Bergen Brunswig Fires Chief Executive
Bergen Brunswig Corp., the nation’s third-largest drug wholesaler, fired Chief Executive Donald R. Roden and said Thursday that its fiscal fourth-quarter earnings plummeted 85%.
Roden assumed the top position at the troubled company nearly three years ago amid great fanfare. Robert E. Martini, chairman and former chief executive, will be interim CEO.
Orange-based Bergen, whose shares have lost nearly 80% of their value since the beginning of the year, has been battered by poor performance at its PharMerica and Stadtlander units, which it acquired this year.
“Bergen had to make this move,” said Michael Krensavage, an analyst at Brown Bros. Harriman in New York City. “Somebody had to pay for the company’s mistakes.”
Operating earnings for the three months ended Sept. 30 fell to $3.95 million, or 3 cents a share, from $26.8 million, or 26 cents a share, a year ago, the company said. Revenue climbed 23% to $4.5 billion.
The slumping earnings were little surprise to analysts, Krensavage said.
The stock closed at $7.63 a share, up 6 cents, on the New York Stock Exchange. The shares were trading as high as $37.75 on Jan. 4.
Given Bergen’s recent performance, Roden’s departure was hardly surprising, said Steven Valiquette, an analyst at Warburg Dillon Read in New York. “The general viewpoint among the investment community is that it lost confidence in his ability to manage the company in a strategically positive way,” he said.
Roden, 53, came to Bergen Brunswig in 1995 as chief operating officer and president; he became chief executive in 1997. He could not be reached for comment Thursday.
In a written statement, Martini, 66, said he will be working closely with other company executives to put the company on a better footing.
“The difficult times we have seen are not indicative of Bergen’s core business,” he said.
The disappointing performance of PharMerica and of Stadtlander may have sealed Roden’s fate, analysts said. In April, Bergen acquired PharMerica, the second-largest supplier of pharmacy services to nursing homes. PharMerica’s operations have suffered greatly, analysts said, because its customers are receiving lower reimbursements from Medicare, the federal health-insurance plan for the aged.
Bergen bought Stadtlander, a specialty pharmacy firm, in January from Counsel Corp. for more than $300 million in cash and stock. Stadtlander was expected to be a boon to Bergen’s bottom line but has failed to perform as billed.
In October, Bergen filed a lawsuit accusing Stadtlander’s former owners of doctoring financial records to make the unit’s purchase seem more enticing. Counsel has denied the allegations.
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Bloomberg News was used in this report.
