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ABC revenues up 9.3% to $35.7 billion for second quarter

BY Michael Johnsen
VALLEY FORGE, Pa. – AmerisourceBergen on Thursday reported adjusted diluted earnings per share increased 15.9% to $1.68 for th second quarter ended March 31. Revenue increased 9.3% to $35.7 billion in the quarter, reflecting an 8% increase in Pharmaceutical Distribution revenue. 
 
“I am pleased with the solid performance we delivered in the March quarter,” stated Steven Collis, chairman, president and CEO AmerisourceBergen. “Our recent acquisitions, MWI Veterinary Supply and PharMEDium, have made strong contributions, and excellent performance in our specialty and consulting businesses helped overcome a challenging year over year comparison and the expected decline in generic inflation. In addition, we have extended our contract with our largest pharmacy retail customer for an additional three years, and our large pharmacy benefit manager customer has extended their contract for an additional year.” 
 
The company also announced that its board of directors authorized a new regular share repurchase program which, together with available capacity under the existing regular share repurchase program, permits the company to purchase up to $750 million in shares of its common stock, subject to market conditions. To date in fiscal year 2016, the company has spent $100 million to repurchase shares of its common stock under its regular share repurchase program.
 
In the second fiscal quarter of 2016, Pharmaceutical Distribution revenues were $34.2 billion, an increase of 8% compared to the same quarter in the prior year. ABDC revenues increased 6%, due primarily to solid organic sales growth from its chain retail and health systems customers. ABSG revenues increased 18%, which was driven by strong performance in the company's oncology business, in its third party logistics business and by sales growth in its blood products, vaccine and physician office distribution businesses. 
 
“Looking ahead, we expect our gross profit in the second half of the year to be negatively impacted by certain accelerating headwinds, including an increase in the rate of generic deflation, and a lower contribution from new generic launches,” Collis said. “In addition, an internal strategic initiative we had launched to increase sales of PRxO Generics and to increase our independent retail segment revenues is ramping slower than we had anticipated. Due to these headwinds, we now expect fiscal year adjusted diluted earnings per share to be in the range of $5.44 to $5.54.”
 
Those headwinds are expected to continue "well into" fiscal 2017, Collis added. “In addition, recent contract renewals combined with expenses related to some key investments in our information technology systems and infrastructure are expected to negatively impact our growth rate in fiscal 2017. As a result, our preliminary expectation is to grow our fiscal year 2017 adjusted diluted earnings per share in the range of 4% to 6% above the midpoint of our new fiscal 2016 guidance, which includes an approximately 3% negative impact from the [aforementioned] expenses. With our unique position in the market, the talent and expertise we have in key growing areas, the strategic investments we have made and our legacy of operational efficiency and thoughtful capital deployment, I have great confidence that we will successfully navigate the challenges of the changing healthcare landscape.”
 
 
 
 
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AmerisourceBergen extends WBA deal by 3 years

BY Michael Johnsen
VALLEY FORGE, Pa. – AmerisourceBergen on Thursday announced that it has extended the term of its strategic, long-term relationship with Walgreens Boots Alliance for an additional three years. 
 
As a result, both the pharmaceutical distribution contract and the Walgreens Boots Alliance Development relationship have been extended to 2026. The extension includes an enhanced commitment from Walgreens Boots Alliance to utilize AmerisourceBergen as its key U.S. distribution partner, and AmerisourceBergen has agreed to make certain working capital investments in the relationship and will proceed with additional capital investments in its distribution network.
 
“We are thrilled to extend our innovative and highly successful partnership with Walgreens Boots Alliance, and we look forward to continuing to reap the rewards of this unique and collaborative relationship well beyond the original 10-year term,” stated Steven Collis, chairman, president and CEO AmerisourceBergen.
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CVS Caremark certified by NCQA in Utilization Management

BY Michael Johnsen
WOONSOCKET, R.I. – CVS Health announced Thursday that pharmacy benefits manager CVS Caremark was certified by NCQA in Utilization Management. NCQA Utilization Management Certification is a quality assessment program that focuses on consumer protection and customer service improvement. Standards recognize that organizations that apply for certification have open access networks, and can improve service quality and utilize customized structures to meet purchaser needs.
 
"At CVS Caremark, we are pleased to earn this important certification from NCQA, which further validates our commitment to providing high quality utilization management services to our clients," stated Jonathan Roberts, president of CVS Caremark. "Utilization management programs help ensure that members access clinically appropriate and cost-effective therapies and as a result, are integral in helping our clients manage costs while improving health outcomes for their members." 
 
The CVS Caremark Utilization Management Program is designed to encourage the appropriate and effective use of medications, identify optimal drug use and promote cost-effective drug benefit plan designs for CVS Caremark clients. The program is based on evidence-based drug information, published guidelines and consensus statements and standards of medical practice, the company stated. 
 
"Achieving Utilization Management certification from NCQA demonstrates that CVS Caremark has the systems, process and personnel in place to conduct utilization management in accordance with the strictest quality standards," said Margaret O'Kane, president, NCQA.
 
NCQA's certification review includes an on- and off-site evaluation conducted by a team of physicians and managed care experts. A review oversight committee of physicians analyzes the team's findings and assigns a certification status based on the organization's performance against standards within applicable certification options. 
 
 
 
 
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