AmerisourceBergen Corporation

Good morning and welcome to the first quarter 2020 AmerisourceBergen earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Bennett Murphy, Senior Vice President of Investor Relations. Please go ahead.

Thank you. Good morning, and thank you all for joining us for this conference call to discuss AmerisourceBergen's fiscal 2020 first quarter results. I'm Bennett Murphy, Senior Vice President of Investor Relations, and joining me today are Steve Collis, Chairman, President, and CEO of 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 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 a discussion of key risks and assumptions, we refer you to today's press release and our SEC filings, including our most recent 10-K. Amerisys Berger assumes no obligation to update any forward-looking statements, and this call cannot be rebroadcast without the express permission of the company. You'll 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. Today, I am pleased to discuss AmerisourceBergen's strong fiscal 2020 first quarter results. We delivered solid performance across both the pharmaceutical distribution and global commercialization services and animal health groups, each delivering year-over-year growth in the first quarter. Revenues were up 5% to $48 billion for the quarter, and our adjusted diluted EPS was $1.76 for the first quarter, an increase of 10% compared to the previous fiscal year period. Before we provide more details on our first quarter results, I want to take a few moments to discuss the ongoing opioid litigation and the decision to exit the Farmedium business. AmerisourceBergen and the other parties continue the complex process of working towards a global resolution of the opioid litigation, while also continuing to prepare for upcoming trials. We are hopeful that the necessary parties understand and see the merits of the global framework as a practical path for global resolution. As we engage in discussions related to the global framework and continue to litigate, we are unable to comment deeply on these matters at this time. AmerisourceBergen remains committed to transparency and providing shareholders with updates as we are able. Moving on to Farmadium. At this point last year, we detailed how we had begun a comprehensive strategic and financial review of Farmadium and engaged a new CGMP expert consulting firm to work with the business's new seasoned leadership team. As we stated at that time, we entered this review phase with a focus on pursuing a thoughtful and decisive course of action that was best for Amerisource Bergen and our shareholders while respecting both the needs of our customers and other stakeholders. Over the past year, we worked internally to optimize the business, continue discussions with regulators, and reach an agreement on the terms of a consent decree for Pharmadium, but the FDA focused on remediating the business. Despite this progress, we still face considerable challenges in order to successfully move the business forward. including ongoing regulatory challenges, continued operational issues, inability to make sufficient progress on remediation, and the continued financial burdens of running the business. Given these factors, we made the difficult decision to shut down and exit the Formidium business. The decision is a difficult one, and we are mindful of the impact it has on our associates and customers. We want to thank all Farmedium associates for their dedication, and we are appreciative of their efforts. As part of the shutdown process, we will provide impacted associates with the support and services they need. We are also disappointed that Farmedium will no longer be able to serve its customers, but believe exiting the business is the appropriate path forward for Amerisource Bergen and its shareholders. Jim will provide financial details, including the decision's impact on fiscal 2020 guidance later in the call. Turning now to our first quarter results, AmerisourceBergen continues to benefit from our unique pharmaceutical-centered strategy that positions us well within the U.S. market. Additionally, the company's core strength and capabilities regarding our unrivaled talent, expertise, and ability to provide comprehensive solutions continues to differentiate us from our peers. I want to thank our associates for their dedication, executional excellence, and focus on consistently creating and delivering value for all of our stakeholders. I am proud to work alongside our teams who remain relentless in their pursuit of opportunities to unlock value for pharmaceutical manufacturers, healthcare providers, and the patients they serve. Within pharmaceutical distribution services, the segment's success reflects this continued focus on customer experience in addition to our ongoing strength in specialty distribution and overall growth in customer volumes. Amerisource Bergen is the leader in specialty distribution and our strong growth continues to be fueled by our deep expertise and key customer relationships. For an organically growing market with favorable demographics, and increased pharmaceutical utilization, resulting from innovation within specialty, particularly in the areas of oncology, ophthalmology, and rheumatology. In these and other therapeutic categories, Amerisource Bergen continues to deliver value and provide differentiated services and solutions to key customer segments, such as our community physician practice partners. A key differentiator for our specialty business our ION GPO remains a competitive advantage in our suite of offerings to oncology physician practices. As the market-leading GPO for community oncologists, ION provides physicians with the contracting, analytics, and business practice solutions they need to run their practices more efficiently and profitably. At the same time, we continue to see positive early signs for biosimilar utilizations. We believe that the right conditions exist in the US for increasing biosimilar commercialization success. We continue to see signs that legislators and commercial plans are recognizing the potential of biosimilars to create better access and affordability for patients. AmerisourceBergen's market-leading position in specialty strongly positions us to benefit from biosimilars. We have aligned ourselves with key customers and biosimilar manufacturers understand the value of contracting with ION as they seek to increase utilization of their products. These elements combined with our scale efficiency state of the art distribution network and competitive sourcing capabilities position Amerisource Bergen to capitalize on market opportunities. Amerisource Bergen is also well positioned to seize market opportunities in animal health and pharmaceutical manufacture services through our global commercialization services and animal health group. Businesses that comprise approximately 20% of AmerisourceBergen's operating income. Our largest business in the segment, MWI, is a market leader in animal health solutions with the right strategic partnerships and capabilities to enhance operational efficiencies and deliver strong customer experience while our portfolio of global commercialization services strengthens health outcomes by supporting pharmaceutical innovation with data-driven solutions that advance and support patient access and adherence to therapy. For example, Xcender's health economics consulting and field tech team reimbursement support services are helping manufacturers maximize market access for products, while the Lash Group's technology-enabled patient access and adherence solutions are helping to reduce barriers for patients to start and stay on therapy. Essential to pharmaceutical manufacturers' ability to commercialize and improve access to innovative therapies is ability to transport trial products and unique patient treatments like cell and gene therapies on time and at the right temperature. World Courier, the global market leader in specialty and clinical trial logistics, is a Trusted Solutions Partner that services these complex needs for manufacturers around the world. Operating in over 50 countries, this highly differentiated and innovative business continues to grow and expand. This business delivers unparalleled service offerings for its pharmaceutical partners in clinical trial logistics and commercial services. For example, World Courier's Cocoon offering is the industry's most dependable and cost-effective refrigerated container solution, providing unprecedented reliability and driving strong momentum for the business this year. In addition, World Courier's Nova technology platform further improves operational excellence, scaling to meet the demand and complex requirements of our global customers. Looking ahead, World Courier will continue to design and deploy patient-centric and forward-thinking transport services in new areas like in-home clinical trials, making treatments in patients' homes possible in virtually every therapeutic area. I am proud of AmerisourceBergen's role as a global healthcare solutions leader and purpose-driven organization. We are united in our responsibility to create healthier futures and recognize that there is always a patient connected to every product. Pharmaceutical care is still the most efficient form of healthcare and medication adherence provides positive health benefits for patients while saving lives and the healthcare systems hundreds of billions of dollars annually. Adherence should be the goal for which all healthcare stakeholders are striving. As an enabler of access and creator of additional efficiencies, AmerisourceBergen will continue to engage in constructive dialogue around benefit design and rising out-of-pocket costs for patients and the sustainability and efficiency of the healthcare system. As a leader in the healthcare supply chain, Amerisource Bourbon remains well-positioned to create sustained long-term value. Execution of our four key strategic pillars, strong customer base, leadership in specialty distribution and services, innovative services and solutions, and proven corporate stewardship positions us well to benefit from market trends with an evolving market landscape. As we move further into fiscal 2020, we will continue to advance our talent and culture and execute on our unique and differentiated business strategy. More than ever, we remain confident in our growth strategy, focused on execution, and dedicated to delivering long-term value for our associates, shareholders, partners, customers, and the patients they serve. 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 first quarter fiscal 2020 results. Jim?