Q3 2020 Amerisourcebergen Corp Earnings Call

[music].

Hello, and welcome to the Amerisourcebergen Q3, F. why 20 earnings conference call.

All participants will be in listen only mode.

Should you need assistance. Please send <unk> specialists are pressing the star keep followed by zero.

After today's presentation, there will be an opportunity to ask questions well. That's a question you mean press Star then one on your Touchtone phone.

Try your question. Please press Star then.

Please note today's event is being recorded.

Oh, no teleconference, or what about Murphy head of Investor Relations Mr. Murphy. Please go ahead.

[music] still 2023rd quarter results.

Today's call will be discussing non-GAAP financial matters.

Solutions. These measures to GAAP provided in today's press release and are also available on our website.

[music] slide presentation to accompany today's press release, our Investor website.

During this conference call will make forward looking statements about our business.

Expectations on adjusted non-GAAP basis, including but not limited to.

Earnings per share.

[music] statements are based on.

Current expectations are subject to uncertainties and change.

Yes, no cure isn't assumptions, we refer you to today's press release.

[music] Amerisourcebergen assumes no obligation to update any forward looking statements on this call cannot be rebroadcast.

Expressed permission the company.

Two questions after todays remarks by management.

Your question to one per participant our for us to get to as many participants as possible.

With that I'll turn the call over to Steve.

[music]. Thank you Beth good morning, everyone on today's call Amerisourcebergen delivered strong results in a third quarter up 2020.

Then father is that it's about business and also she has worked diligently to ensure continued patient access.

Our teams are leveraging amerisourcebergen scale expertise and culture to develop a collaborative innovative services and solutions drop off.

As they navigate the complexities.

Environments.

My remarks, this morning will seem to on two key topics.

I will highlight how amerisourcebergen continues to spread tech.

Support our associates, specifically, how we remain focused on advancing.

And culture.

Better match Korea, and diversity initiatives and why did she is a clear competitive advantage. So.

I'll discuss how amerisourcebergen disposition.

Value over the long term for our shareholders and also for our associates customers suppliers and the communities we serve.

As we shared last quarter.

The health safety and well being about associates continues to be our top priority.

We have taken a number of steps to support our associates, particularly those on the front lawn guided file purpose and value at every turn.

We have prioritized the safety of Associates group continued to work diligently to facilitate patient access supporting a manufacturer and provide a customer as well as navigating these challenging times I remain incredibly proud of all the work associates undertaking across.

All areas of our business.

So I just got starting school last November out Canada is one of Amerisourcebergen biggest competitive advantages.

Our associates power, our culture and I've driven in Boston.

We are good night.

Responsibility to create healthier futures and miscues demonstrated across the entire organization.

We know the experience of all associates is enhanced when they believe in the values and purposes all day employer.

As a company we have already caused.

Focusing on talent development Korea growth and Dobesh city initiatives.

In May Amerisourcebergen was nice adoption city Inc. noteworthy company, what a fourth consecutive year due to a hiring retention and promotion a woman minorities people with disabilities, LGBTQ people and bad fronts, why I'm proud that amerisourcebergen has been.

The recognize fraud diversity and inclusion habits, we all committed to fostering I'm, even more shoppers and increase the workforce, we are dedicated to growing learning and shaping our approach to diversity and inclusion well debate about workforce and the communities we serve.

I see in mind, we took time over the past several weeks to discuss social justice and ratio in equity.

Foster that candid dialogue to discuss topics, including racism I'm conscious bias.

We facilitated board associate councils exactly does and how does he does it cause I bought us he had to shave aims shot at personal experiences you dealing with discrimination and systemic racism.

These discussions somewhat difficult or a name history step to foster crude change.

We recognize this is an ongoing effort and we are committed to continuous improvement there is significant intrinsic value created for all stakeholders by having a strong culture and diversity that Myrisk society as a whole.

I look forward to sharing more about the properties, we are making in this important area.

Orders to come.

Now turning to our results the June quarter is demonstrated the resiliency of our business.

As we successfully manage through the new challenges across the global health care system.

The supply chain has become the invisible pillar all medical innovation.

During the covert 19 pandemic amerisourcebergen and no industry as a whole have become I understood for what we truly are a strategic asset as a way has just been heartened around the importance of pharmaceutical security channels that you got and sustainability of supply.

Amerisourcebergen is taking this opportunity to deepen our relationship with our partners and expand on our value proposition as we continue to execute pharmaceutical centric strategy.

All key Differentiators that service, but there's a lot I bought company continue to position us for continued value creation.

First our broad and strategic relationships provide stability and partnerships with key customers each segment of the healthcare system.

Members about good neighbor pharmacy network demonstrated the central role they play within their communities during this difficult Tom.

I wasn't as an independent pharmacists.

Yes, he technicians and stopped man, but I'd be working tirelessly on the front slots to ensure they if patients continue getting the kid any even when things are actually in most cases.

They have wanted to accident lightning speed to combat the pandemic and serving communities in new and innovative ways, whether through delivery cave packages to an immuno compromised well offering a meal to those who lost their jobs during this crisis.

Independent pharmacies have supported patients while maintaining the highest level of customer service.

We are proud to partner up with these frontline health care providers to deliver K to those who need if most.

Second we continue to bolt on our leadership position in specialty distribution and services.

Our industry, leading specialty distribution businesses have amerisourcebergen position to leveraging our relationships and expertise and a key part of the market.

We continue to see increased by some of that utilization, particularly in oncology well I always business differentiates our value proposition for both top robotic customers and manufacturer partners.

The growth we are seeing in five some nice uptake is encouraging for the future not only for amerisourcebergen, but patient access and the U.S. healthcare system overall.

On the distribution side, we've been working coastie without probiotic customers as they take the necessary actions to improve operability.

Community based practices have adapted to continue treating patients through tenant health visits and by implementing new safety protocols decreased the most pretty cool cases in the office.

In order to minimize patient care disruption health care providers, if that makes it new dismissing protocols have office the procedures and acquired additional P. E four staff.

The value proposition of community base case has never been clear right has a pause few months have further illustrating the vital role, especially practices in the treatment of critically ill patients in controlled environments.

Patients are keenly aware of specialty physician practices, but its teacher provide safe.

Bad debt and convenient treatment at a time when health and wellbeing have never been so important.

I mentioned last quarter. This initial restrictive measures negatively impacted nexus Sri patient access she thinks extra screenings and facing as a coffee continues to navigate the complexities. All this kind of pick it is why phobic carries not deferred providers or more equipped to offer right in that Karen.

Environment, she the benefit of the health and wellbeing all patients.

Third Amerisourcebergen associates continue to focus on providing innovative services and solutions route partners in the healthcare system to navigate these challenging comps.

Amerisourcebergen is uniquely positioned to help our customers in the car environment and as far as focused on providing them with important resources.

For example out sourcing and distribution teams are leveraging our commercial expertise and data and analytics capabilities to provide manufacturing and government entities with actionable channel insights.

We are able to provide significant transparency into the pharmaceutical supply chain and related end markets, which is important resource I stay called the seat to be fully informed by data is that face new challenges Amerisourcebergen is focused on being solutions oriented and continue to identify ways.

To add bad you, particularly at this top of heightened focus on the pharmaceutical supply chain.

And <unk> income you I don't want health business, we announced two new offerings designed to help in there and manage the financial impact of causality.

The offerings that out practices to provide flexible financing solutions for clients, who maybe striving to afford quality camp, where they face what we've made just one more certainty you know I'm serious economic landscape.

The offerings ease the financial burden or both we've seen an emergency paid K, well say, helping practices achieve more consistent revenue long term Clos engagement and most important be better outcomes for their patients.

Finally, turning to out for differentiator.

We continue to focus on strong corporate stewardship in order to create value for all stakeholders.

In addition to something they should US I mentioned earlier during the quarter Amerisourcebergen Foundation brought together more than 60 nonprofit partners in peers NPS during their virtual conference to facilitate collaboration shared best practices and learn from one another.

Based focus on developing strategies to address some of the most difficult issues affecting society today.

Including pandemic resilience, social Justice and racial B quality health and community improvement.

I would suppose spoken is committed to strong corporate citizenship and continuous improvement we are driven by a patterns and culture differentiated by robust customer relationships and leadership in specialty distribution services and you know I said in our responsibility to create healthier.

[music] chips.

How bad do use strategic partnerships and market leadership position Amerisourcebergen do you continue to create long term bad you <unk> or Abbas they called US. Thank you again for your interest in Amerisourcebergen.

With that how could I will chose a pool I wish a job for a more in depth review about third quarter fiscal 2020 results Jim.

Thanks, Steve and good morning, everyone. My remarks today will focus on her adjusted non-GAAP financial result, unless otherwise stated.

Well Grayson comparisons are made against the prior year at June quarter for detailed discussion up our GAAP results. Please refer to our earnings release.

As we entered the fourth quarter up our fiscal year I can say without hesitation that I have been profoundly impressed by the execution and dedication across amerisourcebergen and far businesses have proved resilient as we continue our same telemark a neighbor.

Link patient access I.

Hi, I'm, even more proud of the engagement and commitment by our associates and leaders as we come together to address systematic races, and commit kept progressing towards quality and justice and everything we do.

The actions, we are taking to improve diversity <unk> equity and inclusion will make amerisourcebergen and even better company.

Turning now to discuss our third quarter results.

I will provide his commentary and two main area. This morning first I will detail our adjusted quarterly consolidated results and our segment performance second I will cover the upward revision to our fiscal 2020, adjusted EPS guidance moving now to our third quarter results we.

Finished the quarter with adjusted diluted EPS of <unk> dollar an 85 cents an increase of 5% primarily due to solid operating income slightly above prior year, a lower effective tax rate and a lower share count.

Our consolidated net revenue gross profit operating expenses and operating income.

Each up only slightly as the timing of coping related impacts dampened our growth rates in the June quarter.

Rather than spending time discussing these small year over year increases at the consolidated level I want I well instead focus on the segment level items can provide incremental color in the guidance section.

Net interest expense increased $2 million $38 million, primarily due to a decrease and interest income, resulting principally from a decline in investment interest rates.

Given the current interest rate environment, we expect our fourth quarter net interest expense to be in line with a third quarter.

Moving now to income taxes, our effective income tax rate was 18.8%.

Oh from 21% and the prior year quarter due to a benefit resulting from the discrete tax item.

Our diluted share count declined 3% to 205.5 million shares primarily due to share repurchase as net of stock option exercises regarding free cash flow in cash balance you're taking our adjusted free cash flow was $715 billion.

Our cash flow guidance for the fiscal year against unchanged as we expect the fourth quarter will generate meaningful cash flow.

We ended the quarter with $3.4 billion in caskets was $490 million was held offshore and generally and U.S. dollar denominated holdings.

This completes the review of our consolidated results now I'll cover our segment results.

Beginning with pharmaceutical distribution services segment revenue was $43.6 billion up only slightly due to increased March quarter customer purchase then associated with the onset of open 19, which resulted in fewer purchases in the June quarter.

Segment operating income increased about 3.6% to $427 million with our operating income margin up three basis points as we benefited from lower administrative expenses and higher gross profit.

That's a reminder, this segment's operating income had a 9 million dollar tailwind due to the excess.

Our many EM business.

While the timing and complexity of the impact of Kobin 19, somewhat distorts the comparability of our numbers this quarter and it's abundantly clear that our pharmaceutical centric strategy deep relationships talented associates and leading businesses have enabled amerisourcebergen resilience.

They teams and its don't see s. across our pharmaceutical distribution businesses have done commendable work to deliver on our purpose of being United and our responsibility to create healthier futures, ensuring safe and secure patient access to pharmaceuticals, and supporting the evolving needs that bar menu.

Faster and provider partners.

I will now turn to the other segment, which includes business as they focus on global commercialization services and animal health, including World Courier, Amerisourcebergen consulting and MW why.

In the quarter total revenue was $1.8 billion up 4%, primarily due to growth and our consulting group and World Courier.

Operating income for the group declined by $12 million worth 13%, primarily due to impacts from coping 19 at our MW I business and main we called out expected volume pressure four MW like business associated with opened 19 related impacts during.

In the June quarter, we saw MW like companion animal business rebounded very well and some benefits its normalized however, MW ice production animal fats next step down meaningfully in April and again in May and then leveled off the production animal business continued to see pressure stemming from <unk>.

Decline and food service demand.

That's good place their review of our segment results. So I will now turn to our fiscal 2020 guidance.

As we said in this mornings press release, we are raising our fiscal 2020, adjusted EPS guidance range from $7 in 35 cents to $7.65 to our new guidance range $7, an 80 cents to $7.95 as amerisource.

As a part against business has proven even more resilient than we had to incorporate it into our previous range.

When we provided our guidance back in May we anticipated that June quarter, EPS would decline due to the March pull forward of pharmaceutical sales and negative opened 19 related impacts on our various businesses throughout the quarter, we characterize the expected disruption stemming from coping nine.

Team as a manageable.

Our teams and business and exceeded our own expectations and worked diligently to successfully meet the needs of our customers.

We have seen stability and returned to growth in both our full line and specialty distribution channels as our business saw a return to growth over the course of the corridor I.

Our distribution business is soft sales increased from May to June based on the average weekly sales and each month. These positive trends as we exit in June set us up well for the fourth quarter.

For example, our specialty physician business has proven resilient as practices adaptive to operating in the current environment, allowing them to meet the needs of their patients.

Our non oncology physician business saw a steady returns to accrete cobot levels across therapeutic areas.

Additionally, we have seen increased demand from our health systems customer base as hospitals and clinics have adjusted their operations to provide care in the current environment.

And our global commercialization services and animal health business is world Courier has continued to improve its value. During a time of increased complexity with June being a record month or the business as volume and wait were up globally.

Turning now to our updated financial guidance metrics for fiscal 2020.

Revenue is now expected to be in the mid single digits percent growth range as the June quarter proved to be resilient as dr. patient interactions returned and patients focused on inherent and wellbeing, allowing for continued care and pharmaceutical utilization.

Turning now to operating income we now expect to grow operating income in the mid to high single digits, yet percent range as a result of raising our pharmaceutical distribution operating income guidance to the same range and to reflect our improved expectation.

For the other segments operating income to grow in the low single digits. Instead, if I declined for the fiscal year.

As a reminder, due to exiting that are many EMD business. The pharmaceutical distribution segment has a tailwind of $35 million for the fiscal year, an $18 million said that tailwind if in the fourth quarter.

Regarding tax rate and train the last quarter of the year, we are narrowing our tax rate guidance from a range of 21% to 22%.

To guidance of approximately 21%.

Lastly, we are slightly lowering our expectation for capex to approximately $375 million down from $400 million.

Pertains to fiscal 2021, our corporate planning process remains unchanged, we will provide comprehensive financial guidance at the end of the current fiscal year. This approach allows for guidance to be fully informed by the output of our year end business planning process.

In closing I continue to take great pride in being part of Amerisourcebergen and I'm inspired by the commitment sincerity and focus on execution that are embedded and Amerisourcebergen is culture, the resiliency of our business and the determination of Barr associates to leverage among.

Resource Bergen knowledge and reach makes us even more confident today and we will emerge from this unprecedented time with enhanced capabilities and innovative solutions for the health care system.

Our company is strong and well positioned and we are committed to making it even better for all our associates, which will enable and accelerate long term value for all stakeholders.

Thank you for your interest and Amerisourcebergen now I will turn the call over to the operator to start our key way.

Operator.

Yes. Thank you well now begin the question and answer session to ask questions via Press Star then one on your Touchtone phone, if you're using speakerphone. Please pick up perhaps that before pressing the keys to try your question. Please press Star then too.

This time, we'll pause momentarily to assemble the roster.

And the first question comes from Steven Valiquette with Barclays.

Oh thanks.

Good morning, everyone. Thanks for taking my question I guess I was curious just on the strength of all the resolved just sit here whether or not there is any notable changes in the a generic pricing trends, particularly on the buy side part of your ledger without any factor in the takes profitability ups better outlook for the remainder of 29.

Yeah sure I'll.

Handled that thanks to the question, yes. It's we've indicated previously in fiscal year 20, we have seen generic deflation moderate compared to prior years.

I think there's probably focus on a by manufacturers on maintaining supply in the current environment and so you know overall, a while we still are seeing generic deflation we've seen it moderates and that certainly has been a benefit compared to the past years.

Okay, and then also as far as the profitability of bio Similars within fiscal it's one is that kind of also accelerated at the are gone on.

Yeah, Hi, Steve I think so the question. We yeah, we were very pleased with the properties and by some of that's Oh, we yeah, we actually I'm quite proud of a hero.

Couple of about two years ago, right editorial, saying I had it was true at either throwing the towel by some of those and you know I think that subsequent events a proven that it's really increased patient choice I think it's sad. It's the role of Biosimilars will be to make role for the new wait for the new innovative drugs, so I, but its a.

It's a very important part about business and island, but I on the contracting had physician services organization has been very very profound the ambulance appetite added you having education to the provider community, especially provider community about spots of isn't we radiology.

Mmm, having an impact went out on our customer base. Thanks.

Thank you and the next question comes from Air Caldwell with Baird.

Thanks, very much good morning, a couple of questions first one I'm curious.

Any cost structure, there shouldn't be actions, we're taking them response to go but how much of those might persist over the next few months quarters.

And then secondarily new markets you you've mentioned some new offerings in them to be wide to help their accounts with.

Ah challenges there customers the based I'm curious if you've seen any other new market opportunities that have arisen due to go but you know because it does it change any of your strategy or long term thinking I'm, where you're investing and how you're going to market. Thanks very much.

Yeah I'll.

I'll start and then I'm sure.

Steve would want to add in terms of cost efficiency really in this.

Environment during the June quarter, we were really.

Focused on non skimping on costs on we have some extra compensation that we invested in our frontline associates to really you know on work relic and there.

Hertz and our distribution centers and that's worked out very well we've had additional.

Cleaning costs and those sorts of cost and our distribution center. So we've got some additional costs I'm really we've also had natural savings and other areas such as I'm travel travel expenses were well down during the during the quarter. So those things due in large extent offset each other and you can see we did quite well.

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During the quarter I'm from and from an operating expense standpoint, some of the things you said that you know what are we doing from a from a customer standpoint, you mentioned.

Thank you Steve commented on MW lie during his script. There are really you know a number of value added services, that's down MW I. It has been rolling out with the customers to help in this environment, whether it be you know tele health, our digital payment plans that Steve costumer, social guesstimating pools like parking lot drop off so he.

Sorry value and tools that MW I for binding to customers.

Okay kind of size same type of thing you know, we've just seen I'm getting a sense like world courier be able to provide even.

More surfaces, and managing complexity and this type of environment and as the air Transport capacity was limited customers put more value won the types of services spend world Courier, Ken can provide so those are just a couple of they couple examples of additional customer service since we were providing yeah. The only other thing I'd say is.

That you know weve look for ways to expand our services and and be a innovative unresponsive to this new environment. So I you know somebody innovation has raised the internal the way that we communicate without so is it. So we do these that global calls and we have usually six to 7000 people on them make every sale.

Good Friday, and that's a great opportunity communicate but you know we've always had done a lot of things like again I talked about high on earlier I, obviously that would choose to transfer they meeting environment to online you got a lot of companies are done that but it's still being very important though we have that strong saying to continuity without customer.

Yes.

Yeah, I think we've been able to to manage and this digital environment with both large and small customers and and that's been very important that the small customers really appreciate that back touching base that they've ethic connectivity. So thank you.

Yep. Thank you.

Thank you and the next question comes from Lisa Gill with JP Morgan.

Good morning.

I just had a couple of question and I don't know if it's maybe a little too early to start thinking about your.

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[noise].

Moving to.

We go into 2021 quarter better than anticipated.

Like your guidance for your fourth quarter.

Fairly conservative.

Given what you were able to do.

Can you maybe just.

Think about the moving pieces went to 2021 and then.

So just wondering how things are.

Right.

Part this is fully back up.

I, you know, what where they've had to buying even in in July and and as we think about.

Okay going forward.

Yeah, let me leased to address the first part.

Part of that as we're looking at 2021, and then I'm I think there was a follow up there on specialty with.

Of course, Steve will address and I will say that you were breaking.

Breaking up there on the telecom and so I, but I think I caught most of the.

Skin, so I'm heading into 2021 work in the midst of bar internal planning process like we always are at this time of year. Some of the things said, where I'm looking on if we're doing our 21.

21 planning our.

Hi, Kobin impacts and what can be the cobot impacts on the.

On the health care system.

Oh, we're looking of course and all of our business unit expectations. We're looking at Opex. We did have some benefits that opex in the most recent quarter, which might be I'm hard to get that level of opex benefit in fiscal year 21, particularly as we look at things like re entry costs.

In fiscal year 21 of course, when looking at brand and generic pricing and we've talked about some of that I know moderation of generic deflation that we've seen this year and what happens there in fiscal year 21, So we're really focused on.

Expanding our our value proposition deepening our relationships and growing operating income as we.

As we must get.

Fiscal year 21, and then also you know one thing that is.

Important to note as cheap as you look at fiscal year.

21.

Well when we do come out guidance compared to fiscal year Twentyth. We did have a meaningful pharmedium benefit in fiscal year 20 on size as I said in the prepared remarks about 9 million and that June quarter about 18 million expected in the fourth quarter and 35 million for the fiscal year. So that's another thing to take into.

And then I think you had a follow up on specialty.

Yeah.

You can hear me, but does that sits on the specialty I just want to understand I'm like like.

Going into July the recovery that.

The marketplace.

You know anything driver, it's around the specialty that that'd be helpful.

Yeah, Yeah Hardy send a I've a question for you I I hope we got to have your conference in checking [laughter] I guess I guess, so what we'll see so but.

I'd also say it seemed that that means.

[laughter] so yeah, it would be a good chunk to see everybody again specialty is.

[laughter] look where you had if you look at oncology, obviously, our biggest business. Yeah. We were off a couple of the same to in April and then at recovered very well when we back to a levels, we will refer back to pre covert levels facing.

In oncology and some of the other businesses that was a little bit different some of the basi both businesses like there were a bit we kept but we now seeing them outrageous doctrine and I'd say that just you know going into July this construct the trade the stabilized. So it was a pent up demand. So we saw some you know already strong numbers and.

It's not like that.

I'm not I'm sure you way, it's got to keep on going up.

So it's back to pre carbon levels and.

You know I I think that.

Again, if you have a mix if you have methodology generation.

Obviously, we haven't chemotherapy treatments those are critically important and as soon as you all sites you got to Richard Yeah. One take one thing that's very interesting is that the distribution add to the distribution off services into the community a full for specialty is unique in this country and it's it's proven I think.

I'm very very enjoy very durable for the patients and that's what we've always tried to make the point that is very important that patient access Kate we have I need to and I think in this can this crosses a lot of patients fell a lot site prep going to the physician's office that then they would into Uh huh.

Health system or even a larger outpatient system. So it's a good example of the resiliency of all the U.S. healthcare system.

The way that it's a we have strong community practices.

So thank you.

Thank you and the next question comes from George Hill with Deutsche Bank.

Hey, good morning, guys and thanks for taking the questions maybe two brief ones given how you guys adjusted the guidance I assume that the trends in the quarter pharma business from July kind of reflected what what you saw at the end of June tubes linked in July has been good and then maybe just a quick comment on what you've seen the world Courier business as it relates to the ability to deliver all products and samples the clinical.

Trial sites or what's the an interest in any commentary around that business. Thank you.

Sure and started this Jim I'm happy to answer that.

No the board I'm talking about July I think what was really.

Notable and important news, we saw really all our distribution businesses grow from.

The month of made to the month of June and so we really saw no very nice.

Growth in June compared to May and then what we saw it.

Is the businesses stabilize in the month of July.

Consistent with a with a June so you know we.

We.

Where are our are pleased by the by the trends that we're saying of course as Steve said you know what we saw in July was more of a stabilization Hum and and then see a world Courier as I indicated during the prepared remarks.

World Courier had a record month in the month of I'm Jones.

Just a very strong results customers really placing value one world Courier service I, you know broker areas I've said before we've said before Billy excels at managing complexity.

And as you know air transport capacity was eliminated customers value. The service there were some koeppen related opportunities like Scott like direct to patient and so I'm kind of overall just staying.

A positive trends at World Courier that like our other businesses I'm Gonna we saw good growth in June.

And it's continued in July.

Couple of thank you.

Thank you and the next question constant Charles re with Cohen.

Yeah, Hey, thanks for taking the questions. Maybe just two questions here you guys didn't really touch on a sort of the current opioid or litigation then any updates there that you could provide us with.

Obviously, some recent news there that them like the judge that's kinda shutdown a.

Request for some piece from the the plaintiffs attorneys and any kind of update you can provide us there.

And then secondly, you know I I think there's also been a lot of talk recently about on because because of the crisis. It impart onshoring production of our.

Other generic drugs or a P. I sport for those drugs or you know can you give us your thoughts on what that would mean.

Are there more broadly for the generics market or more specifically, what it might do on the distribution side of things. Thanks.

Yes, Hi, Charles Yeah first of all non opioid yeah. There's no there's no substantive update 'em. So you know we we sit on the law school that we've been focused element the pandemic and I think a lot of that kind of parties have a have also been then given the complexity and the issue of the the number of parties involved we continue.

You to prepare for trials, obviously, we continue to hope that the.

The Counterparties other parties said it will see the merits sort of potential global a framework.

And we remain focused on you know that seem to work we do in the supply chain to meet the critical needs of patients during the pandemic and they just a repeat the second part of your question. Please.

Yes. It was you know the yeah. The the other just there's been some talks about bringing onshore manufacturing sorry, I'm, sorry, guys et cetera.

Sorry, I and you know I was just on a call at this week with.

One of the standards as he was involved in this and they were talking about P. P. But also a FBI and.

No. It's it's there is some discussion in Washington, That's a this is just from you know the reading I do and and different calls. If we were on then that's parts of P.P. and maybe even a kiosk or central security infrastructure needs of the company of the country.

So oh of course, these things don't happen overnight.

There's also a lot of Unbar main toys shoes is the cost issue, which I think everyone is always taken very seriously the global supply chain has become incredibly complex and.

And of course Amerisourcebergen a work with policymakers are all throughout services.

As we have offer our expertise and also work with with industry. So to see if they are any any any major changes and if they all are I did not have to be done with respect to so you'd have to be doctor. The legislative process. So we will be involved in that so thank you.

Thank you.

Thank you and that's present comes on Ricky Goldwasser without Morgan Stanley.

Yeah, Hi, good morning, So there's some headlines last week on government working.

With the private sector.

The distribution administration on the Koby texting swung.

Good about kind of freight your capability, how do you think about available capacity and when we think about the channel that that's going to be administrative error, well Werder <unk>.

When you were infrastructure and relationship.

Yeah, Yeah, Ricky high I'm. Good you can't go force. We you know we all are we are deeply involved in the supply chain I mean, I actually was on a panel for the World Economic Forum, a few months ago and you know I've said it wouldn't be you'll talk on speak the rest of world for the U.S., we have deep coal supply chain capabilities.

Now some of the reported temperature storage requirements are all quite significant well see what the final.

Oh stage and.

Requirements, all but I'm confident that you know where you would work with the manufacturers.

To make sure that said, we can meet the needs in the U.S. market. We of course, we have a very large market share in other countries, we probably wouldn't say as provenance a role you should not of course that that we had been involved in equity active discussions with manufacturers.

As we start to glad it's probably to be honest the city advanced that I think amerisourcebergen would be very galvanizing exhausted around you know just just as part of the healthcare community. In this you know smart global citizens I know you've got yeah that they could be an emergency use authorization for the first.

This will healthcare workers and whatever it is we have the capabilities you know we I have good insights into the way. The hotspot saw we have a good capability to blade Oh its data stage together, so I I feel confident that you know if off to serve amerisourcebergen will be strongly position to be able to do that so.

Thank you.

And then just one follow up on the seasonal flu vaccine or their call today with a discussion around oh being hum during normal.

Flu vaccine.

Season.

How does that incorporate into your guidance and and normal year, how can you maybe get a sense.

Well the contribution from flu vaccine in a normal year versus what it could too.

Yeah.

You know you know Ricky I'm. So vaccines are much more distributors that that then other products because there's so many different points off service.

Additions offices for example that do not use specialty products out there not typically amerisourcebergen customers that they would access products. We they're back they are made suits distributed often.

So you know they there's a lot of out of companies besides out to based on peers that do vaccine that distribution. So I will say manufacturers do do some of that direct.

Who makes good see it's not material to IVC itself you know, it's a it's not a very expensive product yeah. It is somewhat difficult to manage it I was responsible for me I response would be for many good for you as because it was and I see division, which reported into media.

We would literally start working on it.

As the season ended we started working on bookings and.

Issues with the manufacturing the strength, but it's not material to IVC about 40 to 45 weeks into the country.

As you know gates that the vaccine.

Space that it could be higher this year and and we hope it will be high this year. So.

That's that's where it is a drip anything to add on the materiality out because you had to catch up it's a very.

Relatively small part of our plan for the balance some of the or in our brand guidance, but it could drive business in our community fits that after community pharmacies, you know as they do innoculation, so that could be a good way too well patients just talk it used to going back its pharmacies that was you've been reluctant to do it. So I think that's out there.

Could be a positive benefit from this flu vaccine your but.

That's just.

I'm not yet so thanks Ricky.

Thank you and then next question comes from airports or what not from research.

Thank you question on the health of the independent pharmacy marketplace sounds like the move to 30 to 90 day and catch discount card has been a pressure have you seen those pressures and then within your assets, Yes, I O B you off for any tools for offsetting particularly the cash.

Discount card pressure.

[noise] I'm, sorry, if you look at it very chi.

You look at the overall.

The Grand scheme off of the marketplace. They there's not a not very significant market share shifts.

Yeah of course in March we saw a male uptake quite significantly and we as well well documented that there was an increase in the 90 day scripts.

Hi, everybody you know the counter argument to that is that is an increase in patient adherence, which is very good full well business and that saves me why did the things.

Well I remember when I first became CEO not totally type pharmacy group. Adjusted you guys have to do 90 day scripts and that Com 13 years ago must play some people would fall as with any understand your body that scripts, but it's certainly something that has become more common in the markets as you know.

And again, you know we would point to the unique role that the community pharmacist have today.

As one of the most trusted and accessible health care professionals and literally off with very good value I mean, youve got to pick up your generic prescription and pay a Bob go to co pay in most cases and get access to a professional I two independent pharmacy. So yeah, we we noticed that independent pharmacists who have some.

Headwinds, but we working well with them, we think we add a lot of value and that we think that they again will carry on differentiating themselves spot in customer service and the entrepreneurial approach the business jump yeah, Steve, though the one thing I'll add Eric is that and as that shape.

The rebounding independent pharmacy sales over the quarter was comparable to our many of our other distribution businesses what pull forward in March.

Lower sales and April, but then like our other distribution businesses you know a rebound in sales growing from May to June and then stabilization in the month of July consistent with agenda.

That's it thank you [laughter].

If there was concern that we see furloughs moved to unemployment in more cash that could be been things, but as you see it today you haven't seen a significant change and the independent.

That's fair.

Yeah, I mean, we've always said you know I I think we said you know many years it when the affordable Care Act was implemented that we may be sold we thought it might have accounted for 1% to 2%. That's the most impact on scrip audience, because there's no doubt that having insurance coverage is important for patients.

So you know, it's that's been the speed so profoundly so seismic that the impact to deployment that you know that we.

It's hard to say, it's all the trains here, but you know you maybe there's also a lot of prescriptions are axis Fresenius Rod genius, all on Medicaid often and they have supplements insurance and they they all sometimes not employed or they have their retirement savings and you know we don't as you.

Well no we don't really differentiate between Medicaid yeah, we setting an aggregate. So it doesn't really matter trust what coverage. It is but I would agree with you that's very important that patients continue to excess coverage and.

Bottle thing I'll say that our business as dr. that truly do support patient assistance programs, which manufactures have stepped up in this time to make sure that these continuity of patient can be very proud of that.

Thank you. Thank you. Thank you and then that's causing us <unk> Elizabeth Anderson with Evercore.

Hi, Good morning, guys. Thanks for all that clarity.

The outlook so far.

Question on animal Health I think you get some common Crown Heights died during second quarter benefits.

All right like how are you seeing that business transition and DC stood at that business continuing to consolidate.

I shared and so right.

Thank you.

Yeah.

Yes, so if we commented.

Hi.

Animal health had a its operating income impacted by cobot 19 during the quarter, but really the fundamentals there for animal health and MW are quite strong.

We commented we had a good quarter and companion animal way everywhere impact it was production animal and in the UK and so if you just actually look at.

Our animal health business in the U.S. sales were up during the quarter, though I'm rebound in companion animal was was relatively fast and.

And quite nice it looks like it'll be a slower rebound in production animal which has been which was impacted during the quarter for awhile.

Due to wet plant capacity.

You plant capacity, but also by some slowness in foodservice, but at the fundamentals for the business are very strong good market. Our revenue trends are good their market share a few comments. It has been quite good really good execution by the team and good execution on value added services. So we feel very Pos.

About the business for the long term.

Thank you.

Thank you.

That was a last question I would like to return the Fort Amendment for any closing comments.

Yes, I'm. So thank you I everyone for your participation. This morning, I noted was a busy day and I also want to give a special thanks to our associates.

Obviously, serving all roles, including those on the front line, but what about associates for delivering on our essential role in helping.

We are really proud of albeit dedication innovation.

You expand out our value proposition and deepen our relationship with our customers. Thanks for your top today.

Thank you see conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.