertainty and change. For discussion of key risks and assumptions, we refer you to today's press release and our SEC filings, including our most recent 10-K. Mayor Swersbergen assumes no obligation to update any forward-looking statements, and this call cannot be rebroadcast without the express permission of the company. If you have an opportunity to ask questions after today's remarks by management, we ask that you limit your questions to one per participant in order for us to get to as many participants as possible within the hour. With that, I will turn the call over to Steve. Steve?

Thank you, Bennett, and good morning to everyone on today's call. I'm pleased to talk about AmerisourceBergen's continued strong performance in the second quarter of fiscal 2019. On this call, I will highlight how our business remains well positioned for the long-term growth and how AmerisourceBergen unites with stakeholders across the healthcare supply chain as a solutions provider and good corporate citizen. First, our fiscal 2019 second quarter financial performance. Revenues were up a solid 6% to $43.3 billion for the quarter, and our adjusted diluted EPS was $2.11 for the second quarter, an increase of 9% compared to the previous fiscal year period. We are extremely pleased with our performance in the second quarter, which was driven by solid growth in customer volumes, double-digit specialty distribution growth, and overall strong execution across both the pharmaceutical distribution and global commercialization services and animal health groups. I first want to thank our 21,000 associates who are really driving our performance. I couldn't be more proud of their dedication, solution-oriented mindset, focus, and passion for our customers and partners, and I consider it a privilege to work alongside them every day. Our teams are executing well across our robust portfolio of businesses as we continue to enhance the experience and value that we provide for our customers and partners in the industry. Our pharmaceutical distribution services team, notably in specialty physician services and health systems, continue to deepen their customer relationships and seek new ways to unlock value for our partners while enabling patient access to pharmaceuticals. Finally, we are proud of how our global commercialization services and animal health group continues to execute, grow, and deliver differentiated services for pharmaceutical manufacturers and veterinarians. Next, an update on our comprehensive strategic and financial review for FarmMedium. As part of this process, we determined that the best way to maximize the value of the business was to close Pharmelium's smallest and least automated facility and consolidate production into the business's remaining two open facilities to service customers more efficiently and effectively. We believe this decision should optimize the business more appropriately for the long term while ensuring that Pharmelium's focus remains on patient safety and delivering the safest and highest quality products. In addition, As you may recall, we engaged a CGMP expert consulting firm to help us with our review of this business unit. After taking into consideration Pharmadium's enhanced quality assurance and quality control procedures and independent evaluations from our CGMP consulting firm and the business unit's new president, we have determined that it will be difficult for Pharmadium's overall volumes to return to previous levels in the next few years. In addition to our internal review, we have continued discussions with regulators, and based on discussions to date, we expect to enter into a consent decree in the June quarter. Subject to the successful completion of third party orders, we anticipate that a consent decree will allow commercial distribution to continue at the two open compounding facilities. Additionally, we expect that a consent decree would specify requirements that must be satisfied prior to resumption of commercial operations at the Memphis facility. Based on these updates, Jim will provide more details in his comments regarding Farmedium's financial outlook. Despite this challenge, and as evidenced by this quarter's results, Amerisource Bergen continues to execute and deliver strong growth and performance. Our differentiated strategy and investments have positioned us to continue delivering long-term sustainable growth in fiscal 2019 and beyond. At the core of our strategy, remains a clearly defined pharmaceutical-centric focus. AmerisourceBergen continues to benefit from growth in the U.S. pharmaceutical market, which was driven by strong patient demographics and prescription utilization trends, as well as pharmaceutical innovation across brand, specialty, and biosimilars. In fact, the specialty market is experiencing significant growth as an increasing number of breakthrough medicines continue to improve the current standards of care. Our undisputed leadership position in specialty distribution and services places AmerisourceBergen at the forefront of this rapidly growing market segment. While we report distribution and commercialization services in separate segments, together they represent our extensive footprint and comprehensive portfolio and specialty that we have built through decades of significant organic and inorganic strategic investments. Our expertise and capabilities empower us to support the complex solutions needed in both specialty distribution and pre and post commercialization services. Specialty distribution, which includes oncology and physician-administered products, continued its double-digit growth in the second fiscal quarter as we continue to create value for our customers. This part of the US healthcare market is growing well as patient utilization of these life-altering medications continues to increase. The efficiency of the distribution channels we enable, combined with key services and solutions we provide our physician practice customers, are core reasons why AmerisourceBergen remains the preferred partner of choice. Vesey Medical extends AmerisourceBergen's reach and relationship to over 65,000 non-oncology community physician sites, accelerating access to the products, insights, technology, and guidance needed to elevate their practice performance and patients' experience. On the commercialization side, we continue to increase the depth and span of our manufactured services, making ourselves the essential partner for the global pharmaceutical industry. For example, World Courier, the most trusted specialty logistics partner in the world, offers high-quality and innovative services which provide the customized support and flexibility that manufacturers value for clinical trial logistics and commercial services, such as those needed in cell and gene therapy. WorldCareer continues to move innovation forward through recent technology and packaging advancements like Nova and Cocoon, which deliver increased efficiencies and enhanced experience for their customers, empower their sustained growth, and demand for their services. In the years ahead, the strong pipeline of innovative and complex specialty products and increasing number of buyers from the city and the market should further increase demand for the innovative distribution and commercialization services that we provide for our partners. Amerisource Bourbon applies the same innovative mindset towards all opportunities or issues that arise across this dynamic and exciting healthcare landscape. Our ongoing investment in state-of-the-art services and solutions continues to differentiate our business and enable new value creation opportunities for our partners, customers, and the entire healthcare supply chain. Likewise, our focus on driving data connectivity throughout all our offerings further distinguishes our ability to meet the evolving needs of our stakeholders and solidifies Marisol Spurgeon's position as a trusted data company in our industry that stakeholders depend upon to help them deliver care and improve efficiency at scale. As an industry, AmerisourceBergen and its peers create a secure, nationwide supply chain that produces reliable, accessible, and transparent data and analytics that consistently deliver value for our stakeholders. For example, manufacturers value and trust data generated by AmerisourceBergen, which enables them to proactively manage their daily service and inventory levels. On the other end of the supply chain, Our unique set of analytics tools empower the 4,600 pharmacies in our elevated provider network with solutions that help pharmacies maximize profitability, improve operational effectiveness, and enhance patient care. We take great pride in our responsibility as a trusted data source and our role as a solutions provider in the supply chain. With this solutions-oriented approach in mind, we continue to believe there's a facilitation role that we can play if the US healthcare system shifts to one where patients need to access discounted pharmaceutical prices in the pharmacy at the point of sale. Given our fundamental tools and trusted relationships, we believe AmerisourceBergen and its pharmaceutical distribution peers would be best positioned to support the transition. Existing capabilities and proven experience managing and maintaining complex contract administration and chargeback systems today provide the necessary building blocks to operationalize a chargeback system to handle point of sale discounts in the pharmacy. Pharmaceutical distributors existing relationships both on fairness and trust with their pharmacy customers and manufacturer partners positioned distributors to approach this potential reform with solutions that are fair, efficient, and transparent. With support and industry alignment, AmerisourceBergen is ready to play a role in pursuing a distributor-facilitated model. This unique opportunity would further embody AmerisourceBergen's purpose of being united in our responsibility to create healthier futures. In fact, our purpose is the driving force behind everything we do. As a company, AmerisourceBergen recognizes the importance of strong corporate citizenship as a cornerstone to long-term shareholder value creation. We are especially excited by the continued progress and development detailed within this year's Corporate Citizenship Report, which follows externally accepted standards for sustainability reporting and is our most comprehensive report to date. Here are a few highlights. First, we have invested in two solar energy projects located at our distribution centers and introduced several packaging innovation solutions that help reduce waste and energy usage in our efforts to improve the sustainability of our operations. In addition to help enhance our inclusive culture, where our associates respect and support one another, we launched the Connect with Respect campaign and supported colleagues impacted by hurricanes and wildfires through our Associates Assistance Fund. Finally, the Amerisource Bergen Foundation, an independent, not-for-profit charitable giving organization continues to invest in health-related causes that help increase healthcare access for human and animal populations and ensure prescription drug safety. As a distributor of pharmaceutical products, AmerisourceBergen manages the transportation of medication, including controlled substances from manufacturers to licensed providers. We take our role in the supply chain seriously and work to combat opioid abuse by ensuring safe and secure distribution, maintaining operational integrity, advocating for the highest regulatory standards and community outreach. All of this in addition to reporting all controlled substance orders to the DEA and holding suspicious orders. Amerisource Bergen and the Amerisource Bergen Foundation are committed to making a difference in our communities and providing communities across the country resources to combat the epidemic of opioid misuse. Together, our 21,000 associates, board of directors and partners will continue to further our efforts, collectively working to boost our reach and improve across our communities and the supply chain to create a healthier future for all. In closing, Amerisource Bergen is well positioned to continue creating shareholder value and delivering long-term sustainable growth. We are proud of our ability to execute, evolve, and transform our business to meet the needs of our partners, drive value for our stakeholders, and ultimately serve patients. We won't be complacent. We're making investments in our people, solutions, and infrastructure. and focusing on the problems or opportunities that our customers have in their business. Amerisource Bergen is committed to being a thought leader that drives solutions, enables access, and creates additional efficiency. We have the utmost confidence that our differentiated strategy will create sustained long-term value for our stakeholders. More than ever, we are united in our responsibility to create a healthier future And as always, we appreciate Marisol Spurkin. Now I'll turn the call over to Jim for a more in-depth discussion of our quality financial results and our upward revision to fiscal 2019 EPS guidance. Jim?