Bergen Brunswig Logs 78% Increase in Profit

From Bloomberg News

Bergen Brunswig Corp. said its fiscal third-quarter profit rose 78% as the company, the nation's third-biggest drug wholesaler, added contracts and improved its nursing-home pharmacy business.

The Orange company earned $35.2 million, or 26 cents a share, for the quarter ended June 30, up from operating income of $19.7 million, or 15 cents, a year earlier. Earnings beat the 23-cent average estimate of analysts polled by First Call/Thomson Financial.

Sales excluding shipments to customers' warehouses, a benchmark for wholesalers, rose 14% to $5.48 billion.

Bergen Brunswig, which is planning to merge with rival AmeriSource Health Corp. in a $2.3-billion transaction that would create the biggest wholesaler, has benefited by adding contracts to supply pharmaceuticals to drugstores. Business has also improved at its PharMerica unit, which provides pharmacy services to nursing homes.

Bergen's shares, which have more than doubled in the past 12 months, rose $1.25 to $21 on the New York Stock Exchange.

PharMerica had operating earnings of $16 million, compared with a loss of $1.7 million a year ago. In the late 1990s, nursing homes had been hurt financially by cuts in reimbursements from Medicare, the U.S. government's health insurance program for the elderly and disabled.

AmeriSource's profit rose 29%, and rival McKesson Corp.'s earnings increased 42%. Wholesalers are benefiting as doctors write more prescriptions and drug prices rise. Cardinal Health Inc., now the biggest wholesaler, is scheduled to report earnings July 31.

In the year-earlier quarter, a $251-million loss from the sale of the Bergen Brunswig Medical Corp. and Stadtlander Operating Co. units and operating losses from those businesses resulted in a net loss of $239.4 million, or $1.78 a share, for Bergen.

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