AmerisourceBergen Corporation
Q3 2011 Earnings Call Transcript

Published: 28 Jul 2011

[Operator:]

Welcome, and thank you for standing by. [Operator Instructions] I would also like to remind participants that today's conference is being recorded. If anyone has any objections, you may disconnect at this time. And now I will turn the meeting over to Ms. Barbara Brungess. Ma'am, you may begin.

[Barbara Brungess:]

Thank you, and good morning, everyone, and welcome to AmerisourceBergen's Earnings Conference Call covering our third quarter of fiscal 2011. I am Barbara Brungess, Vice President of Corporate and Investor Relations. And joining me today are Steve Collis, AmerisourceBergen President and Chief Operating Officer; and Mike Dicandilo, Executive Vice President and Chief Financial Officer. During the conference call today, we will make some forward-looking statements about our business prospects and financial expectations. We remind you that there are many risk factors that could cause our actual results to differ materially from our current expectations. For a discussion of some key risk factors, we refer you to our SEC filings, including our 10-K report for fiscal 2010. Also, AmerisourceBergen assumes no obligation to update the matters discussed in this conference call. And this call cannot be rebroadcast without the express permission of the company. As always, those connected by telephone will have an opportunity to ask questions after our opening remarks. Now here is Steven Collis to begin our comments.

[Steven Collis:]

Good morning, everyone, and thank you for joining us. This is my first quarterly earnings call as President and CEO of AmerisourceBergen. And I'm very pleased to start off my career as CEO by reporting such outstanding results. We continue to deliver very strong performance on top of exceptional performance in the prior year. And as we enter our fourth quarter, we are well on our way to achieving very good results for our fiscal year that ends on September 30. Our revenues were over $20 billion in the quarter, the first time we eclipsed that mark and an increase of $0.5 billion over last year. Once again, we reported a double-digit increase in gross profit that was driven by specialty generics and helped operating earnings grow 12.5% in the quarter. Our operating expenses increased 9.8% in the quarter, as we continue to invest in our future, both through our SAP implementation and through other internal projects designed to help drive long-term efficiency, the most significant of which, we call Energize [ph]. I'll talk about Energize later in my comments, and Mike will detail the financials. But I want to assure you that we remain vigilant on cost while focused on growing our business. Our operating margin was up an outstanding 13 basis points this quarter. And our diluted earnings per share were $0.66, which is a 16% increase on top of what was a 36% increase last year on a GAAP basis. We continue to do an excellent job managing working capital, and we had $2 billion in cash on hand at the end of June, giving us tremendous financial flexibility. This excellent performance continues to demonstrate the strength of our 2 growth drivers

[Michael Dicandilo:]

Thank you, Steve, and good morning, everyone. As Yogi Berra once said, it's déjà vu all over again. Our tremendous performance in our third fiscal quarter follows the same theme as our second quarter, with solid performance across all of our business units, enhanced by extraordinary performance in our oncology franchise, leading to GAAP EPS growth of 16%. Excluding the $0.05 benefit to last year's June quarter from litigation gains, quarterly EPS would have increased 27%. In addition to our operating results, we took a very big step in Business Transformation program. Our credit ratings were upgraded by Moody's and we increased our dividend once again. We are well-positioned after 9 months to meet or exceed all of the business and financial goals we set for ourselves at the beginning of the fiscal year. I will detail the impressive contribution to the quarter from the big 3 specialty generics, as well as their impact on our increased EPS guidance for fiscal '11 and the challenges we will have in fiscal '12 as their profit contribution moderates. Now let's turn to our June quarter results, starting with the top line. Our revenue of $20.2 billion in the quarter exceeded the $20 billion mark for the first time and increased 3% in total. Drug company revenues were up 4% in the quarter and specialty revenues were down 2% in the quarter, consistent with our guidance for these business units. Drug company growth was driven by alternate site and independent customer growth. Specialty top line growth continues to be impacted by the prior year loss of a large 3PL customer, the change in reimbursement methodology in the dialysis business and generics, which have moderated our top line growth but continue to be a gross profit driver. Gross profit of $654 million in the June quarter increased a robust 11%, and would have been up even more if not for the $18 million reduction in litigation gains from the prior year quarter. A good portion of that gross profit increase year-over-year came from the sales of the 3 large specialty generics which, together, contributed $0.17 of EPS to the current quarter compared to $0.05 in last June's quarter from these drugs. As expected, we sold our remaining Oxaliplatin inventory in the June quarter which contributed $0.08 of the $0.17 EPS contribution, with docetaxel and gemcitabine together contributing the other $0.09. These 3 drugs have now contributed $0.39 to earnings in the first 9 months of fiscal '11 and we expect another $0.06 or $0.07 contribution in 4Q. Overall, generic growth was also strong in the drug company which grew generic revenue in double digits once again this quarter. Before I leave gross profit, our LIFO charge for the June quarter was $11 million, consistent with last year. For the 9 months ended June 30, our LIFO charge was $35 million compared to the $30 million for the same period last year. Turning to expenses, our operating expenses of $336 million were up a higher-than-normal 10% or $30 million in the current quarter compared to last June. As we expected, $10 million of this increase came from the cost of maintaining duplicate IT platforms. An additional $15 million of this increase came from the following

[Barbara Brungess:]

Thank you, Mike. We will now open the call to questions. [Operator Instructions] Please go ahead, operator.

[Operator:]

[Operator Instructions] Your first question comes from Larry Marsh, Barclays Capital.

[Lawrence Marsh:]

Steve, official welcome as CEO, I know, as you said, you started out with great results. I know you'll continue to be successful at ABC, so congrats on the quarter. I really just wanted to reflect on kind of your general thoughts at the marketplace at this sort of preliminary stage for next year's -- I think as you and Mike talked about kind of a midpoint of sort of the mid-270s for next year as a starting point for thinking of expectations for fiscal '12. How are you thinking of the macro environment, I guess, as you look at the next year? Is it kind of as you're seeing today? Are you anticipating any incremental improvement around pricing apart from, obviously, the benefit of oral solids, or are you assuming some incremental same-store margin pressure? And then I have a quick follow-up around Medco.

[Steven Collis:]

Well, Larry, I remember 5 quarters ago when you called it a quarter for the ages, I appreciate your compliment and I'm enjoying the role. And I appreciate the good wishes. We obviously, had better-than-expected results from injectables. And you should remember that Oxaliplatin was really a unique situation. And the other 2, we benefited from the 6-month exclusivity period and limited manufacturers and high ASPs which can be reduced very, very quickly. So, yes, we have some of those dynamics going on at the oral solids next year. So our 2 key growth drivers are specialty and generics. I think we executed very well in all those areas. You saw tremendous contribution, above expectations from on the specialty injectables side, with the 3 big drugs. And I think you'll see us execute very well in the oral solid area next year. And we're looking forward to that. I think our customers are looking forward to that. You'll see great performance from us. Mike, anything to add?

[Michael Dicandilo:]

No, certainly, Larry, revenue growth in the entire industry is going to be a little bit moderated because of the generic trend. And much of the operating income growth is going to come from operating margin expansion. I mean, I think that's the general dynamic that we expect to see and that we have been planning for, for some time. And it's incorporated to those early thoughts.

[Lawrence Marsh:]

And then just on Medco specifically, you called out the nature of the relationship is such you've got a strong relationship certainly and it contributes roughly 5% of earnings. So just clarify that a bit, when you think of that, is that 5% of kind of the earnings stream in calendar 2012 or is it really sort of 5% of trailing earnings or somewhere in the middle?

[Michael Dicandilo:]

Larry, it's really 5% at our current run rate.

[Lawrence Marsh:]

At the current run rate that you were just now speaking of, okay.

[Steven Collis:]

It's just important to note that Medco only buys branded drugs from us.

[Operator:]

Your next question comes from Tom Gallucci, Lazard.

[Thomas Gallucci:]

Just following up on sort of the early outlook for next year. Where are you, I guess, in the planning process or the budgeting process at this stage? Is it sort of done or you're just in the early stages of it and what have you factored in for buybacks or cash utilization in that range that you offered?

[Michael Dicandilo:]

Tom, we're fairly very early in the process. We're actually starting to visit our distribution regions and then our business units in the month of August to have our formal planning presentations, and we'll continue to analyze information for some time. So I think it's early. I think at this point, I really don't want to get into detail of each of the key components of EPS growth, which really, the revenue growth, which again, I think the whole industry is going to moderate some. I mean, we certainly expect operating margin expansion and we certainly expect that we'll deploy our capital to contribute to that EPS growth. But at this point, I don't want to drill down on each factor as they could change by the time we give guidance in early November.

[Thomas Gallucci:]

And then just following up, Steve, I think you have highlighted in this call and in the past sort of how you've broken out that consulting business out of the Specialty Group. Can you talk about maybe the leverage that you're seeing or how you're making an impact on the traditional sort of drug distribution side of the business? What's your capabilities on the specialties side?

[Steven Collis:]

Yes, I think, definitely, it's a trend towards our real world evidence, and we think we, one of the participants in the forefront of that, I think people want to know what's going on real-time, post-launch. We participate very strongly in REMS programs through our specialty and consulting business and increasing the drug company as well. We have field-based reimbursement expertise, as well as program management expertise. So what's been one of the promising trend is more drug approvals in this last couple of quarters. And we participated vigorously in that. And a lot of these drugs are in the main drug wholesale business as well, and are becoming more complex, there's a lot more oral cancer drugs. So I think again looking at AmerisourceBergen more as an integrated company, taking advantage of all our capabilities is really a lot of the work that I started as COO and will be continuing as CEO.

[Operator:]

Your next question comes from Robert Jones, Goldman, Sachs & Co.

[Robert Jones:]

I just want to confirm one thing. Are you guys sure there's no more Oxaliplatin left? Are you sure you checked everywhere?

[Steven Collis:]

Yes, we have 2 bottles in Mike's office on his wall. And we made sure that they actually didn't have real solution in it because we wanted to sell it.

[Robert Jones:]

On the gross margin, you're obviously quite a bit better in the quarter. Mike, could you just maybe parse out for us how much of that was from specialty, specifically Oxaliplatin versus the rest of the business?

[Michael Dicandilo:]

As I mentioned about the 3, the 3 generics contributed $0.17 of EPS contribution. You do the math there and it's a little bit over $70 million compared to the $0.05 benefit or roughly $25 million they contributed last year. So we did have about a $50 million or so increase year-over-year contribution from those drugs.

[Robert Jones:]

Got it. It's helpful. And then Steve, you mentioned the growing importance of the New York metro area. I was hoping just 2 quick points there. Could you touch on maybe some of the market share shifts that you've been seeing in the retail independents in that area? And then the follow-up, just more broadly, as we think about some of these very important upcoming launches, are there special measures you guys are taking or plan on taking to ensure compliance with the retail independent customers around specific drugs?

[Steven Collis:]

In our drug network, we have 27 distribution centers and are Amityville distribution center has got a growth rate in excess of any of the others, and that's why we've expanded. We're looking at the run rate we have with certain customers. And our current run rate is very robust in that market. So I can't talk specifically how others are doing, but we are doing well if not better-than-expected with growth rates in 30% to 40% with the current run rates. So we're excited about the opportunities we have there as we pointed out on the last call. And we'll continue to execute against that. On the second part of the question, there's no doubt that we expect the dynamic generic market next year. A lot of focus is on programs like first to shelve to make sure we got the products to our customers right away. We look at the generic efficiency component which is really how quickly do products convert. And I think the bar keeps on getting lifted and AmeriSourceBergen wants to help our customers participate in that. So those are the sort of things we're looking at. I mentioned the Energize program. We are using the Energize program. And we did spend -- as you know, a lot of money this quarter looking specifically at compliance and how can we do better. One of the key tools that we have is our insight program which helps measure compliance and helps benchmark our independent pharmacies against other like pharmacies. And we're encouraged by the adoption and utilization rate for programs like that.

[Operator:]

The next question comes from Robert Willoughby, Bank of America Merrill Lynch.

[Robert Willoughby:]

Steve or Mike, can you not accelerate the ERP implementation given some of the earnings upside to your plan this year? Or have you done that, or is it just not possible?

[Michael Dicandilo:]

Well, Bob, our goal is to -- first off, we're very happy with our rollout in June in our third [ph] location. It has gone very well, and we're very, very pleased. We are going to continue those implementations. Our next one is in September. And then, we'll follow very quickly with many others and expect to complete those implementations around the end of fiscal '12 or so. And I'll tell you, they are big events for us, Bob. And they take a lot of planning and a lot of careful thought and a lot of interaction with our customers. So we're in no hurry to rush through that process. We'll do it in a very methodical way and with the care and execution that you would expect from us. So very pleased with the results. But we'll continue along at the pace that we had indicated.

[Robert Willoughby:]

Okay. And on the Medco, what do you do with them that you might consider so proprietary that it could be a barrier to that relationship switching?

[Steven Collis:]

Well, I think the only thing that you would point to is the extraordinary service that we give to Medco. And our focus throughout these next couple of quarters would be really on maintaining that excellent standard. And there's no reason that we should do anything different. And we've had the account for a long time. We were really proud to be named the VIP supplier, 2 years in a row. I think that that just points to the closeness of the relationship. And we certainly -- Medco is a growing specialty component so we do a good job there as well. So we have a solid contract, as we see it, until mid-2013. And we expect to earn our place at the table to carry on enhancing and preserving that relationship.

[Robert Willoughby:]

Is there any major software or expense commitment to supporting that relationship that would disappear?

[Steven Collis:]

No.

[Michael Dicandilo:]

No, there's no not any cost, Bob, that are special that we wouldn't able to take out that very quickly.

[Operator:]

Your next question comes from Lisa Gill, JP Morgan.

[Lisa Gill:]

Just a quick follow up on Medco. I think you made the comment, Steve, that it's primarily branded today. Can you maybe just talk about, is there any opportunity at all as we start to move into this next big generic wave for them to buy any generics from you? Or should we only think of generic sales going to the independent markets that are buying generics today?

[Steven Collis:]

Well, they don't only go to the independents. I mean, we do a very good business with regional drive. We've got an increasing hospital generic business that we -- as one of the key differentiators for us. We've got a really strong other mail order business and skilled nursing facilities, long-term care facilities for example, which of course, are really key target areas for us. If you look at one of the key tenets that I have, increasing share and targeted markets, one of the key goals that we have as a drug company is to increase generic share in all the markets that I've mentioned. As far as opportunities, I wouldn't close the door to it. But it's a very different type of generic trend that you see with companies like those. So we haven't been successful working on those areas, but not to say that we don't keep talking about that and that there isn't that possibility in the future.

[Lisa Gill:]

But as they move towards the generic wave then and the margin on this business being so much lower than everything else, that should bring up the overall margin of your business, right? That's one way to think about it. And then secondly, when you think about generic penetration in all the different customer segments that you talked about, can you maybe just talk about where you are today? Are you at 70% or 80% penetration? Do you think you can get to 95%, or are you at 90%? And do you think you can get to 95%? How much delta is still left out in the marketplace for you to capture that incremental share?

[Michael Dicandilo:]

Lisa, this is Mike. First off, I do agree with your thoughts that margins would go up as you lose some of the lower margin business through this generic conversion era. Secondly, I think how I would characterize it is that we're in different stages with different parts of our business. Our retail business, I think we continue to think we were slightly north of 80% or so. And our goal is to continue to creep that up and continue to improve compliance. So I think the good news is over the last couple of years, we've been moving in that direction as our generic growth has exceeded the overall market growth. So we are making some strides there. We've had a particular focus, as Steve mentioned, on things like some of our alternate site customers. We've gone to great lengths to customize some of our generic programs for the subsectors within the alternate site business, and have continued to increase our share there. I think you're probably more in the 50% to 60% penetration range for some of those accounts. And that's an area that continues to be of great opportunity for us. And I would characterize the hospital space, it's a little bit more limited on the oral solid side from the hospital space. But we've always distributed the oral solid generics to the hospitals. But many, in the past, often that was through their own contracts, or GPO contracts. We've been able to convert more of that to our proprietary ProGenerics contract, and have been very successful with that. So I think that's more of the trend that you'll see in the hospital area going forward. And so I'll leave that -- there continues to be great opportunities for us not to just capture the new products, but to increase our penetration with our existing customers.

[Lisa Gill:]

And just as a quick follow-up, is that contemplated in this initial outlook that you have in the 7% to 10% range? Or is it just looking at the conversion of what drugs will be losing patent protection as we go into next year?

[Michael Dicandilo:]

Increased compliance is one of our key goals. It always has been.

[Operator:]

The next question comes from Glen Santangelo, Crédit Suisse.

[Glen Santangelo:]

Mike and Steve, I just want to make sure I have some of these numbers correct that you gave last quarter and this quarter. Mike, if I heard you correctly, last quarter, you seem to suggest that the specialty contribution was $0.35 to $0.40 in fiscal '11. And that was going to $0.10 to $0.15 next year. So we had a $0.25 hole to fill. Now, you're kind of telling us that that hole that needs to be filled is $0.35 given the increased specialty contribution that you're currently seeing. And if I heard you correctly, you seem to say that the oral solid generics were going to fill that $0.25 hole. Now, you're saying they're going to fill the $0.35 hole as well?

[Michael Dicandilo:]

Glen, first off, I think I said $0.36 to $0.40 last quarter for the specialty, just to clarify that, and $0.10 to $0.15 for next year. And you're correct, that was a $0.25 hole this year -- or this quarter, excuse me. I'm now saying $0.45 to $0.46 down to $0.10 to $0.15. And that's the $0.35 hole. As I've said last quarter, I think the generics are going to give us substantial offset to that. But obviously, the gap is a little bit higher. And that's going to be a little bit of a drag on our growth rate which is why we're talking about a pathway to 7% to 10%, versus our normal long-term targets of 15% or so. So our thoughts about next year from an internal target for dollar EPS really haven't changed at all. The only thing that changed is this year has gone up. And we now expect 14% to 15% EPS growth for fiscal '11, which is pretty outstanding when you consider we had a 3% headwind from litigation gains that we had last year that offsets that and some of the investments we had to make in our IT Infrastructure for maintaining the dual system. So simply, we've had a bigger year. It makes our starting point for next year higher. And we continue to look at a solid year in fiscal '12.

[Glen Santangelo:]

So Mike, that's what I was driving at. So last quarter, when you said you expected, I think you said you expected fiscal '12 to be kind of a normal growth year for AmerisourceBergen, now it seems like lower. But basically, as you look out to fiscal '12, nothing's changed on your assumption front related to these oral solid generics that are coming. It's basically all you're saying is your base year changed.

[Michael Dicandilo:]

That's exactly right, Glen.

[Operator:]

Your next question comes from Steven Valiquette, UBS.

[Steven Valiquette:]

On Medco, it sounds like everybody should probably assume at a minimum that the existing contract will hold up through March 13, is that correct? There's no change of control type provision on their side where that can potentially end early?

[Steven Collis:]

Yes, we believe that's correct. That's correct, Steve.

[Steven Valiquette:]

Okay. It's definitely a date-certain contract. It's not volume-based like a lot of [ph] contracts you had previously, is that also...

[Steven Collis:]

No, that's a good question, but it is a date-certain contract.

[Operator:]

Your next question comes from Helene Wolk, Sanford Bernstein.

[Helene Wolk:]

A couple of questions. First, starting with the pricing environment and/or your pricing expectations. Can you give us a little bit of a sense for what you're expecting particularly on the specialty generic side that you called out? And then just more generally, if you're seeing anything change in the generic environment more generally?

[Steven Collis:]

What I think, manufacturers are deploying different tactics on project patent expirations both in injectables and in oral solids, and that impacts us. So we never know for sure where the ASPs are going to come out. I think we've shown an ability to manage this very effectively. But you should note that once more manufacturers enter, the price will drop pretty steadily over successive quarters is what we've seen. Keep in mind Oxaliplatin was a little bit different because there was an [ph] launch and there never more than a handful of manufacturers that came into the space. So that was a little bit of a unique experience with specialty injectables. So, I hope that answer yours. Anything else, Mike?

[Michael Dicandilo:]

Yes, I'd say on the oral solid side, I mean, we still see scattered price increases, Helene, that had a modest impact to the quarter. From an overall inflation or deflation rate, you probably had a little bit of deflation this quarter because you had a couple of big products such as generic Aricept and generic Effexor that had significant drops in price as they've gone through their 6-month exclusivity periods.

[Helene Wolk:]

Great. And then just can you provide an update on what is the current trends in the dialysis business, particularly around the ESA question?

[Steven Collis:]

Well, the bundling did have a modest effect. ESAs in total are less than 3% of our sales, approximately.

[Michael Dicandilo:]

4%.

[Steven Collis:]

About 4%. So it's -- we've seen a decline year-over-year in about the low double digits, 10% to 15% range for the ESA-type products. And that's both on oncology and the dialysis side, by the way.

[Operator:]

Your next question comes from George Hill, Citigroup.

[George Hill:]

Just a point of clarification, Steve. Is it your assumption that after March 2013 that the Medco business goes away?

[Steven Collis:]

No, we don't have that assumption at all. You would expect that we would participate vigorously in whatever happens here, we would participate vigorously. And we think that we've done a great job. And we would, in the successive of the company, we would expect to be considered very strongly.

[George Hill:]

Okay. And I don't know if you're prepared to think about talk about it, but we looked at what's going on in fiscal 2012 with the kind of the loss of the profit contribution of the generic cancer drugs as we go. That should be offset by the small molecule oral solids that come through and provide the growth that year. Is it too early to start thinking about fiscal 2013 when you start to see multisource introduction of a lot of those oral solids where we typically see the AWP fall pretty precipitously once the multisources are introduced? And I guess, is it too early to talk about the impact of that? And should we see a similar impact there but of greater severity like what we're now seeing on the oncology side?

[Michael Dicandilo:]

I'd say, no, George. I mean, I think one thing to keep in mind is our fiscal year is in September. And when you talk about 2012, a lot of the introductions are actually in the second half of 2012 which will fall very nicely into our fiscal '13. So we don't expect to see a huge drop at all. We think it's going to be much more steady than a peak and a decline. And on the specialty side, you actually are going to see I think a couple of new products come through in '13 that you'll see a bounce back there from fiscal '12 as well. So we expect fiscal '13 to be a very good year from a generic perspective. And you put that in combination with us finalizing our rollout of our BT program. We're very excited about our prospects in '13.

[Steven Collis:]

And just going back to your original question, I think one thing is that this would be a very large enterprise. And you should contemplate that it's not impossible there would be several suppliers to it.

[Operator:]

Your next question comes from Ricky Goldwasser, Morgan Stanley.

[Ricky Goldwasser:]

A couple of follow up questions on the specialty side. So first of all, on Taxotere. I mean, is there a scenario where you might see actually better EPS contribution in the September quarter than what you saw in June quarter? I mean, when we look at the competitive landscape, there is different manufacturer, so your supply cost dropped into the September quarter. And when we looked at the ASPs in July, they're almost unchanged from June quarter levels.

[Michael Dicandilo:]

Yes, Ricky, our base assumption is that we had $0.09 from the 2 products. I don't want to get into breaking out each individual one, but $0.09 from generic Taxotere and generic Gemzar in the June quarter. And we expect that to moderate in the fourth quarter overall to $0.06 or $0.07. And part of that is the increased -- we think there will be some additional suppliers and some additional competition. You know ASP is one of the factors. It's not the only factor affecting our thoughts.

[Ricky Goldwasser:]

Okay. And then Steve, when you look at the product universe, are there any other specialty generics that are not scheduled, right, that you think may go generic in fiscal year '12 that are not factored into guidance? I mean, we've seen that last year. What are kind of like your expectations into kind of like next year when you just think about contact to [ph] pipeline and the discussions out in the market?

[Steven Collis:]

No, there's really nothing that we're aware of at this stage. I mean, manufacturers could currently [ph] launch on oral solids side and also on the injectable side, but it's not something that we contemplate. And honestly, nothing that we are hearing about at all at the moment. But of course, we get Oxaliplatin back in August.

[Operator:]

Your last question comes from A. J. Rice, Susquehanna Financial Group.

[Albert Rice:]

Actually, hopefully 2 questions here. First of all, can you just give us any thoughts or update if there is, anyone, on where we are with the bid process for the VA contract? I guess, those bids are in but there were certainly some concern in light of the Medco announcement that maybe people would be more aggressive. Is there any chance that people can change their bids? And then when do you think you might hear on that? And then I guess, also could you give us any flavor if you look ahead to fiscal 2012? Is that a year where you characterize there to be a lot of contracts, significant contracts up for renewal or sort of less than maybe what we've seen in the last few years?

[Steven Collis:]

I'll just talk about the VA, but, no, there's no opportunity to reopen it. We submitted what we probably believe is our best and final bid. So there should be no opportunity and this news was not contemplated when any of us submitted our bids. We expect to hear about the contract award -- yes, the last time was 2003. And it was -- the announcement was right around New Year's eve. So somewhere around that timetable, probably in November to February, February would be absolutely the latest that we could hear about who the award goes to. And just remind me of your second question?

[Albert Rice:]

Just thinking in terms of major contracts like VA and otherwise 2012 versus the last few years.

[Steven Collis:]

No, we don't really have any large contracts coming up in 2012. And one thing that's -- we only have one account that's more than 5% of our revenues. And when you contemplate AmerisourceBergen's franchise, I think that that's a really key differentiator for us.

[Barbara Brungess:]

And now Steve would like to make a few closing remarks.

[Steven Collis:]

Thank you, everyone. We know it's a very busy earnings day. I saw 66 of the 500 S&P 500 companies are reporting today. So we very much appreciate you spending time with us. And we appreciate your attention. I hope that these excellent results confirm our key themes that we have an outstanding franchise here in AmerisourceBergen. And we continue to execute very well against our key objectives while planning for our future. We look forward to discussing our final quarter with you in early November and our final guidance for 2012. Many thanks.

[Barbara Brungess:]

Thanks, Steve. And before we go, I'd like to just highlight a few of our upcoming events. On September 7, we'll be attending the Robert W. Baird Conference in New York. On September 9, we'll be attending the Stifel, Nicolaus Conference in Boston. And on September 13, we'll be attending the Morgan Stanley Conference, also in New York. So thank you very much for joining us today.

[Operator:]

For the replay information on today's conference, if you would like to access the replay, it is [phone] for the toll-free number. And for the toll number, it's [phone]. It will be available approximately 2 hours after the conclusion of the call today. And again, thank you for attending. You may disconnect at this time.