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

Good afternoon. My name is Lisa Gill, and I'm a health care technology and distribution analyst with JPMorgan. It is a great pleasure this afternoon that I introduce AmerisourceBergen. With me today is CEO, Steve Collis; as well as CFO, Jim Cleary. Welcome, Steve. Thanks so much for doing this for me, and I wish we were in San Francisco.

Thank you, Lisa. It's still a pleasure to be able to address you and your clients and also to touch base with people as we start the new year. Also, today is another conspicuous occasion because we are unveiling our new branding campaign, and you'll see some very bright colors in the slides, which I'm still getting used to. But it's really growing very well on me, and it certainly is something that is not -- it's not for the faint of heart. So we have some strong slides here. So with that, I'll get right into our presentation. Of course, we have 1 slide for the lawyers, our cautionary note regarding forward-looking statements, which I assume you've all read. And now let me start talking about AmerisourceBergen, which is my great pleasure to do. This year will mark our 20-year anniversary as Amerisource and Bergen. In August, we'll be celebrating that occasion. And never have I felt better about the company and our positioning. We literally have all lived our purpose during the last eventful year. Our purpose is to be united in our responsibility to create healthier futures. And certainly, that purpose has helped fuel us and help fuel our performance during the last year. Our strength at AmerisourceBergen are our customer base. We have a very strong and robust customer base and are well represented in all segments. My background is in our specialty distribution and commercialization businesses, which we are a hallmark for ABC. And I really refer now to the specialty businesses becoming our overall brand business, and we're looking more towards emerging therapies like cell and gene therapies for the innovation mindset. But part of how we innovate is really being very customer focused, and then we have an excellent history of corporate governance and corporate stewardship, which in these times, should not be overlooked. So we will grow with our customers, and we're going to grow with our strong financial capabilities. One question that has been foremost on our Board's mind and has helped us through the last chaotic 10, 11 months has been our COVID-19 response. And 2 things I'll point out. We resolved, first of all, to keep our frontline workers safe and do everything we could to prioritize their safety and the business continuity of our operations. Literally, health care could not function without AmerisourceBergen and our peer companies sending out prescriptions and taking care of getting therapies out to key customers, and that was what we prioritized. We also resolved to come out of the pandemic stronger than we entered into it, and we didn't know it would be as long as it's turning out to be. We have a much better insight now into when the end of this period could be. But our key strengths and capabilities have enabled us to be part of the solution. And we've had a key role in distributing antivirals and antibody therapies. And we couldn't be more proud of the way that we have performed and the way that our associates have acted united in our responsibilities during the last several months. So we're very proud of that. Those of you who don't know AmerisourceBergen that well, this is the last 5 years. We've had a 5-year CAGR in EPS, and we have a legacy of strong execution, financial stewardship and shareholder value creation. And also, we've had recently announced, in conjunction with last week's announcement of the acquisition of Alliance, increase in our earnings, which is unrelated to that acquisition and is a good, good precursor of our financial performance for this year, so we're proud of our resiliency in these turbulent times. So our next slide is really on Alliance Healthcare and what is the strategic rationale for us in entering into this acquisition and even at this particular time. So this is probably the most important slide that I'll be presenting today. So let me just highlight a few things. First of all, this is not something that has been not contemplated very thoroughly. We've talked about this for many, many years. In fact, in our original deal in 2013 with WBA, we had talked about this iteration. But we really feel that coming off the pandemic and strong performance by both businesses and strong resiliency that we are well positioned to make this important step now. Moreover, there have been benefits to the partnership. We are entering into an extended contract period with Walgreens in the U.S. through 2029. We have a 10-year contract with Boots, and these are core underpinnings of our businesses, the U.K. business and the U.S. business, which will become probably our 2 most important markets in the world. AmerisourceBergen has had a very good experience with high-margin complicated manufacture services businesses that support innovation and position AmerisourceBergen as the partner of choice. World Courier is a very good example. MWI is a good example. And we feel that Alliance Healthcare really extends this theme. Alliance Healthcare, as we've gotten to know it better, has a higher percentage of earnings coming from higher-margin services businesses, and they have both product businesses like Almus as well as Alloga, which I'll talk about. So we feel like it's a very good fit. Also, it's financially accretive to ABC and cash flow positive. We have forecasted our cash flow will increase to 120%, 125% of AmerisourceBergen stand-alone estimate. So -- and we were able to be in a strong financial position to be able to afford this acquisition with over half of the purchases -- of the purchase being paid for in cash, and the other half will be paid down fairly rapidly as we look to the positive cash flow to continue from both the core AmerisourceBergen business as well as from Alliance. So -- and also the strong synergy creation, which at a full year run rate, would be about $150 million would be ABC's share of that -- at -- once we reach full level attainment. So one or some of these high-margin services businesses that we talk about, first of all, the most formidable business, the largest business is Alloga, which is the leading European pharma logistics company. Alloga is an important manufacturer fee-for-service, DTP, our [ Solas ] contractor provider. And it's important also that Alloga is not fully penetrated in all the European markets. We believe that, that's a big upside, with all these businesses to continue to penetrate, where appropriate, the manufacturer services businesses into other markets in Europe. We have some mature markets, France, Spain, and the U.K., where we have some good penetration, but we have other opportunities. We also have opportunities within Alliance to develop COVID-related product solutions, including, in some cases, we're actually doing the PPE as well. Alcura and Skills in Healthcare are important manufacturer services as well. You'll see there that we've said with Skills in Healthcare, we have a presence in 6 countries, where it's about a little bit more than that in Alcura, depending on local market conditions. In the U.S., we do oncology, mainly through infusion centers operated in alternate care facilities, in oncologist offices, in hospital outpatient. But in the U.K., a lot of that is done in our own settings, so that's why the need for Alcura to operate. An important business for us is the product businesses, Almus and Alvita. Almus is the #1 generic brand in the U.K. and I think has got a very good chance to continue to be so given the strong Boots presence and the strong interdependability between Alliance and Boots, which we expect would continue. Also like AmerisourceBergen operates Good Neighbor Pharmacy, we have the Alphega pharmacies, which is 7,000 members across 10 countries, and that's a very important part of our business, considering most of the business in Europe is really servicing independent pharmacies, so a very, very important driver for us. Let's talk about some other drivers. And here, you'll see our new branding on full display. AmerisourceBergen, and I've talked now about Boots and , we really pride ourselves on strong customer relationships. Some of our other key customers are Kaiser and Express Scripts and CPA, an independent pharmacy. And also, we have a very strong vet relationship with Mars, Banfield. So we're very well positioned with key anchor segments in every segment. We've talked about our specialty distribution. When it comes to Part B drugs, AmerisourceBergen has very high market share, not only in oncology which we're best known for but also in areas like rheumatology and ophthalmology through our Besse Medical business. We are capitalizing on an expanding market opportunity with biosimilars, and we pointed to our 2020 success. One of the key drivers for that was biosimilars. We talk about biosimilars as being very important because they also create headroom for other products to come into the market as well as increased patient and physician choice. And then we feel like we have strong organic market growth trends. Post-COVID, governments understand how important a strong health care infrastructure and economy is to the overall population growth and stability, so very important. Some of the businesses that we have been really looking to invest in, and we feel that Alliance grows that theme on our World Courier and ICS businesses, which would work very well with Alloga, and why not doing agreements across Europe and the U.S. between World Courier, ICS and Alliance and Alloga. Our Lash Group, very important. We recently started doing this year with the new season. We started doing some eBVs of our Fusion platform implementations, so exciting to see the technology advancement at Lash. NMR and Profarma are important specialty businesses in Brazil and Canada. NMR will be the distributor for the COVID vaccines in Canada, which we won a joint award with FedEx here, so we're very proud of that. And Xcenda is a very important market access consulting and health economics outcomes business, which, by the way, our Group President, Bob Mauch, founded along with 2 other executives who are still with us, working with us very closely in the business. So Xcenda is a really important business for us as well and valued highly by manufacturers. So not to be forgotten was 6 years ago at your conference, Lisa, we announced the acquisition of MWI, and that has been a great add to AmerisourceBergen. Joining me shortly will be Jim Cleary, our CFO. He actually more or less founded that business. He was really the first professional manager that came in to help grow that business. And World Courier -- sorry, and our MWI, I should say, is also benefiting from both a resilient companion animal and production animal business. Our companion animal business is -- we're the #1 in the U.S. and hope to grow that more internationally. And I'd say that World Courier is distinguished by its people, its customers and its offerings. I said World Courier -- again, MWI has grown by the wonderful people and customer relations they have. And the close intensity of the market, we watch this market very intensely and are pleased with the presence. So let me talk about some of our governance and environmental efforts, the social efforts. We are very much a distributor, so it's different than a manufacturer. So we have not that massive impact on environmental changes that we would like. But we do our share, and we've reduced greenhouse gas emissions by over 5%. We're working with the agencies to increase their awareness of what distributors can do from an environmental perspective, and we're pleased that from a transportation, packaging and operational efficiency, it's part of our business to be as efficient and as thrifty as we can be there, thrifty from both the fiscal point of view but also from an environmental point of view. On the social side, we continue to invest in our people and our communities. ABC has been a leader in diversity and inclusion, and we continue to increase our efforts. We most recently appointed a new Chief Diversity and Inclusion Officer; Lonie Haynes, who joined us, and we're very pleased to have him with us. And I believe that we've distinguished ourselves and have increased the trust in the social contract between management and associates during COVID. Also, I would say our Board is excellent. We have a very diverse Board. Our Board is highly involved with us. They've spent a lot of time with us during this year as we studied this acquisition, but also are still remaining very focused on the culture of transparency, ethics and integrity that we have at AmerisourceBergen. And I couldn't be more proud of the partnership that we've developed with the Board. I think it's an excellent partnership where we have that sort of creative abrasion that I think you want to see between a Board and management, so we're -- there's a good tension where they keep us on our toes. We report to them, and they give us excellent ideas and input on our strategy and execution. So my final slide before we start Q&A is, again, going back to our purpose and being united in our responsibility and reminding you of our key strengths and growth strategies. And hopefully, you understand that the Alliance acquisition is really extending that strategy around the prescription dollar, around specialty distribution and services, the innovation mindset and really, a strong people and purpose orientation with a mixture of portfolio companies like AmerisourceBergen have, always work in concert to overall further our stakeholder objectives. So with that, Lisa, I'll ask you to come back on. And Jim Cleary, our CFO, will join us as well.

Great. Thank you.

This is second year that I've given you time back.

And I appreciate that because...

I'm sure the others does also...

You know I always have lots of questions for you. So first, let me just start, Steve, with your comments around the Alliance deal. And one of the things that came to mind is when you talked about the fact that you've been talking about the fact that -- you've been talking about this for some period of time. We all know you signed the relationship with Walgreens Boots Alliance back in February of 2013. Can you maybe just talk about the timing of now, why this is the right move for you to make this acquisition today would be the first? And then secondly, you did talk about the nice overlaps that you see in the marketplace, but it's been a tough environment over in Europe the last couple of years. I think that if we look at Brexit, where there's a large U.K. presence, we think about reimbursement to those pharmacies and that trickle-down effect to the wholesaler. So maybe if you could just address some of those issues initially around Alliance? And then I have a couple of questions for Jim on Alliance as well.

Yes. And Lisa, the good news is that a lot of our key sell siders understand Alliance pretty well because it's been reported within WBA. And part of this is two parties have been willing. And I think Stefano and Ornella are more telling stories at our schoolyard. They -- this is the business that they grew up on, and they're very, very attached to it. And so I think the discussion has been at times somewhat difficult. But I think if you look at the challenges and the opportunities in today's market, being focused and then having the concentrated investment in AmerisourceBergen is good for all parties. And one of the key synergies that it's very hard to say what will this translate to in fiscal terms is the synergy that we have with Alliance management in terms of being a distributor and the like-mindedness of that and the development of these services and looking at new markets together. And if something -- if we uncover a great learning in Alphega, why not bring that to Good Neighbor Pharmacy? A good example is the business coaching that we were doing in Good Neighbor Pharmacy. Jim, immediately upon hearing about this, working with Mark Shaw and others at MWI, took that straight to their customer base. So I think that's the sort of thing that we look at. But let me just say Alliance is really strong, highly-performing business. You saw the 7% announcement that they had just last week as part of WBA's earnings, a very intact management team. They've operated competitively. They're in 13 different countries, and usually are in the top 2 or 3 in each market. Sometimes a very strong #1 position, like you see in the U.K. and some other countries. Like Egypt, they're #1 in. Turkey, in the top 2, which is a key market for us. So the timing was just right. Both companies have emerged from COVID or are starting to emerge from COVID very strong, a stronger position competitively than we were going into it. I think that the opportunities for innovation post-COVID, when you look at the learnings we've had from how quickly drugs got developed and approved, surely that, that's going to apply itself to advances in life sciences and cell and gene therapy. And the more we've gotten to know the business, I think what we came to really appreciate and be excited about was the mix of the services and distribution businesses and the fact that many of these services businesses are not fully penetrated yet. Lastly, I'd say that we were in a very strong financial position at the end of last fiscal year with a cash-generative year -- and a very strong cash-generative year, strong balance sheet. And we've looked at the market, and we believe that this is the best use of our stakeholders -- for our stakeholders' capital to invest in this. And I just have to give Jim an opportunity to comment on this as well.

Yes. Before we -- before Jim comments on that side, just hold on a second because somebody is asking about the financial aspect as well, Jim. But just one other thing I want to understand, Steve, and that's the specialty component of this market. And one of the things that having followed WBA, following McKesson that owns a business there, they're clearly ahead of us in areas like biosimilars but clearly behind us in areas around services as it relates to specialty pharmacy. So what are some of the things that you think you can bring to the table and perhaps you can bring back here? I know we've talked a bunch in the last year about the potential opportunity around biosimilars.

So one thing we were very positive about with Alliance business is their Alloga business. I think that's been real strong performing. And it's been very important for Alliance to have those capabilities going into Brexit. And that's, I think, showing their strength. They also -- they're by far, #1, Alloga is the #1 company. And we have a real interest in this area with our ICS and World Courier businesses, as you know. So we feel that the business is very resilient anyway. And again, and the mixture of services was tremendously important to us. And on specialty, there will be great learnings, but we're not assuming that we're going to change the market. We're not coming in here with some very strong synergy assumptions. Our synergies are very significant because they come both from the U.S. distribution and working relationship that we have, where we'll get to what we call Project Thor. That was my name for it because we were talking about the deal being called Project Hammer actually, so I thought Thor add with that. And it's something that's going to benefit all of our customers, like the original deal did. There was a lot of talk, Lisa, you'll remember about channel conflict and would customers leave you. And what we were able to tell our customers, if there are small areas where there'd be conflict or overlap, we'll take care of those fairly. That inventory allocation was one. But overall, this will benefit you. And that actually has been really the truth as the scale and then operating intensity, business continuity of AmerisourceBergen, now I don't know where we would have been, but I don't know if we would have been coming out of this pandemic environment as strong as we are without the relationship with Walgreens because it really did help double the scale that we had. And it's doubled again. So -- and that gave us a really strong underpinning to develop our other businesses and invest in systems and invest in business continuity planning, our SAP platform, our e-commerce platform, so feel very good about that.

And Jim, I wanted to touch base on the financials because I think that's something that we definitely have had questions around the accretion of this. You've talked about double-digit accretion going into your next fiscal year after this closes. But I think for maybe some people or investors that don't necessarily follow Walgreens to understand the margin profile of this business you're buying versus your core business and the growth profile versus your core business?

Absolutely, Lisa. And before I get started, I'll do a sound check. Can you hear me fine?

We can hear you fine.

Okay, perfect. Thanks. Okay. Great. So yes, let me cover some of the financial aspects of the deal, and I'll try to hit on all the points that you called out there. First of all, from an accretion standpoint, yes, it is highly accretive. We're expecting it to generate high teens percent adjusted EPS accretion in the first year post-close, and then we're expecting that adjusted EPS accretion to accelerate in subsequent years as we get synergy from both the acquisition and from the expanded U.S. distribution relationship, and we expect those synergies to ramp up over a 4-year time period. And so you also asked about margin, and that is one thing that we really like about the business, and Steve commented about this in his remarks. If you look at AmerisourceBergen's Global Commercialization Services and Animal Health businesses, that represents about 20% of our adjusted operating income. And if you look at Alliance's value-added services businesses that drive innovation, those represent a significantly higher percentage of Alliance's adjusted operating income. And so as a result of that, Alliance has a higher operating margin than AmerisourceBergen has, and it will be -- so it will be additive to our operating margins. You also asked about growth rates and their growth rates are comparable to AmerisourceBergen's growth rates. And so from a financial standpoint, we feel really good about the deal and the opportunity and the future. And then you would also ask about why now? And just as Steve commented, our balance sheet is in really strong shape. We finished last year with our cash being greater than our debt, so we were in a net cash position. So we're paying for fully half of this acquisition with cash from our balance sheet. And of the portion that we are financing with debt, we'll be paying down a significant portion of that within the first 2 years post-close.

And I guess just one last question would be around the $150 million of synergies, Project Thor. How do you think about the buckets that, that will fall into?

Yes. And so let me talk about 2 different types of synergies we're getting from the acquisition and from the expanded relationship in the U.S. The first group of synergies is from the acquisition itself, and we're expecting those synergies to ramp up to $75 million in the fourth year. I will say that the high teens percent adjusted EPS accretion is, in the first year, is not dependent upon those synergies. So these $75 million of synergies ramp up to that level in the fourth year. And it's really collaboration between our manufacturer services businesses and their manufacturer services businesses, collaboration between our private label brands and collaboration between our network of independent pharmacies and that independent pharmacy service business we have. It's Good Neighbor Pharmacy here in the United States, and Alliance has a similar business that services approximately 7,000 pharmacies in Europe. So we'll have synergies that come from that collaboration and then also probably from some data services and some income shared services also. And so those would be the source of the synergies from the acquisition. Then separately, there'll be synergies from the expanded relationship in the United States that we have with WBA with Walgreens, and those will be around things like sourcing, logistics and distribution. The initiatives will include enhanced logistics offerings, product offerings and assortment that will have to do with things like private label products and other front-of-store items and things that will benefit our additional customers and some initiatives around leveraging scale. And that bucket of synergies we're anticipating to be approximately $150 million, that will be shared equally between the 2 companies. And those will also ramp up in the first 4 years. So from AmerisourceBergen standpoint, we're looking at $75 million of synergies from the acquisition and another $75 million of synergies from the expanded U.S. relationship.

Great. I think that as we think about this conference this year, I think one of the main themes is obviously the vaccine and the hope just around the vaccine. I know you're not part of that initial distribution of the vaccine with the CDC, but can you talk about the role that you think that Amerisource will play? I really do think about your Good Neighbor Pharmacies and the role you have with that community-based pharmacy. I think about what I hear from different government leaders about really reaching people in underserved areas of the country. So if you could just spend a couple of minutes around where you think the opportunities are for ABC to play in this vaccine distribution and the opportunities as we roll it out.

Yes. Look, I think we'll see with the new administration. I mean, clearly, it's going to be a priority for them to get shots in the arms. And it's not the vaccines being distributed, it's them getting into patients on, so that's clearly what's important there. So we hope to have a role. I think that the work we've done with the anti-infective products has been very strong. We've had a leading contribution in that effort, and that's really enabled us to know the players at Warp Speed and other areas of the government, the CDC, very well. And I think there's a growing appreciation, and this is also true for Europe, of how important wholesalers are to the health care infrastructure. Bennett likes to use this term, invisible pillar of innovation, and it's somewhat true. And we're also going to be working with the CDC on the strategic national stockpile. So the capabilities of distributors are well-known. And certainly, generally, when you have a special, like an emergency use authorization or a REMS program, something like that, it makes sense to maybe work with a smaller group. But once you start getting into more broader distribution, maybe several vaccines, as each of us -- the most efficient way is for each of us to distribute to our own customers, and so we'll see where that goes. But we want to be -- we're not -- this is not about partisan or fair or anything, it's really about being a part of an overall solution for the citizens of the United States and other countries. And we want to help get the economy back and growing as soon as we can. So that's what our key objective would be, Lisa. And in any way that we can, we have tremendous cold chain storage and distribution and infrastructure, and we're distributing every day to over 100,000 health care sites, if not a lot more. So it's something that we would love to be in, play a role in. And I think that the various parties know who AmerisourceBergen is, and we're always willing to have a discussion. But it would be our great honor to be involved in any way we can.

Yes. At this time of year, usually, we have a discussion around drug pricing. We know that drug pricing was in the very low single digits. I know it's not a big a part of your profit drivers these years just given the way the business model has changed and evolved. But as we think about what we've seen thus far for price increases in January as well as if we think about API on the generic side and being able to procure product, can you maybe just talk about each of those sides of your business today at how pricing looks? Has it stabilized? How do we think about branded pricing? How do we think about API and being able to secure products on the generic side?

I'll take the API question. I'll let Jim talk about inflation. But before that, I'd be very remiss if I didn't mention our Canadian operation, NMR, that has successfully won the distribution contract for vaccines in Canada. So there is significant work being done by ABC as well internationally. And we're very proud of them, and that's a great business for us that is full of very, very motivated and strong people. On API, we are incredibly proud of the work at our sourcing group that, if you look back in April, this was -- I had the concern about, are we going to be able to get product in because so many countries announced restrictions? And the other concern we had was receivables. And if you look at the quality of ABC's balance sheet, I just have to say, people don't maybe know this about me, but I am a chartered accountant. And so if you look at the working capital elements of ABC, our inventory and our receivables, I wonder if our industry gets enough quality for how well we manage those. It really is extraordinary, right? Our inventory, we turn it over so well, and it's very seldom any leakage or spillage or bad goods. And if I go back to some of the terms when I was doing the green ticks in auditing. And then our receivables, and -- we overall manage the receivables very, very well, particularly here in the United States and where our largest businesses are. And the health care economy carries on ticking along. On API supply, it doesn't make sense. I mean I think that there should be some sort of a study that's conducted when the pandemic's over about what worked, what didn't work, how can we do better, what are the lessons that are applicable. And not to over learn and over apply, but it will take a long time to build up more API manufacturing in the U.S. if that's what legislators decide to do. And it will require support because it's often been driven down to the lowest economic variable. And these global supply chains are more complex than even we've realized prior to the pandemic. I mean they are so global, it's unbelievable. And I think you want to make sure that you don't take away from some of the benefit of that, which has really benefited the health care consumer. But whatever the solution is, I think ABC is going to have a prominent seat at the table along with our industry, working with organizations like HDA and the [ CDS ] pharma and bio. We'd have a seat at the table. And I think our capabilities, resiliency and business continuity are well understood. So -- and Jim, the next part of the question was on inflation and deflation. So...

Yes. Sure, Lisa, I think you're asking about branded inflation. And of course, we're on the 11th day of January, and I think the sixth business day of the month. But at this point in time, we'll say that branded pricing has been trending in line with our expectations. And our expectations were for fiscal year '21 to be comparable to fiscal year '20 from a branded inflation standpoint, and that's what we're seeing at this point in time. It's consistent with our expectations. And as you well know, on the buy side, over 95% of our buy-side dollars on brands are fee-for-service. And so while branded inflation does have an impact on our business, over 95% of our buy-side dollars are fee-for-service.

And by the way, Steve, I think that the one thing that most investors and I think we also appreciate about Amerisource as well as your industry is that you have great cash flow, right? So you talk about inventory turns, you talk about your receivables, and that all comes back. And I think it comes really to the forefront when we look at that great cash flow and the ability to pay down debt as quickly as you've done in the past, right? And I think that's what -- part of what gives us so much confidence in this Alliance deal that you'll pay down that debt pretty quickly just given the cash flow that you have.

Yes. And we're committed to remain investment grade. Our Board, in fact, the longest-standing Board member remembers very well when we had an objective. We're immediately, following the merger, to get to investment grade, and the Board is very proud of that. And I think that, that's something that we will commit to. And I've also alluded to -- I'm 27 years in the business, and I've also learned how important it is to have very strong balance sheet, strong cash flow. I mean I'll go back to intimate instances in the past. So...

Yes. Steven, it's really important we add that that's one of the other things we really liked about Alliance is that it's a strong free cash flow business, just like AmerisourceBergen is a strong free cash flow business. So we're expecting our adjusted free cash flow after the acquisition to be 125% of our stand-alone free cash flow.

Okay. Great. We can't not have a conversation around specialty because I think that, that's such a great part of your business. And we can probably weave in a little MWI before we get to the end here because we only have 5 minutes left. But Steve, can you just talk really quickly about how COVID has shifted the oncology business? I mean oncology is such a big part of your specialty business. Are you seeing the business coming back? Are you seeing any change in the way that the business are -- or chemotherapy is being delivered to patients in any way? Are we seeing any shift to the home, et cetera, because of COVID? And do you think -- expect anything in the future would be my first question? And then secondly, are you anticipating any changes around reimbursement for Medicare Part B in this next administration?

So oncology had -- April was a bit of a shock for everyone in the system, but all of our physician businesses have held up very well. They came back fairly quickly, and I think they're coping well. Part of oncology now and ABC has been involved with this is the oral oncology that more and more of the portfolio is oral oncology. So obviously, that's been a bit easier. But I think patients are coming in for their infusions. I spoke to 1 or 2 oncologists who said that there might be a bit of a lag in diagnosis for a few months. But it's maybe, at the most, 1% to 2% of patient loads. So we -- the physicians are -- they've been reimbursed, they've carried on, some of them got CARES Act. We help them with those CARES Act loan applications. And I think that it's been very, very strong. And ABC continues to benefit from some of the consolidation trends. I mean what I'd like to say is that we have a lot of the larger practices that are the consolidators. And we shouldn't underestimate that all those smaller prices are really important, particularly in rural communities, both in all the communities, veterinarians, oncology and pharmacy. They're very, very important, and we like to help those physicians and those practices and those pharmacies stay in business. But -- and be a -- there's a resource for their communities. But often, we -- in all 3 of the businesses, we have many of the acquirers and fastest-growing customers, so that's key. And we continue to look at new opportunities as there's been new innovative therapies. Biosimilars has made room for those. So we'll continue to create those. And Jim, I'd love to have you to have an opportunity to talk about MWI. So...

Yes. Clearly, I mean, with the pandemic, everybody I know got a new pet, and so this is clearly had to be something that was good for MWI. But maybe just talk about just core underlying trends in companion as well as production and just kind of what are your expectations around that business? And do you see incremental opportunities to grow that inorganically? Or do you feel like this is just a business that is a good organic grower, and we'll just continue to make internal investments?

Yes. So Animal Health is one of our many strongly performing businesses. As you know, we increased guidance last week with the strong performance that we were seeing continuing from Q4 to Q1. And we're seeing that in many businesses, and Animal Health is certainly one of those. Being driven by the market and our performance within that business unit in the companion animal space, I personally think the human-pet bond is as strong as it's ever been and that as people have spent more time at home and focused on their family health, that includes their pet health. And so I think people are just understanding of their pet's health as they've ever been, and veterinarians in the companion animal market have performed -- done heroic work. And so it's -- and so that market, I think, has good tailwinds. In the production animal market, we also saw growth in our production animal business last quarter and think that will be a very successful market long term, driven by protein demand. And so that's a very good business for us, where we'll look at growth both organically and through other opportunities also, Lisa.

We're going to have to think about the psychological impact on all these poor dogs who are home with them every day during this pandemic. I know my own dog. I'm in the JPMorgan office, and she did not know what to do today when I was putting on real clothes and leaving the front door. So that's going to be the next business idea for ABC, psychological benefits for animals. Steve, we're right at the top of our time here. But I love to end our last minute here with, over the next 12 months, what are people really, truly going to appreciate about ABC that they don't appreciate today so when we're sitting together, hopefully in person at JPMorgan next year?

I think we'll see, hopefully, this acquisition really be very successfully implemented. We'll see how the approval process goes. The good news is we've had a year to contemplate diligence, and so we've gotten to know each other quite well. But there's still nothing like breaking bread together and getting together and the excitement of the teams meeting, so I'll very much look forward to that. I think you'll carry on seeing our various segments grow, the penetration of biosimilars should continue. And we'll also see some new innovative products being launched in oncology where there have been very strong pipelines. You'll see all of our strong businesses like MWI, World Courier, Lash, et cetera. Our commercialization suites continue to perform very, very well. And you'll see ABC continue to focus on our purpose and on our core expertise in specialty, taking care of our largest customers and being very strong as one unified ABC and one unified maybe Amerisource-Alliance. So Bergen Corporation, we have to work on that. The good news is we have our alphabets all figured out already.

Right. Well, thank you very much. Thank you, Steve. Thank you, Jim. We appreciate your time.

Thank you.

Thank you.

Bye-bye.

Thank you.