Cencora, Inc. (COR) Earnings Call Transcript & Summary

To the AmerisourceBergen session. I'm Bob Jones. I cover health care services here at Goldman. Very excited to have from ABC both Steve Collis, Chairman, President and CEO; as well as Jim Cleary, EVP and CFO. So Happy New Year to you both, and thank you so much for participating this year.

Thank you for having us, Bob. We always look forward to this. It's a good way to start the year. Okay, that's...

Hopefully, next time, will be in person.

I can't imagine we won't be. It's -- 2 years is a long time.

Yes. Yes. Well, look, I know there's a number of topics we want to get into. But I thought, Steve, maybe before we got into the specific areas, as we sit here at the beginning of yet another year and you've held, obviously, several, several roles at ABC and its predecessors going back into the '90s, I just wanted to kind of get your perspective on what are you most excited about as you sit here today across the various businesses and channels that ABC now participates in not just in 2021, but as you look out into the future?

Yes. I'm immensely proud. I mean in August, we'll celebrate -- and you'll recall, it was literally 2 weeks before 9/11 and the first Board meeting of the company, if you look at our history was on 9/11 at the New York Stock Exchange and obviously had to be abandoned. So we don't really have a director left. We have one director left who was there at that time. So quite a remarkable story. But if I think of how the company has evolved, our specialty business, which is where I'm from, the size and resources and services that it has today is remarkable, our core drug wholesale business, the relationship we have with Walgreens, which is about 30% of our revenues and just how we've evolved from a cultural perspective. Our people are very adaptable. They are very purpose-driven, united in our responsibility to create healthier futures. And they truly, truly resonate with the core mission of the company. And over time, as we've done acquisitions and brought new talent in, they are very attracted to this sort of culture. We just recently brought on a new head for diversity and inclusion, Dr. Lonie Haynes, and he joined us from the Pittsburgh area. But he just -- what we're doing already is so fundamentally sound from an integrity point of view, from a moving people forward point of view, from a customer perspective. I have great confidence that AmerisourceBergen will continue to thrive and prosper really by filling out our core purpose and by being pharmaceutical-centered. So I believe that we're going to have a greater role with the government. We've been involved for long. Since the MMA, that was a big lesson for us. We learned a lot about being involved, being at the table. But policy will be important. The continued role with the government when you look at what we're doing with the CDC and the emergency stockpiles and the EUA products, these are important areas of growth for us. But our most important business initiative will be to carry on staying very close to our customers, looking at additional services that they want. And when I say customers, I mean many of our stakeholders, including manufacturers and providers and the various segments we serve. And I think we're very well positioned, and 2020 was a year of -- where we showed the tremendous resilience and fortitude of our business.

No, I think that's a great start. And I think we're going to touch on a lot of the topics that you mentioned in that opening, Steve. But I guess what's obviously top of mind right now for everyone is the vaccine and your heightened focus in very recent days on the rollout. Understanding that Amerisourcebergen is not playing a role at this point as not being the centralized distributor of the vaccine, but somebody who's just very connected, obviously, into the logistics of how product and vaccines in general move around. I'd be curious just to get your thoughts on how you think the initial rollout has gone and just kind of any thoughts around how you think it will go from here.

Bob, first of all, what we've seen accomplished is going to drive -- I believe will drive a whole new wave of innovation. We have the RNA therapy, which I think is so promising not just in vaccines, but in other areas potentially, but just the way -- I believe that the way that the companies have cooperated. AstraZeneca and the University of Oxford and how everyone shared data and BioNTech and Pfizer. And here you have Moderna, which is a relatively new company, which is already over $40 billion market cap. And it's -- so I think we've seen tremendous things happen here. And sure, look, getting our 20 million vaccines by the end of the year was a great goal. I would not set -- why would you set that bar low. You want to set it fairly high. And it's a lot. We've had a very interesting experiences working with the CDC on the EUA products. And you're dealing with a lot of different jurisdictions. States have their own priorities. You really are getting into differences in how states -- depending on the sort of government that they have and how they see the role of the citizen and who they're prioritizing. So I believe it will go well. These products are -- I think almost everyone now has an understanding for how complex logistics and supply chain around drugs is. And now we don't deal with a lot of frozen products, but this is an ultra-complex logistic exercise. And I think it's given people a new appreciation, including legislators, regulators for what we do and how essential it is to innovation and how essential it is to patient care. So I'm hoping that as people start hearing -- as we start seeing some of these numbers abate and we start seeing the vaccines be really taking a hold and reducing the infection rates, we'll see vaccine hesitancy go away and we'll see -- we'll reach the critical mass where people will feel safe to go back to work. I, for one, am really looking forward to going back to work and seeing our AmerisourceBergen associates. And we can't do that without the vaccine, without the next steps we have to take over the next few months. So I hope that answers your question.

Yes. No, no, that's helpful. I mean I guess just one maybe more as it relates to ABC specifically. We had the Moderna CEO at this conference earlier today trying to talk about time lines of when the general population can start to receive vaccines. And there's some optimism that it could maybe happen sooner than what was originally forecasted. I guess, ultimately, how should we think about at what point AmerisourceBergen starts to play its more typical role in distribution as this starts to get out to all the pharmacies in the country, both chain and independent and the masses, if you will, start to look for the vaccine?

Well, our group that -- we have a COVID task force, and we also have a group within our supply chain group, which I have tremendous confidence in and, of course, we've been working very closely with them. And they're the ones that have been doing a lot of the contracts for the EUA. They've developed, I think, as all the wholesalers in our industry have because of the requirements I'm reading today about oxygen. Now we don't do that. But just -- these are basic needs that have emerged, that are so important. So I think you have a whole lot of new areas like should the U.S. invest in core couple of hundred anti-infective products that are onshore, that are manufactured here or that should we have greater stockpiles. I think all these things are very, very important. Your specific question about vaccines, it's possible that given the need to get this out and the time constraints that the CDC and Operation Warp Speed may consider, that they may consider looking at a wider distribution. But that will be up to them and that they'll see how it goes. And I think they've been thoughtful with the kitting process, and we are proud to play a role. And I'm proud that our industry is playing a role as well.

That's great. That's great. I guess let's move on to the core business or the legacy business, if you will. I wanted to first start with specialty, Steve, and then a few related topics. But again, this past year, specialty growth broadly seemed to continue to be very robust, both at a product level and within the organization. Clearly, investment in innovation continues to be very strong, you touched on that in your opening remarks. How are you thinking about specialty growth for AmerisourceBergen in 2021 relative to some of the recent years we've seen?

Yes. We are -- we have a large share of a lot of the Part B provider businesses, and I could not be more proud of the way our oncology supply and, ION groups have continued to develop their business models. We're also focusing a lot on oncology physician specialties. And there's interesting areas in neurology, urology that are growing. Ophthalmology is our largest business at our Besse Medical business. And we are growing our [ CASN ] businesses to ION, which is the IPN businesses like urology network, rheumatology, et cetera. And we're having key opinion leaders and dialogue with key physicians and manufacturers. The more therapies that are available in those ologies, the more interesting they've become to us from a contracting, from a best practice perspective, from a technology perspective. What technologies will we be saying -- helping to distribute and become acceptable in those practices, which is where we have a role through the strong community associations that we have and the key opinion leaders that work with the different physicians that belong to those networks. So I think AmerisourceBergen is well positioned. Our growth in 2020 was great. It was fueled also by biosimilars. Biosimilars are important for many reasons. They provide room for new products to come to market. They increase patient selection and physician selection. And they've also been an important new contracting mechanism for our physicians and for organizations like ION, where we've helped educate the market, repair the market and then also looked at what is happening in the market and how can we -- what can we learn from. But -- so the sweet spot for us is when there's about 3 products. In generics, we talk sometimes about a jailbreak. Well, we haven't really seen a jailbreak with biosimilars. We don't expect to because they're difficult to manufacture, and it's important to pay attention to the quality and the rigors of the manufacturing process. But it's becoming an important part of our community practitioners' arsenal. And I think there's a lot of acceptance, and we'll see more acceptance. And we don't have any huge launches for the next few years, but Humira is coming up. And of course, from an AmerisourceBergen perspective, our sweet spot is really the Part B administered products, which -- when interchangeability, for example, is not such a big issue because often they are acute treatments in areas like chemotherapy and supportive care, et cetera.

No, that's helpful. I guess, maybe just to round out like the specialty bucket, if you will. You seem to have been seeing accelerating growth year-to-year. I mean is the expectation that -- as a channel, as we think about specialty for AmerisourceBergen, is the expectation that the growth will continue to accelerate year-over-year?

Well, there's demographics, right? There's -- we have all the new products, right, that have come out. And in addition, the patients still require the chemotherapy products, the more established, longer-term chemotherapy products. So -- and that's leading for patients to live longer. Generally, patients have been living longer as well because of the demographic changes, as you know. And unfortunately, so many people will contract cancer during their lives. And the good news is that there are so many options, and it's not necessarily -- I remember when I was a kid, we used to whisper, "Oh, they got the big C." And it was -- you just assumed, okay, that was it. And so in many cases, we've been able to have such an impact and I believe will continue to have an impact. Specific to ABC, just carrying on with the tremendous services we provide. We've recently placed our customers on our core SAP system and e-commerce ordering, et cetera, which in the long term, we believe, will be very good for that customer base as you look at a more integrated world. But we've continued to make the right investments in technology, in people, in distribution, in knowledge and listened to our customers and adapted. We've also benefited from a trend. A lot of the larger practices have really consolidated within ABC ION. They are aggregating, rolling up. And a lot of those aggregators are gaining market share. They're gaining market share by quite -- it's difficult to be a single practitioner or even 2- or 3-man practice unless you're in a very small market. So a lot of those practices that are out there aggregating, acquiring whether they backed by private equity money or they just are physician-backed entirely, ION and ABC are their partner of choice.

Got it. Got it. I guess just go back to the biosimilar comments, Steve. It seems like it's come up more and more from the company's earnings call to earnings call. Based on the data we track as well, it seems like you mentioned it, we've seen it, some of these products really seem to be gaining traction in the market within their respective categories. Anything that you'd point to specifically that you think has helped driving this penetration? I know that there's not a ton of categories and a ton of biosimilars, as you mentioned. But it does seem that we've hit a tiny bit of an inflection here.

Yes. I think that's just acceptability of them. I think the type, the quality of the manufacturers, the fact that I don't recall reading any data or any reports of adverse events that are coming out because we have seen the big guys step up and the people that are very experienced in managing biotech products that are now the leading buyers, some the manufacturers. So -- and then I think, look, physicians' reimbursement does often drive and I think we've been able to help physicians benefit, which ultimately helps patients and, as I said earlier, provides room for the newer therapies, the cell therapies and the newer therapies to be launched. So -- and again, I'm very bullish that we'll continue to see growth. If you look at where the FDA product pipeline is -- the approval pipeline, it's not -- it's -- a lot of it is in cancer, and we're very well positioned. And I've talked a lot about our community businesses, but we also have specialty products into hospitals through our ASD division, and that's become really important as well, and that's an important driver of product into the hospital outpatient channel and the acute channel. And so -- and manufacturers are able to do very select discrete programs through any of the number of businesses we have, oncology supply and Besse Medical but also ASD and even our wholesale -- pre-wholesale 3PL business, ICS. So we have lots of different ways to help manufacturers get their product out in the market.

That's helpful, Steve. I guess maybe just one last one. If we just think about how important this category is and how important it could be as we look into the future. EBIT growth across the U.S. distribution business has been really solid of late, kind of growing in that mid-single-digit range, some variability, obviously, quarter-to-quarter. But how should we think about the growth contribution from specialty versus kind of the traditional branded and generic drugs?

Well, I've been looking for a good way to introduce my colleague, my great colleague, Jim Cleary. And I think you provided a perfect venue to do that because he's going to answer the question better than I could. So Jim, are you with us? And do you want to take that question?

Yes, I am here. And thanks, Steve, and thanks, Bob. Bob, it's great to be at your virtual conference today. Yes, we have had very good operating income results, strong for FY '20, particularly strong in the fourth quarter. We bring that momentum for the fourth quarter into the first quarter of FY '21. As you know, our guidance for FY '21 is mid-single-digit operating income growth in both Pharmaceutical Distribution and then our Global Commercialization Services & Animal Health. Steve talked about specialty quite a bit. One of the other areas where specialty benefits us is in our commercialization services businesses. But a lot of the specialty manufacturers are using -- I mean, Steve mentioned the pre-wholesale business, but our other commercialization services businesses also, whether it be World Courier or Lash or Xcenda, they're benefiting from growth in specialty also. And to get to your specific question, we have a number of drivers of operating income performance. And one of the nice things is that in FY '20, our operating margin percent ticked up a little bit, and it particularly did in the fourth quarter. And if we kind of look at what the drivers of that are, clearly, the growth of specialty and growth of biosimilars is a really key driver there. There were some other drivers in FY '20. Generic deflation moderating, that benefited us compared to prior years in FY '20. Clearly, we had really good operating expense per performance with very low growth in operating expenses and nice operating leverage in FY '20. And so there were multiple drivers of that operating income growth and operating margin improvement. And while we don't break it out specifically, the -- probably the biggest driver was our specialty performance in FY '20. And once again, we kind of do bring that momentum into FY '21, which informs our guidance and our confidence in saying mid-single-digit operating income growth.

That's helpful. I guess maybe moving to another key driver that gets a lot of focus and clearly has been volatile as a result of all the things that have happened in this past year, just around script trends. We all, I'm sure, are tracking similar information. But what we've been looking at has been suggesting that we could be back to like a down mid-single-digit year-over-year type of script trend on a week-to-week basis relative to something that was probably closer to flattish in the fall. So I guess 2-part question, is that -- does that kind of coincide with what you guys are seeing from your end? And then how do you think about what that could progress from here, kind of what's contemplated in your outlook relative to kind of what we're seeing right now?

Yes. Let me kind of take a stab at that. And of course, we do track the data that's out there, but really what I focus a lot more on is the trends within our existing businesses and the volume trends within our existing businesses and look at that very closely. And we look at it month-over-month basis and a week-over-week basis. And really, across our businesses, what we've really been calling out is the resilience of our businesses and kind of getting into the specific data, and we talked about this on some of our past earnings calls. But that would probably be the point that I would most make, Bob, as we look into our -- whether or not it be our overall business, which is really shown in our fourth quarter results, but looking into the individual businesses. While we saw some impacts from COVID, first -- in the first few months of COVID, we saw very -- rebound and it really continued to see resilience in our businesses.

So I guess just to follow up. I mean is it safe to say that -- I know it's a lot of different moving pieces. But is it safe to say that, in aggregate, what you've seen play out has -- is something that was, in fact, contemplated in the guidance in totality?

Yes. What I would -- I guess the best way that I would answer that is that when we did our guidance, we felt like we were really well informed based on the trends that we had been seeing in our business at that point in time. And when we did our guidance of mid-single-digit operating income growth, we had a high degree of confidence based on detailed analysis of our businesses and our expectations and confidence and resilience and our business evolve.

Got it. No, no, that's helpful. Another topic that gets a lot of attention all the time but, obviously, given the political environment over the past few months obviously got more -- even more attention is just drug policy and drug pricing. So I guess the one that would be most relevant to Amerisource would be around the most favored nations rule that was put out. And yes, look, there's a lot of debate, obviously, of where this will go, if anywhere. But I think what maybe it did bring to light is that there could be some bipartisan view of trying to do something around Part B pricing. And so I'm just curious, I guess, a, how likely do you think the most favored nations rule is to actually get established? But then probably, b, and more importantly, how much momentum do you think there is around some type of reform around Part B pricing?

Yes, I'm happy to take a first crack at that. And as you're well aware, there were 2 preliminary injunctions. And now I think there actually have been 3. There's been a third from judges, which are halting the MFN. So it doesn't look like it will move forward. And the current administration, it will be very interesting to see the Biden administration and the priorities that it establishes. But with the -- at the current time with the 3 preliminary injunctions, it appears that it's halted at this point in time. And Steve, I'm not sure if there's anything you'd like to add.

Yes. I mean, clearly, I think the last administration, in particular, was very concerned about international price comparability and why the differences. But they are -- we've spent a lot of time looking to reasons. There are a lot of valid reasons why this would occur. Many times, some of these prices are looked at, at the gross levels, which in new product isn't as much of a -- they're not as heavily rebated. But in Europe, for example, you don't get a chance to do price increases. So as some of these products get older, there certainly is a big difference. So I think there are differences in the market. And we'd hope -- I think what's important is if legislators are concerned about the patients, let's have a discussion, let's let it go through the regular process, let there be commentary. There's payers, there's patient organizations, there's manufacturers and everyone needs to sit at the table and work it out. And I think that these problems can be imminently solvable with the right participation by all the interested parties.

No, that's helpful. I mean I guess even just more broadly, like as you think about the new administration coming in, and I know as we sit here today, the runoff in Georgia probably had some implications around what the ultimate configuration of the government and Congress will look like. But are there major things that given what we know about the new administration is -- are there major areas that you are more worried about, more excited about? Are there certain policies you feel like will be things they push on differently than the previous administration?

Well, President-elect Biden, he got us -- I'm on the Board of the CEOs Against Cancer as part of American Cancer Society. And probably the middle of 2018, we -- 2019, I should say, we -- he received an award in DC, and I was present. And he -- and he didn't have prepared remarks. He came and spoke about his passion around cancer research and the moonshot program and how proud he was that there was bipartisan legislation. And I just think that he was very, very sincere about that. And I think having lost a child to cancer, I think he's going to be behind innovation. And I think he's an experienced legislator that understands how to work and work the system in a good way that there's a process that you go through. So I'm optimistic. I think there'll be a lot of pros that will come back. I think we'll have a more predictable environment where we can -- and our organizations like bio and pharma and HDA are all very active. And we'll certainly look forward to being a part of that process.

That's helpful. I just want to make sure we get to touch on a couple more topics that are important. One that resurfaced last year and I'm sure wasn't necessarily something that the company wanted to see was Amazon again. I felt like we had some reprieve there for a few years. But made the announcement about the new pharmacy offerings, probably most relevant to Amerisource being the online pharmacy piece of that announcement, obviously. Just curious, your initial thoughts now that you've had a little bit of time to digest what they have announced. Obviously, I know they're a partner, so you might have a little bit more insight. Yes, just kind of initial reaction to that well-anticipated news.

Yes. I remember Dave Yost telling the story about when he was early in his career, the industry had a big decision to make, whether to support mail-order pharmacies. And I think the philosophy of the wholesalers and our industry has always been to go where the prescription dollar is, and we want to have a segment of portfolio of customers that represents the whole channel. So PillPack, as you referenced, Bob, a longstanding customer. The leadership is in place, the VP of -- the Founder -- the Co-Founder of PillPack is now the VP of Amazon Services and -- Amazon Pharmacy Services, I should say. And we still work with them. And we work collaboratively to be a solution provider, and we meet with them regularly like we would any large growing customer. And we always have to be Switzerland, right? If we're working with Sam's Club, we want them to feel like they have a fair shot at getting the resources of AmerisourceBergen; Publix, same thing; and certainly PillPack, we want to provide them access. And we have dedicated salespeople, business development people. And they -- to them, the most important relationship is that and they, of course, will advocate for that customer and talk about them. And we tend to have customers for the long term. It's not often that we lose customers, and we want them to feel like they can have access to senior management, access to our best ideas, our best resources. If they would like to look at relationship with Elevate, that's something that we, of course, can always discuss within the requirements of how that works, of how that PSAO works, so those sort of things. And that's just example off the top of my head. It's not a specific example, but that's what sometimes customers are looking for from us. And then, of course, we have tremendous knowledge of biosimilars, emerging therapies and all that. So all of that is very interesting. I mean I think I'd always be very proud if our customers would say AmerisourceBergen is a high-contributing, value-add, knowledgeable partner. That's what we're looking for.

Yes. No, no, I can appreciate that, too. I guess as we think about the impacts of COVID, one of them clearly is I think we're all used to doing a lot more from home and having things delivered to us that we might not necessarily have done before. So maybe just using the Amazon Pharmacy as an example, I mean, do you see there being a more pronounced shift in the marketplace? Are you anticipating that you'd see less prescriptions coming from your retail independent channel versus a mail channel? Or do you think kind of what we saw before won't be terribly different than what we see when we come out the other end of this?

Well, there's always the Microsoft Bill Gates quote, right, that change is always underestimated in the short term -- it's always overestimated in the short term and underestimated in the long term. I think the industry is very -- we have a lot of very established players, including our largest customer, Walgreens. So you have our second largest customer, like Express Script, is Express Scripts Cigna. And so there's a lot of -- and I think these companies are proving adaptable. They are very versed in pharmacy and how to interface with consumers. So it's not -- I don't believe that the market is underserved currently and that there's a huge gap. So it's not -- we'll see how the market is. My job is to make sure AmerisourceBergen is well positioned. Jim and Bob Mauch, our Executive Vice President, Group President, is -- that's our jobs and that is having a representation of the market in all the different customer segments. So hard to predict how things will fall out, but I believe AmerisourceBergen is well positioned whatever the outcome is.

That's great. I guess maybe another topic that we'd be remiss not to touch on is opioids. I know you're obviously limited in what you can share. But given the focus from the investment community on it and how big of an overhang it's been, just wanted to check in, see what the latest thoughts were. I think there was some excitement in the latter part of last year that we were getting close. Obviously, haven't seen anything yet. Just wanted to check in and see what your latest thoughts were on a global settlement.

Yes. Bob, certainly understand that you would ask, and I'm sure you all understand that we don't have an update to provide at this time as you're well aware and most of the people listening in, I'm sure, are well aware. In the fourth quarter, we've made the decision to approve for the potential settlement given the significant progress we've made on discussions with all the parties involved, which led us to believe that a settlement was estimable and probable.

Got it. Got it. So we'll stay tuned on that topic. Yes, I guess, another one that we haven't talked about in a little while would be contract renewals. And I know I feel like every few years, this becomes a bigger deal for one or more players in the industry. I know there's a few that we can try to keep track of. Whether there's renewals or extensions, it's kind of hard for us to really know behind the scenes. And so I guess I'll start generally, are there any major renewals on the horizon for 2021? And as you think about some of the renewals that you've seen over the last year or so, any general comments on how pricing has fared would be helpful.

Yes. Let me start out by saying that, no, there isn't anything that we've called out in terms of significant contracts expiring in fiscal 2021. Overall, I would describe the market across our businesses, Bob, as competitive but stable. And Steve, I'm not sure if there's anything that you like to add.

Yes. I mean, generally, we lose customers if there's M&A activity. And even so it's not always the case. It would depend on how the acquirer sees it. But many times, acquirer would have an established business. But we also are fortunate enough to be with a lot of the companies that are being -- are doing -- are acquiring. So for example, even when Express Scripts was acquired by Cigna, we were able to pick up -- and Cigna was not our customer, but Express Scripts was. We were able to pick up some of their residual business that they had in the mail order area. So that's the sort of benefit that we've really been more on the plus side than the negative side of. One thing that, Bob, we talked earlier about the history of ABC and I'm very proud of is that we have done a much better job of staying in touch with our customers outside the RFP process. So I wouldn't be happy with a sales representative or a national accounts lead that's not staying in touch with their customer, except when it comes to an RFP. And we discussed the contracting process often. There's invariably issues that arise. The business has become so much more complex. When I started in the business, we've got a legal template. And we used to just use that to sign our customers and it didn't even go to lawyers. I can't imagine having a contract without several lawyers involved at this stage. So it's -- the business has just become much more evolved. And that's why there's been so much consolidation in the industry. It's required very large, sophisticated, well-resourced players like AmerisourceBergen to be successful in this industry.

No, that's helpful. A couple of more topics I wanted to get to before we run out of time. One would just be thinking about the businesses within the other segment. So MWI, I know, Jim, probably near and dear to you. It's a little harder clearly for us to get kind of real-time insight into the vet world, certainly a little bit more difficult than the pharmaceutical world. I guess just how have volumes been trending in your mind? And as you kind of think out over the next several months, what kind of growth should we be expecting at MWI?

Yes. So I'll say that fiscal year '20 was a strong year for our Animal Health business, and I would just say the animal health market overall. And once again, it really proved its resilience, much like the rest of our business is down. And in the fourth quarter, as you know, we had 8% revenue growth at our MWI business, and that included strong double-digit growth in the companion animal part of the business and growth also in the production animal part of our business. So we're really pleased with the performance of the business. I think what we saw in 2020 as increasing pet ownership, people really focusing on family health, including pet health, people staying at home probably understood their pet's health better than they ever have. Veterinarians really figured it out how to operate in the COVID environment. And so just like people really value the service of their pharmacists, they really value the service on their vet. And so I think what happened in 2020 really steps up the animal health market well for the long term as people will continue to take really good care of their pets. And so we feel very good about that market and our position in that market for the long term. And it is a good business for us and a very good market.

No, that's helpful. So probably a little bit less of a onetime impact and maybe something that's more sustainable.

Yes, I do think so.

I guess, just on the Global Commercialization Solutions, and I think you both touched on this briefly earlier on. But curious if maybe you could break down a little bit what -- within that business how things are trending. I know World Courier is something that gets a good amount of focus and it seems like you've been fairly positive on in recent updates. So just anything about the trend generally within the commercialization solutions and then specifically I'd be curious to hear about World Courier.

World Courier, Bob, is a fantastic business. We bought it in 2014. I know you were probably covering us then, and there was tremendous controversy about that and people referred to what we preferred eventual LBO by the huge amount of stocks we've been buying back in those days and our cash flow, and we were able to diversify. And I'd tell you, if we'd seen another business like World Courier with that quality -- and we really were selected at the time as an ideal buyer because of our focus on the pharmaceutical channel. And I think also our focus on culture and people, which has only gotten stronger in the last couple of years. And we don't disclose the detail, but you can see that World Courier is driving tremendous growth within the other segment. Not a big fan of that name, by the way, but it's driving tremendous growth. They've been able to do innovations during this COVID time, like trials at home. We've also -- I got this question in the one-on-ones, we've also had to change the way we do freight procurement sometimes because there's been fewer commercial flights available. So we've had to work with manufacturers and sometimes upcharge them and try consolidate shipments more and be very thoughtful. This is a tremendously complex business. You bringing in a product from Philadelphia that's being manufactured and depending on what the composition of that product is, if it's got a plant base or depending on the different types of controlled substances, et cetera, is how many forms you have to complete to get it into the European Union. And it's not a business that many people can do very well, and we have really distinguished ourselves at it. It's a business that really has helped us to have -- just I think when we can do these sort of value-added service to manufacturers, it just really helps us -- that really helps us with our core mission. The last thing I'll say is that it's been very helpful to ABC because it has helped us understand the global environment and have resources in different countries. Sometimes it's tremendously small. I think, for example, in Vietnam, we have 4 people, but we still have a presence there, and they are helping facilitate clinical trials in the areas. And it's been a great growth vehicle in our business that Jim and are extremely proud about.

That's probably a good transition to just my last question, Steve. And I know this past year, I think a lot of companies across a lot of industries hit the pause button on serious capital deployment, whether it be from buyback, M&A, anything -- any which way you want to look at it. ABC still clearly has an extremely attractive strong balance sheet. You mentioned pharmaceutical services. And it's kind of a broad moniker, if you will, of different types of companies and industries. Is there specific priorities you'd want to outline as the world gets more normal from a capital deployment perspective and specifically within acquisitions?

Yes. And there was one part -- just let me -- I didn't get to talk about one of our businesses that's really distinguished themselves in the pandemic, which is our NMR business in Canada. They, along with FedEx, received the vaccine award for Canada. So we are -- I just wanted to acknowledge them. And it was definitely one of the points that I wanted to cover in my remarks today. And we are very proud of our businesses, proud of our people, Bob. One of the reasons that we've done so well in the pandemic has been our investment in internal, whether it's distribution systems or system resiliency or actual physical distribution plants. And we're giving our customers what they need. If it's a protocol analysis or reimbursement analysis, if it's clinical trials at home, if it's telehealth for our veterinary clinics, we're developing those resources internally and we're investing in very strong IT and data and analytics capabilities. And so the internal investments are very, very important to us. We haven't done a large acquisition in a while. In the last few years, of course, we did HD Smith. And MWI, it's not that long ago. It's almost coming up on 6 years since we announced that. And those -- and we've done some tuck-in acquisitions for MWI in particular. I think anything that would help us adapt to this new environment, so we have -- we can do it through partnerships like World Courier has done with mail-order delivery and including partnership with our large customers there or we can acquire. When we acquire, we're looking for very specific returns. We're mindful of the fact that -- where our cost of capital is and our share price and multiples are. And so -- but we are active in M&A. Dave Yost, told me always, of course, and this is well established that the ones that you don't do are just as important as the ones that you do, and a lot of people never know about that. And we have been active. We just haven't really found the right asset where it's worth paying what's pretty lofty multiples. You would have thought COVID would impact that. But in fact, it's the opposite. It's -- in fact, the multiples have only gotten higher. But I think ABC could -- we definitely -- if we found the right acquisition, we'd be willing to act. And it has to meet all the criteria, the people, the systems, the business standing within their segment and the growth goals that we have. So Jim, anything else you'd add?

Just to add, just, of course, our balance sheet is extremely strong. We finished the year with 0 net debt. Our cash exceeds our debt. And so our balance sheet is very strong and positions us well for investment.

No, that makes sense. Good place to be and probably a good place for us to wrap it up. But I wanted to thank both Steve and Jim for the time today. Really appreciate it as we kick off the year, hopefully better than last year. And thank you, everybody, for joining today. Really appreciate it.

Bob, it's always a pleasure to work with you. You're a professional, and thank you for your time today. I wish we could be doing it in person at your beautiful headquarters there.

Yes. Next time.

Okay. Thank you.

Thank you, everyone.

Bye-bye. Bye-bye.