Business Context and Reporting Period
This Form 8-K is filed by AmerisourceBergen Corporation (now Cencora, Inc.) on March 28, 2013. The report discloses a revision to fiscal year 2013 financial guidance and the entry into a definitive agreement to sell its Canadian pharmaceutical distribution business.
Key Financial Metrics and Guidance
- Revenue Growth: Revised expectation of 8% to 10% for fiscal year 2013.
- Earnings Per Share (EPS): Increased from a range of $2.96 to $3.06 to a new range of $3.04 to $3.14 for continuing operations.
- Free Cash Flow: Expected to remain in the range of $100 million to $200 million.
- Share Repurchases: The company plans to repurchase approximately $400 million of common stock in fiscal year 2013.
- Exclusions: The revised EPS range excludes significant one-time expenses related to the Walgreen Co. and Alliance Boots, GmbH strategic relationship, including LIFO expenses and non-cash equity warrant expenses.
Material Changes and Transactions
Sale of Canadian Business
The company entered into an agreement to sell AmerisourceBergen Canada Corporation (ABCC) to Kohl & Frisch Limited.
- Sale Price: Estimated between $80 million and $100 million.
- Financing: Approximately half of the sale price will be financed by the Company.
- Timing: Expected to close in the third quarter of fiscal 2013, subject to regulatory review.
- Impact: ABCC represented approximately 2% of total revenues.
Anticipated Charges
The company expects to record an estimated loss on sale and other impairment charges between $160 million and $180 million in the March quarter of fiscal 2013. These charges, along with ABCC's operating losses, will be reported within discontinued operations.
Outlook and Risks
Management has raised its earnings outlook despite the anticipated one-time charges related to the Canadian divestiture. The filing notes that the revised EPS guidance does not account for specific one-time costs associated with the new strategic long-term relationship with Walgreen Co. and Alliance Boots, GmbH. The transaction to sell the Canadian business is subject to customary closing conditions and regulatory approval.
Investor Verification Checklist
- Verify the final closing date and actual sale price of the AmerisourceBergen Canada Corporation transaction.
- Confirm the exact amount of the loss on sale and impairment charges recorded in the March quarter results.
- Monitor the impact of the Walgreen Co. and Alliance Boots, GmbH relationship on future LIFO expenses and non-cash warrant charges.
- Track progress on the $400 million share repurchase program.