Good day, and welcome to the AmerisourceBergen Fiscal 2021 First Quarter Earnings Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Bennett Murphy, Senior Vice President, Investor Relations.
Please go ahead.
Thank you. Good morning and thank you all for joining us for this conference call to discuss AmerisourceBergen's fiscal 2021 Q1 results. I am Bennett Murphy, Senior Vice President, Investor Relations. And joining me today are Steve Collins, Chairman, President and CEO and Jim Cleary, Executive Vice President and CFO. On today's call, we will be discussing non GAAP financial measures.
Reconciliations of these measures to GAAP are provided in today's press release and are also available on our website at investor. Americisourcebergen.com. We have also posted a slide presentation to accompany today's press release on our investor website. During this conference call, we will make forward looking statements about our business and financial expectations on an adjusted non GAAP basis, including, but not limited to, EPS, operating income and income taxes. Forward looking statements are based on management's current expectations and are subject to uncertainty and change.
For a discussion of key risks and assumptions, we refer you to today's press release and our SEC filings, including our most recent 10 ks. AmerisourceBergen assumes no obligation to update any forward looking statements, and this call cannot be rebroadcast without the express permission of the company. You will have an opportunity to ask questions after today's remarks by management. We ask that you limit your questions to 1 per participant in order for us to get to as many participants as possible within the hour. With that, I will turn the call over to Steve.
Thank you, Bennett, and good morning to everyone on the call. AmerisourceBergen has had a strong start to our fiscal 2021 year. We delivered exceptional results driven by differentiated commercial solutions with revenues of $52,500,000,000 for the 1st fiscal quarter, representing growth of 10% year over year and our adjusted EPS increasing 24% versus the prior year quarter. Building upon our business resilience, our teams executed and leveraged our capabilities to create value throughout the supply chain. Our purpose driven culture continues to empower our associates to think, plan and act decisively to support all of our partners and to facilitate patient access to critical medical treatments.
In addition to these results, as we announced in January, we entered into a strategic transaction with Walgreens Boots Alliance to acquire the majority of its alliance healthcare business and extend and expand our existing distribution agreement. As we have said, these agreements are part of the next evolution of enhancing AmerisourceBergen's ability to deliver innovative solutions for our partners, further building on our platform to deliver key distribution capabilities and value added services to support patient access in new geographies. AmerisourceBergen's ongoing focus on patient access means providing innovative services and solutions to support our manufacturer partners and provide customers with our differentiated value proposition. World Courier, for example, is a highly sought after for its expertise in helping manufacturing partners navigate complexities on a global scale. During the pandemic, World Courier's proven track record as an international leader in specialty logistics have enabled us to support our customers worldwide against a backdrop of changing local restrictions, limited air traffic and additional operational challenges.
We have been able to facilitate direct to patient services and global clinical trials at a time when both demand and complexity for these services was understandably at its peak. Similarly, we continue to support patient access to vital treatments for COVID-nineteen. Thanks to our robust suite of specialty distribution capabilities and our deep industry expertise, we are uniquely positioned to support our public and private partners and AmerisourceBergen is both honored and proud to be able to be part of the solution to help them preserve public health. In the U. S, we continue to be the distributor of antiviral and antibody therapies, which are playing an increasingly important role as more and more hospitalized patients are receiving these treatments help them recover from COVID-nineteen.
In Canada, our Inomar business is partnering with Fenix as the primary distributor for the COVID vaccine. Our team at Inammar is safely and securely storing the vaccines in its storage facilities across Canada and packaging them to support the temperature requirements specified by the manufacturer. AmerisourceBergen's scale and expertise in specialty as well as our culture of delivering collaborative and innovative solutions enable this important work. We have spent years building on and enhancing our leadership in specialty distribution. This continued investment in and focus on an important part of the pharmaceutical market continues to benefit both AmerisourceBergen and our partners.
And over the last several months, the ability of our sourcing and commercial teams to leverage our expertise and data analytics capability is foundational to our ability to play an important role in providing the specialty distribution solutions for COVID related treatments. We deliver a clear and differentiated value proposition for our partners in the U. S. Healthcare system and continue to focus on building on our strengths, especially distribution as those capabilities continue to be even more important to all our customers. AmerisourceBergen's strong portfolio of customers is another important differentiator for us as it is an important driver of growth across our businesses.
Over the years, AmerisourceBergen has made it a priority to have long term strategic relationships with manufacturers and providers that embrace and appreciate collaboration. As we announced last month, we have agreed to strengthen our strategic partnership with Walgreens by extending and expanding our commercial agreements. This extended and expanded partnership in the U. S. Will allow us to create incremental growth and efficiency opportunities, enabling each of our enterprises to better serve our respective customers.
Teams from both our companies have already identified new opportunities for enhanced growth and efficiency in the areas of logistics, transportation and distribution. As we continue to realize the improved capabilities derived from this partnership, these initiatives will enhance our ability to create differentiated value for all of AmerisourceBergen's customers. Including our more than 5,000 GoodKnave Pharmacy and Elevate Provider NAREQIP members. These independent pharmacies provide critical care for their communities and their fearlessness and adaptability as entrepreneurs have enabled them to rise to the challenges of the pandemic. We are proud to have been able to support them with the tools they have needed to connect with their patients and keep them healthy.
We look forward to working as a network administrator on behalf of qualified and eligible pharmacy network partners to support vaccination efforts in their communities when we enter the broader inoculation phase here in the United States. In the Animal Health segment, our MWI business has moved swiftly to deliver innovative solutions to help our customers succeed in the current environment. These include ensuring that MWI associates are accessible to our customers 20 fourseven and bolstering our customers' abilities to offer virtual services to their pet parent clients, including innovative client communication solutions and home delivery services of quality medications and pet care products. AmerisourceBergen's long term focus on strong customer relationships, leadership in specialty distribution and manufacturer services and our continued ability to support innovation has solidified our market leadership and business strength over the years. From this position of strength, we recently took a significant step to empower the next evolution of enhancing our ability to provide innovative and global healthcare solutions.
As we announced last month, we entered into a strategic agreement with Walgreens Boots Alliance to acquire the majority of its Alliance Healthcare business. Through this acquisition, we will extend our distribution capabilities into key new markets, adding depth, breadth and reach and strengthening our global platform of manufacturer and other value added services. With expanded scale and added services, our combined business will be able to better support pharmaceutical innovation through a global footprint of broad leadership and local expertise, which further positions AmerisourceBergen as the partner of choice. The pandemic has heightened both our public and private partners' awareness of the value of a strong and capable pharmaceutical supply chain and Alliance Health Care better positions AmerisourceBergen to meet its increasingly global nature as well. As our global footprint expands, so too does the importance of corporate stewardship.
AmerisourceBergen understands and appreciates the value of being a responsible enterprise and our recent initiatives including continue to advance our talent and culture, accelerating workforce diversity inclusion and further investing in and supporting our associates. We remain vigilant in our efforts to protect the safety and well-being of our associates as the COVID waves affect various regions and teams and the importance of the work we're doing remains unwavering. Driven by our purpose, we are maintaining our enhanced protection and safety protocols and appropriately compensating frontline associates. Remote work is still the prevailing policy for all suitable roles. We are watching the situation closely as I'm sure all of you are doing and will continue to prioritize the health and safety of our associates.
Underscoring our efforts to support and empower our associates around the world, AmerisourceBergen was recently certified as a great place to work company following their surveys of employees around the world. The survey revealed that our associates reported a consistently positive experience with peers among leaders and in job responsibilities. We saw high scores for all indicators and our overall score was significantly higher than the typical U. S.-based company. Additionally, for the 4th year in a row, the Human Rights Campaign has recognized AmerisourceBergen as the best place to work for LGBTQ Equality, awarding us a perfect score on the Corporate Equality Index due to our nondiscrimination policies, equitable benefits, support of an inclusive culture and focus on corporate social responsibility.
AmerisourceBergen recognizes the business and personal importance of having a culture that is inclusive and equitable regardless of race, gender, sexual orientation or gender identity and for veterans and people with disabilities as well. To this end, we are accelerating our diversity and inclusion strategy to become an even more diverse and equitable company. Over the past months, we have conducted a comprehensive D and I organizational assessment, initiated a global D and I strategy to support a more measured and engaged workforce, formed a D and I Council led by senior C suite executive and signed the CEO pledge for diversity and inclusion, which is a commitment to increase diversity and support more inclusive work environments. AmerisourceBergen strives to ensure that our associates feel they're part of a fair, are
part of a
fair, inclusive and transparent workplace. A diverse, inclusive and equitable culture is a proven enhancer of business value and these initiatives will ensure that we have the right programs and tools in place in the short term, so that we can become a leader in this area in the longer term. Our success in advancing our progressive culture, one that is fueled by the passion, pride and dedication of our purpose driven associates is visually embodied by our new brand, which we unveiled last week. The new brand embodies a spirit of innovation with a design that is energizing, confident and inspiring, while also displaying our unity as an enterprise when we go to market. As we continue to move our business forward, we remain committed to advancing a differentiated culture that inspires our associates, unites them and helps them develop and achieve their full potential.
Our business strength is a direct result of having engaged, passionate and dedicated associates and a focus on advancing our talent and culture remains a key strategic priority. In closing, I want to take this time to thank our associates. We have continued to execute across our business to help us deliver innovative solutions to our partners. As AmerisourceBergen continues to evolve, we are empowered by our purpose and we will build upon our strengths to drive growth across the enterprise. We will further strengthen our portfolio of solutions and customer relationships, enhance our specialty capabilities to support both upstream partners and downstream customers, continue to focus on execution and supporting innovation and enable positive outcomes globally by facilitating market access and supporting pharmaceutical innovation.
I continue to be inspired by, proud of and confident in our teams who rise to the many challenges and complexities that we face with courage and effectiveness. By being united in our responsibility to create healthier futures, AmerisourceBergen is purpose driven and well positioned to create long term sustainable growth. Now, I turn the call over to Jim for a more in-depth review of our financials. Jim?
Thanks, Steve, and good morning, everyone. My remarks today will focus on our adjusted non GAAP financial results unless otherwise stated. Growth rates and comparisons are made against the prior year December quarter. For a detailed discussion of our GAAP results, please refer to our earnings release. As Steve mentioned, we clearly had a strong start to our 2021 fiscal year with growth across our businesses.
As I said back in November, we entered fiscal 2021 with strong momentum and that clearly accelerated in the quarter as our teams executed across the entire portfolio of AmerisourceBergen Businesses. Guided by our purpose, our teams worked diligently to support pharmaceutical innovation and facilitate patient access to vital medications. AmerisourceBergen's key differentiators continue to provide a platform for value creation for all our stakeholders, helping provide key solutions for our partners both upstream and down to ultimately ensure patient health and well-being. Throughout my tenure with AmerisourceBergen, I have shared my pride in being part of a company that is driven by purpose, focused on execution and unwavering in our efforts to strengthen our associate experience. Our associates power our success and AmerisourceBergen continues to protect, support and invest in our talent.
Turning now to discuss our Q1 results. I will provide commentary in 2 main areas this morning. First, I will review our adjusted quarterly consolidated results and our segment performance. 2nd, I will cover the upward revision to our fiscal 2021 guidance. Beginning with our Q1 results, we finished the quarter with adjusted diluted EPS of $2.18 an increase of 24%, primarily due to exceptional operating income growth across our businesses.
Our consolidated revenue was $52,500,000,000 up 10%, driven by revenue growth in both the Pharmaceutical Distribution Services segment and other, which includes our Global Commercialization Services and Animal Health Group of Businesses. Gross profit increased 15% to $1,400,000,000 driven by increases in gross profit in each operating segment. In the quarter, gross profit margin increased 12 basis points from the prior year quarter. This gross margin improvement is due to growth in a number of our higher margin businesses and in particular a significant increase in sales of specialty products. The margin improvement is also due to the gross profit portion of the tailwind related to exiting the PharMEDium business and additionally a reversal of reserves taken in the back half of fiscal twenty twenty associated with forecasted inventory value write downs that did not materialize.
The PharMEDium comparison and the inventory write down reversal contributed 1 third of the 12 basis point gross profit margin improvement. Consolidated operating income was $617,000,000 up $122,000,000 or 25% compared to the prior year quarter. This increase was driven by the increased gross profit in both the Pharmaceutical Distribution Services segment and our Global Commercialization and Animal Health Group, which I will discuss in more detail when I review segment level performance. To support our revenue growth while protecting, supporting and appropriately compensating our frontline associates, operating expenses grew 8% to $810,000,000 Operating expenses as a percent of revenue was 1.54%, which is a 2 basis point decline from the prior year quarter. Moving now to net interest expense, which increased $3,000,000 to $34,000,000 primarily due to a decrease in interest income resulting from a decline in investment interest rates.
Our effective tax rate was 22%, up from 21% in the Q1 of fiscal 2020. Our diluted share count declined modestly to 206,800,000 shares. Regarding free cash flow and cash balance, our adjusted free cash flow was $838,000,000 in the Q1. This strong start to the year on cash flow positions us well after the Q1 and we are on track with our adjusted free cash flow guidance for the year. We ended the quarter with $4,900,000,000 of cash, of which $1,100,000,000 was held offshore.
This completes the review of our consolidated results. Now I will turn to our segment results. Beginning with Pharmaceutical Distribution Services, segment revenue was $50,500,000 up 10%, driven by increased specialty product sales, including COVID-nineteen therapies, as well as growth at some of our largest customers and broadly across our businesses. Segment operating income increased about 27% to $496,000,000 with operating income margin up 13 basis points. As a reminder, the exit of the PharMEDium business represented a $20,000,000 tailwind to the segment's operating income, roughly half of which is in gross profit and the other half in operating expense.
Excluding the PharMEDium tailwind, segment operating income growth would have been up 20%. The strong operating income performance was driven by continued positive trends across our robust portfolio of customers and broadly across our businesses, and in particular, a significant increase in sales of specialty products. AmerisourceBergen's leadership in specialty distribution led by the Specialty Physician Services Group and our capabilities in supporting specialty sales into health systems continue to provide us the platform to deliver differentiated value for our partners through our scale, reach and expertise. In the quarter, our specialty physician services group continued its strong growth as practices are prepared operationally to continue to treat their patients throughout COVID challenges. Additionally, our health systems business had significant growth as we're helping to facilitate vital access to antiviral and antibody therapies for COVID-nineteen patients.
The fundamentals of the health systems business overall continue to be strong, particularly as we are now also seeing increased biosimilar utilization in this customer segment. While biosimilar utilization continues to be strongest and most impactful on the specialty physician side, we are encouraged to see growing adoption trends in health systems. I will now turn to the other segment, which includes businesses that focus on global commercialization services and animal health, including World Courier, AmerisourceBergen Consulting and MWI. In the quarter, total revenue was $2,100,000,000 up 11%, driven by growth across the 3 operating segments. Operating income for the group was up 17 16%, primarily due to growth at MWI and World Courier.
MWI is benefiting from ongoing process initiatives and the strength of its customer relationships, particularly in the companion business where veterinarians are benefiting from increased pet ownership, increasing standards of care and adapting well to virtual engagement and limited physical interaction. World Courier has continued to differentiate itself as the provider of choice in global specialty logistics as their commercial customers navigate increased complexity, the need for cell and gene solutions grows and there is an increased utilization of direct to patient capabilities. Additionally, I will note that World Courier's growth rate in the quarter was augmented by foreign currency exchange rates. This completes the review of our segment results. So I will now turn to our fiscal 2021 guidance.
This updated financial guidance does not include any contribution from the proposed Alliance Healthcare acquisition announced in January 2021. As I have just outlined, AmerisourceBergen delivered exceptional growth in the Q1 and continues to expect positive trends across our business as we move further into fiscal 2021. Therefore, as we said in this morning's press release, we are raising our fiscal 2021 adjusted EPS guidance from a range of $8.25 to $8.50 to our new guidance range of $8.40 to $8.60 reflecting growth of 6% to 9%. We are also updating other financial guidance metrics for fiscal 2021. Revenue is now expected to be in the high single digit percent growth range as we have seen better than expected growth in both pharmaceutical distribution services and other.
Next, operating expenses. We now expect operating expenses to grow in the mid to high single digit percent range. We remain committed to investing in, protecting and ensuring the safety and well-being of our associates, especially those on the front lines. Turning now to operating income. We now expect to grow operating income in the high single digit percent range.
This is a result of raising our pharmaceutical distribution operating income guidance for the high single digit range given the significant operating income growth in the Q1 and continued overall positive trends across the business. It also reflects our improved expectation for operating income in other, which we now believe will grow in the mid to high single digit range as a result of positive trends Animal Health businesses. Lastly, regarding shares outstanding, given the cash needs associated with the Alliance acquisition, we are narrowing our guidance from a range of $206,000,000 to $207,000,000 and we now expect to finish the year around 207,000,000 shares outstanding. All other financial guidance metrics for fiscal 2021 remain unchanged. Regarding our fiscal 2nd quarter EPS expectations, while we do not provide quarterly guidance, I will note that the March 2021 quarter will be impacted by a tough comparison to the March 2020 quarter, which had a significant pull forward of sales associated with increased customer purchases at the onset of COVID-nineteen.
In closing, our strong customer relationships, focus on execution excellence and commitment to innovation will continue to drive our business forward, while enhancing our capabilities to serve our partners and their patients. AmerisourceBergen is well positioned by our key differentiators and we are excited for how the Alliance Healthcare acquisition will build on our pharmaceutical centric strategy, expanding our reach and further strengthening our global platform for value added services and solutions. Our work around the acquisition remains on track and we look forward to welcoming the Alliance Health Care team. These past several quarters have proven the importance of pharmaceutical innovation and access and I have spoken in great detail about the resilience of AmerisourceBergen's business. Clearly, our results and expectations show that the word resilience understates the strength of our business as our purpose driven teams are leveraging our capabilities and expertise to provide important value added solutions to help contribute to positive patient outcomes globally.
We are making positive contributions to the people, planet and communities where we live and work by being a responsible business And in our upcoming Global Sustainability and Corporate Responsibility Report, we will be providing an update on our commitments in these areas to show how our business practices align with many of the leading global sustainability frameworks. We know that by doing business thoughtfully and with long term perspective, AmerisourceBergen can drive sustainable growth while creating value for all our stakeholders and fulfilling our purpose of being united in our responsibility to create healthier futures. Thank you for your interest in AmerisourceBergen. Now I will turn the call over to the operator to start our Q and A. Operator?
The first question today comes from Glenn Santangelo of Guggenheim Securities. Please go ahead.
Yes. Thanks. Good morning and for taking my question. Jim, I just want to follow-up with you on the guidance. It's kind of hard to reconcile all the moving pieces in the fiscal 2021 guidance.
You raised the guidance last month when the company announced the Alliance Healthcare acquisition and now you're raising it again today with these better than expected 1Q results. So could you maybe help us think about maybe what has changed from the beginning of the fiscal year, taking into consideration some of the incremental COVID related benefits you called out in the release and your prepared remarks? Thanks.
Glenn, thanks a lot for the question. Yes, I'd be happy to talk about guidance and some of the moving pieces. And first of all, I'll say that, of course, it's early in our year and at this stage after the completion of our 1st fiscal quarter, we've done a healthy increase to guidance versus our original guidance in November. We're up $0.20 at the lower end of guidance and up $0.15 at the higher end of guidance. And this is really due to the fact that we're seeing positive trends across our businesses and really strong execution across the business, both in pharmaceutical distribution and in commercialization and animal health.
And some of the positive trends that we're continuing to see in pharmaceutical distribution include continued very good performance in specialty physician services, very strong performance also in health systems, including the distribution of COVID treatments. We're seeing strong biosimilar growth in Q1 in both specialty physician services and in health systems, very good growth at some of our largest customers and broadly across our businesses. And then in commercialization services and animal health, we're seeing strong growth in MWI and World Courier with continued positive trends. And so as we think about guidance beyond these overall positive trends that I've mentioned just now and in my prepared remarks, there are also some noteworthy moving pieces to call out Related, first of all, to the exit of PharMEDium, we had our final tailwind in Q1, a $20,000,000 tailwind related to the exit of PharMEDium in Q1, which of course doesn't repeat in future quarters. We also had, which I mentioned in my prepared remarks, the inventory write down recovery in Q1.
That was a $10,000,000 benefit to GP in Q1, which of course doesn't repeat in future quarters. And then also in Q2, we begin to lap the significant year over year growth rates related to biosimilar utilization. And so the contribution to operating income will continue to grow from biosimilars, but not at the same rates we saw in the last three quarters of fiscal 2020 or the first quarter of fiscal 2021. And then also, a key point with regard to our guidance assumptions is our guidance assumes that our sales of COVID therapies will be significantly lower for the balance of the year than they were in the first quarter, particularly during the second half of the fiscal year. Regarding OpEx, we're starting to compare to the part of the fiscal year that had notably low expenses, particularly in the second half of the fiscal year.
And as you'll recall, we called out in fiscal 2020, particularly in the back half of the year, that last year we benefited from lower OpEx growth associated with lower healthcare costs and travel. And then finally, Glenn, there's a couple of things below the operating income line. We assume in our guidance that the acquisition debt for the Alliance acquisition is issued a few months before closing the acquisition and we have associated carrying costs. And then also importantly, there's no share repurchases in our guidance as we prepare for the acquisition. So overall, I'd say that we feel very good about the increase in guidance.
The fundamentals in our business are strong as evidenced by the excellent Q1 results. And we've done a good increase in guidance, particularly given the fact that it's early in the fiscal year.
The next question comes from Eric Coldwell of Baird. Please go ahead.
Thanks. Jim, first before my question, I just have to say you raised guidance here for the 2nd time in a month and then you tell us all seven things that are headwinds. So I'm sure the underlying performance has to be pretty fantastic if that's the case or at least headwinds for the rest of the year, I guess we would call it. I'm really interested, you've talked a lot about patient access and manufacturer services. And I think in the past, The Street perhaps thought that was maybe a bit more lip service than it really is.
I mean, we're seeing it with these $2,000,000,000 revenue beat in a quarter with low scripts and low coughcoldflu season. You've talked a lot about COVID therapies, and I know you've had several exclusive deals with the antiviral and antibody distribution to health systems that you've highlighted a few times today?
Yes, sure. Absolutely. And first of all, thank you for your positive comments on the quarter. Yes, the fundamentals of our business and the execution and the performance of our businesses have been very strong. With regard to the impact of COVID therapies, approximately $0.12 of EPS in the Q1 is due to the net impact of COVID.
And this reflects the important work we're doing distributing COVID therapies and it also includes elevated expenses associated with things like associate bonuses for frontline associates, cleaning costs, a payroll ramp which represents things like quarantine pay, overtime and temporary health. And the expenses that I just described were a couple pennies during the quarter and are included in the $0.12 of net benefit to EPS during the quarter that I just mentioned. And I think one important thing to call out is that our guidance does assume that our sales of COVID therapies will be significantly lower for the balance of the year, particularly in the second half of the year. But in summary, the net benefit during the quarter was $0.12 of EPS.
The next question comes from Lisa Gill of JPMorgan. Please go ahead.
Thanks very much and good morning. Great quarter as well. And as we about just a couple of moving parts, Jim, I just want to understand the renewed relationship with Walgreens. So generally, when you have a contract that renews and you extend the length, you give up some amount of pricing or give something else up. Is there anything attached to this new extended relationship with Walgreens as we think about what the margin structure of the overall business will look like going forward is my first question.
And then secondly, I just want to understand underlying utilization trends. You talked about going into the March quarter that there were some things that were pulled forward a year ago. But what have you seen here in the 1st month of the March quarter around generalization? And how do we think about cough, cold and flu impact on your business?
Hi Lisa. Thanks for your comments. I'll take the first question. I'm worried I won't get a question if I don't answer this one given all the guidance. But I just think we should go back to the 2013 deal.
And it was really a remarkable deal that in many ways changed our industry. WBAD of course was a key feature in that. That was a big change in our industry and we were able to get much more competitive pricing for our generics. But also the way we structured the distribution agreement with taking on the generics of Walgreens, which I think has been a terrific benefit to not only Walgreens, but to ourselves and our scale and leverage and also brought again more competitive pricing to our customers. So the way we set that up was really brilliant I think and very it stood the test of time.
And the agreement has self regulating mechanisms and it's still working through 2029, which this next phase of our contract will go through. We took into account changes in brand mix, many areas like that. So we didn't really have to make any adjustments because those to market mechanisms were already in place. And then the second part of your question, I'll let Jim was going to answer.
Yes. The second part of the question was on utilization. And I will say on the with regard to the Walgreens relationship, we are really excited also about expanding the agreement and all the initiatives that we're going to be working on with Walgreens with regard to growth and efficiency around things like sourcing, logistics and distribution and the potential synergies that we have targeted there. And then on utilization, we aren't really calling out anything on January at this point. We're still in the 1st few days of February.
But I'll just comment then on the Q1 and the Q1 of the year, we really saw very strong fundamental trends throughout our business, many of which we talked about in the prepared remarks. And that's what I've really focused on and we've really focused on as a company is the sales data and sales trends in our businesses. And probably given our strength in specialty, clearly, we've seen strong trends in specialty physician services and strong trends in health systems. But I'll also say just broadly across our businesses, we saw good volume and profitability trends across our businesses in both pharmaceutical distribution and our global commercialization services and animal health businesses.
Thanks.
The next question comes from Robert Jones of Goldman Sachs. Please go ahead.
Hey, this is Kevin on for Bob this morning. Thanks for taking the questions. I just wanted to in the other segment, growth is obviously pretty strong there coming around like 17% I think year over year. I know you guys talked about the overall COVID impact at $0.12 Wanted to know if any of that could be attributed to the other segment. And then just as we're looking out over the balance of the year, guidance is calling for growth somewhere south of that.
I know you have somewhat easy comp in fiscal 3Q. So anything just on the cadence over the course of the year and what might drive that sequential deceleration would be helpful.
Sure. So with regard to the other segments, yes, we did have a very strong quarter with revenues up 11%, operating income up 16%. And you'd asked about the impact of COVID on the other segment. And really, Carl, probably the one thing I'll call out is that, it's been an opportunity for World Courier, really to prove its value to manufacture partners with things like direct to patient capability and with things like just our best in class solutions being able to help manufacturers navigate the complex environment for global logistics that has become more complex in the COVID environment. And so COVID has enabled World Courier to really show its value.
And then I think the second part of your question had to do with guidance. And we've really kind of gone through guidance in prepared remarks and the first question. But I guess you talked about cadence. And so the one thing that I'd reemphasize is if we look at cadence for the year, we had a particularly strong quarter in the March quarter of fiscal 2020 as there was a pull forward of sales during the month of March with the onset of COVID. And so that makes the March quarter 2021 a little bit tougher comp.
The next question comes from Ricky Goldwasser of Morgan Stanley. Please go ahead.
Yes. Hi. Good morning and congrats on the quarter. So thinking about kind of vaccine, I understand that you're doing kind of like outside the U. S, not yet in the U.
S. But how do you think the market is going to evolve? And what could be the opportunities for you, especially as I think we're waiting for the J and J vaccine approval that could change some of the access point in the marketplace. So how do you think about your potential role there?
Yes. Hi, Ricky. Thanks for the question. So I actually was on a couple of calls. I heard Doctor.
Fauci speak last night. We had Doctor. Gauti as a guest at our Thinkloud Commercialization Summit. And of course, we are all fixated on this. And I do believe that the U.
S. Is going to get tremendous amounts of supply in the next couple of months. And the pharmaceutical distribution is highly efficient and sophisticated. I kind of bristle a bit when people point to any impediment to vaccination as distribution and it's just such a misnomer. And we believe that people will get their patients will well, the supply chain will not be a problem.
As you know, the U. S. Has got an appropriate infrastructure to ensure accurate and timely delivery. I also do appreciate that in the U. S.
We've seen that this really enhances the role of distribution and supply chain as the whole COVID pandemic has really exposed the importance. And we like to talk about companies like AmerisourceBergen being the invisible pillar of innovation. And I think that's very true without us that getting the products to market and the access that we talk about so much has been would not be as efficient as it is. We are doing the distribution in Canada. Of course, Canada is sourcing their product from Europe.
We're proud of that role and also proud that our World Courier business is doing some very complex logistics. We actually heard again at the Thinkloud Summit, the harrowing story of Norway where we had to charter a boat to get some products to remote island before it expire. So there's terrific stories. I'm sure that everyone involved in this unique logistics and distribution challenges has got great stories to tell. Moreover, I would just say our future alliance company and of course we'll let them talk about it is also playing a role in vaccine distribution.
So ABC is well positioned to be an essential provider for logistics and distribution. Thanks.
The next question is from Eric Percher of Nephron Research. Please go ahead.
Thank you. Steve, maybe I'll ask you for some insight on distribution to the hospital channel. Has the growth been dominated by the Gilead and Lilly products where you had talked about exclusives publicly? Are you seeing additional products? And I think at heart, it's hard to track product demand in the hospital channel, but we certainly can track the number of hospitalizations for COVID.
So has this been more therapies adopted or has it been simply about the number of hospitalized?
No, it's there have been about 5 or 6 EUA products, Bennett, right? And we are playing a prominent role in almost all of them because of the unique capabilities that AmerisourceBergen has on data reporting. We have every hospital in the U. S. Just about registered as a customer and the licensing.
And then just stability with limited supply and unprecedented demand and really waves of demand to quote a term that our competitor used a lot nonlinear demand. So just based on patient inputs and so it's been quite extraordinary the role that we played and you will see that of course fluctuate from quarter to quarter and Jim has spent a lot of time explaining that. But the therapies are important and we hope that they won't be as much in demand as they were in the Q1. So thanks.
The next question is from George Hill of Deutsche Bank. Please go ahead.
Hi. This is Charlotte on for George. Thanks for taking my question. Can you expand more on what drove the gross profit margin expansion in the core drug segment? Given the growth especially in branded generic conversions, we would have expected less margin expansion.
So if you could just provide any color there?
Yes, sure. Yes, we did see very good margin performance during the quarter. And as I said, margins were up 15% or 12 basis points. And let me kind of go through some of the things that drove it. One was increased specialty product sales at both specialty physician services and health systems.
Really in both specialty physician services and health systems that included biosimilars, but as we talked a lot about in health systems that also included COVID-nineteen treatments. And so really kind of that was one of the drivers of our increased gross margin during the quarter. And we continue to see the positive trends in biosimilars. But of course, as we've commented on, we began to see significant utilization in biosimilars in the Q2 of fiscal 2020 and we start to lap that significant year over year comparison difference now. And so we'll continue to see growth in biosimilars, but perhaps at a lower rate.
Other things that helped our margin, getting back to your question, we are seeing growth overall in our higher margin businesses. So specialty physician services we talked about MWI and World Courier are also higher margin businesses. Growth in those higher margin businesses is adding to our gross profit. And then the other thing that I've called out is exiting the PharMEDium business helped our gross profit about half of the benefit was in GP and the other half in OpEx, so that helped our gross profit. And then the reversal of the inventory write down reserve that I mentioned that also helped our gross profit during the quarter.
So there were a number of different things, but really the performance of our businesses was excellent and the performance of our higher margin businesses was particularly strong during the quarter.
The next question is from Charles Rhyee of Cowen. Please go ahead.
Hi, this is James on for Charles. You've noted strong performance in MWI and Royal Courier, which drove other operating profit growth. But can you talk more about maybe how the consulting services business is performing in the quarter and some of the dynamics that you're seeing in that business?
Yes. Our consulting business continues to perform well. It's an important part of our business, our Lash business and our Exensa business. At the Lash business, for instance, we're really kind of fully into rolling out Fusion and rolling out Fusion is going well and we view that to be a nice competitive advantage for us. And so our consulting businesses are very important businesses to us, provide really important manufacturer services, think that they'll have good synergies with some of Alliance's manufacturer services business.
So we look forward to that collaboration. And so overall, our performance there is as expected and continues to be a super important part of the company, just didn't grow as fast during the quarter as the MWI or World Courier Businesses.
Yes. And as I said, the Thinkloud Commercialization Summit was held this week. It's the first virtual one. And really we took our core businesses and focused on emerging trends like cell and gene therapies, access and reimbursement issues, copay accumulators, various issues that are foremost the manufacturers' minds. And I have to tell you, I had to stop listening to the I had to drag myself away from listening because it was such compelling content that we were able to provide.
We have such excellent people that understand the manufacturer side and understand the commercialization process, product life cycles, emerging trends on innovation. It was really just I couldn't have been more proud of the way that our people showed up in this conference. And I look forward to seeing the rest of it because really AmerisourceBergen's expertise, you think of the work that World Courier does, it's remarkably complex. And we do it so well and we have such outstanding people and we've displayed leadership in this area for many years as we have at Lash and so many of our other commercialization businesses. So thanks for the question.
The next question is from Steven Valiquette of Barclays. Please go ahead.
Thanks. Good morning, everyone. So I just wanted to check the box just on the brand pricing and generic price in early calendar 2021. I'm guessing that brand pricing maybe has been in line with your expectations. On the generic side, a little bit of a bump up in actual price increase activity, but curious if that's something that has caught your attention or you would also characterize just overall generic pricing is kind of in line with your prior views?
A little more color there would be great. Thanks.
Yes. We could say for both in line with our expectations brand and generic pricing are trending in line with the original expectations we had for the year. You asked about generics. We saw that generic deflation moderated in fiscal 20 20 and there was a leveling off at the end of the Q4, but still in general range that we experienced throughout the year. And we're expecting similar levels of generic deflation in 2021 that we saw in 2020.
So as I said, both are trending in line with our expectations.
The next question is from Jalendra Singh of Credit Suisse. Please go ahead.
Thank you. Actually, I wanted to drill down a little bit more into your MWI business. Maybe can you parse out some of the trends saw in the quarter as well as more recently when it comes to both production and companion market? What are your expectations for the remainder of fiscal 2021 in terms of getting back to pre COVID levels in production market and the degree of strength you expect in companion? Help us give more color there, please.
Yes. First of all, I'll say that quickly that the execution of our Animal Health business, which was excellent during the quarter, whether it be revenues, GP, OpEx, pop in, just really strong execution in customer service and customer focus by the team. The growth in the quarter really came from the companion animal market, which is very strong right now. The production animal market has been more impacted by the COVID environment, but we feel very optimistic about the underlying strength and future of both the companion animal and production animal market.
The next question is from Kevin Caliendo of UBS. Please go ahead.
Hi, thanks for taking my call. I hate to bring up opioids, but just wanted to given that one of your competitors also reserved, it does seem like we are very close to the end here. I'm not going to ask you for specific timing or anything like that, but how should we expect, given what you know now, a settlement to look like in terms of how you would pay out lump sums or extended over the 18 years? Sort of what's your expectation of how a settlement, if and when, is done, Yes. We
continue to see
Yeah. We continue to see progress in our discussion with the various parties. We did record an accrual at the end of our year, September year end. As we believe that liability is estimable and profitable given ongoing discussion, we really are limited in the comments unfortunately we can make about this. Thanks for understanding.
With that, I'm going to close out today's call. I couldn't be more proud of the execution in the last quarter. Proof that AmerisourceBergen continues to utilize our scale, capabilities and expertise to deliver differentiated solutions for our partners. Our strategic focus on pharmaceuticals, long history of leadership and investment in specialty and strategic partnerships with customers and manufacturers continues to be foundational to our success. As we look ahead with excitement for the opportunity to build on our differentiated platform with the Alliance transaction, I continue to be inspired by internal focus on also advancing our talent, culture and workplace.
We are powered by our associates and guided by our responsibility to create healthier futures.
Thank you
for your time and attention today.