Because of the weak performance of PMSI, general slowing growth in the pharmaceutical market and other factors, the company lowered the upper end of its 2008 earnings forecast. It said it now expects earnings per diluted share to be $2.77 to $2.87, instead of $2.77 to $2.95, as previously predicted.
CHICAGO (Reuters) - AmerisourceBergen Corp <ABC.N> reported a higher quarterly net profit on Wednesday and said it has terminated the sale process for PMSI, its workers' compensation business, because bids were not high enough.
Because of the weak performance of PMSI, general slowing growth in the pharmaceutical market and other factors, the company lowered the upper end of its 2008 earnings forecast. It said it now expects earnings per diluted share to be $2.77 to $2.87, instead of $2.77 to $2.95, as previously predicted.
Net profit was $133.9 million, or 82 cents per diluted share, in its second quarter, compared with $129.5 million, or 68 cents per diluted share, in the year-ago period.
Gains were led by improved margins in its pharmaceutical distribution business, strong pricing and increased generic drug contributions, the company said.
!ADVERTISEMENT!Revenue jumped 8 percent in the quarter to $17.8 billion.
The Valley Forge, Pennsylvania-based company said it will focus its efforts on turning around PMSI.
President and Chief Executive Officer David Yost said in a prepared statement, "Because the final bids did not reflect the turnaround value of the business, which we expect to capture, we will focus on significantly improving the business and delivering that value to shareholders."
He said he expects PMSI to improve in the second half of this fiscal year and show improvement in fiscal year 2009.
"In the future, we believe this business can be a strong, long-term contributor to shareholder value as part of AmerisourceBergen," Yost added.
The company also said it raised its expectations for share repurchases in fiscal 2008.
In the first half of fiscal 2008, the company bought back $395 million of AmerisourceBergen shares and now expects to use a substantial amount of the $302 million remaining in the current authorization during the remainder of this fiscal year. As a result, the company said it expects to repurchase $400 million to $500 million of its shares in fiscal 2008.
AmerisourceBergen said that if pharmaceutical market growth is in the range of 2 percent to 3 percent, "We see a clear path to low-double-digit diluted-earnings-per-share growth in fiscal-year 2009 through operating margin expansion and strong cash generation."
Its shares closed on Tuesday at $40.97. They have traded between $54.88 and $38.74 in the past 52 weeks.
(Reporting by Debra Sherman and Lewis Krauskopf, editing by Mark Porter and Maureen Bavdek)
