AmerisourceBergen Corp. (NYSE:ABC)

The inventory levels of the company show a generally increasing trend over the six-year period. Beginning at approximately 11.46 billion US dollars in 2017, inventories experienced a modest increase in 2018, reaching around 11.92 billion US dollars. This was followed by a slight decrease in 2019 to about 11.06 billion US dollars. However, from 2019 onward, inventory values have steadily risen, with a significant increase observed in 2020, where inventories grew to approximately 12.59 billion US dollars.

The growth continued more markedly through 2021 and 2022, reaching roughly 15.37 billion and 15.56 billion US dollars, respectively. This upward trend in inventories from 2020 to 2022 suggests an accumulation of stock or increased purchasing activities during these years, which might indicate preparation for higher demand or strategic stocking decisions. The increase is substantial, marking more than a 25% rise between 2019 and 2022.

Trend Summary

- 2017-2018: Moderate inventory increase.

- 2018-2019: Slight inventory decline.

- 2019-2020: Significant inventory rise.

- 2020-2022: Steady and notable growth in inventory levels.

Insights

- The overall trend suggests a strategic buildup of inventories over recent years.

- The substantial increases from 2020 onwards may be related to external market conditions or internal company strategies aiming to ensure supply chain robustness.

- The minor reduction in 2019 could indicate operational adjustments prior to the later growth phase.

The financial data over the six-year period reveals several important trends and adjustments due to the inventory LIFO reserve.

Inventories

Both reported and adjusted inventories show an overall upward trend from 2017 through 2022. Reported inventories increased from approximately $11.46 billion in 2017 to $15.56 billion in 2022. Adjusted inventories, which account for the LIFO reserve, are consistently higher than reported inventories by about $1.4 billion to $1.7 billion, reflecting the inventory valuation adjustment. The increase is steady with minor fluctuations, and the largest jump occurs between 2020 and 2021.

Current Assets

Reported current assets follow a rising trajectory, increasing from roughly $24.3 billion in 2017 to nearly $39.6 billion in 2022. Adjusted current assets also rise in line with the reported amounts but remain higher throughout the period due to inventory adjustments, reaching about $40.97 billion in 2022. This suggests growth in liquidity and short-term assets with consistent LIFO impacts on the inventory line.

Total Assets

Total assets show a steady increase when adjusted, moving from approximately $36.8 billion in 2017 to $57.9 billion in 2022, with a notable peak in 2021 at $58.65 billion. The reported total assets follow a similar progression but are lower by the LIFO reserve amount, increasing from $35.3 billion in 2017 to about $56.6 billion in 2022. The adjustments indicate inventory valuation significantly affects the asset base size.

Stockholders’ Equity

The reported stockholders’ equity fluctuates considerably, starting at $2.06 billion in 2017, increasing to about $2.93 billion in 2018, then declining sharply into negative territory in 2020 (-$1.02 billion), marginally recovering to $223 million in 2021, and declining again to negative $212 million in 2022. The adjusted figures present a different picture, showing positive equity throughout the period but with marked volatility. Starting at $3.53 billion in 2017, equity peaks at $4.47 billion in 2018, then declines sharply to about $500 million in 2020, recovering to $1.54 billion in 2021 but falling again to approximately $1.17 billion in 2022. The adjustments via the LIFO reserve suggest structural pressure on equity, though the adjustments prevent reporting negative equity in most years.

Net Income (Loss)

Reported net income shows large variability: a gain of $364 million in 2017, a sharp rise to $1.66 billion in 2018, followed by declines and losses in 2019 (-$855 million) and a significant loss in 2020 (-$3.41 billion). The company returns to profitability in 2021 and 2022 with $1.54 billion and $1.70 billion respectively. Adjusted net income generally follows a similar pattern but with slightly different magnitudes, indicating the impact of inventory accounting on reported profitability. The loss in 2020 is slightly less severe in adjusted terms. Overall, the data points to a volatile profitability pattern influenced by operational or market conditions and accounting adjustments.

Liquidity Analysis

The reported current ratio shows a gradual improvement from 0.91 in 2017 to a peak of 0.98 in 2020, followed by a decline back to 0.91 by 2022. The adjusted current ratio, which accounts for inventory LIFO reserve adjustments, follows a similar pattern but remains consistently higher than the reported ratio, rising from 0.96 in 2017 to 1.02 in 2020 and then declining to 0.94 in 2022. This suggests that the company’s liquidity position improved up to 2020 but weakened slightly thereafter, though the adjustment indicates a somewhat stronger current asset base than initially reported.

Profitability Trends

The reported net profit margin fluctuates considerably, starting at a modest 0.24% in 2017, rising to nearly 1% in 2018, then dropping sharply to a negative margin of -1.8% in 2020. The margin recovers slightly to around 0.7% in 2021 and 2022. The adjusted net profit margin exhibits a similar pattern but with slightly lower extremes in losses and gains, indicating that adjustments based on LIFO reserves moderate the volatility in profitability but do not mask the overall trend of initial improvement, subsequent loss, and partial recovery.

Asset Efficiency

Total asset turnover ratios show a general decline over time. The reported ratios decrease from 4.34 in 2017 to 3.73 in 2021 before recovering somewhat to 4.22 in 2022. Adjusted ratios are slightly lower but follow the same trend, decreasing from 4.16 to 3.65 in 2021 and rising to 4.12 in 2022. This pattern indicates decreasing efficiency in asset utilization until 2021 with a rebound in 2022, perhaps reflecting operational adjustments or asset base changes.

Leverage Analysis

Reported financial leverage ratios exhibit large fluctuations, plummeting from 17.11 in 2017 to 12.84 in 2018 and fluctuating irregularly thereafter, with an extreme spike to over 256 in 2021 and missing data for 2020 and 2022, suggesting data inconsistencies or extraordinary financial structuring. The adjusted financial leverage ratios portray a smoother but still highly variable pattern: decreasing from 10.42 in 2017 to 8.78 in 2018, increasing steadily thereafter to reach 91.54 in 2020, then decreasing to 38.1 and 49.45 in subsequent years. This suggests increased reliance on financial leverage, particularly from 2019 onwards, with notable volatility potentially linked to changes in balance sheet management.

Return on Equity (ROE)

The reported ROE follows a volatile trajectory, rising sharply from 17.66% in 2017 to 56.55% in 2018, then declining to 29.71% in 2019. Data for 2020 is missing. In 2021, an extraordinary spike to nearly 690% is recorded, with no data for 2022. The adjusted ROE shows a more moderate but still volatile pattern: peaking at 38.63% in 2018, decreasing to 18.97% in 2019, plunging to a significant negative value in 2020 (-679.89%), and then recovering strongly to 86.84% and 150.7% in 2021 and 2022 respectively. The large fluctuations suggest considerable volatility in equity returns, likely driven by the company’s leveraged financial structure and performance variability during the period.

Return on Assets (ROA)

Both reported and adjusted ROA display similar trends. Initially low but positive in 2017 (around 1%), ROA peaks in 2018 at 4.4%, then declines sharply in 2020 to significant negatives (-7.7% reported and -7.43% adjusted). Recovery follows in 2021 and 2022, with ROA returning to low positive levels between 2.28% and 3.05%. This pattern indicates profitability pressures on the asset base during 2020, with restoration of returns in subsequent years.

Overall Insights

The data reflects a company experiencing moderate growth in liquidity and profitability up to 2018 and 2019, followed by operational and financial stress in 2020, as evidenced by sharp declines in profit margins, returns, and asset efficiency. There is a notable recovery trend starting in 2021, though leverage and return metrics remain highly volatile. Adjusting for inventory LIFO reserves generally moderates some volatility and improves liquidity ratios but does not materially alter the underlying trends observed in profitability, efficiency, leverage, and returns. The financial leverage and ROE metrics, in particular, display extreme volatility in some years, which warrants further investigation into the underlying financial events or accounting treatments.

Current Assets (Reported vs Adjusted)

The reported current assets exhibited a consistent upward trend over the six-year period, increasing from approximately 24.3 billion US dollars in 2017 to nearly 39.6 billion US dollars in 2022. This growth reflects a steady accumulation of current asset value. When adjusted for the inventory LIFO reserve, current assets presented higher values throughout the period, beginning at around 25.8 billion US dollars in 2017 and rising to about 41.0 billion US dollars in 2022. The adjustment reduces inventory valuation effects, thus providing a more conservative asset estimate, yet it also reveals a parallel sustained growth reflecting the company's expanding asset base.

Current Ratio (Reported vs Adjusted)

The reported current ratio showed a modest but steady upward movement from 0.91 in 2017 to a peak of 0.98 in 2020, indicating improving short-term liquidity over the first four years. However, the ratio declined thereafter, ending at 0.91 in 2022, which may suggest somewhat increased liquidity constraints or a rise in current liabilities relative to current assets. The adjusted current ratio values were consistently higher than the reported ratios, starting at 0.96 in 2017 and reaching a peak of 1.02 in 2020, crossing the threshold of 1.0, which generally signals adequate liquidity. From 2020 onward, the adjusted current ratio decreased slightly to 0.94 by 2022 but remained above the reported ratios, underscoring the mitigating effect of adjusting for the LIFO reserve on liquidity evaluation.

Insight Summary

The data indicate a general increase in current assets over the analyzed period, with adjusted figures systematically exceeding reported values due to inventory accounting adjustments. Liquidity, as measured by the current ratio, improved gradually through 2020 but experienced a minor decline in the subsequent two years under both reported and adjusted data. The adjusted current ratios suggest a relatively stronger liquidity position when accounting for the LIFO reserve, though the downward trend post-2020 may warrant further monitoring of working capital management and obligations. Overall, the company’s asset base growth and the adjustments for inventory valuation play a significant role in assessing short-term financial health.

The evaluated financial data reveals notable fluctuations in net income and profitability margins over the analyzed periods.

Reported net income (loss) attributable to AmerisourceBergen Corporation

This metric experienced significant variability, starting at approximately $364 million in 2017, peaking sharply at about $1.66 billion in 2018, followed by a decline to approximately $855 million in 2019. A pronounced loss occurred in 2020, with net income dropping to -$3.41 billion. Subsequently, the company returned to profitability, achieving around $1.54 billion in 2021 and slightly increasing to about $1.70 billion in 2022.

Adjusted net income (loss) attributable to AmerisourceBergen Corporation

The adjusted net income mirrored the reported figures with some variations. It rose from roughly $207 million in 2017 to approximately $1.73 billion in 2018, declined to about $833 million in 2019, and also reflected a substantial loss in 2020 at approximately -$3.40 billion. Recovery followed, with adjusted net income reaching around $1.34 billion in 2021 and increasing to nearly $1.77 billion in 2022.

Reported net profit margin

Reported profit margins showed a rise from 0.24% in 2017 to a peak of 0.99% in 2018, then declined to 0.48% in 2019. The margin turned negative in 2020, dropping sharply to -1.8%. Positive margins were regained thereafter, with 0.72% in 2021 and stability at 0.71% in 2022.

Adjusted net profit margin

The adjusted profit margins followed a similar trend to the reported margins. Margins increased from 0.13% in 2017 to 1.03% in 2018, decreased to 0.46% in 2019, and fell to -1.79% in 2020. Positive margins returned in the subsequent years, with 0.62% in 2021 increasing slightly to 0.74% in 2022.

Overall, the data indicate a period of strong growth through 2018, followed by declines and a substantial loss in 2020, likely due to extraordinary or one-off events. There is a clear recovery in both net income and profit margins in the two years following 2020, returning to levels comparable to the earlier period, though margins remain relatively low. The close alignment between reported and adjusted figures suggests adjustments moderately affect outcomes but do not substantially change the overall trends observed.

Total Assets (Reported and Adjusted)

The reported total assets demonstrated a steady increase from 35,316,470 thousand USD in 2017 to a peak of 57,337,805 thousand USD in 2021, followed by a slight decrease to 56,560,616 thousand USD in 2022. The adjusted total assets, accounting for the LIFO reserve, showed a similar upward trend from 36,783,470 thousand USD in 2017 to 58,654,005 thousand USD in 2021, then declined slightly to 57,944,016 thousand USD in 2022. This pattern indicates overall asset growth with a minor contraction in the most recent period.

Total Asset Turnover (Reported and Adjusted)

The reported total asset turnover ratio exhibited a moderate increase from 4.34 in 2017 to a peak of 4.58 in 2019. It then declined to 4.29 in 2020 and experienced a more significant drop to 3.73 in 2021 before partially recovering to 4.22 in 2022. The adjusted total asset turnover followed a comparable trend, increasing from 4.16 in 2017 to 4.41 in 2019, then decreasing to 4.15 in 2020 and 3.65 in 2021, with a recovery to 4.12 in 2022. These fluctuations suggest variability in asset efficiency over time, with a notable decline in 2021 and some rebound in the following year.

Insights on LIFO Reserve Adjustments

The adjusted total assets consistently remain higher than the reported figures, reflecting the impact of the LIFO reserve on asset valuation. Despite the overall growth trend, the adjustments do not significantly alter the pattern of change across periods. Similarly, total asset turnover ratios adjusted for LIFO effects are slightly lower but track closely with reported ratios, implying that inventory accounting adjustments moderately influence the turnover metrics.

The financial data demonstrates several key trends in the company's asset base, equity position, and financial leverage over the six-year period.

Total Assets

Reported total assets show a steady increase from approximately $35.3 billion in 2017 to a peak near $57.3 billion in 2021, followed by a slight decline to $56.6 billion in 2022. The adjusted total assets, which account for inventory LIFO reserve adjustments, follow a similar upward trajectory, rising from about $36.8 billion in 2017 to $58.7 billion in 2021 before a minor decrease to $57.9 billion in 2022.

Stockholders’ Equity (Deficit)

The reported stockholders' equity reveals considerable volatility, starting at $2.1 billion in 2017, rising to roughly $2.9 billion in 2018, then experiencing a drop to $2.9 billion in 2019. A significant decline is then observed in 2020, resulting in a deficit of nearly $1.0 billion. Equity rebounds slightly to positive but low levels in 2021 and again turns negative, albeit slightly smaller, in 2022. When adjusted for LIFO reserves, equity figures are notably higher and more stable, beginning at $3.5 billion in 2017 and peaking at $4.5 billion in 2018. Though a sharp drop occurs in 2020 to $0.5 billion, adjusted equity recovers to $1.5 billion in 2021 before dipping modestly to $1.2 billion in 2022.

Financial Leverage

Reported financial leverage ratios indicate some inconsistency, with values decreasing from 17.11 in 2017 to 12.84 in 2018 and slightly increasing to 13.61 in 2019. Data for 2020 and 2022 are missing, and 2021 shows an anomalously high ratio of 256.71, which suggests an abnormal financial condition or reporting discrepancy during that year. The adjusted financial leverage, which incorporates LIFO reserve adjustments, follows a declining trend from 10.42 in 2017 to 8.78 in 2018 and modestly rises to 9.27 in 2019. A sharp increase is noticeable in 2020, reaching 91.54, followed by decreases to 38.1 in 2021 and then an increase to 49.45 in 2022. This pattern suggests increased reliance on debt or other liabilities during the middle years, stabilizing at elevated levels afterward compared to the initial years.

Overall, the data reflects a consistent expansion in asset size, accompanied by fluctuating equity levels with adjustments revealing a more favorable equity position than reported figures alone. Financial leverage trends display periods of significant increase, indicative of higher risk or leveraged positions, particularly around 2020. Adjusted metrics provide a clearer perspective on the company’s financial structure by mitigating the distortions caused by LIFO inventory accounting.

The financial data exhibits notable fluctuations across the analyzed periods, with significant variations in net income, stockholders' equity, and return on equity (ROE) metrics.

Net Income

The reported net income demonstrates considerable volatility. Initially, there is a strong increase from 364,484 thousand USD in 2017 to a peak of 1,658,405 thousand USD in 2018, followed by a decline to 855,365 thousand USD in 2019. In 2020, a substantial loss of 3,408,716 thousand USD is recorded, which sharply reverses to a profit of 1,539,932 thousand USD in 2021 and further increases to 1,698,820 thousand USD in 2022.

The adjusted net income mirrors these fluctuations closely but with some differences in magnitude. It starts at 206,684 thousand USD in 2017, rises to 1,725,805 thousand USD in 2018, then decreases to 832,765 thousand USD in 2019, and records a substantial loss of 3,401,316 thousand USD in 2020. The subsequent recovery reaches 1,336,932 thousand USD in 2021 and 1,766,020 thousand USD in 2022. The adjusted figures generally show a smoother transition yet preserve the overall trend.

Stockholders' Equity

The reported total stockholders’ equity reveals growth through 2018 and 2019, peaking at 2,932,824 thousand USD and 2,878,917 thousand USD, respectively. However, there is a sharp decline in 2020, with equity turning negative to -1,018,924 thousand USD. Following this, the equity remains depressed and negative for the last two periods, recorded at 223,354 thousand USD in 2021 and further declining to -211,559 thousand USD in 2022.

Adjusted stockholders’ equity presents a different pattern. It starts significantly higher at 3,531,461 thousand USD in 2017, grows steadily to 4,467,224 thousand USD in 2018 and 4,390,717 thousand USD in 2019, then experiences a major reduction to 500,276 thousand USD in 2020. However, unlike the reported figures, adjusted equity recovers to positive figures of 1,539,554 thousand USD in 2021 and 1,171,841 thousand USD in 2022, indicating adjustments have a considerable impact on the equity valuation.

Return on Equity (ROE)

The reported ROE exhibits high variability. It shows strong profitability levels of 17.66% in 2017, surging to 56.55% in 2018 and then declining to 29.71% in 2019. The data for 2020 is missing, likely due to the negative equity and large net loss. In 2021, reported ROE spikes dramatically to 689.46%, which may be influenced by the low positive equity base, and data for 2022 is unavailable.

The adjusted ROE demonstrates a similar volatile pattern but with more complete data. It starts lower at 5.85% in 2017, then climbs to 38.63% in 2018 and declines to 18.97% in 2019. In 2020, a significantly negative adjusted ROE of -679.89% reflects the large loss and reduced equity. The metric recovers strongly thereafter, reaching 86.84% in 2021 and further increasing to 150.7% in 2022, indicating improving returns on the adjusted equity base after the disruption caused in 2020.

Overall, the data reveals a period of substantial financial instability around 2020, marked by large losses and significant decreases in equity under both reported and adjusted measures. The adjusted figures tend to moderate some of the volatility observed in the reported data, particularly regarding stockholders’ equity. Notably, the recovery phase post-2020 demonstrates improvement in profitability and equity, although the elevated ROE percentages suggest that the base of equity remains relatively low. The fluctuations in reported and adjusted measures underscore the impact of inventory LIFO reserve adjustments and other considerations on the financial statements.

The financial data reveals several noteworthy trends over the six-year period examined. Beginning with reported net income, there is considerable volatility observed. After an initial profit of approximately $364 million in 2017, net income surged significantly in 2018 before declining in the following year. The year 2020 saw a substantial net loss nearing $3.4 billion, followed by a recovery in 2021 and 2022 with profits exceeding $1.5 billion and $1.6 billion respectively. The adjusted net income figures reflect a slightly smoother trend, with a notable loss in 2020 as well but smaller fluctuations in other years.

Total assets have demonstrated consistent growth throughout the period, both in reported and adjusted terms. Reported total assets increased from about $35.3 billion in 2017 to a peak near $57.3 billion in 2021, before a slight decline in 2022. Adjusted total assets follow a similar pattern but with marginally higher values each year compared to the reported amounts.

Regarding profitability, Return on Assets (ROA) aligns with income trends. Reported ROA started modestly at just over 1% in 2017, rose substantially to 4.4% in 2018, decreased in 2019, dipped sharply into negative territory in 2020, and then improved again to above 2.5% by 2021 and 2022. Adjusted ROA mirrors this pattern closely but with slightly lower values in certain years, indicating the impact of adjustments on performance measurement.

Key Observations:

1. The year 2020 stands out as an anomaly with significant net losses and negative ROA, suggesting extraordinary circumstances affecting profitability.

2. Adjusted figures consistently show lower net income and total assets compared to reported figures, highlighting the adjustments' reducing effect on these metrics.

3. Despite fluctuations in income and profitability, the asset base expanded considerably over the six years, reflecting growth or acquisitions.

4. Recovery in net income and ROA in 2021 and 2022 indicates resilience and possible return to stable operational performance after the 2020 downturn.