Q4 2020 Amerisourcebergen Corp Earnings Call
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Welcome to the Amerisourcebergen Q4, FY <unk> earnings call, all participants will be in listen only mode.
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After todays presentation, there will be an opportunity to ask questions.
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Please note this event is being recorded.
I would now like to turn the conference over to Bert.
Please go ahead.
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Thank you good morning, and thank you all for joining US for this conference call is Scott.
[music] fiscal 2024th quarter and full year results.
Murphy Senior Vice President Investor Relations.
Joining me today are Steve Collins, Chairman, President and CEO.
Jim Carey Executive Vice President and CFO.
Paul will be discussing non-GAAP financial measures reconciliations of these financial measures to GAAP.
In today's press release.
[music] on our website <unk> dot Amerisourcebergen dot com.
During this conference call, we will make forward looking statements.
[music] financial expectations, our adjusted non-GAAP basis, including but not limited to <unk> operating income and income taxes.
Forward looking statements are based on management's current expectations that are subject to certain can change pretty scary theorists, sometimes refer you to today's press, please see filings, including our most recent form 10-K.
Mr. Burton assumes no obligation to update any forward looking statements in this call cannot be rebroadcast without the express permission of the company.
I wanted to ask questions. After today's remarks by management we are.
Question, So one per participant in order for us to get to as many participants as possible within the hour with that I will turn the call over to Steve.
Thank you Barry and good morning to everyone on the call.
Today, we will be discussing amerisourcebergen strong performance in fiscal 2020 expectation for fiscal 2021.
We would like.
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Yeah.
In fiscal 2021.
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Execute an inherent resilience.
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We tried to.
Trey I phrased today.
SAS is facing our industry.
Have you been able to.
They called it needs why maybe continuity and stability all the supply chain.
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But of course, there's 19 pandemic.
I guess my first marriage.
The health safety, and well being about <unk> and.
Hi, So this first we have enhanced.
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Oh this is for us.
So she has a backup and okay.
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Feedback from our associates on these measures have been overwhelmingly positive.
No I think the change of Associates survey type communication collaboration and creativity and innovation remains the same.
Yes, I understood I appreciate the opportunity to deliver on our purpose and be part of the solution how painful role in their supply chain.
In addition to our normal supplier or something.
Our teams have been sure pretty cold medications.
A prioritized basis to facilitate patient access.
The pharmaceutical distribution side, but.
But if you could provide real time data analytics has helped facilitate actionable channel solutions and awareness.
Sure and government stakeholders.
Well Korea, she has been helping manufacturer partners navigate because they say oh really.
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So I think innovation anymore trials.
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We believe the strength of Amerisourcebergen stoppers.
Oh hi.
All right I, certainly have demonstrated alphas scissors and yet our longstanding commitment to robust.
Business continuity.
Oh stake holders now haven't even greater appreciation.
Overall in the supply chain and a healthcare system overall.
I'm, especially proud of the inspiration and diligent asset Serasa, yes.
We have supported our customers, but increased collaboration and innovative solutions, ensuring that they'll be able to meet patient needs, even as I adapted to the new environment.
I would now like to comment on some of the recent developments regarding the Angel Oh right.
Opioid vacation reservation.
We have made significant progress in the fourth quarter actual was reaching a potential settlement to resolve opioid goals.
As a result, the company determined it was appropriate to occur.
Well, there's a tangible satellite baseball framework that we think is workable older Red bar.
Oh and discussions are ongoing and we are not able to comment on the matter at this time.
Retail topic formalities selling funds will be used in support of initiatives to combat the opioid epidemic getting treatment rehabilitation may know, how and other important yeah.
As you all know we have been consistent in stating our desire to be a part of the solution to address the enormity of the opioid challenge.
Oh, I have and will continue to take all the supply chain Sterci and continue to work diligently alongside our industry partners and government and state agencies.
Combat drive Dobesh.
We will also continue to support real solutions to help address the crosses the communities. We serve is working.
Oh.
Just to reiterate we finished.
He is an important step towards razorfish, which would allow office and our people.
Well make our vital role in the health care system, which is being.
I'll just say during the call.
Hi, Debbie.
Looking ahead Amerisourcebergen access fiscal 2020 watt with strong my main.
Key differentiators continue to provide exact value creation.
All of this.
First we have to base customer base in the industry.
Just four or five key asset classes across all the same machine, which we operate.
Got various any extensive customer base amerisourcebergen is well positioned to support patient access whatever a prescription is India.
Today, I would like to highlight <unk> independent pharmacy.
In September we held very special forces.
I know good neighbor Pharmacy conference and trade show.
So as far as I was saying flat I'm waiting for me.
Jackie policies have maintain their patients and communities.
They have gone above and beyond what the entrepreneurial spirit and adapted to the pandemic environment with innovations such as leveraging social media to engage with their patients Nike and distributing hand, sanitizers all supply gas.
Speaking today will drop through prescriptions, we shared his purpose driven mindset about GMP pharmacy and will continue to support what about cost and that's why I understand their needs delivering a seamless experience and deepening our relationship with them.
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We continue to build on Amerisourcebergen unparalleled in the meeting space, We branch out.
Hi father value added services, we provide especially physician services business as the strongest for probably out of service and customer relationships in the industry.
Our position in the market.
To capitalize on emerging craze, Texas arise as I said, that's where we saw better than expected adoption and growth this year, and which has become a meaningful and growing our business.
He said I feel good report focused on Biosimilars I like to be strong utilization drain.
Overall gross to watch them as a corresponding savings they will create for the healthcare system.
The growth of Biosimilars is a long term problem for Amerisourcebergen as we are able to provide valuable commercialization services actually two manufacturers and support access downstream to community based rights.
Actually it has been an important driver of Amerisourcebergen is growth over the last few years and fiscal 2021, we are focused on furthering our value proposition and supporting our specialty physician customer base by continuing to invest in technology innovation and data and analytics solutions.
Our ability to continue to see innovation is out there to differentiate.
We embrace advanced technologies to enable real time communication and transparency for alcohol.
Sourcing and distribution teams integrated commercial expertise without data <unk> analytics capabilities to provide actionable child insights to our provider and manufacturer partners and government stakeholders.
This week Amerisourcebergen watch selected by the Department of Health and human services.
Old manage and distribute pharmaceuticals, where the strategic national stockpile, we take great pride in being chosen to support the government that pharmaceutical stockpiled activity.
Amerisourcebergen is a trusted data provided in the pharmaceutical supply chain risk.
Hey holders across the health system used to enable data driven solutions to new and existing challenges.
We also continue to build upon our partnerships to become even more efficient and to serve our customers greater speed efficiency and data capabilities.
Having an innovative might meet that not only do we see creative ways to solve problems, but also that we all decisive and nimble jokes aside all capabilities. During the past decade. For example, Weve quickie launch kinda help tools weight based workouts that homes I think technology solution out.
We provided across our customer spectrum, especially physician services, and South Carolina, well adapt to the new environment America.
Amerisourcebergen remains solutions, our intent and committed to providing value added innovation and services. So that our customers can take advantage of the opportunities available in this rapidly evolving marketing.
Finally, turning to our fourth differentiator, we have a history of successful corporate stewardship.
The financial side, we have maintained our thoughtful and strategic approach to capital deployment with a focus on value creation and maintaining financial strength.
This fiscal year, we invested $370 million in the business through capital expenditures, while at the same time, returning more than 760 million to shareholders through dividends and share repurchases.
On the P. Southern community side, we are guided by our purpose, we guided car associates operating that's sustainable and responsible manner and supports healthy and resilient communities, where we live and work we are making positive improvements for the environment and not communities in the last year, we have refused screen.
House gas emissions by more than 5%.
Earlier, I mentioned, the Sars get satisfaction with our covered response.
It wasn't feed 'em malachy improvement in engagement on topics, a personal importance, Texas diversity and inclusion member.
Membership and I'm sorry, your resource groups. For example has increased by more than 40% year over year.
In addition in spy recent conversations with this I was just around social injustice and raising equity we have a site plans for more diversity and inclusion initiatives in the coming year.
Just this week, we appointed a new chief top is that he had increase in office.
And we look forward to working with him to continue our progress and focus in this important area.
Its value generated by the power of difference and we believe that fostering an environment that embraces diversity inclusion gracing I'm conscious buyers and basket I'll focus our culture make it happen even better amerisourcebergen.
As we enter fiscal 2021 evolving healthcare landscape continues to offer opportunities for amerisourcebergen to leverage our strengths and capitalize on our unique position in the market.
Our focus on several key objectives.
14 growth across the enterprise I have seen our market, leading specialty portfolio innovative costly mistakes services Activations and GE. They are strong strategic partnerships.
There are three I execution excellence by reinforcing our ability to deliver basic cost service and efficiency.
Three continuing to strengthen our associates experience, but a concerted effort to check on our cats and culture and.
Fourth evolving our technology and communications to further the interoperability of our businesses and to become an even more unified amerisourcebergen.
Most of all we remain purpose driven well position to create significant stakeholder badger outlook.
Our businesses and teams rose to the challenges of the Oh and went above and beyond what you did on the support and results for our customers and their patients. Thanks.
Thank you John associates for their dedication inspirational if its execution and four remaining United in our responsibility to create healthier future.
Now I will turn the call over to Jim will more in depth review of our fourth quarter and fiscal 2020 results and to provide the school 2021 guidance Jim.
Thanks, Steve and good morning, everyone for Amerisourcebergen fiscal 2020 went to Europe resilience made possible by the diligent execution of associates across our organization and enhanced by the exceptional performance they delivered across our businesses and fine art purpose artists sell.
Okay got it and innovating to meet the needs of our customers and their patients our team strengthened our relationships with partners, both upstream and down focusing on providing transparency in solutions at a time when they need it has no.
Amerisourcebergen its long history of internal investment how support this important work and enabled us to establish robot business continuity plans, which utilized our mission and modernized distribution network and our strong IP infrastructure I take great pride in being part of such a purpose driven company.
Yeah, and humbled by the results and our teams have to library. So before I delve into these results. Please note that my remarks today will focus on our adjusted non-GAAP financial results unless otherwise stated refracing comparisons are made against the prior year period for a discussion of our GAAP results. Please refer to our earnings release.
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Moving now to our fourth quarter results. We finished the quarter with adjusted diluted EPS of $1.89 cents, an increase of 17% primarily due to higher operating income.
Consolidated revenue was $49.2 billion up 8% driven by solid revenue growth in both the pharmaceutical distribution services segment and other which includes our global commercialization services, an animal health group of goodness gets gross profit increased 6% to $1.3 billion driven by.
Gross profit rose in each operating segment, resulting from higher revenue.
Consolidated operating income was $530 million $74 million or 16% driven by the performance of both the pharmaceutical distribution services segment, and our global commercialization services and animal Health group.
Moving now to income taxes, our income tax rate was 21.7% in.
Due to an unfavorable discrete item up from 19.6% from the prior year quarter, which included a favorable discrete item.
Our adjusted diluted share count increased by 3.3 million shares for 2% to 206.4 million shares driven by opportunistic share repurchase as earlier in the fiscal year, notably when the share price came under pressure with the market in the month of March or in the year, we repurchase.
$420 million of our shares.
It's still 2020, as Steve mentioned, Amerisourcebergen returned over $760 million to shareholders and share buybacks and dividends and this morning, We also announced the company's board of directors approved a dividend increase of 5%.
This completes the review of our consolidated results now I'll cover our segment results.
Beginning with pharmaceutical distribution services segment revenue was $47 billion up 8%. This segment continues to benefit from strong specialty product sales, including growth in specialty physician services as well as the overall customer growth, particularly with some of our larger customers.
Fourth quarter revenue rose.
From an easier comparison to the prior year quarter.
In the fourth quarter of fiscal 2019, our large mail order pharmacy customer had already seen volume from one of our large health plans roll off and we had not yet onboarded the customers post merger incremental volume norms.
Normalizing for that comparison revenue growth would still have and at the upper end up at a mid single ticket range.
Segment operating income increased about 18% to $426 million as a reminder, the segment's operating income had an $18 million tailwind. It can be accessed our many MKS has in addition, as we called out was back in May we established an incremental bad debt reserve.
In the March quarter relating to the onset of Kobe 19 incremental reserve was not related to any specific customers, but due to a point in time analysis, that's a potential receivables risk as a result that they continued financial resilience of our customers we determined that it was appropriate.
To reverse a significant portion of this bad debt reserve. If you were to back out the tailwind from the Pharmedium access and the benefit from that bad debt for a personal segment operating income rose in the quarter would have been more in line with segment revenue growth.
I will now turn to the other segment, which includes definitely says they focused on global commercialization services in animal health.
During world Courier, Amerisourcebergen consulting and M.W.I. animal health.
In the quarter total revenue was $2 billion up 11%, primarily due to browse and MW lie in world Courier, but also reflecting growth across the group.
You got to realize revenue grew 8% for anything by double digit growth in the companion animal business as well as growth and the production animal business.
Although commercialization services group, which includes world Courier and Amerisourcebergen consulting businesses had revenue growth in the mid teens.
The other segment operating income of $105 million, an increase of 20%.
Korea continued its exceptional performance in the quarter.
That completes the review of our segment results for the quarter.
Across our broad portfolio of businesses, particularly and specialty physician services and also for our largest customers Walgreens and express scripts.
Consolidated operating income grew 7% for the year is two $2 billion, while our operating margin increased two basis points as.
As it relates to operating expenses, we did experience a favorable impact from lower than expected corporate administrative costs, which resulted in a modest expense growth or the year.
Arms critical distributions segment operating income group, 8%.
And global commercialization services and animal health had operating income growth of 5%.
From a segment perspective, we saw growth and cross our businesses and pharmaceutical distribution. This segment continue to benefit from our strategic relationships and each customers segment and strong performance and specialty physician services, where innovation and demographics and can use.
B organic growth drivers.
In addition, we had notable contribution from Biosimilar utilization in fiscal 2020, as we saw better than expected update of Biosimilars, particularly in oncology.
And other worlds Courier continues to differentiate itself with key solutions in a complex world for global specialties logistics.
Or manufacturer partners are leveraging our capabilities to enable at home clinical trials and support treatment accessibility through world Courier.
The investment we have made over the last few years has positioned our world Courier business to offer best in class solutions for a manufacturer customers along with the expertise and capabilities needed help navigate and increasingly complex environment for global specialty logistics.
The adjusted effective tax rate for fiscal 2020 was 28% and Ah relatively consistent to 26% in the prior fiscal year.
Turning now to EPS are full year adjusted diluted EPS from 11% to $7.90, primarily due to the resilience and outstanding execution throughout our businesses that enabled us to deliver strong operating income growth R.
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Adjusted free cash flow for the year was $1.9 billion higher than expected, primarily due to timing of customer and supplier payments.
The timing benefit helps fiscal 2020, adjusted free cash flow and results and slightly lower adjusted free cash flow expectations for fiscal 2021, which we expect to be $1.5 billion.
Again, I am proud of the way he is our associates and teams is executed and adapted to deliver a strong fiscal 2020 results as we enter fiscal 2021, we have strong momentum and visibility to continue our growth trajectory and both of our operating segments before deep.
Selling our guidance I will note that are working assumption for pharmaceutical pricing and fiscal 2021 is that brand installation and generic deflation rates will each be similar to what was experienced in fiscal 2020.
Turning out and discuss our fiscal 2021 financial guidance.
As a reminder, we do not provide or looking guidance on a gap basis. So all of the following metrics are provided on and adjusted non-GAAP basis.
Starting with revenue waves.
We expect consolidated revenue growth in the mid single taken percent range.
Operating expenses.
We expect consolidated operating expenses to grow in the mid single digit percent range.
Do not expect the same level of paper ability from lower corporate administrative costs experienced in fiscal 2020 to repeat.
Understanding the importance of expense management, we will certainly be thoughtful and trying to have operating expense growth in the lower part of that mid single digit percent range. However in fiscal 2021, and we will continue to be diligent and protecting our associates and thoughtful and how we utilize continued remote worker associates that are not on the frontline.
Regarding operating income we expect for operating income to grow in the mid single digit percent range with mid single digit percent growth expected for both of our operating segments.
And pharmaceutical distribution services, we continued to capitalize on our leadership and specialty distribution, particularly specialty physician services and benefit from our team entered customer relationships across pharmaceutical distribution.
As it relates to the impact from exiting <unk>, we won't experienced a 20 million dollar operating income tailwind and the first quarter of fiscal 2021, as we last the last quarter and our financials prior to the far many of exit.
Moving now to other.
The global commercialization services and animal Health group is expected to continue its positive trajectory in fiscal 2021 supported by continuing to execution from MW I've world's terrier and our businesses within insulting as the businesses continue supporting our commercial partners and successfully preferred thing.
The COVID-19 landscape.
Turning now to our consolidated tax rate expectation or guidance assumes a full year adjusted tax rate of approximately 21% to 22%.
Regarding cell count as a reminder, we do not include unidentified capital allocation in our guidance are fiscal 2021 guidance assumes that we finished the years between 200 and 207 million weighted average shares outstanding as.
As a result of these expectations were guiding our fiscal 2021, adjusted EPS to be in the range of $8 and $28.45, reflecting growth of 4% to 7%.
Finally, turning to capital expenditures and cash flow expectations.
Capex is expected to be about $400 million.
We have many projects in place and there is no one project driving our capital expenditure rather they are assured focused on supporting growth increasing efficiency are enhancing our commercial and compliance capabilities amerisourcebergen balanced approach to capital deployment, which prioritises and turmoil investment is an important commercial and finance.
Shall differentiator for us now.
Now for adjusted free cash flow, we expect our adjusted free cash flow for fiscal 2021 to be approximately $1.5 billion as I mentioned earlier, the timing benefit that helped fiscal 2020 cash flow to be higher than expected has an offsetting impact on fiscal 2021.
In closing we have seen firsthand this year, how valuable amerisourcebergen purpose premium talent and culture are to delivering differentiated value to all our stakeholders.
Drawing upon our adaptability resilience openness and dedication as professionals, we continue to deliver for all our partners and come together as individuals to embrace our differences and confidence that we are furthering our talent and culture as we become any and more unified amerisourcebergen, but.
Fundamentals of our business remains strong as we continued to benefit from our pharmaceutical centric strategy cheat partnerships and leadership and specialty amerisourcebergen as well positioned to continue to create long term shareholder value and deliver on our purpose of being United in our responsibility to create healthier futures.
Now I'll turn the call back over to Steve for some final remarks, Steve.
Our undertaking across all areas of our business.
This concludes our prepared remarks were today now I will turn the call over to operator to begin the Q and a station operator.
Speakers. Your line is now open we will now begin the question and answer session to ask a question Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset for pressing the keys.
Withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Operator first question please.
Our first question will come from Robert Jones with Goldman Sachs. Please go ahead.
Great. Thanks for taking the questions I guess, maybe just to start on guidance in the pharma segment, you calling for mid single digit EBIT growth there what I wanted to just get a little bit more on your thoughts around the underlying assumptions versus some of the more one time.
Items, specifically thinking about things like lapping Pharmedium, which you mentioned and then obviously additional cobi costs from this year that might not recur at the same level at least for next year and then I guess to the upside I know, Steve you continue to talk about the growing opportunity with bio Similars I was hoping maybe you could also touch on what if anything it can.
Centered in that opportunity for for fiscal 21.
Sure well, obviously, I mean I'll start with.
With some of your questions you asked on guidance and then turn it over to Steve for your final part of the question. So fiscal year 21 financial guidance I mean, it reflects strong growth across multiple businesses building upon the momentum from a strong fiscal year 20. Despite this holding 19 challenges.
And as you know.
Were guiding to mid single digit revenue growth in mid single digit operating income growth in that mid single digit operating income growth is both in pharmacy distribution segment and another and adjusted diluted EPS guidance in the range of eight to 28.5 and keeping in mind there.
We don't include on I doubt on identified capital allocation in our guidance. So in terms of pharmaceutical distribution.
Some of the things that are driving it you know we continue to benefit from our pharmaceutical centric positioning.
Particularly from our leadership in specialty where we're seeing biosimilar is continuing to contribute meaningfully and were expecting pharmaceutical utilization trends generally consistent with the experience we had in fiscal year 20.
We are assuming that brand inflation and generic deflation levels.
They are in line with what we saw in fiscal year 2000.
We will have a tailwind in the first quarter.
Fiscal year 21.
From the exit of Pharmedium, and so that will be a.
A benefit of $20 million.
And operating income tailwind on comparing the first quarter 21 with the first quarter at 20, and then we continue to remain disciplined on expense management, we were and are strongly encouraged by our opex.
Opex performance.
And next fiscal year 20, and continue to remain focused on expense management. We are unlikely to have the same level of favorability related to some of the corporate and administrative expenses.
In fiscal year 2001 that we had in fiscal year 2000, like dark internal health care expenses would be an example of that but we continue to expect to perform well on the Opex front and so if we look also kind of quarterly cadence I would say that the first quarter will be a bit stronger because we have the.
Tailwind compared to first quarter fiscal year 20 related to Pharmedium and then b on the second quarter will be a little bit tougher because were comparing to the second quarter fiscal year 20, where in March we had elevated sales with the onset of Kobe.
Yes.
Hi, guys. Thanks for the question, yes, we've seen that encouraging usage or boxes and that to the bottom is market is continued to.
We expect to materially increase by 2025.
Most importantly.
One of the areas that we've really been focusing on is our data and analytics capability and we've talked a lot in my script in particular about innovative solutions and enables us to provide.
Provide unique solutions to government and commercial partners. So we believe that during this period, we become the invisible pillar of innovation and this is a further example, I think many many more stakeholders are aware of the capabilities of in Amerisourcebergen than they were before so I think.
One time more profitable two times I mean, just to kind of put this in reference as we start to think about the number of bio similars that that will come to the market over the next few years and I agree with you that I believe that this is a great opportunity, especially given the size of your specialty business and the manufacturing services that you have I'm just trying to put this into context I know you said that there is part of that.
In your 2021 guidance, but but how do we think about that that margin differential and the opportunity not just for 2021, but over the next several years.
This is driving growth.
In the foreseeable future and then clearly it sounds like you're getting closer to an opioid settlement and resolution of litigation. That's that's occupied you for a few years now so now with that you you you're freeing up kind of like that capacity how are you thinking.
I think strategically about capital deployment in areas for potential expansion.
Sure Let me, let me start out there so yeah, we are.
Second for capital expenditures to be a little bit higher in fiscal year 21 in fiscal year 2000, or about 370 million in fiscal year 20 in our guidance is about $400 million and and fiscal year 21, and we've got many projects in place. There is no. One project is driving our capex, it's really a shared focus across.
Supporting growth so a lot of our Capex is about 40 wells, increasing our efficiency and then enhancing our commercial and compliance capabilities.
Capabilities and then in terms of.
Capital deployment of our capital deployment strategies remain unchanged.
Best in the business strategic M&A.
Opportunistic share repurchase and maintaining a reasonable dividend and one thing I think it's.
Okay, Steve I just wanted to also follow up on on sort of the opioid litigation you know, it's it's obviously an encouraging sign in and assuming you're correct in on the number that you put in the press release, such a reserved for the 5.5 billion aftertax over 18 years, it's only about $300 million a year and so when I think about that in the car.
Context of free cash flow of about 1.5 billion. How do you think about changes you may or may not you know have to make to your historical capital deployment strategy and then Jim maybe my my problem for you would be is there anything you can do in this low interest rate environment to maybe get creative on how you fonder.
Pay for settlement or do you just anticipate this may be something that you find that free cash flow. Thanks in advance.
Yeah, I I mean.
Again I think on.
An office in Las Vegas pretty alrighty.
Yeah, We we went to Wisconsin Tonight it and.
We talked about that very small moving puts and takes as opposed to any large moving puts and takes it almost seems like what I would characterize as a normal year going back to all the pricing concerns and everything that we've seen stretching back to 2015, I guess I'd ask would you characterize it that way and then my quick follow up would be as it relates to the 21 guidance.
Can you talk about how you're thinking about volumes relative to the pre covert baseline.
Yes, yes.
Thank you I mean, yeah, it's interesting that be referring to the past 12 months with all of the.
Occurrences that we've had.
Not not necessary for vessels when when our society as a normal year, but.
Underestimated I think physicians us very well Jim I see you have a comment yeah and I think.
The last six months of fiscal year 20 will all of fiscal year 2001 in particular, the last six months of fiscal year 20, we really demonstrated.
Daily and so far businesses to operate in this environment and so that gives us a good confidence in our fiscal year 21 guidance as we look at mid single digit revenue growth guidance in mid single digit operating income guidance for fiscal year 21.
Next question are these operator.
Our next question will come from Charles for Ya, What's Kellen. Please go ahead.
I would love to hear any thoughts you have on Cove, Ed Hi impact as we get through the middle of the year, how meaningful that is and then two other specifics one would be generic pricing stable is that less of a benefit than it was when we are moving from higher deflation to lower deflation.
Last of the three in the independent pharmacy.
Marketplace. There has been reports of your extending your largest customer there for long contract did that have any negatives in this year that might be unique relative to a normal year.
Yes, let me let me start out there so yes about.
Asked the man.
It's not enough to really comment on the United States.
We managing through and that's really around crossing balancing that we had talked about the old customers.
No nothing nothing important to comment on it all there. Thanks.
Thank you.
Our next question will come from Steven Valiquette with Barclays. Please go ahead.
Great. Thanks, Good morning, Steven Jim Congrats on these results.
So the U.S. elections, obviously are not quite concluded yet as we all know.
Just curious if you have any updated thoughts just on the outlook for a drug price reform going forward there will be some visibility on a split Congress, but maybe just within your overall F. F Y 21 guidance, you make any sort of allocation.
For potential changes on either international pricing parity or other things or does all that just get absorbed within the guidance range. Thanks.
Hi, Steve.
Sure all the fall that pulls me. This morning is what's going on in Pennsylvania.
No I don't.
Thanks, Good that was quite as direct as this call me Matt.
Our policy I think we always go back to some vaccines, it's really important to remember that pharmaceuticals are the most efficient form of a source of cash and that I think people sometimes forget. This nos you, obviously, but that total healthcare spending we actually on the 10% now and overall increases have been pretty.
Reasonable so.
I think those are the themes that we try highlights and.
Horse if there were any changes that you referenced like the international pricing that should be done thoughtfully and in the transit and then transition.
Instead of way.
So you know I.
Thank you you've seen the market rallies yesterday on healthcare stocks and.
I think we Amerisourcebergen, we have a seat at the table. We are involved we've really advance in that area.
By saying that we're excited.
About fiscal year 21, we'd also be opening new headquarters rock company, and we hoping that we can.