Q2 2020 Earnings Call
[music].
Good day and welcome to the first or second quarter 2020 earnings Conference call.
All participants will be in listen only mode.
The news assistance for some more often specialist pressing the star team.
After todays presentation, there will be an opportunity to ask questions.
So actually question, what's the stores and one on it.
[music].
So what's your question. Please press Star then too.
Please note this is being recorded.
Oh, no converts over Murphy.
<unk>. Please go ahead Sir.
Good morning. Thank you all for joining US This conference call it's Scott.
[music] fiscal 2022nd quarter results I bet in Murphy Senior Vice President Investor Relations and joining me today or do you College, Chairman President and CEO.
Jim Carrey Executive Vice President and CFO.
Just called discussing non-GAAP financial measures.
[music].
There's a gap are provided in today's press release.
On our website.
Amerisourcebergen dotcom.
We've also.
Jason to accompany today's press release to our website.
During this conference call will make forward looking statements about our business expectations, adjusted non-GAAP basis, including but not limited to eat yes already coming in free cash flow.
These statements are based on management's current expectations are subject to certain didn't change.
Of course, he's made up of P. experts and leaders across the company.
I'll tell us force has been advising individual teams in need is and also meets with government officials.
Task Force help us move quickly to implement our business continuity things, which are enabled by the robustness of our distribution network technology and the tenant and innovation about associates.
The shrink about infrastructure head enhance our ability to provide haitians access to the medications they need.
<unk>, we're going to has a history of investing in our businesses and capabilities give me not significant technological and operational flexibility.
Last month, we demonstrated this when we temporary because one of our largest distribution centers out of an abundance of caution given its proximity to a covert Nazi hot spot.
We invoke our business continuity plan for the region and seamlessly transferred volume other amerisourcebergen distribution centers.
The temporary closure to perform extensive fat sanitation measures.
The location.
Amerisourcebergen also moved decisively to partake non frontline associates, we were able to quit t. ship all suitable roles to working remotely.
This important distancing measure was a cheap as a result of close the initial collaboration and strong I.T. infrastructure.
Tops of proactive measures would not be possible without the significant investments. We have may now distribution Simpson networks and technology.
On the pharmaceutical supply side outsourcing and commercial teams have worked diligently to ensure that we are understanding them on and or costing sustainability of supply to maintain the necessary in that tree to a great very neat.
I have made it a priority to keep in regular communication with all stakeholders to base maintain continuity of supply and meet increased demand from providers.
This is being a period when alignment and coordination is vital and we have amplified how proactive approach to communications and engagements.
Our teams have held numerous custom a virtual town halls in order to discuss factors influencing the supply chain.
Lawn our response in business continuity and articulate the resources available to our customers.
These events have facilitated reach thousands of participants and are a good example of amerisourcebergen com transparent and patient focus response.
Despite these uncertain times I have been inspired day by the dedication innovation and thoughtfulness displayed by Amerisourcebergen associates.
We have seen firsthand the importance of our purpose driven organization, especially given the lie to roll Amerisourcebergen plays in the health care system.
It is times like these that reinforce our confidence in amerisourcebergen strategic position resiliency and ability to provide critical services and solutions in any economic climate.
Over the years, we're focused much of our time with investors and analysts on providing visibility into amerisourcebergen or strategic fillers.
The world around US has changed the way we are now working the way, we connect and the way we communicate the key differentiate as it said amerisourcebergen appalling remain constant.
Let me remind you of them and why that underscore out confidence in our strategic positioning.
First we have a diverse portfolio customers.
He anchor relationships in each segment.
We have fault and nurtured longstanding and collaborative partners with a diverse group of customers ranging from community and national retailers to health systems and community positions.
An example from one of these customer groups is not good neighbor pharmacy.
Remain the to be working tirelessly on the front lines to ensure they patients continue getting the case I need even when things are asking most chaotic we live by creating k. packages were at risk customers, providing drive-thru services.
Asking hand, sanitizer or keeping in touch with patients five social media.
Independent pharmacy partners have done and exemplary job or showcasing the crucial part safe today.
Proving community health.
These top of relationships enabled us to capitalize on pharmaceutical utilization in the United States across a variety of settings and distribution channels.
Second we maintain market leading positions in specially distribution and services, where pharmaceutical innovation and demographic trains will continue to drive long term growth.
During this period of social system thing, we've been working without providing customers to help him navigate the complexity of operating in this environment.
Understanding that they are some natural delays in patients seeing doctors when necessary referrals.
We believe the ability the availability of tasting and improve operability or practices will enable ease practices to show more efficiency the complex needs of the new and existing patients.
We have works closely with that community physician practices to provide advance analytics to help them navigate the temporary slowdown in patient visits juju social distancing.
At the same Tom how commercialization teams are working pelosi within manufacture partners, who support efforts to ensure patients continues to be able to excess vital pharmaceutical therapies.
How lashed business has be supporting a partners program that helps eligible unemployed patients maintain access to therapy, despite loss of health insurance Judy <unk>.
Additionally, whoa couriers capability to provide direct you patients cynical crawl services has been a key exit in supporting the shift of help.
Out of hospitals and into the home.
Lowering the burden on hospitals and pharmacies as complexity increases will Korea thrives as his capabilities are unparalleled in its market.
Navigating complexity is a foundational traders amerisourcebergen and it's how is our third key differentiate.
Our ability to provide innovative services and solutions.
Proactively invasive and innovate to be based in class partners as evidenced by the force thoughts that God of us to dedicate capital expenditures in our distribution Center network.
T capabilities and specialized has to my focus solutions.
One such example is a tool we are using to provide their boss analytics rock community physician customers.
Physician practices are leveraging our strategic financial intelligence solution infer God.
Monitor and evaluate potential area of concern.
Given the current situation, we are providing analyses to monitor areas in active barcode with non team hatches, new patient volume transition to tell her health services and potential delay claims processing and payments.
And M.W.I.R. team recognize that the need for engineering practices, you virtually dates with it has become critically important.
In response to business announced a series of technology tools to providing proof remote communication.
April curbside operations, what practices and they patients.
These examples illustrate the whole strength for Amerisourcebergen.
Talent expertise and resources facilitate our ability to provide comprehensive solutions.
Finally, amerisourcebergen continues to be a strong awkward should focus on advancing talent and culture and maintaining strong financial help.
Are tenants and culture have been on full display in these recent weeks.
Unparalleled values for all our stakeholders, we have heard from individuals across the organizations that they are proud to have for a copy like amerisourcebergen without for Aristide on our purpose in values, especially during times of great Sassone.
At the same town the financial health of the organization remained unchanged with one of the strongest balance sheet in company history and it continues focus on cash flow generation.
This financial stability and strength provides amerisourcebergen.
Flexibility and fire power navigate the current environment.
Actively and continue to deploy capital appropriately in order to provide long to value for what our stakeholders.
Now I will turn the court over to Jim to discuss our second quarter results and revised outlook for fiscal 2020, Jim.
Teeth.
Good morning, everyone. My remarks today will focus only on our adjusted non gap financial result growth rates and comparisons are made against a prior year March quarter, unless otherwise noted for a discussion of barn gap results. Please refer to our earnings release.
Before I discussed our second quarter financial results and revise outlook for the second half of the year.
First take a moment to reflect on Amerisourcebergen in the code that 19 pandemic.
February I reached my five year, Mark with that company and over these past several weeks I have never been prouder to be part of Amerisourcebergen.
November earnings call I said, the associate businesses and culture across Amerisourcebergen, our fundamental to our success and to the incredible value proposition, we deliver for our manufacture and provider partners.
While I did not know then the unprecedented circumstances, we find ourselves in now.
Under mental truth remains unchanged Amerisourcebergen talent purpose and businesses have the company and our partners well positioned to navigate new challenges and increase complexity.
Vital access we enable and solutions we provide.
Have taken center stage as health care has never been more important and the need for efficiency and stability. So paramount.
Our purpose and our culture are guiding our company and I feel privileged to be a part of it we have been able to leverage significant internal resources and capabilities to meet the evolving need to have our upstream and downstream partners over the years Amerisourcebergen has prioritized internal investment before all other capital deployment.
Steve already details many of the investments that we are benefiting from now so I will simply say that the result, validate the investments and our businesses.
The infrastructure of tools resources and talent that Amerisourcebergen has amassed enables are robust business continuity plans to ensure continued patient access.
Turning out to discuss our financial results and expectations I.
I will provide commentary and two main areas. This morning.
First I will quickly have our our adjusted orderly consolidate and segment performance and second I will cover a revision to our fiscal 2020 guidance given the current environment I will focus much of my commentary on quantitative and qualitative color that is valuable and understanding the various him.
Acts of public 19.
Beginning with our second quarter result, we finished the quarter with adjusted diluted Dps of $2.40, an increase of or 18%.
Due to higher operating income and to a lesser extent a lower share account are consolidated revenue was $47.4 billion up over 9%.
And by strong revenue growth in both the pharmaceutical distribution services segment and other our global commercialization services Animal Health group.
Gross profit increase 7% or $99 million to $1.4 billion consolidated operating expenses increased 6% at $745 million, while operating expense broken the quarter was driven by the timing of certain one time items, we expect all year fiscal.
2020 operating expense growth to be in the low single digit range.
Consolidated operating income was $672 million up 9% with our operating margin flat to the prior near quarter.
I noted in January to March 2020 quarter benefited from the removal of our many I'm from our adjusted result, after the January decision permanently exit a business, which incurred or $18 million of operating losses in the prior year March quarter.
Operating income still would have grown nearly 7%.
Doubt that year over year comparison tailwind.
Net interest expense decreased $9 million to $34 million the adoption of the new lease accounting standard escalate Twentytwenty continues to have a favorable impact on the interest expense line.
We have benefited from interest income on higher than expected cash balances in the first half of the year given the recent federal reserve rate cuts, we do not expect to have as significant of a benefit from interest income looking at the balance of the year, We expect quarterly net interest expense to be relatively in line with the mark.
Quarter.
Moving out to income taxes are adjusted income tax rate was 21.5% slapped compared to the prior near quarter.
Are diluted shared Pal increase 3% to 207 million shares.
It's still here today, we have repurchase approximately $400 million of our shares.
Regarding free cash flow and our cash balance fiscal year. Today, we had just it's free cash flow of $910 million, putting us right on track with our guidance or full year adjusted free cash flow of approximately $1.5 billion.
We ended the quarter with $3.7 billion in cache of wish for 135 million was held off shore and generally in U.S. dollar denominated holdings.
This completes a review of our consolidated result, now I'll cover our segment results.
Beginning with Pharmaceuticals distribution services segment revenue was $46 billion up 9%.
A segment continues to benefit from some of the next largest customers continued strong growth in specialty distribution and overall market growth.
In the corridor, we experienced increase pharmaceutical demand as many of our customers increase their purchases at the onset of over 19, resulting in higher revenue and gross profit.
However, we also incurred elevated operating expenses and consequently, there was no significant impact to operating income.
Segment operating income increased about 9% to $563 million.
We continue to benefit from our leading specialties position services businesses.
Maintaining a strong portfolio a distribution customer relationships.
Well now turn to the other segment, which includes businesses that focused on global commercialization services and animal health, including World Courier, Amerisourcebergen consulting and am Debbie why.
In the quarter total revenue was $1.9 billion up 13% with all three operating segments delivering double digit growth.
The group had operating income of $108 million up 8%.
Primarily driven by gross profit growth at Am Devon lie and World Courier.
Set in part by higher operating expenses.
This complete the review of our second quarter results. So I will now turn to our revised escalate 2020 guidance.
As we said in this morning's press release, we are lowering professional 2020, adjusted E.P.F. guidance to a range of $7.35 to $7.65 down from the previous range of $7.55 to $7.80.
Normally after the execution and performance of our businesses and the first task.
The raising our all year items.
However, given names unprecedented times, we must provide guidance to reflect the potential impacts of covert 19 or the second half a year.
As we look at the second half a year.
The main factor impacting the range of potential outcomes spend a year is the magnitude and duration of patient disruption.
Analyze and probability weight it the potential open 19 related impacts on our various business units.
Overall, we feel strongly that the current disruption, it's manageable for Amerisourcebergen and our businesses are resilient.
We are also monitoring weekly volume trends to understand business and product mix impacts.
April trends provide some insight and we're encouraging with sales growth overall for our full line distribution and quality.
Are not ontology physician business saw significant weeklies sales decline year over year in the beginning of April but those declines began to soften toward the end of the month.
We anticipate that for this position class of trade delays and diagnoses and necessary testing well delayed future sales ascension administered pharmaceuticals.
Additionally, certain of our global commercialization services and animal health businesses in particular, M.W. I will be impacted by lower volumes.
Overall horror of biased guidance factory sand.
Oh, good shit adjusted E.P.S. decline and the third quarter, some of which is related to the March or a pharmaceutical sales that I called out earlier, and then a return to eat PS growth in the fourth quarter.
Factors that move us within our guidance range.
Magnitude of that Covin related impacts on our businesses and also the speed of the rebound if our businesses.
Factors that are not incorporated into our guidance range because we do not currently expect these factors to occur.
Include a higher magnitude impact of covert nine keen on our businesses throughout our whole or order.
And any significant bad debt expand beyond current assumptions.
The resulting full year guidance ranges art.
Revenue in the low to mid single digit per cent growth range.
Operating income both at the consolidated level and pharmaceutical distribution to be in the low to mid single digit percent growth range.
Operating income for other our global commercialization services, an animal health businesses is now expected to decline in the low single digit percent range.
Finally, given the share buybacks. So far this year, we are lowering our expectation for weighted shares outstanding kept between 206, and 207 million shares down from our previous expectation of approximately 208 million shares over here.
There is no change to our adjusted free cash flow guidance approximately $1.5 billion for fiscal 2020.
Of our cash flow and balance sheet supports amerisourcebergen facility to focus on ensuring continued patient access to care.
In closing there are still much that remains to be learned.
As the country H. businesses and individuals contemplate the appropriate path forward.
But hopefully you appreciate the guidance update and additional polar as we seek to enhance transparency and communication, especially in this unprecedented environment.
Air source Bergen is focused on doing what is best protecting and supporting our associates, providing key services in solutions to our partners to enable continue patient access.
And creating longterm value for all our stakeholders.
We are well positioned fire pharmaceuticals centric strategy.
Strategic relationships across our company and significant financial strength and importantly, we are guide Empire purpose, driven by our talents and culture and positively differentiated by our businesses and our customers.
Thank you for your interest and Amerisourcebergen now it'll turn the call back over to speed.
Thank you Jim before turning a corner over for Q. and May I want to take a minute to discuss commercial slogans commitment to responsible corporate citizenship.
As we highlighted in our recent establish 2019 corporate citizen report.
I'll focus on in spot associates.
<unk> operations.
And healthy communities enables amerisourcebergen too advanced environmental social and governance initiatives to create healthier futures around the world.
Our commitment to the health of associates and communities influences every decision, we make and as soon as a vital god as the world around us continues to change.
The pause several weeks have been a period of disruption for the world as broad many challenges.
Alive, Sabine dramatically altered and the importance of health and wellbeing has has it been greenport.
While I cannot tell you what exactly will happen in each and every elements of our business.
Weeks and months I'll continue that we will emerge from this period will enhance capabilities and solutions.
As well as a heightened awareness of the value we pray for all stakeholders.
Ivy profoundly impressed.
By the exceptional leadership and collaborative teamwork throughout the organization.
Thanks to this we have been able to rapidly a deck and proactively address potential concerns caused by covert 90.
I'd like to thank in particular, those associates on the front lines.
Nurses pharmacists and distribution center associates use powerful devotion and determination made this all possible Amerisourcebergen is powered father talent overhead associates, and we are staying true to and guided by our purpose of the United in our response.
Ability to create healthier futures.
Thank you for your interest in Amerisourcebergen.
These stay safe and healthy I will now two of the Cordova to the operator to begin q. in a.
Thank you we will now began the question that sort of special.
Screw question, the Ripper star good warm on your toes okay.
If you're using the speaker pro as you. Please.
Pressing the keys.
Charter question is per starting to.
Those first question <unk>.
Oh, sorry matching to my name I, Thank you to Steve and the team and everyone that that are doing things appear on that the front lines of this epidemic.
Steve I know you and I have both been around for a long time, we lived through Oh, one o. two 2000 in May 2000 in mind as we started think about this potential recessionary environment.
<unk> 19.
How are you thinking about pharmaceutical utilization looking back at those periods thinking about this what you having your guidance you talked about the rebound getting into your fourth quarter, but generally speaking up you can talk about trends there any trends that you're seeing Sip I think one of the concerns in the market is that it.
Do you see more people getting prescriptions delivered to the home what does that mean for the the Martin I'm not business for home delivery with P.B.M. <unk> versus coming into the pharmacy and then you know how do we think about specialty trends again, he talked about on quality coming back I think about.
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Non on qualities the week, but you know what's your anticipation there as as we start to think about things like Tele medicine virtual care visits.
This world started change with Kobe banking I know that that's a lot to had to break down there, but just want to really understand how you think about the trends going forward.
Hi, Lisa Thank you.
To being around a long time, because you asked me most about Q. and I prepared.
In one question, but you know there's no doubt look I think.
When we started this.
You know school, hoping we could hold for example out board meeting at the end of May.
Impersonal.
Reluctant to to change it to a virtual meeting so it was so there's no doubt that this is being more sustained.
More more serious than than anything we've faced.
Society.
In recent memory, which which.
On on.
We have more than enough people are potting Ahmed I think in health kick look prescriptions on the most efficient form of health care.
Given to be very resilient.
Patients wine to continue to take their prescriptions. So we start with that that's that's a really good business. Some of the trains obviously, it's been difficult for people to gave to physicians offices.
I think it's being somewhat interesting a friend of mine is a cardiologist said people are willing to go to the grocery store, but they're not willing to come visit me when they have you know a serious issue and.
Much more serious issue so thinks is being.
When I think about reopening I hope that the first thing people will do is go back to their physicians offices that dangerous.
Therapist. This is what they should be thinking about that are getting getting back to health and wellness as a priority.
But but you know a couple of trains you know Microsoft's hit on earnings call that Baby you know to you as they've experienced two years of digital <unk> in two months I think into health I've heard as described as 10 years of acceptance.
Having said that pose covert they won't be much more restrictions.
Example, on kind of health from one state to another.
But we can expect that trade I think that generally that he commas.
As opposed to regular matter what is going to be much more important and we'll be thinking about that as part of digital acceleration.
So we'll be thinking about that.
About for the three pillars of Amerisourcebergen community Pharmacy community veterinarians community oncologist, some physicians, especially physicians.
Thinking about how to assist all of them with that digital transformation in fact, our strategy groups. Some of the smartest people in the company.
I'm thinking through that and we getting ready for that.
That's part of the comment about Amerisourcebergen being better prepared.
You know when we come out of this cross us, we'll be well positioned as well position as we were going into it I think you also need to look at our Davos customer base.
You know we are represented with anchor customers in every segment and so we do benefit yes, I will admit to of course that.
That of course, it's higher margin business for us the community pharmacy business than than shipping to 100 my oldest thoughts.
Course, that's true in these different working capital matrix associated with that but we don't expect.
A very significant trained to occur once once things emerge. We do think again that it's very important to bring those customers into e. comments, you know on specialty.
We have seen.
Patient new patients starts slow down we've even seen some very specialized medicines in some of the basic medical business slowed down but.
We do believe.
I think with a lot of logic and experiences those will be some of the first prescriptions and the first visits to come back as our referenced.
Caught a g. is holding up well.
Again, the softness has really been related to load a new patients.
Longer the restrictions continue.
We would expect.
Further weakness or if there's a re emergence of hot spots in certain areas.
You know, but hospitals, we believe all continuing to resume to normal operations and that'll be a positive trained for us.
And.
Pathology reports has been a a key.
Key guiding factor towards getting new diagnoses phone call. The G. and we believe all of those areas of Saudi to open up so I've rambled on quite a lot chat I'm sure we going to get to some more questions, but but excellent question lease and good to hear your voice. Thank you.
Next question. Please yes, Sir next personally I'm for Robert Jones of Goldman Sachs.
The great. Thanks for the question I guess, maybe just to pick up there on the physician administered side.
Obviously, there's been an impact as you guys have high later than we've seen in the marketplace.
Specialist in college, it's has not been.
The visits there have not been immune you know clearly to the pandemic yeah any sense you can give us on how those scripts have trended.
Specifically relative to the broader prescription market and then I know you you said you expect to channel to be down, but can you give us any more on the order of magnitude and maybe timing of how prolonged you think the weakness could be within within the specialty channel.
Yeah.
Hi, Bob Hope Yu Ching well. So you know referrals have been impacted and patients visited some specially practices as I've mentioned had been working through essentially the limitations of operating in a social distancing world.
You know ask I'll I'll physicians have as we understand started using set of health as as much as possible.
And also they've had to use no waiting rooms.
Casing people to come upstairs for visits et cetera, So everyone had to adapt to the new order and and again, we anticipate that would carry on for.
More weeks or couple months.
And of course.
Lower visits and.
Apology reports of fish.
God knows he says has led to a mix of some law styles and.
But we do believe it go so we'll leave it has a two page that's demand.
So when you're dealing with complex illnesses.
The therapies extremely valuable lifesaving choose to those patients and we have space that that'll be the first resume minutes or they will be a real pent up demand.
Those physicians are going to be kind of.
Just to the he off positions, they're going to have two p. working round the top literary to keep up I think once once everyone feels safe to go back to the offices and what's that we see federal very far state.
Students face reopened or Susan states have lace.
It's hot spots areas. So.
We are international business, So we'll see that resume.
You know and of course goes without saying that people with critical illnesses and need to see examined referred and treated participate lists.
He has to be holding up rid us of the well probably because those patients who were under treatment or or or continuing this treatment.
Symbology has has been under pressure.
You know, we're starting to see some some phrases of normalize anymore.
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And again I talked about the the thought of you reports on the hospitals being able to return so increased variability of casing I would allow for more palpable more capable operating environment for positions.
Hope hope that gives you a question Bob.
Jim as a common please yes boss one one thing I'll add up and down.
Within my prepared remarks, but for emphasis.
Of course been monitoring monitoring weekly sales trends in that month of April and of course, we typically wouldn't talk about the most recent months on end earnings call, but given the current environment and wanting to provide that additional holler end.
Already.
I sat in this Steve.
Mentioned during the months of April.
Oncology and the specialty position market, we still soft solid growth and where we saw the decline with sand on on quality physicians specialty market, you know, Steve said things like ophthalmology, but we see.
It see those sales declines.
IRET towards the.
Towards the end of the month and of course, we don't want to put overly emphasize you know the single week or or or a single month, but I think that those.
Those additional numbers and friends are helpful to think about.
Yeah. That's helpful can expect.
Next question please.
Yes, Sir next question comes from her purchaser was not prone research.
Thank you appreciate your comments on the mission reorganization at this time question on the supply side I know, there's some shortages relative to demand.
Shortages relative to find particularly in the generics market I'd be interested to hear your thoughts as we think about creating more resilient thier diversity does that lead to increased and input costs for some period of years as we attempt to.
To build that resiliency.
Yeah.
Yeah.
So.
We have seen the market.
Pre singly focussed on access and the importance of access to the importance of supply.
The things that we've seen.
Eric this year, which.
Surprise, you is moderation of generic inflation and that's one thing that has benefited us.
During our fiscal year 20, and we had called out on a couple of our recent earnings calls that we get started to see us moderation, but we said you know it's too early to call. It friend, that's something that we continue to see the moderation of generic deflation. It you know part of that is.
Tightly related to that current environment and really be.
Increase focus on.
Staff and supply in security and so that is some that is that is one of the things that we've been seeing the last couple of months.
Eric you know it's.
We are spending a lot of Tom first war I'm extremely proud of our supply chain group. They have source so explicitly in so called for the Union.
As I've said before they were really when this crosses hits, we we didn't get everything 100% rock, but we inventory outweigh we needed to and you know.
Assad.
Looking for manufactured partners.
History, along without Faulkner, we battled emphasizing quality unpredictability or.
Us and.
We work hard to ensure that so we have strong manufacturer partners and I think the horses.
I'll Hawkiness if I.
Spoken to a couple of generic manufactured phrases.
They've all been working knocking on the front lawns, and which really proud of the work that they've done juices patients through through this crisis.
Thank you for next question please.
Oh, my personal income for one frame here as well.
Please go ahead.
Oh, yeah, thanks for taking the question.
You know get get to take going on the balance sheet, you know when speaking with investors.
Focus here and so I'd be curious again.
Updated thoughts on Capitol deployment and.
30 is always internal investment maybe see is based on your actions here that that report maybe starting to look more attractive and also be curious how you think about you know the dividend given the market's appetite for yield maybe a shift in the emanate landscape given the current environment and just taking all that into consideration.
And while the opium litigation is still sort of outstanding in any updates there would be helpful. Thanks.
Mmm.
Thanks.
You know I'll I'll, just I'll I'll just reiterate.
You know we've always say.
Diagnoses decide to me when you ever get a question that you don't lock a watch while you're worried about to say Washington was ended up being very true raw fish.
So what you'd worried about whether it was was was regulation and and reimbursement and and it became much more parent over.
And over his but you know the other thing that I think is that we say, which is really happens to be true is our first priorities into another in basements June June June.
Jim.
How about detailed how important knows investments in infrastructure distribution business continuity.
As being in creativity.
<unk>.
Productive for our businesses and you know I would say that the other thing that we've invested in a lot is communications and culture and maybe that's not something that is communicable that well to June basis, but it's feeding create every important.
The conflict communication you've had to our people.
One of the base in basements that we've had throughout this period and next because we have aquatic writing for me it's awesome.
Have had that but it's each have 70% of associates with.
But still be able to support him and we have had town hall meetings, we we have over 6000 evil.
So I think.
That's very important.
As far as in a knows we always aw open to look at it we haven't seen the value offer me a lot of our interest in him and I as being a commercialization services area. We.
We we that is very much we need really good technology. Good people read customer base. It than we were literally fees that you know when we look at acquisitions, they should be additive through our own businesses and you know.
Equal quality, we often just don't see that and then the p. market as being very very rough.
Okay.
That.
This has been editing.
Hand operative, Jim because yours yours.
But.
On.
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He busy with other pandemic, so essentially I was a span of updates and we remain very focused on the country's critical needs is this but we do believe it to the global gentleman intensity offered.
This is one that should be taken news.
We hope.
We hope that.
We hope it chronicity parties will see that the merits of a potential float global framework and I will continue I, if it's on that front.
<unk> has to add something yeah, he emptied what I'll add on on Capitol deployment. It's.
You know.
This year so far this fiscal year, we've got about.
Or $100 million.
Share reworked.
And then also it within our press release today, we announced a new share repurchase authorization, we were getting towards the end day and used up most of our prior share repurchase authorization.
And you do share repurchase authorization today, and then also course as as you're aware, we recently increase our given in in January also.
Okay. Thank you.
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All right next question comes from Charles.
Oh.
Yeah. Thanks, Thanks for taking the questions and you know things role.
Out here.
Deal with the pandemic them.
One of the focus on the other <unk> a segment a little bit here, you know, you're you're talking about a double digit decline in revenues here in the fiscal third quarter.
I guess a couple of questions you know where where is most of it would you say is coming from I kind of gleaned that maybe it's becoming more from M.W.Y., but you know I think it would rule courier there were some revised clinical trials trial guidelines issued by the F.D.A. wondering how much what kind of impacted that having fun curry.
Maybe globally, what other you know what are other countries doing in terms of how they are.
<unk> or modifying their guidelines for clinical trials and is there any impact on the consulting side.
Given that.
Perhaps farmers, maybe a little bit more insulated you know from a direct.
Impact from a code it and then just you know last as do I think you're answering glens questions about opiods at the end I kind of Miss that is is it that you expect that we should get to global framework still at some point or is it something that you would expect that.
Have to wait until the pandemic is really settled down before states.
Could kind of revisiting recruit back to discuss the issue. Thanks.
Yeah, let me start and I'll address the.
The question you had the extent of question you had on our other segment and what we indicated today is that for the segment for the fiscal year, where.
Expecting that decline operating income to being a low signal singled ticket percent range for the I'm fiscal year, and you know two largest businesses and the other segment R.M.W.Y. and world career, So well really kind of focus my remarks, there and M.W. I had a really from Puerto we disclose the revenues and the Q. rubber.
Growth was 10%.
From operating income growth during the quarter, it's really well sufficient but the animal health market will be impacted by covert 19, and M.W.Y. will be impacted.
Companion animals benefits are impacted by social gets can sing production animal will be impacted by substantially reduced sales of protein to restaurants, and hotels and also be impacted by stuff some supply chain issues.
The close packing plants, I think probably companion animals will come back quicker than production animals, and but both markets they'll come back and be strong and M.W. ice really well positioned in the market Steve talking at prepared remarks about some of the technology things haven't got the ice doing when that market comes back.
W. I will be as strong are stronger than they never very quickly on bottles courier.
Really interesting case study if we hit looked back a couple months ago.
We would have thought the world's courier would've been one of our businesses most impacted by the onset of coping 19, because if it's international presence, whether it be in China, or South Korea, or Italy, or any of the other countries where it operates.
The what we found is that something we always knew that world Courier really excels by managing complexity for manufacturers.
And so what we're seeing as worlds perrier, while number of shipments might be down wait stop shipments cake in homes settings is up and as we look at world Courier today.
Impacts of covert 19, we think about the impact of the impacts will be significantly less than what we would have thought of a couple of months ago with regard to the rest of those businesses and the group there won't be some impact and consulting but like the rest of Amerisourcebergen fitness is so resilient and it'll be very manageable.
And then just on updates.
Just to just just to be additive to what I said earlier.
Really know substantives update.
Over the past few months.
A lot of us.
Including that they've begun so happy focus on the pandemic response.
But as we have previously said we continue to hope this an issue or you will see that merits of of potential global framework and we'll continue I if it's on their front. Thanks.
Next question please.
Thorough nice person comes from Stephen delicate with Barclays. Please go ahead.
Great. Thanks.
Even Jim Hope you guys are stands save.
Just a quick follow up on M.W.Y., Yeah, I guess the same there was a pull forward of volume on the human prescription side, yeah. So I go through feeling one color whether one.
Happening on the a companion animals side.
And also with all the headlines right now in the press around.
Protein.
Processing et cetera.
There you know how much of that impacting that business right now, it's going to get a little more color on some of those.
Particulars with an animal health thanks.
Sure just like a lot of our businesses add amerisourcebergen.
Some polls board of revenue.
S.
W.I. and the animal health markets at the onset of Coven 19 that.
That that happened in animal health, just like it happened, Jim and many of our markets and as a production animal market related impacted and I commented dishonest earlier, and it's really two things that I said demand issue from.
Restaurants, and hotels and institutions that are largely clothes, and then their supply chain issues.
Related to.
Close got packaging plans or even things like the packaging required or certain markets. There's a shortage of packaging for certain markets and an oversupply of packaging for other markets, where demand has has gone down and so as we do it looked at the business. We do think that that companion animals will come back.
For them production animals, but as I said before both Marcus will come back and M.W. ice really wells edition. So when the market does come back it'll be a stronger stronger than than than ever.
Great. Thank you next question please.
Paradise question comes from Air cooled Road bear.
Oh.
They think I was about to up to another call. So I'm sorry, if I just missed this answer did you specifically quantify the or X. pulled forward revenue.
Into two q. from three Q., what you're thinking the quarter of a quarter impact of that <unk> was number one.
Number two this may be a bit off topic, but I think everybody's expecting an extremely high flu vaccine season.
As we prepare for the next wave I'm curious if you can remind us what youre historic exposure was to flu vaccine and if you have any early thoughts on what the potential as well as the timing of flu vaccine dosages might be thanks very much.
Sure I'll take the first part a bass.
We didn't specifically quantified the revenue hold Ford, but the additional color that I'll provide that I believe will be very helpful. It's that damn we had as we said we had a revenue and gross profit pulled forward from Q3, 222, and but we also indicated that we had elevated.
So there was not an operating income impact or at least there wasn't a significant operating income impact and to provide a little bit more detail. There. We established a incrementals bad debt reserve of $19 million into March quarter related to the onset of coping 19, and it's not related to any specific.
Immerse, but we get considered the credit environment and financial strength of customers. So that's really what caused.
To be a revenue in G.P.
Poll Ford, but not an impact to operating income and then there were some other smaller costs and another March quarter.
No.
Which has to do with it like important things such as I.T. work from home enabled meant bonuses for front line distribution Center associates, I'm cleaning supplies and services and so for all those reasons. There was a poll through revenue in gross profit, but not a significant impact on operating income during the quarter.
Yeah, you know I'm flu vaccine, we Don comment on individual products, but.
I went off covers task force.
I actually had the P.D.F.'s today with him and we all are starting to think through what could be much more.
The same demand and you know vaccines his little but I'm user list just to give you some color.
It is an area with manufacturer's do do more direct sales and they all are the distributors you know if you look at the parole prescription Balkan Amerisourcebergen caught on the case in him very calm off your chip, but when it comes to vaccines is more distributed his position to position distributed et cetera.
I enrolled so.
As a much more complicated market. So I hope that gives you something.
Do expect increased them on for sure.
And we also expect manufacturers will stay about so I mean, we have calm operator for one more question.
Another question comes from George <unk>. Please go ahead.
Yeah, Good morning, Steven Steven Jim Thanks for taking the question I guess, just too quick wins I guess, Steve could you differentiate and this is particularly I'm asking for comments and have marched through April the performance of the chain drug store versus the independent drug stores that they basically perform the scene, where it because seen any meaningful different.
I don't know if he would remind us kind of the non ontology versus ontology.
Sizes of the inside and specialties segment just.
So we can kind of put some context around the under performance of the non in college you businesses versus the ontology businesses. Thank you.
Charles.
They have these early changes in prescription data, which off you know sort of in <unk>.
So they would see it on some increase utilization neither would I think you talked about nine days from.
<unk>.
Today, but.
You really market share retail market shares held up pretty one I think overall.
Things that aren't customers would adapt.
General belief is that these will settle close to two way they should be and you know the Sydney reiterate that amerisourcebergen is well position with t. angry customers, including no matter what estate.
And you know of course, I'll spatial descriptions business will be.
Great to drive a for longterm grow up so.
Whereas the non 30, so I am going to I'm going to close up.
Just one thank you all for your Tom today.
I have to sincerely say that during these parks three months I've never be proud of the role that.
Amerisourcebergen place to ensure healthier futures.
And before we close the coal I want to take a moment to thank all the move members of the health kick community, who are working tirelessly to help our country and indeed the world managed through this crosses Hawks and beach sympathies lie with all the many victims of this pandemic.
A good day and thank you for your intention interest in Amerisourcebergen. Thank you.
Thank you. This includes for this conflict scroll humid out as much reminds me of order food there.