Good day, and welcome to the AmerisourceBergen Q4 FY 2020 earnings call. I would now like to turn the conference over to Bennett Murphy. Please go ahead.
Thank you. Good morning, and thank you all for joining us for this conference call to discuss H2's fiscal 2020 Q4 and full-year results. I'm Bennett Murphy, senior vice president, investor relations, and joining me today are Steve Collis, chairman, president, and CEO, and Jim Cleary, executive vice president and CFO. On today's call, we'll be discussing non-GAAP financial measures. Reconciliations of these financial measures to GAAP are provided in today's press release and are also available on our website at investor.a merisourcebergen .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 tax. 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 Form 10-K. AmerisourceBergen assumes no obligation to update any forward-looking statements, and this call cannot be rebroadcast without the express permission of the company. You'll have an opportunity to ask questions after today's remarks by management. We ask that you limit your question to one 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. Good morning to everyone on the call. Today, we will be discussing AmerisourceBergen's strong performance in fiscal 2020 and our expectations for fiscal 2021. Importantly, we would like to start by first of all acknowledging the exceptional efforts of our associates to support our customers and help them navigate the challenges stemming from the COVID-19 pandemic. In fiscal 2020, we once again delivered a strong performance due in large part to our continued ability to innovate and execute an inherent resilience of our business. Driven by our purpose and guiding principles, our associates stepped up whenever we challenged to address the unprecedented circumstances facing our industry.
Thanks to them, we've been able to meet stakeholder needs while enabling the continuity and stability of the supply chain and demonstrating the vital nature of our role in the health system as an invisible pillar for pharmaceutical innovation and access. When the COVID-19 pandemic first emerged, we put the health, safety, and well-being of our associates and customers first. We implemented enhanced cleaning protocols and supported associates by providing additional paid time off for associates needing to quarantine or care for family members, bonuses for frontline associates, and backup dependent care. We also shifted all suitable roles to remote work. Feedback from our associates on these measures has been overwhelmingly positive. More than 90% of associates surveyed say communication, collaboration, and creativity and innovation have remained the same or better.
We also understood and appreciated our opportunity to deliver on our purpose and be part of the solution, given our central role in the supply chain. In addition to our normal supply apportionment process, our teams have ensured that critical medications are allocated on a prioritized basis to facilitate patient access. On the pharmaceutical distribution side, our ability to provide real-time data and analytics has helped facilitate actionable channel solutions and awareness for commercial and government stakeholders. At World Courier, our team has been helping manufacturer partners navigate the complexity of moving materials across the globe with limited global air traffic, while also enabling innovation with clinical trials in at-home settings. We believe the strength of AmerisourceBergen's diverse portfolio, combined with our dynamic operating agility, have demonstrated our business's resilience and our long-standing commitment to robust business continuity planning and investment.
Our stakeholders now have an even greater appreciation for our vital role in the supply chain and in the healthcare system overall. I'm especially proud of the inspiration and diligent efforts of our associates, who have supported our customers with increased collaboration and innovative solutions, ensuring that they are able to meet patient needs even as they adapted to the new environment. I would now like to comment on some of the recent developments regarding the potential global framework for opioid litigation resolution. We have made significant progress in the Q4 towards reaching a potential settlement to resolve opioid lawsuits. As a result, the company determined it was appropriate to accrue for the potential settlement based on a framework that we think is workable for all the relative parties.
Advanced discussions are ongoing, and we are not able to comment deeply on the matter at this time. We take comfort from our belief that settlement funds will be used in support of initiatives to combat the opioid epidemic, including treatment, rehabilitation, mental health, and other important efforts. As you all know, we have been consistent in stating our desire to be a part of the solution to address the enormity of the opioid challenge. We always have and will continue to take our role in the supply chain seriously and continue to work diligently and alongside our industry partners in government and state agencies to combat drug diversion. We will also continue to support real solutions to help address the crisis in the communities we serve, work in, and call home.
Just to reiterate, we believe that this is an important step towards resolution, which would allow our business and our people to focus on performing our vital role in the healthcare system, which has been clearly on display during the COVID-19 pandemic. Looking ahead, AmerisourceBergen enters fiscal 2021 with strong momentum as our key differentiators continue to provide a platform for value creation for all our stakeholders. First, we have the best customer base in the industry with a balanced portfolio of key anchor customers across all the segments in which we operate. With our diverse and extensive customer base, AmerisourceBergen is well-positioned to support patient access wherever a prescription is needed. Today, I would like to highlight our Good Neighbor Pharmacy network of independent pharmacies. In September, we held our first virtual ThoughtSpot, our annual Good Neighbor Pharmacy Conference and trade show.
Through our SourceWeek, I was inspired by the unwavering commitment that our GNP pharmacies have maintained for their patients and communities. They've gone above and beyond with their entrepreneurial spirit and adapted to the pandemic environment with innovations such as leveraging social media to engage with their patients, making and distributing hand sanitizers to all supply guests, and adapting to enable drive-thru prescriptions. We share this purpose-driven mindset of our GNP pharmacies and will continue to support all of our customers by understanding their needs, delivering a seamless experience, and deepening our relationship with them. Second, we continue to build on AmerisourceBergen's unparalleled leading specialty franchise. Enhanced by the value-added services we provide, our specialty physician services business has the strongest portfolio of service and customer relationships in the industry.
Our position in the market enables us to capitalize on emerging trends such as the rise of biosimilars, where we saw better than expected adoption and growth this year, and which has become a meaningful and growing part of our business. A recent IQVIA report focused on biosimilars highlighted these strong utilization trends, expected overall growth for biosimilars, and the corresponding savings that they will create for the healthcare system. The growth of biosimilars is a long-term driver for AmerisourceBergen, as we are able to provide valuable commercialization services upstream to manufacturers and support access downstream to community-based providers. Specialty has been an important driver of AmerisourceBergen's growth over the last few years. In fiscal 2021, we are focused on furthering our value proposition and supporting our specialty physician customer base by continuing to invest in technology, innovation, and data and analytics solutions.
Our ability to continuously innovate is our third differentiator. We embrace advanced technologies to enable real-time communication and transparency for our partners. Our sourcing and distribution teams integrate their commercial expertise with our data and analytics capabilities to provide actionable channel insights to our provider and manufacturer partners and government stakeholders. Earlier this week, AmerisourceBergen was selected by the Department of Health and Human Services to store, manage, and distribute pharmaceuticals for the Strategic National Stockpile. We take great pride in being chosen to support the government in their planned pharmaceutical stockpile activity. AmerisourceBergen is a trusted data provider in the pharmaceutical supply chain, with stakeholders across the health system use to enable data-driven solutions to new and existing challenges. We also continue to build upon our partnerships to become even more efficient and to serve our customers with greater speed, efficiency, and data capabilities.
Having an innovative mindset means that not only do we seek creative ways to solve problems, but also that we are decisive and nimble to apply our capabilities. During the pandemic, for example, we quickly launched telehealth tools, web-based workflow platforms, and other technology solutions, helping providers across our customer spectrum from specialty physician services to MWI Animal Health adapt to the new environment. AmerisourceBergen remains solutions-oriented and committed to providing value-added innovations and services so that our customers can take advantage of the opportunities available in this rapidly evolving market. Finally, turning to our fourth differentiator, we have a history of successful corporate stewardship. We have maintained our thoughtful and strategic approach to capital deployment with a focus on value creation and maintaining financial strength.
This fiscal year, we invested $370 million in the business through capital expenditures, while at the same time returning more than $760 million to shareholders through dividends and share repurchases. On the people and community side, we are guided by our purpose. We engage our associates, operate in a sustainable and responsible manner, and support healthy and resilient communities where we live and work. We are making positive improvements for the environment and our communities. In the last year, we have reduced greenhouse gas emissions by more than 5%. Earlier, I mentioned associate satisfaction with our COVID-19 response. We have also seen a marked improvement in engagement on topics of personal importance, such as diversity and inclusion. Membership in our employee resource groups, for example, has increased by more than 40% year-over-year.
In addition, inspired by our recent conversations with associates around social injustice and racial inequity, we have exciting plans for more diversity and inclusion initiatives in the coming year. Just this week, we appointed a new Chief Diversity and Inclusion Officer, and we look forward to working with him to continue our progress and focus in this important area. There's value generated by the power of difference, and we believe that fostering an environment that embraces diversity, inclusion, and addressing unconscious bias advances our purpose and our culture, making us an even better AmerisourceBergen. As we enter fiscal 2021, the evolving healthcare landscape continues to offer opportunities for AmerisourceBergen to leverage our strengths and capitalize on our unique position in the market. We are focused on several key objectives.
Supporting growth across the enterprise by enhancing our market-leading specialty portfolio of innovative customer-centric services and solutions and deepening our strong strategic partnerships. Furthering our execution excellence by reinforcing our ability to deliver best-in-class service and efficiency. Three, continuing to strengthen our associates' experience with a concerted effort to advance our talent and culture. Fourth, evolving our technology and communications to further the interoperability of our businesses and to become an even more unified AmerisourceBergen. Most of all, we remain purpose-driven and well-positioned to create significant stakeholder value. Our businesses and teams rose to the challenges of the year and went above and beyond to deliver support and results for our customers and their patients. Thank you to our associates for their dedication, inspirational efforts, and execution, and for remaining united in our responsibility to create healthier futures.
I will turn the call over to Jim for more in-depth review of our Q4 and fiscal 2020 results and to provide fiscal 2021 guidance. Jim?
Thanks, Steve, good morning, everyone. For AmerisourceBergen, fiscal 2020 was a year of resilience made possible by the diligent execution of associates across our organization and enhanced by the exceptional performance they delivered across our businesses. Embodying our purpose, our associates adapted and innovated to meet the needs of our customers and their patients. Our teams strengthened our relationships with partners both upstream and down, focusing on providing transparency and solutions at a time they needed it most. AmerisourceBergen's long history of internal investment helped support this important work and enabled us to establish robust business continuity plans, which utilized our efficient and modernized distribution network and our strong IT infrastructure. I take great pride in being part of such a purpose-driven company and have been humbled by the results that our teams have delivered.
Before I delve into these results, please note that 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 period. For a discussion of our GAAP results, please refer to our earnings release, which was published earlier today. Moving now to our Q4 results. We finished the quarter with adjusted diluted EPS of $1.89, an increase of 17%, primarily due to higher operating income. Our consolidated revenue was $49.2 billion, up 8%, driven by solid 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 6% to $1.3 billion, driven by gross profit growth in each operating segment resulting from higher revenue.
Consolidated operating income was $530 million, up $74 million or 16%, driven by the performance of both the Pharmaceutical Distribution Services segment and our Global Commercialization Services and Animal Health group. Moving now to income taxes. Our income tax rate was 21.7% due to an unfavorable discrete item, up from 19.6% in the prior year quarter, which included a favorable discrete item. Our adjusted diluted share count decreased by 3.3 million shares or 2% to 206.4 million shares, driven by opportunistic share repurchases earlier in the fiscal year, notably when the share price came under pressure with the market in the month of March. For the year, we repurchased $420 million of our shares. In fiscal 2020, as Steve mentioned, AmerisourceBergen returned over $760 million to shareholders through share buybacks and dividends. This morning, we also announced that the company's board of directors approved a dividend increase of 5%.
This completes the review of our consolidated results. I'll cover our segment results. Beginning with Pharmaceutical Distribution Services, segment revenue was $47 billion, up 8%. The segment continues to benefit from strong specialty product sales, including growth in specialty physician services, as well as overall customer growth, particularly with some of our larger customers. Q4 revenue growth benefited from an easier comparison to the prior year quarter. In the Q4 of fiscal 2019, our large mail order pharmacy customer had already seen volume from one of their large health plans roll off, and we had not yet onboarded the customer's post-merger incremental volume. Normalizing for the comparison, revenue growth would still have been at the upper end of the mid-single-digit range. Segment operating income increased about 15% to $426 million.
As a reminder, the segment's operating income had an $18 million tailwind due to the exit of the PharMEDium business. In addition, as we called out back in May, we established an incremental bad debt reserve in the March quarter related to the onset of COVID-19. The incremental reserve was not related to any specific customers, but due to a point-in-time analysis of potential receivables risk. As a result of the continued financial resilience of our customers, we determined that it was appropriate to reverse a significant portion of this bad debt reserve. If you were to back out the tailwind from the PharMEDium exit and the benefit from the bad debt reversal, segment operating income growth in the quarter would have been more in line with segment revenue growth.
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 Animal Health. In the quarter, total revenue was $2 billion, up 11%, primarily due to growth at MWI and World Courier, but also reflecting growth across the group. MWI's revenue grew 8%, driven by double-digit growth in the companion animal business, as well as growth in the production animal business. The Global Commercialization Services group, which includes World Courier and AmerisourceBergen Consulting businesses, had revenue growth in the mid-teens. The Other Segment had operating income of $105 million, an increase of 20%. World Courier continued its exceptional performance in the quarter. This completes the review of our segment results for the quarter.
Before I turn to our full year fiscal 2020 results, I want to take a moment to discuss our expense accrual in connection with opioid lawsuits. In the Q4, we recorded a GAAP pre-tax charge of $6.6 billion, which is excluded from our adjusted non-GAAP results. The company is in advanced discussions, which are ongoing, to reach a global settlement to resolve cases currently filed and that could be filed in the future by states, counties, municipalities, and other governmental entities covered by the settlement. The decision to record the charge is due to the significant progress made during the fourth fiscal quarter toward reaching a potential settlement and our determination that a loss is now probable and the amount is reasonably estimable. The global settlement remains subject to contingencies that could impact whether the parties ultimately decide to move forward.
Due to the ongoing work towards a settlement, we are unable to comment further on these matters at this time. Now I will turn to our full year fiscal 2020 performance. Our consolidated revenue was $189.9 billion, up 6%, driven by growth across our broad portfolio of businesses, particularly in specialty physician services, and also for our largest customers, Walgreens and Express Scripts. Consolidated operating income grew 7% for the year to $2.2 billion, while our operating margin increased two basis points. As it relates to operating expenses, we did experience a favorable impact from lower-than-expected corporate administrative costs, which resulted in a modest expense growth for the year. Pharmaceutical Distribution segment operating income grew 8%, and Global Commercialization Services and Animal Health had operating income growth of 5%. From a segment perspective, we saw growth across our businesses in Pharmaceutical Distribution.
This segment continues to benefit from our strategic relationships in each customer segment and strong performance in specialty physician services, where innovation and demographics continue to be organic growth drivers. In addition, we had notable contribution from biosimilar utilization in fiscal 2020, as we saw better-than-expected uptake of biosimilars, particularly in oncology. In Other, World Courier continues to differentiate itself with key solutions in a complex world for global specialty logistics. Our manufacturer partners are leveraging our capabilities to enable at-home clinical trials and support treatment accessibility through World Courier. The investment we have made over the last few years has positioned our World Courier business to offer best-in-class solutions for our manufacturer customers, along with the expertise and capabilities needed to help navigate an increasingly complex environment for global specialty logistics.
The adjusted effective tax rate for fiscal 2020 was 20.8% and was relatively consistent to 20.6% in the prior fiscal year. Turning now to EPS. Our full-year adjusted diluted EPS grew 11% to $7.90, primarily due to the resilience and outstanding execution throughout our businesses that enabled us to deliver strong operating income growth. Our EPS also benefited from lower net interest expense and a lower share count, with share count down by 2%. Adjusted free cash flow for the year was $1.9 billion, higher than expected, primarily due to timing of customer and supplier payments. The timing benefit helped fiscal 2020 adjusted free cash flow and results in slightly lower adjusted free cash flow expectations for fiscal 2021, which we expect to be $1.5 billion. Again, I am proud of the ways our associates and teams have executed and adapted to deliver strong fiscal 2020 results.
As we enter fiscal 2021, we have strong momentum and visibility to continue our growth trajectory in both of our operating segments. Before detailing our guidance, I will note that our working assumption for pharmaceutical pricing in fiscal 2021 is that brand inflation and generic deflation rates will each be similar to what was experienced in fiscal 2020. Turning now to discuss our fiscal 2021 financial guidance. As a reminder, we do not provide forward-looking guidance on a GAAP basis, so all of the following metrics are provided on an adjusted non-GAAP basis. Starting with revenue. We expect consolidated revenue growth in the mid-single digit % range. Next, operating expenses. We expect consolidated operating expenses to grow in the mid-single digit % range. We do not expect the same level of favorability from lower corporate administrative costs experienced in fiscal 2020 to repeat.
Understanding the importance of expense management, we will certainly be thoughtful in trying to have operating expense growth in the lower part of that mid-single digit % range. However, in fiscal 2021, we will continue to be diligent in protecting our associates and thoughtful in how we utilize continued remote work for our associates that are not on the front line. Regarding operating income, we expect our operating income to grow in the mid-single digit % range, with mid-single digit % growth expected for both of our operating segments. In Pharmaceutical Distribution Services, we continue to capitalize on our leadership in specialty distribution, particularly specialty physician services, and benefit from our key anchor customer relationships across pharmaceutical distribution.
As it relates to the impact from exiting PharMEDium, we will experience a $20 million operating income tailwind in the Q1 of fiscal 2021 as we lap the last quarter in our financials prior to the PharMEDium exit. Moving now to other. The Global Commercialization Services and Animal Health group is expected to continue its positive trajectory in fiscal 2021, supported by continued execution from MWI, World Courier, and our businesses within consulting, as the businesses continue supporting our commercial partners in successfully traversing the COVID-19 landscape. Turning now to our consolidated tax rate expectation. Our guidance assumes a full-year adjusted tax rate of approximately 21%-22%. Regarding share count, as a reminder, we do not include unidentified capital allocation in our guidance. Our fiscal 2021 guidance assumes that we finish the year between 206 and 207 million weighted average shares outstanding.
As a result of these expectations, we are guiding our fiscal 2021 adjusted EPS to be in the range of $8.20 to $8.45, reflecting growth of 4%- 7%. Finally, turning to capital expenditures and cash flow expectations. First, CapEx is expected to be about $400 million. We have many projects in place, and there is no one project driving our capital expenditure. Rather, they have a shared focus on supporting growth, increasing efficiency, or enhancing our commercial and compliance capabilities. AmerisourceBergen's balanced approach to capital deployment, which prioritizes internal investment, is an important commercial and financial differentiator for us. Now for adjusted free cash flow. We expect our adjusted free cash flow for fiscal 2021 to be approximately $1.5 billion. As I mentioned earlier, the timing benefit that helped fiscal 2020 cash flow to be higher than expected has an offsetting impact on fiscal 2021.
In closing, we have seen firsthand this year how valuable AmerisourceBergen's purpose-driven talent and culture are to delivering differentiated value to all our stakeholders. Drawing upon our adaptability, resilience, openness, and dedication as professionals, we continue to deliver for all our partners and come together as individuals to embrace our differences. I'm confident that we are furthering our talent and culture as we become an even more unified AmerisourceBergen. The fundamentals of our business remain strong as we continue to benefit from our pharmaceutical-centric strategy, key partnerships, and leadership in specialty. AmerisourceBergen is well-positioned to continue to create long-term shareholder value and deliver on our purpose of being united in our responsibility to create healthier futures. I will turn the call back over to Steve for some final remarks. Steve?
Thank you, Jim. Before we open the call up for questions, I would like to share my reflections on a year that has made a lasting impact on our lives. 2020 has been a year of uncertainty and challenge for communities across the globe. During this time, AmerisourceBergen has put the needs of our associates, our customers, and our communities first. From planning safe ways to work, to ensuring the delivery of life-saving medication, and to raising nonprofits to bring relief to communities from California to Lebanon. Through our purpose, scale, and expertise, we have ensured that our partners have had the connectivity, capability, and data they have needed to think, plan, and act effectively.
As we worked to ensure that patient needs were met across our footprint, we recognized that we were only able to do so because of the resilience of our business, which has been reinforced by our focus on pharmaceuticals, our diverse portfolio of customers and businesses, our differentiated customer experience, and our leadership in specialties. As I've said for the last few months, I've never been prouder to be a part of AmerisourceBergen. I've been humbled by the conviction, dedication, inspirational effort, and professional execution carried out by our associates. Their teamwork and passion have truly enabled us to deliver on our purpose of being united in our responsibility to create healthier futures. I remain incredibly proud of the work that our associates are undertaking across all areas of our business. This concludes our prepared remarks for today.
Now I will turn the call over to our operator to begin the Q&A session. Operator?
Speaker, your line is now open. We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster.
Operator, our first question, please.
Our first question will come from Robert Jones with Goldman Sachs. Please go ahead.
Great. Thanks for taking the questions. I guess maybe just to start on guidance in the pharma segment. You're calling for mid-single digit EBIT growth there. Wanted to just get a little bit more on your thoughts around the underlying assumptions versus some of the more one-time items. Specifically thinking about things like lapping PharMEDium, which you mentioned, and then obviously additional COVID-19 costs from this year that might not recur at the same level, at least for next year. And then I guess to the upside, I know, Steve, you continue to talk about the growing opportunity with biosimilars. Was hoping maybe you could also touch on what, if anything, is considered in that opportunity for fiscal 2021.
Sure. Well, Bob , it's Jim . I'll start with some of your questions you asked on guidance and then turn it over to Steve Collis for your final part of the question. Fiscal year 2021 financial guidance, it reflects strong growth across multiple businesses, building upon the momentum from the strong fiscal year 2020, despite the COVID-19 challenges. As you know, we're guiding to mid-single digit revenue growth and mid-single digit operating income growth, and that mid-single digit operating income growth is both in Pharmaceutical Distribution Services and in other. Adjusted diluted EPS guidance in the range of $8.20- $8.45. Keeping in mind there that we don't include unidentified capital allocation in our guidance. In terms of Pharmaceutical Distribution Services and some of the things that are driving it, we continue to benefit from our pharmaceutical-centric positioning.
Particularly from our leadership in specialty, where we're seeing biosimilars continuing to contribute meaningfully. We're expecting pharmaceutical utilization trends generally consistent with the experience we had in fiscal year 2020. We're assuming that brand inflation and generic deflation levels, they're in line with what we saw in fiscal year 2020. We will have a tailwind in the Q1 of fiscal year 2021 from the exit of PharMEDium, that will be a benefit of $20 million in operating income tailwind, comparing the Q1 of 2021 with the Q1 of 2020. We continue to remain disciplined on expense management. I'm strongly encouraged by our OpEx performance in fiscal year 2020, and continue to remain focused on expense management.
We're unlikely to have the same level of favorability related to some of the corporate and administrative expenses in fiscal year 2021 than we had in fiscal year 2020. Our internal healthcare expenses would be an example of that. We continue to expect to perform well on the OpEx front. If we look also at quarterly cadence, I would say that the Q1 will be a bit stronger because we have the tailwind compared to Q1 fiscal year 2020 related to PharMEDium. The Q2 will be a little bit tougher because we're comparing to the Q2 of fiscal year 2020, where in March we had elevated sales with the onset of COVID-19.
Bob, hi. Thanks for the question. We've seen encouraging usage of biosimilars, and the biosimilars market is continued to expect to materially increase by 2025. Most importantly, we see potentially increased molecules volume by 2%-4%, indicating increased patient accessibility as supportive care and other products become more affordable and especially with some of the copay in equity that we've tried to highlight elsewhere. Of course for ABC, the Part B products are the most impactful. I think biosimilars are a key trend for us. They're important for our customers. They're important for the patients that we all ultimately serve. The pricing is remaining intact to the commercialization business that we are so in favor of performing for ABC are able to still be employed as access and adherence solutions. Very positive trend for ABC, we believe. Next question, please.
I guess that-
Sorry, Bob. Please go ahead, Bob.
I was just going to say that one other item, I saw that AmerisourceBergen was selected by HHS for this Strategic National Stockpile Initiative. I was just wondering if you could comment on what, if anything, is included in guidance around that new contract.
Yeah. No. There's nothing specific in our guidance. We can confirm that we've been selected to store, manage, and distribute Strategic National Stockpile of pharmaceuticals. I think, this is a further testament to the value that ABC provides, our deep commercial expertise. I think one of the areas that we've really been focusing on is our data and analytics capability. We've talked a lot in my script, in particular about innovative solutions that provide unique solutions to government and commercial partners. We believe that during this period, we've become the invisible pillar of innovation. This is a further example. I think many more stakeholders are aware of the capabilities of an AmerisourceBergen than they were before. I think this is extremely good evidence of that. We're proud to receive this award.
Yeah. Bob, I'll just add that the contract is in our numbers. There's nothing specific to call out.
Okay, great. Thank you.
Next question, please. Operator.
Our next question will come from Lisa Gill with J.P. Morgan. Please go ahead.
Thanks very much, good morning. First, just to start and go back to your comments around biosimilars. Jim, I understand that the comments that Steve made and that this is positive, is there any way for you to frame what the potential margin opportunity would be for a biosimilar versus a traditional branded drug that goes through your specialty business?
Yeah. Let me start out there. As we commented on biosimilars is really one of the very positive things that's driving our strong results in our specialty physician services business. We do see higher margin opportunities with biosimilars than we see with traditional brands. That was one of the factors, for instance, we were quite pleased this year when we saw our operating margin tick up a couple basis points and biosimilars and the adoption of biosimilars being stronger than we expected is one of the factors that caused our operating margin to tick up during the fiscal year.
When we think about it, if we were just to use traditional margin, is there a way to think, like, is this one time more profitable, two times? Just to put this in reference as we start to think about the number of biosimilars that will come to the market over the next few years. I agree with you that I believe that this is a great opportunity, especially given the size of your specialty business and the manufacturing services that you have. I'm just trying to put this into context. I know you said that there is part of that in your 2021 guidance, but how do we think about that margin differential and the opportunity, not just for 2021, but over the next several years?
Yeah. We do think it, clearly was a positive factor in 2020, will be a positive factor for us in 2021 and in future years, the growth of biosimilars. We won't get specific on margin, but we'll say that the margin is higher than brand specialty, and not as high as generic margin. We do feel like it will be a continued growth driver for our businesses.
Lisa, one final point. Community oncology practices, particularly we believe members of our ION Solutions that have really shown an ability to partner with key manufacturers, have been early adopters in embracing biosimilars. If you look at the data on our larger practices adoption versus providers on a national level, it's favorable. We believe that that's further evidence of our being able to promote new and effective therapies.
Our next question will come from Ricky Goldwasser with Morgan Stanley. Please go ahead.
Yeah. Hi. Good morning. Sorry. Good morning. I have one question that really around kind of like CapEx and capital deployment. I think you increased your CapEx guidance for this year. What areas are you looking to spend on, and how should we think about these areas as driving growth in the foreseeable future? Clearly it sounds like you're getting closer to an opioid settlement and resolution of litigation that's occupied you for a few years now. Now with you freeing up kind of like that capacity, how are you thinking strategically about capital deployment in areas for potential expansion?
Sure. Let me start out there. Yeah, we are expecting for capital expenditures to be a little bit higher in fiscal year 2021 than fiscal year 2020. They were about $370 million in fiscal year 2020, and our guidance is about $400 million in fiscal year 2021. We've got many projects in place. There's no one project that's driving our CapEx. It's really a shared focus across supporting growth. A lot of our CapEx is about supporting growth, increasing our efficiency, and then enhancing our commercial and compliance capabilities. In terms of capital deployment, our capital deployment strategies remain unchanged. Invest in the business, strategic M&A, opportunistic share repurchase, and maintaining a reasonable dividend. One thing I think is really nice to point out is that our balanced approach to capital deployment has been a commercial and financial differentiator for us.
We ended fiscal year 2020 with a trailing three-year average adjusted return on invested capital of over 18%. I think we are well-positioned for capital deployment ending fiscal year 2020 with zero net debt.
Thanks, Jim. I just would add that for strategic accretive M&A, it's important that the targets must be actionable with appropriate returns. Jim and Laz, our controller, work very closely with our finance committee of our board. We evaluate all opportunities. I'd say that overall, we didn't do any M&A this year. AmerisourceBergen continues to benefit from our strategy being pharmaceutical centric, particularly our strength in specialty. We're always looking to build on our key strengths. Commercialization Services, Animal Health, those are areas, patient access, analytics and data to the extent that they are in the specialty area. Those are all key areas for us, Ricky.
Our next question will come from Glen Santangelo with Guggenheim. Please go ahead.
Thanks for taking my question. Steve, I just wanted to also follow up on sort of the opioid litigation. It is obviously an encouraging sign, assuming you are correct, and the number that you put in the press release that you reserved for the $5.5 billion after tax over 18 years, it is only about $300 million a year. When I think about that in the context of free cash flow of about $1.5 billion, how do you think about changes you may or may not have to make to your historical capital deployment strategy? Jim, maybe my follow-up for you would be, is there anything you can do in this low interest rate environment to maybe get creative on how you fund or pay for settlement, or do you just anticipate this may be something that you fund out of free cash flow? Thanks in advance.
Yeah. Hi, Glen. Again, I think Jim answered the last question pretty thoroughly. We always contemplated and our first priority is of course always internal investments. We did about $360 million, $370 million this year. We have always robust requirements from the business, which also get well scrutinized. Essentially, they've been some of our best returns and the area of interoperability, et cetera, those are very important for us. As we look at different liquidity options, as we look at the cash holding and the free cash flow, we'll keep on looking at being that preferred place for shareholders to invest. Jim has a comment as well.
Yes, Glen. As I commented earlier, our capital deployment priorities remain unchanged. We're certainly cognizant of the potential settlement and the impact of the settlement as we consider capital deployment. At the same time, it's really important that this doesn't change our strategic focus and the need to invest in our business and return capital to shareholders. As everyone knows, the other important piece of running our business is remaining investment grade, and that's something that we've been aware of and conscious of throughout the opioid discussions.
Thank you.
Next question, please.
Our next question will come from George Hill with Deutsche . Please go ahead.
Good morning, guys. Steve, I'm going to ask kind of a characterization question first of all. With the FY 2021 guidance, we talked about the very small moving puts and takes as opposed to any large moving puts and takes. It almost seems like what I would characterize as a normal year, going back to all the pricing concerns and everything that we've seen stretching back to 2015. I guess I'd ask, would you characterize it that way? Then my quick follow-up would be, as it relates to the FY 2021 guidance, can you talk about how you're thinking about volumes relative to the pre-COVID baseline?
Yeah. George, thank you. It's interesting that we're referring to the past 12 months with all the occurrences that we've had, not necessarily for AmerisourceBergen, but in our society as a normal year. Look, the resilience of our businesses were truly on display. We had, of course, the spike in March and then the soft-ish April and May. If you go back to those times, the confusion that we had. I think we've had also in 2009, we had the fiscal crisis and the worldwide recession, and our business was extremely recession-proof in those times as well. Payers keep paying, our customers keep on seeing their patients and keep on really finding ways to access patients.
I think, if you think about fiscal year 2020, the resiliency overall, the way that some of our businesses that were a bit softer, including, say, even our production animal health businesses came back. Those are all very important to us and I think a good reason why we performed the way we did. If you look at fiscal year 2021, we expect that overall providers will be able to navigate through any surge in the virus, in patient loads very effectively. I think that we're much more aware of patient treatments. There's more effective therapies that are available, and that have been approved or emergency utilization, even now, one for full FDA utilization. We're quite optimistic about our providers' abilities to sustain and manage through any prolonged COVID crisis.
Some of the trends that we've talked about, and we've talked about them a lot, including our portfolio of customers and the businesses we own, the pharmaceutical-centric and our ability to do incredible business continuity planning, which should not be underestimated, I think positions us very well. Jim, I see you have a comment.
Yeah. I think the last six months of fiscal year 2020, well, all of fiscal year 2020, but in particular, the last six months of fiscal year 2020, we really demonstrated the resilience of our businesses to operate in this environment. That gives us good confidence in our fiscal year 2021 guidance as we look at mid-single-digit revenue growth guidance and mid-single-digit operating income guidance for fiscal year 2021.
Next question, please operator.
Our next question will come from Charles Rhyee with Cowen. Please go ahead.
This is James on for Charles. I just had a question on other. The performance in other was strong this quarter, adjusted op income up 21%, up 5% for the year, which was ahead of the fiscal 2020 guidance despite COVID-19. Can you speak more on what drove the strong growth in the quarter and then some of the puts and takes heading into fiscal 2021?
Sure. In the Other segment, we did have a very strong quarter of operating income up 20%, and we did hit 5% operating income growth for the year, and we're guiding growth to next year to mid-single digits. We saw some of the businesses in Other be a little bit more impacted by COVID-19 during our third fiscal quarter, but really come back nicely in the fourth fiscal quarter. Really kind of the standout business in the Other segment has been World Courier. As World Courier really has demonstrated the value of its service in global specialty logistics that manufacturers have really valued during this environment. That's been a standout and really carry strong momentum into next fiscal year. We've really seen good performance during the quarter from other businesses also.
We saw MWI with 8% revenue growth, including double-digit revenue growth in companion animal, and a return to growth in production animal also during the fourth fiscal quarter. We saw solid performance out of Lash and other businesses. We think those businesses are very well positioned going into fiscal year 2021.
Next question, please.
Our next question will come from Eric Percher with Nephron Research. Please go ahead.
Thank you. I want to return to the theme on pharmaceutical growth and maybe some of the seasonality. I think we heard you loud and clear from PharMEDium in Q1. I would love to hear any thoughts you have on COVID-19 impact as we get through the middle of the year, how meaningful that is. Then two other specifics. One would be generic pricing stable. Is that less of a benefit than it was when we were moving from higher deflation to lower deflation? Last of the three, in the independent pharmacy marketplace, there's been reports of you extending your largest customer there for a long contract. Did that have any negative in this year that might be unique relative to a normal year?
Let me start out there, Eric. You asked about kind of seasonality in pharm distribution as it relates to fiscal year 2021. Again, I think what the H2 of fiscal year 2020 demonstrated was our resilience and our ability to perform well and have solid growth in the COVID environment. As we look to seasonality this upcoming year, We do have the tailwind, the $20 million tailwind in the Q1 from exit of PharMEDium. In the Q2, we do have a little bit more of a tougher comp because, as we commented before, we saw a sales spike in the month of March last year with the onset of COVID. That creates a little bit tougher comp during the Q2. I think really kind of the key theme is just the resilience of the business.
Of course, we track the volumes in all of our businesses very closely. We've just seen strong resilience in fiscal year 2020 that we would expect to continue in fiscal year 2021 in this environment. On generic deflation, the question you asked on generic deflation, we saw generic deflation moderate, as we've commented during fiscal year 2020, and our expectation for fiscal year 2021 is for generic deflation to be consistent with what we saw in fiscal year 2020. With regard to independents and what we see in independents, Steve, I'm not sure if you'd like to comment at all on independents.
Yeah. I think you're talking about our largest buying group customer, and there's nothing to really comment on there. We're managing through, and that's really around pricing and balancing that we have talked about with all customers. Nothing important to comment on there at all, Eric.
Thank you.
Our next question will come from Steven Valiquette, with Barclays . Please go ahead.
Great. Thanks. Morning, Ed, Steve, and Jim, congrats on these results. The U.S. elections obviously are not quite concluded yet, as we all know. Just curious if you have any updated thoughts just on the outlook for drug price reform going forward. There'll be some visibility on a split Congress, but maybe just within your overall FY 2021 guidance, do you make any sort of allocations for potential changes on either international pricing parity or other things, or does all that just get absorbed within the guidance range? Thanks.
Steve, my 88-year-old father called me this morning and said, "What's going on in Pennsylvania? Why can't you get your results out?" I don't think that that was quite as direct as this comment. On policy, I think we always go back to some of our key themes. It's really important to remember that pharmaceuticals are the most efficient form of source of care, and that I think people sometimes forget, just not you, obviously, but that total healthcare spending, we actually are under 10% now, and our overall increases have been pretty reasonable. I think those are the themes that we try to highlight. Of course, if there were any changes that you referenced, like the international pricing, that those should be done thoughtfully and in a transition sensitive way. I think you've seen the market rallied yesterday on healthcare stocks.
I think we, AmerisourceBergen, we have a seat at the table. We're involved. We've really advanced in that area. We often get seen as experts on a lot of these reimbursement and policy areas as it affects our customers. That's a big part of our focus, right? We'll continue to advocate on behalf of community-based care. We'll continue to be a fair partner to pharma and bio and those sort of organizations. We'll also look to make sure that anything that affects our industry is fairly legislated, like the pedigree rule is a good example of that, things like that. We think it's important, and also AmerisourceBergen, of course, really benefits as a mutual fund of all pharmaceutical-based spending. We're well-represented in all the segments. You should just think about that. I think, operator, no more questions? Okay.
Our investor relations head is putting an end to questions. I'm going to just end up by saying we're excited to finally be in fiscal year 2021. We focused on execution and growth in fiscal year 2021, which we now just completed October. Most excitingly, from a personal point of view, I remember when I joined the former Bergen Brunswig about 27 years ago, that we were doing about $3 billion or $4 billion in sales, and potentially this next year, this upcoming year, when we could celebrate the 20th anniversary, we will celebrate the 20th anniversary of Amerisource and Bergen merging. We could record $200 billion in revenues, which would be quite a momentous achievement for a 20-year-old company. Just let me end by saying that we're excited about fiscal year 2021.
We'll also be opening new headquarters for our company, and we're hoping that we can celebrate together with our wonderful associates that have done such a great job throughout this year. We are well-positioned to deliver growth and create stakeholder value as we are guided by our purpose of being united in our responsibility to create healthier futures. Thank you for your time today. I know it's been a busy morning. Thank you.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.