March 4, 2009 - AmerisourceBergen Corp. (ABC-NYSE) a pharmaceutical services company, offers drug distribution and related services to healthcare providers and pharmaceutical manufacturers in the United States, the United Kingdom, and Canada. It distributes brand name and generic pharmaceuticals, over-the-counter healthcare products, home healthcare supplies and equipment, and related services to healthcare providers, such as acute care hospitals and health systems, independent and chain retail pharmacies, mail order facilities, physicians, medical clinics, and long-term care and other alternate site pharmacies.

In addition, it offers distribution and other services to physicians, who specialize in various disease states; distributes vaccines, injectibles, and plasma and other blood products; and provides commercialization services, third party logistics, group purchasing services, and other services for biotech and other pharmaceutical manufacturers, as well as reimbursement consulting, data analytics, practice management, and physician education.

Further, AmerisourceBergen delivers unit dose, punch card, unit-of-use, and compliance and other packaging solutions to institutional and retail healthcare providers; and offers contract packaging and clinical trial materials services for pharmaceutical manufacturers. It serves customers through a network of distribution and service centers, and packaging facilities. The company was founded in 1985 and is headquartered in Chesterbrook, Pennsylvania.

When the December quarter ended (the company's first quarter....fiscal year ends on September 30), sales were up 3.5% compared to the same period a year ago. But profits soared by 18%, thanks to 2 primary drivers: generic drug distribution and its specialty distribution and related services business. Cost controls also helped. Final quarterly net was 73 cents a share, up from 62 cents in 2007. For the year, analysts expect earnings to hit $3.19, then go to $3.52 in 2010. Over the last 5 years, earnings averaged annual gains of 12.76%. Analysts don't see that changing in the next 5.

The company has been buying back its own shares at a noticeable rate. During the first quarter, it purchased $88 million worth and still ended the quarter with $471 million in cash. Over the full year, analysts believe a total of $350 million worth of shares will be off the market. Total shares are 152,277,593. With the stock trading at $31, the full year could eliminate as many as 12 million shares if all $350 million is spent.

This is a company that is serving a sweet spot in the economy: baby boomers. There are more of them every day, and as they age, they need more medical services and medicines. With generic drugs being much less expensive, the demand can only grow. That demand will create more distribution channels and higher usage of existing ones for ABC. Simple as ABC, really.

More numbers: Forward P/E is 8.8. Price to Book is 1.71. Operating margin for the last 12 months was 1.22% and Profit margin was .36%. Cash per share is $3.09. Total debt is $1.19 billion. Current ratio is 1.06. Book Value is $17.72. Institutions own 97% of the stock. There's an annual dividend of 40 cents a share for a yield of 1.3%.

Check out ABC if you're looking for a way to take advantage of the aging population. There's no question it will keep growing. As it does, look for ABC to deliver needed medicines.

Company Web site: www.amerisourcebergen.net

- Ted Allrich