AmerisourceBergen Corporation

Good morning and good afternoon, everyone, and welcome to the Amerisource Bergens Q2 Fiscal Year 2023 Earnings Call. My name is Emily, and I'll be coordinating your call today. After the prepared remarks, there will be the opportunity for any questions, which you can ask by pressing Start, followed by the number 1 on your telephone keypads. I'll now turn the call over to our host, Bennett Murphy. Please go ahead.

Thank you. Good morning, good afternoon, and thank you all for joining us for this conference call to discuss Amerisource Bergens Fiscal 2023 Second Quarter Results. I am Bennett Murphy, Senior Vice President, Head of Investor Relations and Treasury. 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, which is available on our website at investor.amherst.bergen.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 Form 10-K. Amerisource Bergen 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 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.

Thank you, Bennett. Good morning and good afternoon to everyone on the call. Today, we will discuss Amerisource Bergen's fiscal 2023 second quarter results. and how our execution against our strategic imperatives and thoughtful capital deployment position us to continue delivering long-term sustainable growth. In the second quarter, we delivered strong financial performance with revenue growth of nearly 10% and adjusted EPS growth of 9%. Our performance reflects our team members' focus on execution and ability to deliver differentiated solutions to our customers and partners. Additionally, we continue to leverage our infrastructure and scale to increase efficiency and align our capabilities to our customers' needs. This continued emphasis, along with the fundamental strength of our business and balance sheet, power our ability to continue investing internally and externally to drive our future growth. As part of our work to bolster productivity and efficiency, we are leveraging our robust infrastructure to align our capabilities to commercial needs and optimize our organizational structure. Across the company, our leaders and team members continue emphasizing collaboration to capitalize on our collective power as we adapt to an ever-changing landscape with a focus on preparing for future opportunities and growth while delivering on our goals of today. Continuously pursuing efficiency is vital in our business, and in parallel AmerisourceBergen is executing and delivering strong performance. The fundamentals of our business remain strong as we continue to capitalize on opportunities provided by our pharmaceutical-centric strategy and capabilities. Our results continue to demonstrate the value of our pharmaceutical-centric strategy, key strategic partnerships, leadership in specialty, and comprehensive global commercialization services. Our leadership in specialty distribution is a key differentiator for AmerisourceBergen, both with farmer manufacturers and with our downstream provider customers. Through our scale, commercial expertise, and deep understanding of the challenges providers face, we are able to offer a comprehensive range of services, including our GPOs, data analytics, and technology solutions that help them manage effectively and devote more time to serving their patients. In addition, leveraging our position at the center of healthcare, we facilitate communication, education, and knowledge sharing between providers, pharma manufacturers, and key thought leaders through our extensive network. One example of this was our recent ion exchange meeting. which brought together hundreds of our ION GPO members to participate in panel discussions addressing the complexities community oncologists face and provided them with valuable opportunities to connect with fellow physicians and other industry partners. Community oncologists are important partners for our business, and community care is crucial for efficiency and quality in healthcare. As we continue to invest in and enhance our business, we are committed to accelerating our growth and leadership in specialty by advancing oncology-focused practice solutions and services and continuing to lead with market leaders. Most recently, we announced our agreement to invest in One Oncology, a network of leading community oncologists with 900 affiliated providers across 14 states. This investment will deepen and enhance our strong ties to community providers, and One Oncology's practice management services are complementary to AmerisourceBergen's existing capabilities in inventory management, practice analytics, and clinical trial support. We know One Oncology and its members well, with many of the physicians serving as advisors to ION, and with AmerisourceBergen having served many of these practices for over two decades. Our future plans for collaboration with One Oncology include opportunities for sharing key insights to enhance the value we are able to provide all our community oncology partners as we look to a future where data analytics and value-based contracting will play an even greater role in community oncology. The trusted relationships and legacy we have built within communities support our ultimate goal to create better patient experiences and outcomes across specialty classes and sites of care. Our commitment to our relationship goes beyond providing high quality dependable services every day. It also means that we are flexible and agile, helping our partners navigate complexity to provide reliable access to pharmaceuticals. We invest and innovate to provide our partners with new technologies and resources. broadening the scope and scale of our portfolio of capabilities. For example, World Courier recently enhanced its white glove customer experience by adding real-time location monitoring on all multi-use packaging shipments, setting a new standard for tracking in the pharmaceutical logistics industry. The ability to track and monitor the precise location of shipments in transit globally allows us to deliver superior service to our customers, proactively anticipate potential risks, and ensure the secure and timely distribution of products. This capability further expands AmerisourceBergen's leadership in specialty logistics and positions us to be the partner of choice for innovative products in development and coming to market, such as cell and gene therapies, that often require the ability to monitor temperature and location in real time. Cell and gene therapies are an exciting new frontier for healthcare and pharmaceutical innovation, and Amerisource Bergen is focused on evolving our solutions to help orchestrate services across the treatment development and patient journey. In April, we announced the launch of our Cell and Gene Therapy Integration Hub, a new platform agnostic system offering cell and gene therapy developers support at every stage of the product life cycle, from clinical trial to specialty logistics services, market access strategies, and patient support services. While certainly in its early days, we understand how important it is for AmerisourceBergen to play a vital role in helping to advance innovation and access to these products. As we continue to invest in our business and differentiate our value proposition, we are applying our intellectual confidence to capture new opportunities for emerging trends and future innovation. For our upstream partners, we support a common goal of accelerating treatment time to market and maximizing product success. For partners big and small, we offer a unique comprehensive suite of services that supports customer needs, including deep expertise in specialty pharmaceuticals, an efficient and innovative approach to support products throughout the commercialization journey, and a global footprint paired with local expertise, including the US and European 3PL and global specialty logistics. Over the last year, we have detailed how we are well positioned to capture growth opportunities in the pharma services market, particularly with small and mid-sized biopharma manufacturers who are more likely to outsource key parts of the clinical development and commercialization process. According to a recent IQVIA report, these emerging biopharma companies are rapidly gaining share. Having originated a little over two-thirds of new drugs in 2022, while representing two-thirds of the innovation pipeline. Importantly, these companies are increasingly launching products independently upon approval. In fact, nearly 70% of drugs originated by emerging biopharmaceutical manufacturers were launched independently in 2022. Our recently closed acquisition of PharmaLex enhances our portfolio of solutions to support pharma, both large and small, as they move through the development process. We are uniquely positioned to provide key solutions, including pharmacovigilance, regulatory affairs consulting, and clinical trial logistics to help accelerate time to market and support ongoing access across geographies. As these players increasingly manage the entire product lifecycle, a global footprint and comprehensive suite of pre- and post-commercialization services positions us to be their partner of choice. We continue to invest, partner, and build to ensure that we have the right capabilities in place to expand the reach of innovative therapies and transform patient access and support, all while positioning our business for future growth. As a purpose-driven organization, our future will be defined by our impact on our people, the environment, and communities in which we live and work around the world. In February, the earthquakes that impacted Turkey had a devastating humanitarian impact. Following the earthquakes, we committed funds to assist in local on-the-ground support and product donations, and the Merisors Bergen Foundation provided a package of relief funds to our strategic nonprofit partners who have extensive experience in supporting disaster response efforts. Our associate assistance fund supported impacted team members based in Turkey by providing resources for shelter immediately following the earthquake, assistance to those who are hospitalized, and longer-term financial assistance for housing and other crucial needs. Team members continue to support their colleagues in Turkey by taking advantage of our foundations two to one donation matching program and I'm proud of the work our teams have done to help one another in times of need. Our work to support access and equity is key to delivering on our purpose of creating healthier futures and we are helping to build a community where everyone can thrive. We are collaborating and engaging with team members, partners, customers and patients in our communities. working together with a shared goal of creating fair and comparable access. This means working to improve health access and equity in the communities in which our team members live and work. One such initiative is our pharmacy recruit solution, which is creating a program for community pharmacists to contact potential qualified patients and refer them to clinical trial sites for enrollment. We hope that this initiative will help reduce representation gaps that can exist in clinical trial research by leveraging the reach and trusted relationships of community pharmacies. These efforts are deeply aligned with our purpose, and we will continue to work to address the systemic barriers that exist within the healthcare ecosystem, reduce the disparities that disproportionately impact vulnerable communities, and empower more equitable health outcomes for patients. Driven by our purpose, powered by our team members, and fueled by the strength and resilience of our business, we continue to deliver value for all our stakeholders. Leveraging our foundation in distribution and our portfolio of complementary pharmaceutical-centric solutions, we create differentiated value for our customers and partners as a key connector at the center of the healthcare system. As we look forward to the remainder of the fiscal year, I continue to be inspired by the thoughtfulness and tenacity of our team members around the world who live our purpose each day. Now I will turn the call over to Jim for a more in-depth review of our second quarter results and our updated guidance. Jim?