AmerisourceBergen Corporation

Ladies and gentlemen, thank you for standing by, and welcome to the ABC earnings call. At this time, all lines are in a listen-only mode. Later, we'll conduct a question-and-answer session, and instructions will be given at that time. If you should require assistance on the call, please press star, then zero. As a reminder, today's conference is being recorded. I'd now like to turn the conference over to Head of Investor Relations, Bennett Murphy. Please go ahead.

Thank you. Good morning, and thank you all for joining us for this conference call to discuss Amerisource Bergen's fiscal 2019 fourth quarter and full-year financial results. I am Bennett Murphy, head of 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.emeritusbergen.com. We've also posted a slide presentation to accompany today's press release on our investor website. During this 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 SAC filings, including our most recent 10-K. The Mayor's Service Burger assumes no obligation to update any forward-looking statements, and this call cannot be rebroadcast without the express permission of the company. You will have the 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'll turn the call over to Steve.

Thank you, Bennett, and good morning to everyone on today's call. I am very pleased to discuss AmerisourceBergen's strong fourth quarter and full fiscal year results, as well as to look ahead and highlight how AmerisourceBergen continues to execute a differentiated strategy and foster a purpose-driven culture to position itself for long-term growth. Before we discuss our results for the quarter, I want to comment on some of the recent developments regarding the opioid epidemic and related litigation, which we recognize is of concern to our stakeholders, including our investors. As you all know, we have been consistent in stating our desire to address the enormity of the opioid challenge by bringing solutions to the table. We continue to work diligently and alongside partners to combat drug diversion while supporting real solutions to help address the crisis in the communities we call home, work, work in, and serve. As we communicated a couple weeks ago, AmerisourceBergen, along with our peers, reached a settlement with two Ohio counties in the first track of the multi-district opioid litigation. We believe that settling the case is an important stepping stone to achieving a global resolution and demonstrating that our industry is being constructive and thoughtful in how we can address this crisis and try to resolve related litigation. We expect settlement funds to be used in support of initiatives to combat the opioid epidemic, including treatment, rehabilitation, mental health, and other important efforts. With the Ohio settlement agreed upon, AmerisourceBergen and the other parties will continue the complex process of working towards a global resolution. We are hopeful that the necessary parties, including many state and local governments, will understand and see the merits of the global framework as a practical path for global resolution. We take our role in the supply chain seriously. As we continue to work closely with stakeholders to evaluate next steps concerning these complex matters, AmerisourceBergen will remain responsible stewards of shareholders' capital. Together, our board of directors, management team, and associates are focused on developing meaningful solutions for this epidemic. AmerisourceBergen also remains committed to transparency and as we are able to, provide shareholders and other stakeholders with information on our efforts and solutions to address the opioid epidemic and related litigation. Now turning to our business results. Overall AmerisourceBergen performed extremely well in fiscal 2019, driven by execution across our pharmaceutical distribution and global commercialization services and animal health teams. Revenues were up 5% to $45.6 billion for the quarter and reached almost $180 billion for the full year, a 7% increase year over year. We delivered adjusted diluted EPS of $1.61 for the fourth quarter and $7.09 for the full fiscal year, an increase of 12% and 9% respectively compared to the previous fiscal year periods. This strong performance reflects the hard work, dedication, and solution-oriented mindset of our 22,000 associates, who enable our company to create value for our shareholders, partners, customers, and the patients they serve. Together, we accomplished many notable achievements in fiscal 2019. First, starting with the pharmaceutical distribution services segment. Overall, our core pharmaceutical distribution business achieves strong performance despite challenges at Pharmadium. Our distribution businesses are delivering best-in-class service and solutions to a solid portfolio of customers while maintaining strong execution across the various teams. Our continued strength in specialty distribution and wraparound downstream practice management services produced another year of double-digit growth. We strengthened our relationship with pharmaceutical manufacturers and grew our provider customer base in addition to benefiting from a robust pipeline of pharmaceutical manufacturer innovation. Additionally, our expertise in areas such as oncology, ophthalmology, and rheumatology continue to create an advantage for our market-leading specialty distribution franchise in multiple classes of trade, including health systems and physician practices. Finally, we successfully integrated H.D. Smith, and realized the operational synergies of the acquisition more quickly than we expected, which bolstered the strong performance of this segment. I'm extremely pleased with how our associates continue to utilize a customer-centric approach to address current market needs and to capitalize on new opportunities and believe that this approach will continue to differentiate AmerisourceBergen in the market and drive our success. Turning now to an update on Pharmadium. Although this business faced challenges in fiscal 2019, we continue to make progress. In August, Pharmadium completed third-party audit inspections at its two open facilities. Based on the findings of the audit, Pharmadium's operations remain on track, and importantly, in compliance with the consent decree. The two open facilities continue to operate with enhanced quality assurance and quality control procedures. In fiscal 2020, we will continue to remediate and optimize operations as we continue to evaluate the appropriate next steps for the business. Next, turning to the performance of our global commercialization services and animal health businesses. As a group, these businesses continue to unlock value through their focus on building strong partnership with and providing robust services for manufacturers. MWI Animal Health delivered strong results as it continues to support growth and demand of its strong customer base, particularly within corporate accounts where the business is successfully collaborating with key partners to create value commercially. MWI continues to further expand relationships with customers who are growing faster than the market. Additionally, our commercialization businesses are benefiting from investments in leading data and technology platforms across the group, like Nova at World Korea and Fusion at Lash, which continue to drive efficiency and execution excellence. We are pleased with the differentiated services these businesses provide and believe that their performance will continue to create value for manufacturers, especially as an increasing number of new innovative therapies come to market in the coming years. As the essential commercialization partner, Amerisource Bergen is committed to the ongoing development of an investment in forward thinking and patient-centric solutions that further enhance the customer experience and advance access and adherence outcomes for manufacturers. In addition to supporting manufacturers, we are continuously driving innovation across all points of care, given the ongoing evolution of the entire healthcare landscape. In this dynamic market environment, AmerisourceBergen continues to focus on the elements we can control, namely, number one, innovating and investing to support growth across the enterprise, Two, maintaining focus on execution excellence. Three, strengthening associate experience. And lastly, continuing our move towards one ABC. These objectives are in place across the enterprise as we begin the new fiscal year. Furthermore, our differentiated portfolio of businesses and solutions position us well to achieve them. First, our core pharmaceutical distribution business continues to enhance safety and security and improve product access and efficiency throughout the healthcare supply chain. Our state-of-the-art distribution network, ability to competitively source generic pharmaceuticals, and extensive footprint in physician-administered products are some of the differentiated capabilities that enable us to drive access to pharmaceutical care across all points of the healthcare spectrum. as well as remaining well-positioned for future opportunities such as biosimilars, a market that is evolving and remains promising. In addition to our global commercialization services, an animal health group continues to be the essential partner for manufacturers through all phases of product development and commercialization. MWI's highly efficient distribution network and strong demand creation capabilities provide pharmaceutical manufacturers with the capabilities required to advance animal health, while our portfolio of commercialization services businesses offer the critical global specialty and third-party logistics services, market access strategies, patient access and adherence solutions, and regulatory and compliance support to facilitate access to pharmaceutical manufacturers life-saving products. As we enter fiscal 2020, we have a clear vision for execution across these pillars to deliver on continued shareholder value creation. First, we will continue our focus on alignment with key customers. We are proud of the strong customer partnerships that continue to grow well in each market segment. As a pharmaceutical-centered company, Amerisource Bergen will continue to leverage our pharmaceutical supply chain expertise and scale to deepen relationships and drive additional shared value for all of our partners, both upstream and downstream. Second, we will continue to build on our leadership in specialty distribution and services. Amerisource Bergen provides unparalleled value to our comprehensive offering in both pharmaceutical distribution and commercialization services. Our extensive footprint in specialty distribution and capabilities uniquely position Amerisource Bergen to provide the innovative commercialization and wraparound services required by complex specialty products. Leveraging our strength and scale, we are growing manufacturer and provider relationships, providing the best services and solutions that serve the evolving need while delivering a seamless customer experience. Third, we will leverage unique insights from our partnerships and relationships across the globe and industry to bolster our development and delivery of innovative services and solutions. We continue to create and evolve our customer-focused offerings to further enhance and expand value for manufacturers and our provider customers. For example, we are developing marketing services, digital tools, and benchmarking solutions that help pharmacy customers overcome the barriers and complexities of today's healthcare ecosystems. In addition, we are accelerating the use of technology and data platforms to meet the data, product commercialization, and patient adherence needs of our manufacturer partners. Through our businesses, we are constantly exploring ways to apply or expand our expertise to solve new challenges, such as bringing simplicity and efficiency to the complex and challenging world of cell and gene therapies. As connectors between manufacturers and providers, we remain relentless in our pursuit of the most innovative services and solutions that support manufacturer growth and enable providers to run their businesses efficiently. Finally, AmerisourceBergen continues to focus on strong corporate stewardship. On the financial side, we remain focused on cash flow generation and strategic capital allocation to continue value creation for our shareholders. On the people side, we are advancing both our people and culture through talent development, career growth, and diversity initiatives. I am proud to work alongside the 22,000 purpose-driven associates at AmerisourceBergen, and I want to take a moment to thank all of them for their tireless commitment to our customers, unwavering compassion for the patients they serve, and for the collaborative, innovative, and purpose-driven approach towards solving unmet needs. Our talent is a competitive advantage, and we continue to make additional investments to enhance our associates' experience. I'm personally committed to further strengthening the collective engagement of our associates to move closer towards one ABC, becoming even more unified and united in the execution of our strategy and acceleration of our growth. Our strategy focused on customer partnerships, specialty leadership, innovative services and solutions, and successful stewardship, of pillars that differentiate Ameris Holzbergen. It is Ameris Holzbergen's purpose that provides the direction and guidance through which we evaluate everything that we do. That purpose of being united in our responsibility to create healthier futures means that we recognize our responsibility to efficiently and effectively deliver healthcare. Our purpose unites, motivates, and empowers us to deliver value for all of our shareholders, making a positive impact on our communities, our partners, and the patients they serve. Our purpose exists in harmony with our growth strategy to ensure that we are a company that does well while also being a good corporate citizen. This is a challenge and a commitment we have always accepted and one that we are well positioned to achieve. We are confident in our growth strategy, focused on execution, and dedicated to bringing long-term value for all of our stakeholders, working as one unified and connected organization to improve product access and efficiency throughout the healthcare supply chain. Thank you again for your interest in Amerisource Bergen. I will now turn the call over to Jim for a more in-depth review of our fourth quarter and full 2019 fiscal year financial results, as well as our financial guidance for fiscal 2020. Jim?