Good day, and welcome to the Amerisource Second Quarter 2020 Earnings Conference Call. All participants will be in 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, Head of Investor Relations. Please go ahead, sir.
Thank you. Good morning and thank you all for joining us for this conference call to discuss AmerisourceBergen's fiscal 20 2Q2 results. I am 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 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've also posted a slide presentation to accompany today's press release to our website. During this conference call, we 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 free cash flow. 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, our SEC filings, including our most recent 10 ks.
AmerisourceBergen assumes no obligation to update any forward looking statements on this call, and this call cannot be rebroadcast without the express permission of the company. You will have the 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'll turn the call over to Steve.
Thank you, Bennett, and good morning to everyone on today's call. As you saw from our earnings release, AmerisourceBergen delivered excellent performance for the Q2 and first half of fiscal twenty twenty. With a strong first half of the year behind us, I will focus this morning's call on 2 main areas. First, we will discuss AmerisourceBergen's actions in response to the COVID-nineteen pandemic. And second, we will talk about how AmerisourceBergen is positioned to deliver value over the long term for our shareholders and also for our associates, customers, suppliers and our communities.
Jim will then discuss our results in more detail and our outlook for the remainder of the year. 1st, with regard to the actions we have taken in response to the COVID 2019 pandemic, I've never been prouder of AmerisourceBergen and our associates. We have been guided by our purpose and values and the company has prioritized supporting the safety of our associates. In turn, our associates have been innovating in helping our manufacturer and provider customers navigate new or intensified challenges. The health, safety and well-being of our associates is paramount and we have taken several steps to support our frontline associates, which have included enhanced cleaning protocols and additional support from 3rd party cleaners, enhanced paid time off for associates needing to quarantine or care for family members, weekly bonuses for frontline associates and backup dependent care.
These measures are important in protecting and supporting our associates and key to AmerisourceBergen's ability to support the foundational elements of healthcare. As you can imagine, the necessity of our services and solutions has been highlighted and amplified as manufacturers and providers navigate increased complexity and new challenges. To help efficiently and effectively address these challenges head on, We established an internal response task force that is made up of key experts and leaders across the company. Our task force has been advising individual teams and leaders and also meets with government officials. Task force help us move quickly to implement our business continuity plans, which are enabled by the robustness of our distribution network, technology and the talent and innovation of our associates.
The strength of our infrastructure has enhanced our ability to provide patients access to the medications they need. AmerisourceBergen has a history of investing in our businesses and capabilities, giving us significant technological and operational flexibility. Last month, we demonstrated this when we temporary closed one of our largest distribution centers out of an abundance of caution given its proximity to a COVID-nineteen hotspot. We invoked our business continuity plan for the region and seamlessly transferred volumes to other AmerisourceBergen distribution centers. We used the temporary closure to perform extensive sanitation measures at the location.
AmerisourceBergen also moved decisively to protect non frontline associates. We were able to quickly shift all suitable roles to working remotely. This important distancing measure was achieved as a result of close leadership collaboration and strong IT infrastructure. The types of proactive measures would not be possible without the significant investments we have made in our distribution center network and technology. On the pharmaceutical supply side, our sourcing and commercial teams have worked diligently to ensure that we are understanding demand and forecasting sustainability of supply to maintain the necessary inventory to address varying needs.
We have made it a priority to keep in regular communication with all stakeholders to best maintain continuity of supply and meet increased demand from providers. This has been a period when alignment and coordination is vital and we have amplified our proactive approach to communications and engagements. Our teams have held numerous customer virtual town halls in order to discuss factors influencing the supply chain, outline our response and business continuity and articulate the resources available to our customers. These events have facilitated reach to thousands of participants and are a good example of AmerisourceBergen's calm, transparent and patient focused response. Despite these uncertain times, I have been inspired daily by the dedication, innovation and thoughtfulness displayed by AmerisourceBergen and Associates.
We have seen firsthand the importance of our purpose driven organization, especially given the vital role AmerisourceBergen plays in the healthcare system. It is times like these that reinforce our confidence in AmerisourceBergen's strategic position, resiliency and ability to provide critical services and solutions in any economic climate. Over the years, we have focused much of our time with investors and analysts on providing visibility into AmerisourceBergen's 4 strategic pillars. While the world around us has changed the way we are now working, the way we connect and the way we communicate, the key differentiators that set AmerisourceBergen apart remain a constant. Let me remind you of them and why they underscore our confidence in our strategic positioning.
First, we have a diverse portfolio of customers with key anchor relationships in each segment. We have built and nurtured longstanding and collaborative partners with a diverse group of customers ranging from community and national retailers to health systems and community physicians. An example from one of these customer groups is our Good Day for Pharmacy, where members have been working tirelessly on the front lines to ensure their patients continue getting the care they need even when things are at their most chaotic, whether by creating care packages for at risk customers, providing drive through services, donating hand sanitizer or keeping in touch with patients via social media, our independent pharmacy partners have done an exemplary job of showcasing the crucial part they play in improving community health. These types of relationships enable us to capitalize on pharmaceutical utilization in the United States across a variety of settings and distribution channels. 2nd, we maintain market leading positions in specialty distribution and services where pharmaceutical innovation and demographic trends will continue to drive long term growth.
During this period of social distancing, we've been working with our provider customers to help them navigate the complexity of operating in this environment, understanding that there are some natural delays in patients seeing doctors for necessary referrals. We believe the ability the availability of testing and improved operability of practices will enable these practices to serve more efficiently the complex needs of their new and existing patients. We have worked closely with our community physician practices to provide advanced analytics to help them navigate the temporary slowdown in patient visits due to social distancing. At the same time, our commercialization teams are working closely with their manufacturer partners to support efforts to ensure patients continue to be able to access vital pharmaceutical therapies. Our Lash business has been supporting a partners program that helps eligible unemployed patients maintain access to therapy despite loss of health insurance due to COVID-nineteen.
Additionally, World Courier's capability to provide direct to patient clinical trial services has been a key asset in supporting the shift of healthcare out of hospitals and into the home, thereby lowering the burden on hospitals and pharmacies. As complexity increases, World Courier thrives as its capabilities are unparalleled in its market. Navigating complexity is a foundational trait of AmerisourceBergen and it powers our 3rd key differentiator, our ability to provide innovative services and solutions. We proactively invest and innovate to be best in class partners, as evidenced by the foresight that guided us to dedicate capital expenditures in our distribution center network, IT capabilities and specialized customer focused solutions. One such example is a tool we are using to provide the advanced analytics for our community physician customers.
Physician practices are leveraging our strategic financial intelligence solution, Infogive, to monitor and evaluate potential area of concern. Given the current situation, we are providing analyses to monitor areas impacted by COVID-nineteen such as new patient volume, transition to telehealth services and potential delays in claims processing and payments. At MWI, our team recognized that the need for veterinarian practices to virtually engage with their clients has become critically important. In response, the business announced a series of technology tools to provide improved remote communication and enable curbside operations for practices and their patients. These examples illustrate a core strength for AmerisourceBergen.
Our talent, expertise and resources facilitate our ability to provide comprehensive solutions. Finally, AmerisourceBergen continues to be a strong corporate steward with a focus on advancing talent and culture and maintaining strong financial health. Our talent and culture have been on full display in these recent weeks, delivering unparalleled value for all our stakeholders. We have heard from individuals across the organization that they are proud to work for a company like AmerisourceBergen with our priority on our purpose and values, especially during times of great size of need. At the same time, the financial health of the organization remains unchanged with one of the strongest balance sheets in company history and a continued focus on cash flow generation.
This financial stability and strength provides AmerisourceBergen with the flexibility and firepower to navigate the current environment effectively and continue to deploy capital appropriately in order to provide long term value for all our stakeholders. Now, I will turn the call over to Jim to discuss our 2nd quarter results and revised outlook for fiscal 2020. Jim?
Thanks, Steve, and good morning, everyone. My remarks today will focus only on our adjusted non GAAP financial results. Growth rates and comparisons are made against the prior year March quarter, unless otherwise noted. For a discussion of our GAAP results, please refer to our earnings release. Before I discuss our Q2 financial results and revised outlook for the second half of the year, I want to first take a moment to reflect on AmerisourceBergen and the COVID-nineteen pandemic.
In February, I reached my 5 year mark with the company. And over these past several weeks, I have never been prouder to be part of AmerisourceBergen. On our November earnings call, I said the associates, businesses and culture across AmerisourceBergen are fundamental to our success and to the incredible value proposition we deliver for our manufacturer and provider partners. While I did not note then the unprecedented circumstances we find ourselves in now, the fundamental truth remains unchanged. AmerisourceBergen's talent, purpose and businesses have the company and our partners well positioned to navigate new challenges and increase complexity.
The vital access we enable and solutions we provide have taken center stage as health care has never been more important and the need for efficiency and stability is so paramount. Our purpose and our culture are guiding our company and I feel privileged to be a part of it. We have been able to leverage significant internal resources and capabilities to meet the evolving needs of our upstream and downstream partners. Over the years, AmerisourceBergen has prioritized internal investment before all other capital deployment. Steve already detailed many of the investments that we are benefiting from now.
So I will simply say that the results validate the investments in our businesses. The infrastructure of tools, resources and talent that AmerisourceBergen has amassed enables our robust business continuity plans to ensure continued patient access. Turning now to discuss our financial results and expectations. I will provide commentary in 2 main areas this morning. First, I will quickly cover our adjusted quarterly consolidated and segment performance.
And second, I will cover the revision to our fiscal 2020 guidance. Given the current environment, will focus much of my commentary on quantitative and qualitative color that is valuable in understanding the various impacts of COVID-nineteen. Beginning with our Q2 results, we finished the quarter with adjusted diluted EPS of $2.40 an increase of 14% primarily due to higher operating income and to a lesser extent a lower share count. Our consolidated revenue was $47,400,000,000 up over 9% driven by strong revenue growth in both the Pharmaceutical Distribution Services segment and other, our global commercialization services and animal health group. Gross profit increased 7% or $99,000,000 to $1,400,000,000 Consolidated operating expenses increased 6% to $745,000,000 While operating expense growth in the quarter was driven by the timing of certain one time items, we expect full year fiscal 2020 operating expense growth to be in the low single digit range.
Consolidated operating income was $672,000,000 up 9% with our operating margin flat to the prior year quarter. As I noted in January, the March 2020 quarter benefited from the removal of PharMEDium from our adjusted results after the January decision to permanently exit the business, which incurred $14,000,000 of operating losses in the prior year March quarter. Operating income still would have grown nearly 7% without that year over year comparison tailwind. Net interest expense decreased $9,000,000 to $34,000,000 new lease accounting standard in fiscal 2020 continues to have a favorable impact on the interest expense line. We have benefited from interest income on higher than expected cash balances in the first half of the year.
Given the recent Federal Reserve rate cuts, we do not expect to have as significant of a benefit from interest income. Looking at the balance of the year, we expect quarterly net interest expense to be relatively in line with the March quarter. Moving now to income taxes. Our adjusted income tax rate was 21.5%, flat compared to the prior year quarter. Our diluted share count decreased 3% to 207,000,000 shares.
Fiscal year to date, we have repurchased approximately $400,000,000 of our shares. Regarding free cash flow and our cash balance, fiscal year to date we had adjusted free cash flow of $910,000,000 putting us right on track with our guidance for full year adjusted free cash flow of approximately $1,500,000,000 We ended the quarter with $3,700,000,000 in cash, of which $435,000,000 was held offshore and generally in U. S. Dollar denominated holdings. This completes the review of our consolidated results.
Now I'll cover our segment results. Beginning with Pharmaceutical Distribution Services, segment revenue was $46,000,000,000 up 9%. The segment continued to benefit from growth of some of its largest customers, continued strong growth in specialty distribution and overall market growth. In the quarter, we experienced increased pharmaceutical demand as many of our customers increased their purchases at the onset of COVID-nineteen resulting in higher revenue and gross profit. However, we also incurred elevated operating expenses and consequently there was no significant impact to operating income.
Segment operating income increased about 9% to $563,000,000 We continue to benefit from our leading specialty physician services businesses and maintaining a strong portfolio of distribution customer relationships. 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 $1,900,000,000 up 13% with all 3 operating segments delivering double digit growth. The group had operating income of $108,000,000 up 8%, primarily driven by gross profit growth at MWI and World Courier, offset in part by higher operating expenses. This completes the review of our 2nd quarter results.
So I will now turn to our revised fiscal 2020 guidance. As we said in this morning's press release, we are lowering our fiscal 2020 adjusted EPS guidance to a range of $7.35 to $7.65 down from the previous range of $7.55 to $7.80 Normally, after the execution and performance of our businesses in the first half, we would be raising our full year guidance. However, given these unprecedented times, we must revise guidance to reflect the potential impacts of COVID-nineteen for the second half of the year. As we look at the second half of the year, the main factor impacting the range of potential outcomes for the year is the magnitude and duration of patient disruption. We have analyzed and probability weighted the potential COVID-nineteen related impacts on our various business units.
Overall, we feel strongly that the current disruption is manageable for AmerisourceBergen and our businesses are resilient. We are also monitoring weekly volume trends to understand business and product mix impacts. April trends provide some insight and were encouraging with sales growth overall for our full line distribution and oncology. Our non oncology physician business saw significant weekly sales decline year over year in the beginning of April, but those declines began to soften toward the end of the month. We anticipate that for the physician class of trade delays in diagnoses and necessary testing will delay future sales of physician administered pharmaceuticals.
Additionally, certain of our global commercialization services and animal health businesses, in particular MWI, will be impacted by lower volumes. Overall, our revised guidance factors in a double digit adjusted EPS decline in the 3rd quarter, some of which is related to the March pull forward of the pharmaceutical sales that I called out earlier and then a return to EPS growth in the 4th quarter. Factors that move us within our guidance range include the magnitude of the COVID related impacts on our businesses and also the speed of the rebound of our businesses. Factors that are not incorporated into our guidance range because we do not currently expect these factors to occur include a higher magnitude impact of COVID-nineteen on our businesses throughout our full 4th quarter and any significant bad debt expense beyond current assumptions. The resulting full year guidance ranges are revenue in the low to mid single digit percent growth range operating income both at the consolidated level and pharmaceutical distribution to be in the lowtomidsingledigit percent growth range.
Operating income for other, our global commercialization services and animal health businesses is now expected to decline in the low single digit percent range. Finally, given the share buyback so far this year, we are lowering our expectation for weighted shares outstanding to between 206,000,000 and 207,000,000 shares, down from our previous expectation of approximately 208,000,000 shares for the year. There is no change to our adjusted free cash flow guidance of approximately $1,500,000,000 for fiscal 2020. The health of our cash flow and balance sheet supports AmerisourceBergen's ability to focus on ensuring continued patient access to care. In closing, there is still much that remains to be learned as the country, states, businesses and individuals contemplate the appropriate path forward.
But hopefully, you appreciate the guidance update and additional color as we seek to enhance transparency and communication especially in this unprecedented environment. AmerisourceBergen is focused on doing what is best, protecting and supporting our associates, providing key services and solutions to our partners to enable continued patient access and creating long term value for all our stakeholders. We are well positioned by our pharmaceutical centric strategy with deep strategic relationships across our company and significant financial strength. And importantly, we are guided by our purpose, driven by our talent and culture and positively differentiated by our businesses and our customers. Thank you for your interest in AmerisourceBergen.
Now I will turn the call back over to Steve.
Thank you, Jim. Before turning the call over for Q and A, I want to take a minute to discuss AmerisourceBergen's commitment to responsible corporate citizenship. As we highlighted in our recently published 2019 Corporate Citizen Report, our focus on inspired associates, sustainable operations and healthy communities enables AmerisourceBergen to advance environmental, social and governance initiatives to create healthier futures around the world. Our commitment to the health of our associates and communities influences every decision we make and has served as a vital guide as the world around us continues to change. The past several weeks have been a period of disruption for the world that has brought many challenges.
Our lives have been dramatically altered and the importance of health and well-being has been reinforced. While I cannot tell you what exactly will happen in each and every element of our business over the coming weeks months, I can tell you that we will emerge from this period with enhanced capabilities and solutions as well as a heightened awareness of the value we create for all stakeholders. I've been profoundly impressed by the exceptional leadership and collaborative teamwork throughout the organization. Thanks to this, we have been able to rapidly adapt and proactively address potential concerns caused by COVID-nineteen. I'd like to thank in particular those associates on the front lines, our nurses, pharmacists and distribution center associates whose powerful devotion and determination made this all possible.
AmerisourceBergen is powered by the talent of our associates and we are staying true to and guided by our purpose of being united in our responsibility to create healthier futures. Thank you for your interest in AmerisourceBergen. Please stay safe and healthy. I will now turn the call over to the operator to begin Q and A.
Thank you.
Today's first question comes from Lisa Gill with JPMorgan. Please go ahead.
Thanks very much and good morning. Thank you to Steve and the team and everyone that are doing things here on the front lines of this epidemic. Steve, I know you and I both been around for a long time. We lived through 'one, 'two, 2000 and eight, 2,009. As we start to think about this potential recessionary environment post COVID-nineteen, how are you thinking about pharmaceutical utilization?
Looking back at those periods, thinking about this, what you have in your guidance, you talked about the rebound getting into your Q4. But generally speaking, if you can talk about trends there, any trends that you're seeing shifts? I think one of the concerns in the market is that if we do see more people getting prescriptions delivered to the home, what does that mean for the margins on that business for home delivery with PBMs for mail order versus coming into the pharmacy? And then, how do we think about specialty trends? Again, you talked about oncology coming back.
As we think about April, non oncology still weak. But what's your anticipation there as we start to think about things like telemedicine, virtual care visits, as this world starts to change with COVID-nineteen? I know that that's a lot to kind of break down there, but just want to really understand how you think about the trends going forward?
Yes. Hi, Lisa. Thank you. We must have been around a long time because you asked me most of our Q and A prepared in one question. But there's no doubt look, I think when we started this, I was still hoping we could hold for example our Board meeting at the end of May in person.
I was reluctant to change it to a virtual meeting. So there's no doubt that this has been more sustained, more serious than anything we faced as a society in recent memory which you don't need me to pine on. We have more than enough people are piling on that. I think in health care, look prescriptions are the most efficient form of health care. They've proven to be very resilient.
Patients want to continue to take their prescriptions. So we start with that that's a really good business. Some of the trends obviously it's been difficult for people to get to physicians offices. I think it's been somewhat interesting. A friend of mine is a cardiologist said people are willing to go to the grocery store, but they're not willing to come visit me when they have a serious issue and that's led to much more serious issues.
So I think there's been when I think about reopening, I hope that the first thing people will do is go back to their physicians' offices, their dentists, their physical therapists. This is what they should be thinking about getting back to health and wellness as a priority. But a couple of trends, Microsoft said on their earnings call that they've experienced 2 years of digital acceleration in 2 months. I think in telehealth, I've heard it described as 10 years of acceptance. Having said that post COVID there will be much more restrictions for example on telehealth from one state to another.
But we can expect that trend. I think that generally that e commerce as opposed to regular mail order is going to be much more important and we'll be thinking about that as part of digital acceleration. So we'll be thinking about that. I talk about for the 3 pillars of AmerisourceBergen community pharmacy, community veterinarians, community oncologists and physicians, specialty physicians. We'll be thinking about how to assist all of them with that digital transformation.
In fact, our strategy groups, some of the smartest people in the company, we've been thinking through that and we're getting ready for that. And that's part of the comment about AmerisourceBergen being better prepared. When we come out of this crisis, we'll be well positioned as well positioned as we were going into it. I think you also need to look at our diverse customer base. We are represented with anchor customers in every segment and so we do benefit.
Yes, I will admit of course that of course it's higher margin business for us, community pharmacy business than shipping to 100 mail order sites. Of course, that's true and there's different working capital metrics associated with that. But we don't expect a very significant trend to occur once things emerge. We do think again that it's very important to bring those customers into e commerce. On specialty, we have seen some patient new patient starts slow down.
We've even seen some very specialized medicines in some of the basic medical business slow down. But we do believe and I think with a lot of logic and experience that those will be some of the first prescriptions and the first visits to come back as I referenced. Oncology is holding up well. Again, the softness has really been related to lower new patients. The longer the restrictions continue, we would expect further weakness or if there's a reemergence of hotspots in certain areas.
But hospitals, we believe are continuing to resume to normal operations and that will be a positive trend for us. And pathology reports has been key gating factor towards getting new diagnoses for oncology. And we believe all of those areas are starting to open up. So I've rambled on quite a lot here. I'm sure we're going to get to some more questions, but excellent question, Lisa, and good to hear your voice.
Thank you. Next question, please.
Yes, sir. Our next question comes from Robert Jones with Goldman Sachs. Please go ahead.
Great. Thanks for the questions. I guess, Steve, maybe just to pick up there on the physician administered side. Obviously, there's been an impact as you guys have highlighted and we've seen in the marketplace. The specialist oncologist has not been the visits there have not been immune clearly to the pandemic.
Any sense you can give us on how those scripts have trended specifically relative to the broader prescription market? And then I know you said you expect the channel to be down, but can you give us any more on the order of magnitude and maybe timing of how prolonged do you think the weakness could be within the specialty channel?
Yes. Hi, Bob. I hope you're tuned well. So referrals have been impacted and patient visits at some specialty practices as I mentioned have been working through essentially the limitations of operating in a social distancing world. Our physicians have as we understand started using telehealth as much as possible.
And also they've had to use no waiting rooms texting people to come upstairs for visits etcetera. So everyone had to adapt to the new order. And again, we anticipate that would carry on for a couple more weeks or a couple more months. And of course, lower visits and delayed pathology reports etcetera and new diagnosis has led to a mix of some lost sales. And but we do believe it also will lead and has led to pent up demand.
So we've been dealing with complex illnesses. The therapy is extremely valuable lifesaving to those patients and we expect that that will be the first to resume and it will be a real pent up demand. And those physicians are going to be kind of analogous to the ER physicians. They're going to have to be working around the clock literally to keep up I think once everyone feels safe to go back to the offices. And also we think that it will vary by state as certain states reopen or certain states have less hotspots areas.
So we are a national business, so we'll see that resume. And of course, it goes without saying that people with critical illnesses need to be examined, referred and treated by the specialists. Oncology has been holding up relatively well, probably because those patients who were under treatment are continuing their treatment. Ophthalmology has been under pressure. We're starting to see some trends of normalizing or stability.
And again, I talked about the pathology reports and the hospitals being able to return. So increased availability of testing would allow for more capable operating environment for physicians. So I hope that gets your question Bob. Jim has a comment please?
Yes. Bob one thing I'll add and this was in my prepared remarks but for emphasis we have, of course, been monitoring weekly sales trends in the month of April. And of course, we typically wouldn't talk about the most recent month on an earnings call, but given the current environment, we wanted to provide that additional color and clarity. And as I said and as Steve mentioned, during the month of April, oncology and the specialty physician market, we still saw solid growth and where we saw the decline was in non oncology physician specialty market. As Steve said, things like ophthalmology, but we did see those sales declines moderate towards the end of the month.
And of course, we don't want to put overly emphasize a single week or a single month. But I think that those additional numbers and trends are helpful to think about.
Yes, that's helpful context. Thanks.
Next question, please.
Yes, sir. Our next question comes from Eric Percher with Nephron Research. Please go ahead.
Thank you and I appreciate your comments on the mission of the organization at this time. Question on the supply side, I know there's some shortages relative to demand, but have you seen any shortages relative to supply and particularly in the generics market. I'd be interested to hear your thoughts as we think about creating more resiliency or diversity. Does that lead to an increase in input costs for some period of years as we attempt to build that resiliency? Yes.
So we have seen the market increasingly focused on access and the importance of access and the importance of supply. One of the things that we've seen, Eric, this year, which won't surprise you is moderation of generic deflation. And that's one thing that has benefited us during our fiscal year 2020 and we had called out on a couple of our recent earnings calls that we had started to see a moderation, but we said it was too early to call a trend. That's something that we've continued to see the moderation of generic deflation. And part of that is likely related to the current environment and really the increased focus on access and supply and security.
And so that is one of the things that we've been seeing in the last several months.
Yes. Eric, it's we are spending a lot of time first of all, I'm extremely proud of our supply chain group. They have sourced so expertly and so thoughtfully. And as I've said before they were ready when this crisis hit. We didn't get everything 100% right, but we inventory up where we needed to.
And on the API side, we're looking for manufacturer partners. ABC has a history along with our partner WeBare are emphasizing quality and predictability of overprice and we work hard to ensure that we have strong manufacturer partners. And I think you've also seen our partners step up. I've spoken to a couple of generic manufacturer presidents and CEOs and they've all been working like they are in the front lines. And we're extremely proud of the work that they've done to assist patients through this crisis.
Thank you.
Next question please.
Our next question comes from Glenn Santangelo with Guggenheim. Please go ahead.
Yes. Thanks for taking the question.
Steve, I just wanted to
kind of get your take on the balance sheet. When speaking with investors, there's always a lot of focus here. And so I'd be curious to get your take on updated thoughts on capital deployment. And I appreciate the first priority is always internal investment, but it may be seems based on your actions here that repo may be starting to look more attractive. I'd also be curious how you think about the dividend given the market's appetite for yield, maybe
a shift in the M
and A landscape given the current environment and just taking all that into consideration while the opioid litigation is still sort of outstanding and any updates there would be helpful? Thanks.
Thanks. I'll just reiterate that we've always said remember Dave Yost used to say to me when you ever get a question that you don't like what are you worried about to say Washington? Well, it landed up being very true, right? That is what you're worried about was regulation and reimbursement. And it became much more apparent over my tenure than over his.
But the other thing that I think is that we say which is really happens to be true is our first priority is internal investment. Jim has really detailed and I've detailed how important those investments in IT infrastructure, distribution, business continuity planning has been incredibly fortuitous productive for our businesses. And I would say that the other thing that we've invested in a lot is communications and culture. And maybe that's not something that is communicable that well to investors. But it's been incredibly important.
The constant communication you've had to our people has been one of the best investments that we've had throughout this period. And that's because we have quite a great Internet site and we have had the ability to have 70% of our associates working at home, but still be able to support them. And we have had town hall meetings where we have over 6,000 people. So I think that's very important. As far as M and A goes, we always are open to look at it.
We haven't seen the value often there. A lot of our interest in M and A has been in the commercialization services area. We that is very much we need really good technology, good people, good customer bases. And we literally think that when we look at acquisitions, they should be additive to our own businesses and at least equal quality. And we often just don't see that.
And then the PE market has been very, very robust. So that's this hasn't been anything. I'll hand over to Jim because you asked a broad question. But let me just say on opioid litigation. We have been busy with the pandemic.
So there's essentially no substantive update. And we remain very focused on the country's critical needs at this time. But we do believe that the global settlement that has been offered is one that should be taken very seriously. And we hope that we hope that the necessary parties will see that the merits of the potential global framework and we'll continue our efforts on that front. Jim has to add something.
Yes. Steve what I'll add on capital deployment is, Glenn as you know this year so far this fiscal year, we've done about $400,000,000 of share repurchases. And then also it was in our press release today, we announced a new share repurchase authorization. We were getting towards the end and used up most of our prior share repurchase authorization. And so we announced a new share repurchase authorization today.
And then also of course as you're aware, we recently increased our dividend in January also.
Okay. Thank you. And our
next question comes from Charles Rhyee with Cowen. Please go ahead.
Yes. Thanks for taking the questions and thanks for all that you're doing out here dealing with the pandemic. I wanted to focus on the other segment a little bit here. You're talking about a double digit decline in revenues here in the fiscal Q3.
I guess
a couple of questions. Where is most of it would you say is coming from? I kind of gleaned that maybe it's coming more from MWI, but I think with World Courier, there were some revised clinical trial guidelines issued by the FDA. Wondering how much what kind of impact is that having on World Courier? And maybe globally, what are other countries doing in terms of how they are curtailing or modifying their guidelines clinical trials?
And is there any impact on the consulting side given that perhaps pharma is maybe a little bit more insulated from a direct impact from COVID? And then just lastly, Steve, I think you're answering Glenn's questions about opioids at the end. I kind of missed that. Is it that you expect that we should get to a global framework still
at some point? Or is
that something that you would expect that you'd have to wait until the pandemic has really settled down before states could kind of revisit and regroup back to discuss the issue? Thanks.
Yes. Let me start and I'll address the question you had the extensive question you had on our other segments. And what we indicated today is that for the segment, for the fiscal year, we're expecting the decline of operating income to be in the low single digit percent range for the fiscal year. And the 2 largest businesses and the other segments are MWI and World Courier. So I'll really kind of focus my remarks there.
And MWI had a really strong quarter. We disclosed the revenues in the Q. Revenue growth was 10%, strong operating income growth during the quarter. It's really well positioned. But the animal health market will be impacted by COVID-nineteen and MWI will be impacted.
Companion animal vet visits are impacted by social distancing. Production animal will be impacted by substantially reduced sales of protein to restaurants and hotels and also be impacted by some supply chain issues due to closed packing plants. I think probably companion animal will come back quicker than production animal. And but both markets will come back and be strong. And MWI is really well positioned in the market.
Steve talked in his prepared remarks about some of the technology things MWI is doing. And when that market comes back, MWI will be as strong or stronger than ever. Very quickly on World Courier. It's a really interesting case study. If we had looked back a couple months ago, we would have thought that World Courier would have been one of our businesses most impacted by the onset of COVID-nineteen because of its international presence, whether it be in China or South Korea or Italy or any of the other countries where it operates.
So what we found is that something we always knew that World Courier really excels by managing complexity for manufacturers. And so what we're seeing is World Courier, while number of shipments might be down, weight's up, shipments to in home settings is up. And as we look at World Courier today, the impacts of COVID-nineteen, we think while the impact of the impacts will be significantly less than what we would have thought of a couple of months ago. With regard to the rest of the businesses in the group, there will be some impact in consulting. But like the rest of AmerisourceBergen's businesses, they're resilient and will be very manageable.
Yes. And then just on just to be additive to what I said earlier. There's really no substantive update over the past few months. Clearly a lot of us probably including the litigants have been focused on the pandemic response. But as we have previously said, we continue to hope that the ESRI parties will see the merits of a potential global framework and we'll continue our efforts on that front.
Thanks. Next question please.
Yes, sir. Our next question comes from Steven Valiquette with Barclays. Please go ahead.
Great. Thanks. Steve and Jim, hope you guys are staying safe. Just a quick follow-up on MWI. I guess, assuming that there was a pull forward of volume on the human prescription side, I guess, I'm curious to get a little more color whether that was also happening on the companion animal side.
And also with all the headlines right now in the press around protein processing etcetera and some bottlenecks there. How much is that impacting that business right now? Just want to get a little more color on some of those particulars within animal health. Thanks.
Sure. Just like a lot of our businesses at AmerisourceBergen, there was some pull forward of revenue at MWI and the animal health markets at the onset of COVID-nineteen. That happened in animal health just like it happened in many of our markets. And the production animal market really is impacted. And I commented this on earlier and it's really two things.
It's a demand issue from restaurants and hotels and institutions that are largely closed. And then there are supply chain issues related to closed packaging plants or even things like the packaging required for certain markets. There's a shortage of packaging for certain markets and an oversupply of packaging for other markets where demand has gone down. And so as we do look at the business, we do think that companion animal will come back quicker than production animal. But as I said before, both markets will come back and MWI is really well positioned.
So when the market does come back, it will be stronger, stronger than ever.
Okay. Thank you. Next question please.
Our next question comes from Eric Coldwell with Baird. Please go ahead.
Hey, thanks. I was about to hop to another call. So I'm sorry if I just missed this answer. Did you specifically quantify the Rx pull forward revenue into 2Q from 3Q, what you're thinking the quarter over quarter impact of that pull forward was, number 1. Number 2, this may be a bit off topic, but I think everybody is expecting an extremely high flu vaccine season, as we prepare for the next wave.
I'm curious if you can remind us what your historic exposure was to flu vaccine and if you have any early thoughts on what the potential as well as the timing of flu vaccine dosages might be? Thanks very much.
Sure. I'll take the first part of that. We didn't specifically quantify the revenue pull forward, but the additional color that I'll provide that I believe will be very helpful is that we had as we said, we had a revenue and gross profit pull forward from Q3 to Q2. And but we also indicated that we had elevated costs, so there was not an operating income impact or at least there wasn't a significant operating income impact. To provide a little bit more detail there, we established an incremental bad debt reserve of $19,000,000 in the March quarter related to the onset of COVID-nineteen and it's not related to any specific customers, but we did consider the credit environment and financial strength of customers.
So that's really what caused there to be a revenue in GP pull forward, but not an impact to operating income. And then there were some other smaller costs in the March quarter, which had to do with like important things such as IT work from home enablement, bonuses for frontline distribution center associates, cleaning supplies and services. And so for all those reasons, there was a pull through of revenue and gross profit, but not a significant impact on operating income during the quarter.
Yes. On flu vaccine, we don't comment on individual products, but on our COVID task force, I actually had the meeting yesterday with them and we are starting to think through what could be much more sustained demand. And vaccine is a little bit unusual. Just to give you some color, it is an area where manufacturers do more direct sales and there are other distributors. If you look at the broad prescription market, AmerisourceBergen, Cardno, Miketan have very high market share.
But when it comes to vaccine, there's more distributed, there's physician distributors, etcetera, that they roll. So it is a much more bifurcated market. So I hope that gives you some color. But do expect increased demand for sure. And we also expect manufacturers will step up.
So I think we have time operator for one more question.
And our next question comes from George Hill with Deutsche Bank. Please go ahead.
Yes. Good morning, Steve and Jim. Thanks for taking the question. I guess just two quick ones. I guess, Steve, could you differentiate and this is particularly I'm asking for comments end of March through April, the performance of the chain drugstores versus the independent drugstores, have they basically performed the same or have you guys seen any meaningful difference?
And Jim, I don't know if you would remind us kind of the non oncology versus oncology sizes inside of the specialty segment just so we can kind of put some context around the underperformance of the non oncology businesses versus the oncology businesses? Thank you.
Charles, hi. There have been some early changes in prescription data, which are sort of intuitive. So there was some increased utilization of May order. I think we've talked about 9 day scripts being pulled forward a bit. I saw CBS talked about that a bit yesterday.
But really market share retail market share has held up pretty well. And I think overall we think that our customers will adapt. And our general belief is that things will settle close to where they should be. And just let me reiterate that AmerisourceBergen is well positioned with key anchor customers including in the mail order sector. And of course our specialty scrip business will be a great driver for long term growth.
So we're after 9:30. So I am going to close-up. I just want to thank you all for your time today. I have to sincerely say that during these past 3 months, I've never been prouder of the role that AmerisourceBergen plays to ensure healthier futures. And before we close the call, I want to take a moment to thank all the members of the healthcare community who are working tirelessly to help our country and indeed the world manage through this crisis.
Our hearts and deep sympathies lies with all the many victims of this pandemic. Have a good day and thank you for your attention and interest in AmerisourceBergen. Thank you.
Thank you. This concludes today's conference call. You may now disconnect your lines and have a wonderful day.