Cencora (COR) 10-K risk factor changes: FY2019 vs FY2018

[removed: Our] [added: Our] results of operations could be adversely impacted by manufacturer pricing [removed: changes and fewer generic pharmaceutical launches.][added: changes.]

In fiscal [removed: 2018,] [added: 2019,] we continued to experience [removed: an] unfavorable brand and generic pharmaceutical pricing [removed: environment,] [added: trends,] which negatively impacted our Pharmaceutical Distribution Services reportable segment profit and our consolidated operating earnings.

We expect [removed: this] [added: these trends] to continue in fiscal [removed: 2019,] [added: 2020,] which could have [removed: a material and] [added: an] adverse effect on our results of operations.

[removed: Similarly, we] [added: We] sell brand pharmaceutical products to many of our customers using WAC as the reference [added: price and to other customers based on their negotiated contract] price.

If [removed: the government enacts proposals to directly or indirectly regulate WAC list prices, or if] manufacturers change their pricing policies or practices with regard to [removed: WAC,] [added: WAC or if prices charged by manufacturers do not align with prices negotiated to be paid by our customers,] and we are unable to negotiate alternative ways to be compensated by manufacturers or customers for the value of our services, our results of operations could be adversely affected.

If the frequency or rate of brand and generic pharmaceutical price increases slows, whether due to regulatory mandates, the implementation of [removed: any of the] [added: legislative proposals,] policy [removed: proposals noted in the Blueprint,] [added: initiatives] or voluntary manufacturer actions, our results of operations could be adversely affected.

[removed: Competition] [added: Competition] and industry consolidation may erode our [removed: profit.][added: profit.]

[removed: Increasing] [added: Increasing] governmental efforts to regulate the pharmaceutical supply channel and pharmaceutical compounding may increase our costs and reduce our [removed: profitability.][added: profitability.]

At the federal level, the DQSA establishes federal traceability standards requiring drugs to be labeled and tracked at the [removed: lot] [added: bottle] level, preempts state drug pedigree requirements, and will [removed: eventually] require all supply-chain stakeholders to participate in an electronic, interoperable prescription drug traceability [removed: system.][added: system by November 2023.]

In addition, the DQSA established 503B outsourcing facilities as a category for providers of CSPs, [added: allowing such facilities to voluntarily register with the FDA.]

[removed: Our CSP business locations have registered with the FDA as 503B] outsourcing facilities and have implemented policies and procedures to achieve compliance with current federal and state requirements for such facilities.

There can be no assurance that we are fully compliant with the [removed: new] DQSA requirements, or with additional related state regulatory and licensing requirements, and any failure to comply may result in suspension or delay of certain operations and additional costs to bring our facilities into compliance.

Moreover, we expect that the FDA will continue to issue draft and final guidance and to promulgate regulations in its efforts to implement the requirements in the DQSA, including those relating to current good manufacturing practices [removed: ("GMPs")] [added: ("cGMPs")] and other matters related to 503B outsourcing facilities, which may require changes to our business, some of which may be significant.

Complying with [removed: these] [added: the DQSA requirements] and other chain of custody and pharmaceutical distribution and compounding [removed: requirements] [added: requirements, including follow-on actions related to current public concern over the abuse of opioid medications,] could result in suspension or delays in our production and distribution activities which may increase our costs and could otherwise adversely affect our results of operations.

[removed: Legal, regulatory] [added: Legal, regulatory,] and legislative changes with respect to reimbursement, pricing, and contracting may adversely affect our business and results of operations, including through declining reimbursement [removed: rates.][added: rates.]

Additionally, on occasion, price increases and pricing practices with respect to certain brand and generic pharmaceuticals have been the subject of U.S. Congressional [removed: inquiries.][added: inquiries, federal and state investigations and private litigation.]

Any law or regulation impacting pharmaceutical [removed: pricing, including] [added: pricing or reimbursement, such] as [removed: a result of] pricing controls or [removed: legislative efforts] [added: indexing models] at the federal or state level, could adversely affect our operations.

Federal insurance and healthcare reform legislation known as the Affordable Care Act ("ACA") became law in March 2010, and included numerous reforms [added: broadening healthcare access and] affecting [added: Medicare and Medicaid] reimbursement, pricing, and contracting for prescription [removed: drugs.][added: drugs, including changes to the Medicaid rebate statute.]

Likewise, we cannot predict the impact of any efforts to change or repeal any provisions of the [removed: ACA.][added: ACA may have on the ACA or other healthcare legislation and regulation.]

Any reduction in the Medicaid reimbursement rates to our customers may indirectly impact the prices that we can charge our customers for [removed: multisource] [added: multiple source] pharmaceuticals and cause corresponding declines in our profitability.

[removed: The] [added: Subsequent legislation has made additional changes to federal drug payment policies, including the] Bipartisan Budget Act of [removed: 2018 subsequently] [added: 2018, which] increased the [added: Medicaid] rebate due with respect to line extensions of single source or innovator multiple source oral solid dosage form drugs.

Unless we are able to [removed: develop plans] [added: successfully advocate] to [added: prevent or] mitigate the [removed: potential] impact of these legislative and regulatory changes, these changes in reimbursement and related reporting requirements could adversely affect our results of operations.

There can be no assurances that [removed: recent and] future changes to [added: drug reimbursement policies, drug pricing and contracting practices outside of federal healthcare programs, or to government drug price regulation programs such as] the [removed: Part D] [added: Medicaid rebate, ASP, or 340B] program will not have an adverse impact on our business.

[removed: Additionally, CMS] [added: The Centers of Medicare & Medicaid Services ("CMS")] published a final rule on November 13, 2017 that reduces Medicare outpatient hospital reimbursement for separately payable drugs (other than vaccines) purchased through the 340B drug [removed: pricing] [added: discount] program from average sales price ("ASP") plus 6% to ASP minus 22.5% (with certain exceptions), effective January 1, 2018.

[removed: On July 27,] [added: Separately, on November 21,] 2018, CMS published a [removed: proposed] [added: final] rule that [removed: would reduce] [added: reduces] from 6% to 3% the “add-on” payment for new, separately-payable Part B drugs and biologicals that are paid based on WAC when ASP data during first quarter [removed: of] [added: or] sales is unavailable.

Any future reductions in Medicare reimbursement rates [added: or modifications to Medicare drug pricing regulations such as ASP calculations] could negatively impact our customers' businesses and their ability to continue to purchase such drugs from [removed: us.][added: us, or could indirectly affect the structure of our relationships with manufacturers and our customers.]

At this time, we can provide no assurances that future Medicare and/or Medicaid payment or policy changes, if adopted, would not have [removed: an] [added: a material] adverse effect on our business.

For example, several states have adopted laws that require drug manufacturers to provide advance notice of certain price [removed: increase] [added: increases] and to report information relating to those price [removed: increases.][added: increases, while others have taken legislative or administrative action to establish prescription drug affordability boards or multi-payer purchasing pools to reduce the cost of prescription drugs.]

[removed: If] [added: If] we fail to comply with laws and regulations in respect of healthcare fraud and abuse, we could suffer penalties or be required to make significant changes to our [removed: operations.][added: operations.]

[removed: Public] [added: Public] concern over the abuse of opioid medications, including increased legal and regulatory action, could negatively affect our [removed: business.][added: business.]

We are deeply committed to diversion control efforts, have sophisticated systems in place to identify orders placed warranting further review to determine if they are suspicious (including through the use of data analytics), and engage in significant due diligence [removed: and ongoing monitoring of customers.]

The adverse resolution of any of these lawsuits or investigations could have [removed: an] [added: a material] adverse effect on our business, results of operations, and cash [removed: flows.][added: flows and could result in a lower than historical level of capital available for deployment, including a lower level of capital returned to stockholders.]

In addition, [added: Rhode Island and Delaware have enacted opioid taxes, Minnesota has enacted increased licensure fees, and] other states are considering legislation that could require entities to pay an assessment or tax on the sale or distribution of opioid medications in those [removed: states and may vary in the assessment or tax amounts and the means of calculation from the OSA.][added: states.]

If [removed: other] [added: additional] state or local jurisdictions enact legislation [removed: similar to] [added: that taxes or assesses] the [removed: OSA] [added: sale or distribution of opioid medications] and we are not able to mitigate the impact on our business through operational changes or commercial [removed: arrangements,] [added: arrangements where permitted,] such legislation in the aggregate may have a material adverse effect on the Company's results of operations, cash flows, or financial condition.

[removed: Our] [added: Our] business, results of operations, and cash flows could be adversely affected by legal [removed: proceedings.][added: proceedings.]

We conduct our operations through a variety of businesses, including the distribution of pharmaceuticals, the dispensing of healthcare [removed: products] [added: products,] and the provision of services to the pharmaceutical industry.

Litigation is costly, [removed: time-consuming] [added: time-consuming,] and disruptive to ordinary business operations.

The defense and [removed: resolutions] [added: resolution] of these current and future proceedings could have a material adverse effect on our results of operations and financial condition.

Any settlement, judgment or fine could [added: materially] adversely affect our results of operations.

[removed: Our] [added: Our] revenue, results of operations, and cash flows may suffer upon the loss, or renewal at less favorable terms, of a significant customer or group purchasing [removed: organization.][added: organization.]

Our business operations could also be affected by additional factors that are not presently known to us or that we currently consider not to be material.

The reader should not consider this list to be a complete statement of all risks and uncertainties.

Additionally, there are a number of policy initiatives being considered which, if enacted, could directly or indirectly regulate or impact WAC list prices.

If such initiatives are passed and we are unable to negotiate equitable changes with our suppliers and/or customers, our results of operations could be adversely impacted.

Our CSP business locations have registered with the FDA as 503B

Additional details on risks related to our 503B outsourcing facilities and implementation of cGMPs are described below.

As discussed in the risk factor below about public concern over the abuse of opioid medications, certain governmental and regulatory agencies, as well as state and local jurisdictions, are focused on the abuse of opioid medications in the United States.

In addition to conducting investigations and participating in litigation related to the misuse of prescription opioid medications, federal, state and local governmental and regulatory agencies are considering legislation and regulatory measures to limit opioid prescriptions and more closely monitor product distribution, prescribing, and dispensing of these drugs.

On December 27, 2018, the United States District Court for the District of Columbia concluded that this policy exceeded CMS statutory authority (with regard to 2018 payments).

While the appeals process is still underway, CMS solicited comments in the proposed calendar year 2020 Medicare outpatient prospective payment system rule on appropriate payment for such 340B-acquired drugs, potentially including a reduced rate of ASP plus 3%

for calendar years 2018 through 2020.

Notably, the Trump Administration and members of Congress proposed numerous amendments to Part B drug distribution and payment models during 2018 and have continued to do so throughout 2019.

Some of these proposals could have significant effects on our business, including a potential proposal to create an “International Pricing Index” payment model that would modify distribution methods for Part B drugs and tie reimbursement rates to international drug pricing metrics.

On July 31, 2019, the Department of Health and Human Services announced a “Safe Importation Action Plan” that outlines two potential pathways to allow importation of certain drugs from foreign markets.

and ongoing monitoring of customers.

We are currently engaged in discussions with the objective of reaching potential terms for a global resolution of the multi-district opioid litigation and other related state court litigation described in Note 13 of the Notes to Consolidated Financial Statements.

Given the large number of parties involved, the complexity and difficulty of the underlying issues, and the resulting uncertainty of achieving a potential global resolution, we continue to litigate and prepare for trial in the cases pending in the multi-district opioid litigation as well as in state courts where lawsuits have been filed, and intend to continue to vigorously defend ourselves in all such cases.

Since these matters are still developing, we are unable to predict the outcome, but the result of these lawsuits could include excessive monetary verdicts and/or injunctive relief that may affect how we operate our business, or we may enter into settlements of claims that may also include monetary payments and/or injunctive relief.

For example, New York has instituted an opioid excise tax, which went into effect on July 1, 2019, and taxes entities that make the initial sale or distribution of opioid medications into the state.

In May 2019, PharMEDium reached an agreement on the terms of a consent decree (the “Consent Decree”) with the FDA and the Consumer Protection Branch of the Civil Division of the DOJ.

The Consent Decree permits commercial operations to continue at PharMEDium’s Dayton, New Jersey, and Sugar Land, Texas compounding facilities and administrative operations to continue at its Lake Forest, Illinois headquarters subject to

compliance with the requirements set forth therein.

As required by the Consent Decree, we have completed audit inspections by an independent cGMP expert at the Dayton and Sugar Land facilities to determine that the facilities are being operated in conformity with cGMP.

Additional audit inspections by the independent cGMP expert of the Sugar Land and Dayton facilities are also required at least annually for a period of four years.

The Consent Decree also establishes requirements that must be satisfied prior to the resumption of commercial operations at the Memphis, Tennessee facility.

Through fiscal 2019, our results of operations were adversely impacted by the Memphis suspension.

Prior to our acquisition of the business, PharMEDium received a warning letter from the FDA in 2014 and a series of Form 483 reports were issued in 2015 and 2016 following up on the 2014 letter.

If we complete one or more acquisitions, our results of operations and financial condition may be adversely affected by a number of factors, including: regulatory or compliance issues that could arise; changes in regulations and laws; the failure

As previously disclosed, we have commenced a comprehensive strategic and financial review of PharMEDium, which remains ongoing.

The review includes consideration of the ongoing regulatory, operational, and financial challenges that face PharMEDium as a result of the Consent Decree, state regulatory actions, and related matters.

While we are unable to predict the outcome of the review, if we are unable to achieve our objectives within the anticipated time frame, or at all, it could have a material adverse effect on our reputation, results of operations, or financial condition.

Additionally, rating agencies continually review the ratings they have assigned to us and our outstanding debt securities.

To maintain our ratings, we are required to meet certain financial performance ratios.

Liabilities related to litigation or any significant related settlements, an increase in our debt or a decline in our earnings could result in downgrades in our credit ratings.

Actual or

anticipated changes or downgrades in our credit ratings, including any announcement that our ratings are under review for a downgrade or have been assigned a negative outlook, could limit our access to public debt markets, limit the institutions willing to provide credit to us, result in more restrictive financial and other covenants in our public and private debt, and would likely increase our overall borrowing costs and adversely affect our earnings.

Recently, one of our customers, Diplomat Pharmacy, Inc. ("Diplomat"), indicated in a public filing that it believes it is probable it will need to obtain waivers as of December 31, 2019 for breach of certain financial debt covenants in its credit agreement.

Diplomat's Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 (the "Diplomat 10-Q") also reflected management's assessment that there is uncertainty regarding its ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to Diplomat’s ability to continue as a going concern.

The Diplomat 10-Q stated that if Diplomat violates its covenants and access to its credit facility is terminated or its indebtedness thereunder is accelerated, it may be unable to repay its obligations due under the credit agreement, which would have a material adverse impact on its liquidity and business.

As a result of the foregoing, including the consequences of the going concern assessment of Diplomat's management, we may be unable to recover amounts owed to us and to continue the relationship on our current terms.

In May 2018, the Trump Administration announced a wide-ranging "Blueprint" to address concerns over drug pricing which listed, among other things, potential mechanisms to encourage manufacturers to limit increases in or to reduce the WAC of individual products.

Although the Blueprint did not create legal or regulatory mandates, and no specific mandates have been passed or proposed thus far, some manufacturers announced price freezes or delays in WAC increases in the ensuing months.

A decline in the number of generic pharmaceutical launches, or launches that are less profitable than those in the past, could also adversely impact our results of operations.

allowing such facilities to voluntarily register with the FDA.

The ACA changed the formula for Medicaid federal upper payment limits ("FULs") for multiple source drugs available for purchase by retail community pharmacies on a nationwide basis.

The Centers for Medicare & Medicaid Services ("CMS") calculate FULs for multiple source drugs as 175% of the weighted average of average manufacturer price ("AMP"), with certain exceptions.

In addition, CMS regulations require state Medicaid programs to implement payment methods for brand (non-multiple source) products designed to be consistent with the actual acquisition cost of such drugs, effective April 1, 2017.

Medicaid reimbursement for drugs calculated under the final rule may reflect significant reductions from prior reimbursement levels, although the impact of the changes varies by state Medicaid program.

The ACA also amended the Medicaid rebate statute to increase minimum Medicaid rebate percentages and made other changes expected to result in increased Medicaid rebate payments by pharmaceutical manufacturers, which could indirectly impact our business.

In addition, the Bipartisan Budget Act of 2015 extended to generic drugs inflation-based Medicaid drug rebates similar to those that are paid by manufacturers on brand drugs.

The Medicare Prescription Drug Improvement and Modernization Act of 2003 significantly expanded Medicare coverage for outpatient prescription drugs through the Medicare Part D program.

The Part D program has increased the use of pharmaceuticals in the supply channel, which has had a positive impact on our revenues and profitability.

There have been additional legislative and regulatory changes to the Part D program since its enactment.

On August 29, 2018, CMS issued guidance which, beginning in 2020, would provide flexibility for Part D plans to implement "indication based" formularies that may restrict coverage of certain drugs for certain indications.

Declining reimbursement rates for Medicare Part B drugs and other economic factors have caused a number of physician practices, including some of our customers, to move from private practice to hospital settings, where they may purchase their specialty drugs under hospital prime vendor arrangements rather than from specialty distributors.

Although this trend has slowed down in the past several years, it could increase in the future due to various factors, including legislative and regulatory requirements that affect how CMS reimburses for Medicare Part B drugs, as well as the ability of certain hospitals to purchase drugs at significant, statutorily-mandated discounts pursuant to the federal 340B drug discount program for groups of patients.

In addition, federal changes in drug reimbursement policy could reduce the rate of reimbursement for drugs covered under Medicare Part B or physician services under Medicare, which could negatively impact our customers' businesses and their ability to continue to purchase such drugs from us, and thereby result in corresponding declines in our profitability.

For example, on September 20, 2017, CMS issued a request for information seeking recommendations for payment models, which could include prescription drug models under Medicare Parts B and D and state Medicaid programs.

CMS also included in its proposed 2019 hospital outpatient prospective system proposed rule, published July 31, 2018, a request for comments on a potential innovation model that would allow healthcare providers to acquire Part B drugs through value-based agreements with manufacturers administered by private-sector vendors.

Finally, on August 7, 2018, CMS advised Medicare Advantage plans that they may implement prior authorization “step therapy” or similar utilization controls with respect to Part B drugs.

For instance, under the "sequestration" provision of the Budget Control Act of 2011 (as amended), a 2% cut is being made to Medicare provider and plan payments, generally effective for services provided on or after April 1, 2013.

On May 11, 2018 the Department of Health and Human Services requested comments on a "Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs," which outlines a wide range of proposals and policy considerations intended to improve competition; lower patient out-of-pocket costs; enhance negotiation; and provide incentives for lower manufacturer list prices.

Some of the proposals would require Congressional approval, and others could be adopted administratively.

There can be no assurances that future changes to Medicare and/or Medicaid prescription drug reimbursement policies, drug pricing and contracting practices, or government drug price regulation programs such as the Medicaid rebate or 340B program will not have an adverse impact on our business.

Since these matters are at an early stage, we are unable to predict the outcome.

For example, in April 2018, the State of New York enacted the Opioid Stewardship Act (“OSA”), which went into effect on July 1, 2018 and established an aggregate $100 million annual assessment on all entities that sell or distribute opioid medications in New York.

The 2017 Tax Act includes a broad range of tax reform provisions affecting businesses, including lower corporate tax rates, changes in business deductions, and international tax provisions.

Specifically, enforcement actions may include the DOJ filing a civil complaint for a consent decree against our PharMEDium subsidiary.

The FDA and other governmental entities enforce compliance with applicable current GMP requirements through periodic risk-based inspections.

Prior to our acquisition

of the business, PharMEDium received a warning letter from the FDA in 2014 following the inspection of PharMEDium's Mississippi, New Jersey, Tennessee and Texas 503B outsourcing facilities in 2013.

The FDA reinspected all of these facilities in 2015 and 2016 and issued FDA Form 483 reports at each of the facilities as well as at PharMEDium's headquarters in Lake Forest, Illinois.

We have not resumed commercial distribution at the Memphis facility.

We will continue to assess how best to address the remediation needed at the Memphis facility and PharMEDium's other facilities and the impact of PharMEDium on our results of operations.

We continue to be in active communication with the FDA and the Consumer Protection Branch of the Civil Division of the DOJ regarding the ongoing compliance efforts of PharMEDium, including efforts to resume commercial distribution at the Memphis facility.

Representatives of the Company and PharMEDium have had an initial meeting with DOJ and FDA to discuss potential resolution of ongoing matters and whether a consent decree is necessary.

Further discussions are anticipated, including with regard to the possible entry of a consent decree.

of our customers.

Many of these foreign data privacy regulations (including the General Data Protection Regulation, which went into effect in the European Union on May 25, 2018) are more stringent than those in the United States.

meet business plans or other unanticipated events and circumstances such as a rise in interest rates, may affect the accuracy or validity of such estimates.

[removed: Overview][added: Overview]

[removed: Pharmaceutical] [added: Pharmaceutical] Distribution Services [removed: Segment][added: Segment]

[removed: Other][added: Other]

Other consists of operating segments that focus on global commercialization services and animal health [removed: and includes ABCS, World Courier, and MWI.][added: (MWI Animal Health).]

[removed: Executive Summary][added: Executive Summary]

| • | Revenue increased [removed: 9.7%] [added: 6.9%] from the prior fiscal year primarily due to the revenue growth of our Pharmaceutical Distribution Services segment; |

[removed: | • |] Distribution, selling, and administrative expenses [removed: increased 15.6% from the prior fiscal year as the Pharmaceutical Distribution Services' segment expenses increased by 19.4% from the prior fiscal year primarily due to the January 2018 consolidation of Profarma, the January 2018 acquisition of H.D. Smith, and the duplicate costs resulting from the implementation of new information technology systems. Distribution, selling, and administrative expenses] in Other increased by 8.2% in the [removed: current] fiscal year [added: ended September 30, 2018] primarily to support its revenue growth, the January 2018 consolidation of the specialty joint venture in Brazil, and due to duplicate costs resulting from the implementation of new information technology [removed: systems; |][added: systems.]

| • | Our effective tax rates were [removed: (37.2)%] [added: 11.7%] and [removed: 60.3%] [added: (37.2)%] in the fiscal years ended September 30, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] respectively. Our effective tax rate in the fiscal year ended September 30, [removed: 2018] [added: 2019] was primarily impacted by the [removed: effect] [added: $570.0 million impairment] of [added: long-lived assets (see Note 1 of] the [added: Notes to Consolidated Financial Statements) and legal settlements, which changed the mix of domestic and international income. The effective tax rate in the fiscal year ended September 30, 2019 was also impacted by a $37.0 million decrease to the Company's transition tax related to the] Tax Cuts and Jobs Act (the "2017 Tax Act"). Our [added: effective tax rate in the fiscal year ended September 30, 2018 was primarily impacted by the effect of 2017 Tax Act. Our] total income tax benefit in the fiscal year ended September 30, 2018 of $438.5 million reflects $612.6 million of tax benefits recognized and a reduction in the U.S. federal income tax rate from 35% to 21%, both resulting from the 2017 Tax Act. Additionally, during the fourth quarter of fiscal 2018, a portion of a 2017 legal settlement charge was determined to be deductible, which favorably impacted our effective tax rate for the fiscal year ended September 30, 2018. [removed: We expect that the federal corporate tax rate reduction as a result of the 2017 Tax Act will continue to favorably impact our effective tax rate compared to prior periods through fiscal 2019. The effective tax rate for the fiscal year ended September 30, 2017 was negatively impacted by non-deductible legal settlement charges.] Our effective tax rates for the fiscal years ended September 30, [removed: 2018] [added: 2019] and [removed: 2017] [added: 2018] were favorably impacted by [removed: our] [added: the Company's] international businesses in Switzerland and Ireland, which have lower income tax rates, and the benefit from stock option exercises and restricted stock vesting; and |

[removed: | • |] Net income attributable to AmerisourceBergen Corporation was significantly higher in the [removed: current] fiscal year [added: ended September 30, 2018] primarily due to the 2017 Tax Act and legal settlement charges that were incurred in the prior fiscal year. [removed: |]

[removed: Results] [added: Results] of [removed: Operations][added: Operations]

[removed: Year ended September] [added: Year ended September] 30, [removed: 2018 compared] [added: 2018 compared] to the Year [removed: ended September] [added: ended September] 30, [removed: 2017][added: 2017]

[removed: Revenue][added: Revenue]

| | | [removed: Fiscal] [added: Fiscal] Year [removed: Ended September 30,] [added: Ended September 30,] | | | | | | | | |

| [removed: (dollars] [added: (dollars] in [removed: thousands)] [added: thousands)] | | [removed: 2018] [added: 2018] | | | | [removed: 2017] [added: 2017] | | | | [removed: Change] [added: Change] |

| [added: Total] Other | | 6,332,730 | | | | 5,747,863 | | | | 10.2% |

We currently expect our revenue growth percentage to be in the [removed: mid-single] [added: mid to high-single] digits in fiscal [removed: 2019.][added: 2020.]

Our future revenue growth will continue to be affected by various factors, such as industry growth trends, including drug utilization, the introduction of [removed: new] [added: new,] innovative brand therapies (including biosimilars), the likely increase in the number of generic drugs that will be available over the next few years as a result of the expiration of certain drug patents held by brand-name pharmaceutical manufacturers and the rate of conversion from brand products to those generic drugs, price [removed: increases] [added: inflation] and price deflation, general economic conditions in the United States, competition within the industry, customer consolidation, changes in pharmaceutical manufacturer pricing and distribution policies and practices, increased downward pressure on government and other third-party reimbursement rates to our customers, and changes in federal government rules and regulations.

The Pharmaceutical Distribution Services segment grew its revenue by 9.7% from the prior fiscal [removed: year,] [added: year] primarily due to the growth of some of its largest customers, overall market growth, and especially strong oncology product sales.

In addition, revenue increased in the [removed: current] [added: prior] fiscal year due to the January 2018 acquisition of H.D. Smith and the January 2018 consolidation of Profarma.

A number of our contracts with customers, including group purchasing [removed: organizations ("GPO"),] [added: organizations,] are typically subject to expiration each year.

We may lose a significant customer if [removed: any] [added: an] existing contract with such customer expires without being extended, renewed, or replaced.

During the fiscal year ended September 30, [removed: 2018,] [added: 2019,] no significant contracts expired.

Additionally, from time to time, [removed: other] significant contracts may be [removed: renewed] [added: terminated in accordance with their terms or extended, renewed, or replaced] prior to their expiration dates.

If those contracts are [removed: renewed] [added: extended, renewed, or replaced] at less favorable terms, they may also negatively impact our revenue, results of operations, and cash flows.

[removed: Gross Profit][added: Gross Profit]

Gross profit in the [removed: current] fiscal year [added: ended September 30, 2018] was favorably impacted by increases in gross profit in Pharmaceutical Distribution Services and Other and an increase in gains from antitrust litigation settlements.

Our [removed: costs] [added: cost] of goods sold includes a LIFO provision that is affected by manufacturer pricing practices, which may be impacted by market and other external influences, changes in inventory quantities, and product mix, many of which are difficult to predict.

[added: The] LIFO [removed: expense] [added: credit] in the current fiscal year was primarily driven by lower [removed: generic deflation and lower generic inventory levels,] [added: brand inflation,] offset in part by lower [removed: brand inflation] [added: generic deflation] in comparison to the prior fiscal year.

After [removed: FDA] [added: U.S. Food and Drug Administration ("FDA")] inspections of [removed: our] [added: PharMEDium] compounding facilities, we voluntarily suspended production activities in December 2017 at our largest compounding facility located in Memphis, Tennessee pending execution of certain remedial measures.

The OSA established an annual $100 million Opioid Stewardship Fund (the "Fund") and [removed: requires] [added: required] manufacturers, distributors, and importers licensed in NYS to ratably source the Fund.

The ratable share of the assessment for each licensee [removed: is] [added: was to be] based upon opioids sold or distributed to or within NYS.

As a percentage of revenue, Pharmaceutical Distribution Services gross profit margin of 2.14% in the [removed: current] fiscal year [added: ended September 30, 2018] decreased 2 basis points from the prior fiscal year.

As a percentage of revenue, gross profit margin in Other of [removed: 19.90%] [added: 19.13%] in the current fiscal year decreased from [removed: 20.96%] [added: 19.90%] in the prior fiscal year.

[removed: Operating Expenses][added: Operating Expenses]

Distribution, selling, and administrative expenses [removed: increased] [added: decreased] 15.6%, or $331.6 million, from the prior fiscal year as the Pharmaceutical Distribution Services' segment expenses increased by 19.4% from the prior fiscal year primarily due to the January 2018 consolidation of Profarma, the January 2018 acquisition of H.D. Smith, and the duplicate costs resulting from the implementation of new information technology systems.

Distribution, selling, and administrative expenses in Other increased by [removed: 8.2%] [added: 2.7%] in the current fiscal year [removed: primarily] [added: due] to [added: an increase in costs to] support [removed: its] revenue [removed: growth,] [added: growth at MWI, and] the January 2018 consolidation of the specialty joint venture in Brazil, [added: offset in part by a reduction in distribution, selling,] and [removed: due to duplicate costs resulting from the implementation of new information technology systems.][added: administrative expenses at ABCS.]

As a percentage of revenue, distribution, selling, and administrative expenses were [removed: 1.46%] [added: 1.48%] in the current fiscal year, and represents a [removed: 7] [added: 2] basis point [added: increase compared to the prior fiscal year.]

Employee severance, litigation, and other in the fiscal year ended September 30, 2018 included $36.7 million of [removed: employee] severance costs primarily related to position eliminations resulting from our business transformation efforts and restructuring activities related to our consulting [removed: business.][added: business, $61.5 million of litigation costs primarily related to legal fees in connection with opioid lawsuits and investigations, and related initiatives, $33.9 million of acquisition-related deal and integration costs (primarily related to H.D. Smith), $33.0 million related to our business transformation efforts, and $18.4 million of other restructuring initiatives.]

[removed: Other costs] [added: Employee severance, litigation, and other] in the fiscal year ended September 30, 2018 included [added: $36.7 million of severance costs primarily related to position eliminations resulting from our business transformation efforts and restructuring activities related to our consulting business, $61.5 million of litigation costs primarily related to legal fees in connection with opioid lawsuits and investigations, and related initiatives,] $33.9 million of acquisition-related deal and integration [removed: costs,] [added: costs (primarily related to H.D. Smith),] $33.0 million [removed: of other costs] related to our business transformation efforts, and $18.4 million of other restructuring initiatives.

Employee severance, litigation, and other in the fiscal year ended September 30, 2017 included $7.8 million of employee severance costs primarily related to position eliminations as we began to reorganize to further align our organization to our customers' [removed: needs.][added: needs, $917.6 million of litigation costs primarily related to litigation settlements and accruals, $17.0 million of acquisition-related deal and integration costs, $13.3 million of other restructuring initiatives, and $3.7 million related to our business transformation efforts.]

The operating segments that focus on global commercialization services include ABCS and World Courier.

| • | Pharmaceutical Distribution Services' gross profit increased 6.2% from the prior fiscal year primarily due to the increase in revenue largely due to strong specialty product sales, the January 2018 consolidation of Profarma, and the January 2018 acquisition of H.D. Smith and was negatively impacted by our pharmaceutical compounding operations as production at our Memphis facility has been suspended since December 2017. Gross profit in Other increased 4.3% from the prior fiscal year primarily due to growth at World Courier and MWI, the January 2018 consolidation of the specialty joint venture in Brazil, and ABCS's growth in its Canadian operations. Total gross profit in the current fiscal year was favorably impacted primarily by increases in gains from antitrust litigation settlements, a last-in, first-out ("LIFO") credit in the current year in comparison to a LIFO expense in the prior year, and the reversal of a previously-estimated assessment related to the New York State Opioid Stewardship Act; |

| • | Distribution, selling, and administrative expenses increased 8.3% from the prior fiscal year as the Pharmaceutical Distribution Services' segment expenses increased by 10.2% from the prior fiscal year primarily due to an increase in costs to support the increase in revenue, the January 2018 consolidation of Profarma, and the January 2018 acquisition of H.D. Smith; |

| • | Operating income decreased 23.0% in the current fiscal year primarily due to a $570.0 million impairment of PharMEDium's long-lived assets (see Note 1 of the Notes to Consolidated Financial Statements), and an increase in employee severance, litigation, and other costs, offset in part by increases in gains from antitrust litigation settlements, a LIFO credit in the current fiscal year, and an increase in total operating segment income; |

| • | Net income and earnings per share were significantly lower in the current fiscal year primarily due to the $570.0 million impairment of long-lived assets and the significant income tax benefit recognized in the prior fiscal year as a result of the 2017 Tax Act. |

| (dollars in thousands) | | 2019 | | | | 2018 | | | | Change |

| Pharmaceutical Distribution Services | | $ | 172,813,537 | | | $ | 161,699,343 | | | 6.9% |

| Other: | | | | | | | | | | |

| MWI Animal Health | | 3,975,232 | | | | 3,789,759 | | | | 4.9% |

| Global Commercialization Services | | 2,893,109 | | | | 2,542,971 | | | | 13.8% |

| Total Other | | 6,868,341 | | | | 6,332,730 | | | | 8.5% |

| Intersegment eliminations | | (92,757 | | ) | | (92,438 | | ) | | |

| Revenue | | $ | 179,589,121 | | | $ | 167,939,635 | | | 6.9% |

In addition, revenue increased in the current fiscal year due to the January 2018 consolidation of Profarma and the January 2018 acquisition of H.D. Smith.

| (dollars in thousands) | | 2019 | | | | 2018 | | | | Change |

| Pharmaceutical Distribution Services | | $ | 3,682,986 | | | $ | 3,466,956 | | | 6.2% |

| Other | | 1,314,172 | | | | 1,260,485 | | | | 4.3% |

| Intersegment eliminations | | (659 | | ) | | (609 | | ) | | |

| LIFO credit (expense) | | 22,544 | | | | (67,324 | | ) | | |

| PharMEDium remediation costs | | (48,603 | | ) | | (61,129 | | ) | | |

| New York State Opioid Stewardship Act | | 22,000 | | | | (22,000 | | ) | | |

| Gross profit | | $ | 5,138,312 | | | $ | 4,612,317 | | | 11.4% |

Gross profit in the current fiscal year was favorably impacted primarily by the increase in gross profit in Pharmaceutical Distribution Services, the increase in gross profit

in Other, an increase in gains from antitrust litigation settlements, the LIFO credit in the current year in comparison to a LIFO expense in the prior year, and the reversal of a previously-estimated assessment related to the New York State Opioid Stewardship Act.

We continue to incur remediation costs in connection with our compounding operations.

Additionally, in April 2019, we ceased production at our compounding facility in Cleveland, Mississippi.

In December 2018, the OSA was ruled unconstitutional by the U.S. District Court for the Southern District of New York, and, as a result, we reversed the $22.0 million accrual in the quarter ended December 31, 2018.

NYS filed an appeal of the court decision on January 17, 2019; however, we do not believe a loss contingency is probable.

Pharmaceutical Distribution Services gross profit increased 6.2%, or $216.0 million, from the prior fiscal year primarily due to the increase in revenue largely due to strong specialty product sales, the January 2018 consolidation of Profarma, and the January 2018 acquisition of H.D. Smith and was negatively impacted by our pharmaceutical compounding operations as production at our Memphis facility has been suspended since December 2017.

As a percentage of revenue, Pharmaceutical Distribution Services gross profit margin of 2.13% in the current fiscal year remained relatively flat compared to the prior fiscal year.

Gross profit in Other increased 4.3%, or $53.7 million, from the prior fiscal year primarily due to growth at World Courier and MWI, the January 2018 consolidation of the specialty joint venture in Brazil, and ABCS's growth in its Canadian operations.

| (dollars in thousands) | | 2019 | | | | 2018 | | | | Change |

| Distribution, selling, and administrative | | $ | 2,663,508 | | | $ | 2,460,301 | | | 8.3% |

| Depreciation and amortization | | 462,407 | | | | 465,127 | | | | (0.6)% |

| Employee severance, litigation, and other | | 330,474 | | | | 183,520 | | | | |

| Goodwill impairment | | — | | | | 59,684 | | | | |

| Impairment of long-lived assets | | 570,000 | | | | — | | | | |

| Total operating expenses | | $ | 4,026,389 | | | $ | 3,168,632 | | | 27.1% |

Distribution, selling, and administrative expenses increased 8.3%, or $203.2 million, from the prior fiscal year.

Pharmaceutical Distribution Services' segment expenses increased by 10.2% from the prior fiscal year primarily due to an increase in costs to support revenue growth, the January 2018 consolidation of Profarma, and the January 2018 acquisition of H.D. Smith.

| • | Pharmaceutical Distribution Services' gross profit increased 8.9% from the prior fiscal year primarily due to the increase in revenue, the January 2018 consolidation of Profarma Distribuidora de Produtos Farmacêuticos S.A. ("Profarma"), a leading pharmaceutical wholesaler in Brazil (see Note 2 of the Notes to Consolidated Financial Statements), and the January 2018 acquisition of H.D. Smith, offset in part by a lower contribution from our pharmaceutical compounding operations as it shipped fewer units as we voluntarily suspended production in December 2017 at our Memphis facility pending execution of certain remedial measures. We have been in active communication with the FDA and the Consumer Protection Branch of the Civil Division of the DOJ regarding our ongoing compliance efforts at PharMEDium, and representatives of the Company and PharMEDium have had an initial meeting with the DOJ and the FDA to discuss potential resolution of ongoing matters and whether a consent decree is necessary (see Item 1A. Risk Factors on page 8). Further discussions are anticipated, including with regard to the possible entry of a consent decree. Gross profit in Other increased 4.6% from the prior fiscal year primarily due to World Courier and the January 2018 consolidation of the specialty joint venture in Brazil (see Note 2 of the Notes to Consolidated Financial Statements), offset in part by lower gross profit at ABCS, specifically the Lash consulting group. Total gross profit in the current fiscal year was negatively impacted by an increase in last-in, first-out ("LIFO") expense in comparison to the prior fiscal year; |

| • | Operating income increased 36.2% in the current fiscal year primarily due to the decrease in employee severance, litigation, and other costs as we incurred significant litigation settlement charges in the prior fiscal year, offset in part by an increase in distribution, selling, and administration expenses and an increase in LIFO expense in the current fiscal year; |

The suspension of this production facility negatively impacted gross profit in the current fiscal year.

We have been in active communication with the FDA and the Consumer Protection Branch of the Civil Division of the DOJ regarding our ongoing compliance efforts at PharMEDium, and representatives of the Company and PharMEDium have had an initial meeting with the DOJ and the FDA to discuss potential resolution of ongoing matters and whether a consent decree is necessary (see Item 1A.

Risk Factors on page 8).

Further discussions are anticipated, including with regard to the possible entry of a consent decree.

The initial payment to NYS is due on January 1, 2019 for opioids sold or distributed during calendar year 2017, and future assessments, beginning with the 2018 calendar year, will be payable quarterly beginning on April 1, 2019.

The OSA expires on June 30, 2024.

increase compared to the prior fiscal year.

Litigation costs were $61.5 million in the fiscal year ended September 30, 2018 and primarily related to opioid lawsuits, investigations, and related initiatives.

Litigation costs were $917.6 million in the fiscal year ended September 30, 2017 and primarily related to litigation settlements and accruals.

Other costs in the fiscal year ended September 30, 2017 included $17.0 million of acquisition-related deal and integration costs, $13.3 million of other restructuring initiatives, and $3.7 million related to our business transformation efforts.

We expect that the federal corporate tax rate reduction as a result of the 2017 Tax Act will continue to favorably impact our effective tax rate compared to prior periods through fiscal 2019.

Net income attributable to AmerisourceBergen Corporation was significantly higher in the current fiscal year primarily due to the 2017 Tax Act and legal settlement charges that were incurred in the prior fiscal year.

| Pharmaceutical Distribution Services | | $ | 147,453,495 | | | $ | 141,701,997 | | | 4.1% |

| Other | | 5,747,863 | | | | 5,207,095 | | | | 10.4% |

| Intersegment eliminations | | (57,532 | | ) | | (59,406 | | ) | | |

| Revenue | | $ | 153,143,826 | | | $ | 146,849,686 | | | 4.3% |

| Pharmaceutical Distribution Services | | $ | 3,182,836 | | | $ | 3,232,873 | | | (1.5)% |

| Other | | 1,204,545 | | | | 1,106,309 | | | | 8.9% |

| Intersegment eliminations | | (556 | | ) | | (104 | | ) | | |

| LIFO credit (expense) | | 157,782 | | | | (200,230 | | ) | | |

| Gross profit | | $ | 4,546,002 | | | $ | 4,272,606 | | | 6.4% |

The LIFO credit in the fiscal year ended September 30, 2017 was primarily driven by lower brand inflation and greater generic deflation in comparison to the prior fiscal year.

Pharmaceutical Distribution Services gross profit decreased 1.5%, or $50.0 million, from the prior fiscal year.

Gross profit in the fiscal year ended September 30, 2017 was adversely impacted primarily by the Kaiser Permanente contract renewal effective July 1, 2016 at less favorable terms, a GPO customer contract renewal effective April 1, 2016 at less favorable terms, lower price appreciation, and a lower contribution from PharMEDium as it shipped fewer units while we increased our investment in quality control and quality assurance systems to enhance product quality and patient safety and to meet all of PharMEDium's commitments to the FDA pursuant to the new federal requirements for outsourcing facilities, all of which were offset in part by an increase in revenue.

The decrease from the prior fiscal year was primarily due to the above-mentioned contract renewals, lower price appreciation, and increased sales to some of our larger customers that typically have a lower gross profit margin.

Gross profit in Other increased 8.9%, or $98.2 million, from the prior fiscal year.

The increase was primarily due to revenue growth of ABCS and MWI.

As a percentage of revenue, gross profit margin in Other of 20.96% in the fiscal year ended September 30, 2017 decreased from 21.25% in the prior fiscal year.

| Distribution, selling, and administrative | | $ | 2,128,730 | | | $ | 2,091,237 | | | 1.8% |

| Depreciation and amortization | | 397,603 | | | | 364,735 | | | | 9.0% |

| Warrants expense | | — | | | | 140,342 | | | | |

| Employee severance, litigation, and other | | 959,327 | | | | 102,911 | | | | |

| Pension settlement | | — | | | | 47,607 | | | | |

| Total operating expenses | | $ | 3,485,660 | | | $ | 2,746,832 | | | 26.9% |

The decrease in expenses as a percentage of revenue in comparison to the prior fiscal year was primarily due to initiatives taken in the second half of fiscal 2016 to improve operating efficiency across many of our businesses and certain administrative functions.

Depreciation expense increased 11.7% from the prior fiscal year due to an increase in the amount of property and equipment placed into service relating to our distribution infrastructure and various technology assets.

There was no Warrants expense in the fiscal year ended September 30, 2017 as the Warrants were exercised in the fiscal year ended September 30, 2016.

Warrants expense in the fiscal year ended September 30, 2016 was $140.3 million.

See discussion on page [removed: 42] [added: 41] under the heading "Market Risk," which is incorporated by reference herein.

[removed: Industry Overview][added: Industry Overview]

Pharmaceutical sales in the United States, as recently estimated by IQVIA, an independent third-party provider of information to the pharmaceutical and healthcare industry, are expected to grow at a compound annual growth rate of approximately [removed: 5.5%] [added: 4.2%] from [removed: 2017] [added: 2018] through [removed: 2022,] [added: 2023,] and the growth rate is dependent, in part, on pharmaceutical manufacturer price increases.

[added: *Aging Population.*] The number of individuals age 65 and over in the United States is expected to exceed [removed: 59] [added: 61] million by [removed: 2022] [added: 2023] and is the most rapidly growing segment of the population.

[added: *Introduction of New Pharmaceuticals.*] Traditional research and development, as well as the advent of new research, production, and delivery methods, such as biotechnology and gene therapy, continue to generate new pharmaceuticals and delivery methods that are more effective in treating diseases.

[added: *Increased Use of Generic Pharmaceuticals.*] A number of patents for widely used brand-name pharmaceutical products will continue to expire during the next several years.

[added: *Increased Use of Drug Therapies.*] In response to rising healthcare costs, governmental and private payors have adopted cost containment measures that encourage the use of efficient drug therapies to prevent or treat diseases.

Pharmaceuticals currently account for approximately [removed: 12%] [added: 11%] of overall healthcare costs.

[added: *Legislative Developments.*] In 2010, the federal government enacted major health reform legislation designed to expand access to health insurance, which increased the number of people in the United States who are eligible to be reimbursed for all or a portion of prescription drug costs.

[removed: The Company][added: The Company]

[removed: Strategy][added: Strategy]

Our business strategy is focused on the global pharmaceutical supply channel where we provide value-added distribution and global commercialization services to healthcare providers (primarily pharmacies, health systems, medical and dialysis clinics, physicians, and veterinarians) and pharmaceutical manufacturers that [removed: increase] [added: improve] channel efficiencies and [removed: improve] patient outcomes.

Implementing this [removed: disciplined,] [added: disciplined and] focused strategy in a seamless and unified way has allowed us to significantly expand our business, and we believe we are [removed: well-positioned] [added: well positioned] to grow revenue and increase operating income through the execution of the following key elements of our business strategy:

| • | [removed: Optimize] [added: *Optimize] and Grow Our Pharmaceutical Distribution and Strategic Global Sourcing [removed: Businesses.] [added: Businesses.*] We believe we are [removed: well-positioned] [added: well positioned] in size and market breadth to continue to grow our distribution businesses as we invest to improve our operating and capital efficiencies. Distribution, including specialty pharmaceuticals, anchors our growth and position in the pharmaceutical supply channel as we provide superior distribution services and deliver value-added solutions, which improve the efficiency and competitiveness of both healthcare providers and pharmaceutical manufacturers, thus allowing the pharmaceutical supply channel to better deliver healthcare to patients. |

We believe we have one of the lowest [removed: cost] operating [added: cost] structures among all pharmaceutical distributors.

| • | [removed: Optimize] [added: *Optimize] and Grow Our Global Commercialization Services and Animal Health [removed: Businesses.] [added: Businesses.*] Our consulting service businesses help global pharmaceutical and biotechnology manufacturers commercialize their products. We believe we are the largest provider of reimbursement services that assist pharmaceutical companies in supporting access to branded drugs. We also provide outcomes research, contract field staffing, patient assistance and copay assistance programs, adherence programs, risk mitigation services, and other market access programs to pharmaceutical companies. World Courier is a leading global specialty transportation and logistics provider for the biopharmaceutical industry. World Courier further strengthens our service offerings to global pharmaceutical manufacturers and provides an established platform for the introduction of our specialty services outside North America. MWI Animal Health (“MWI”) sells pharmaceuticals, vaccines, parasiticides, diagnostics, micro feed ingredients, and various other products to customers in both the companion animal and production animal markets. MWI also offers its customers a variety of value-added services, including its e-commerce platform, technology management systems, pharmacy fulfillment, inventory management system, equipment procurement consultation, special order fulfillment, and educational seminars, which we believe closely integrate MWI with its customers' day-to-day operations and provide them with meaningful incentives to continue doing business with MWI. We continue to seek opportunities to expand our offerings in our Global Commercialization Services and Animal Health businesses. |

| [removed: •] [added: *•*] | [removed: Acquisitions.] [added: *Acquisitions.*] In order to grow our core strategic offerings and to enter related markets, we have acquired and invested in businesses and will continue to consider additional acquisitions and investments. |

| • | [removed: Divestitures.] [added: *Divestitures.*] In order to allow us to concentrate on our strategic focus areas, we have divested certain non-core businesses and may, from time to time, consider additional divestitures. |

[removed: Operations][added: Operations]

[added: *Operating Structure.*] We are organized based upon the products and services we provide to our customers.

Our operations as of September 30, [removed: 2018] [added: 2019] are comprised of the Pharmaceutical Distribution Services reportable segment and other operating segments that are not significant enough to require separate reportable segment disclosure, and, therefore, have been included in Other for the purpose of reportable segment presentation.

[removed: Pharmaceutical] [added: *Pharmaceutical] Distribution Services [removed: Segment][added: Segment*]

The Pharmaceutical Distribution Services reportable segment distributes a comprehensive offering of brand-name, specialty brand-name and generic pharmaceuticals, over-the-counter healthcare products, home healthcare supplies and equipment, outsourced compounded sterile preparations, and related services to a wide variety of healthcare providers, including acute care hospitals and health systems, independent and chain retail pharmacies, mail order pharmacies, medical clinics, long-term care and [added: alternate site pharmacies, and other customers.]

[removed: Other][added: *Other*]

[removed: World Courier, which operates in more than] 50 countries, is a leading global specialty transportation and logistics provider for the biopharmaceutical industry.

[added: *Sales and Marketing.*] The majority of Pharmaceutical Distribution Services’ sales force is led nationally, with geographic focus and specialized by either healthcare provider type or size.

[added: *Customers.*] We have a diverse customer base that includes institutional and retail healthcare providers as well as pharmaceutical manufacturers.

Our two largest customers, Walgreens Boots Alliance, Inc. ("WBA") and Express Scripts, Inc. ("Express Scripts"), accounted for approximately [removed: 33%] [added: 34%] and approximately 13%, respectively, of revenue in the fiscal year ended September 30, [removed: 2018.][added: 2019.]

Our top 10 customers, including governmental agencies and group purchasing organizations ("GPO"), represented approximately [removed: 68%] [added: 64%] of revenue in the fiscal year ended September 30, [removed: 2018.][added: 2019.]

If those contracts are not renewed or are [removed: renewed] [added: extended, renewed, or replaced] at less favorable terms, they may negatively impact our revenue, results of operations, and cash flows.

[added: *Suppliers.*] We obtain pharmaceutical and other products from manufacturers, none of which accounted for 10% or more of our purchases in the fiscal year ended September 30, [removed: 2018.][added: 2019.]

The 10 largest suppliers in fiscal year ended September 30, [removed: 2018] [added: 2019] accounted for approximately [removed: 46%] [added: 45%] of our purchases.

[added: *Information Systems.*] The Pharmaceutical Distribution Services operating segment operates its full-service wholesale pharmaceutical distribution facilities in the United States on two primary enterprise resource planning ("ERP") systems.

All of our other operating segments operate the majority of their businesses on their own common [removed: ERP] [added: operating] systems resulting in the ability to rapidly deploy new capabilities.

We are currently making significant investments to enhance and upgrade the [removed: ERP] [added: operating] systems utilized by our other operating segments.

For example, in an effort to comply with future pedigree and other supply chain custody requirements (see Risk Factor - [removed: Increasing] [added: *Increasing] governmental efforts to regulate the pharmaceutical supply channel and pharmaceutical compounding may increase our costs and reduce our [removed: profitability),] [added: profitability)*,] we expect to continue to make significant investments in our secure supply chain information systems.

A significant portion of our data center [removed: operations is] [added: operations, which were previously] outsourced to third-party [removed: service providers.][added: providers, is now insourced.]

[removed: Competition][added: Competition]

[removed: Our] ABCS, World Courier, and MWI [removed: businesses] also face competition from a variety of businesses.

[removed: Intellectual Property][added: Intellectual Property]

[removed: Employees][added: Employees]

World Courier, which operates in more than

Additionally, from time to time, significant contracts may be terminated in accordance with their terms or extended, renewed, or replaced prior to their expiration dates.

We are currently working to transition all of these facilities to a single primary ERP system.

On May 17, 2019, PharMEDium Healthcare Holdings, Inc. ("PharMEDium") reached an agreement on the terms of a consent decree (the "Consent Decree") with the FDA and the Consumer Protection Branch of the Civil Division of the DOJ that was entered by the United States District Court for the Northern District of Illinois on May 22, 2019.

The Consent Decree permits commercial operations to continue at PharMEDium’s Dayton, New Jersey and Sugar Land, Texas compounding facilities and administrative operations to continue at its Lake Forest, Illinois headquarters subject to compliance with the requirements of the Consent Decree.

As required by the Consent Decree, we have completed audit inspections by an independent cGMP expert at the Dayton and Sugar Land facilities to confirm that the facilities are being operated in conformity with cGMP.

Additional audit inspections by the independent cGMP expert of the Sugar Land and Dayton facilities are also required at least annually for four years.

The Consent Decree also establishes requirements that must be satisfied prior to the resumption of commercial operations at the Memphis, Tennessee facility, where we voluntarily suspended production activities in December 2017.

We continue the ongoing compliance efforts of our subsidiary PharMEDium, including efforts to resume commercial distribution at the Memphis, Tennessee facility.

Aging Population.

Introduction of New Pharmaceuticals.

Increased Use of Generic Pharmaceuticals.

Increased Use of Drug Therapies.

Legislative Developments.

Risk Factors on page 8).

In fiscal 2018, we acquired Northeast Veterinary Supply Company ("NEVSCO").

NEVSCO was an independent, regional distributor of veterinary pharmaceuticals and medical supplies serving primarily the northeast region of the United States and is expected to strengthen MWI's support of independent veterinary practices and provide even greater value and care to current and future animal health customers.

In fiscal 2018, we acquired H.D. Smith Holding Company ("H.D. Smith").

H.D. Smith was the largest independent pharmaceutical wholesaler in the United States and provides full-line distribution of brand, generic, and specialty drugs, as well as high-value services and solutions for manufacturers and healthcare providers.

H.D. Smith’s customers include retail pharmacies, specialty pharmacies, long-term care facilities, institutional/hospital systems, and independent physicians and clinics.

In fiscal 2018, we made additional investments in Profarma Distribuidora de Produtos Farmaceuticos S.A. ("Profarma"), a leading pharmaceutical wholesaler in Brazil, and a joint venture with Profarma to provide specialty distribution and services in the Brazilian marketplace.

Operating Structure.

alternate site pharmacies, and other customers.

Sales and Marketing.

Customers.

Suppliers.

Information Systems.

We continue to be in active communication with the FDA and the Consumer Protection Branch of the Civil Division of the DOJ regarding the ongoing compliance efforts of our subsidiary PharMEDium, including efforts to resume commercial distribution at the Memphis, Tennessee 503B outsourcing facility where we voluntarily suspended production activities in December 2017.

Representatives of the Company and PharMEDium have had an initial meeting with DOJ and FDA to discuss potential resolution of ongoing matters and whether a consent decree is necessary (see Item 1A.

Further discussions are anticipated, including with regard to the possible entry of a consent decree.

Federal insurance and health care reform legislation known as the Affordable Care Act (the "ACA") became law in 2010.

The ACA is intended to expand health insurance, including coverage for at least a portion of drug costs, through a combination of insurance market reforms, an expansion of Medicaid, subsidies, and health insurance mandates.

The ACA contains many provisions designed to generate the revenues necessary to fund the coverage expansions and reduce the costs of Medicare and Medicaid.

Among other things, the ACA changed the formula for Medicaid federal upper payment limits for multiple source drugs available for purchase by retail community pharmacies on a nationwide basis to no less than 175% of the weighted average manufacturer price.

Further, implementing regulations require state Medicaid programs to apply payment mechanisms for branded prescription drugs which are consistent with pharmacies' "actual acquisition costs" for drugs.

These provisions could reduce prescription drug reimbursement levels under state Medicaid programs.

In addition, changes in the interpretations of existing regulations may result in significant

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: Form 10-K][added: Form 10-K]

[removed: | þ | | ANNUAL] [added: ☑ ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934 |][added: 1934]

[removed: | | | For the Fiscal Year Ended September] [added: FOR THE FISCAL YEAR ENDED September] 30, [removed: 2018 |][added: 2019]

[removed: | o | | TRANSITION] [added: ☐ TRANSITION] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934 |][added: 1934]

[removed: | | | For the transition period from to |][added: FOR THE TRANSITION PERIOD FROM ___________ TO___________]

[removed: (Exact] [added: *(Exact] name of registrant as specified in its [removed: charter)][added: charter)*]

| [added: 1300 Morris Drive] | [added: Chesterbrook,] | [removed: (a Delaware Corporation) 1300 Morris Drive Chesterbrook, PA 19087-5594 610-727-7000] [added: PA] | | [added: 19087-5594] |

[removed: Securities] [added: Securities] Registered Pursuant to Section 12(b) of the [removed: Act:][added: Act:]

Yes [removed: o] [added: ☐] No þ

Indicate by check mark whether the registrant has submitted [removed: electronically,] [added: electronically] every Interactive Data File required to be submitted [removed: and posted] pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange [removed: Act.:][added: Act:]

[removed: |] Large accelerated filer þ [removed: | |] Accelerated filer o [removed: | |] Non-accelerated filer o [removed: | |] Smaller reporting company [removed: o | | Emerging growth company o |][added: ☐]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act [removed: o][added: ☐]

The aggregate market value of voting stock held by non-affiliates of the registrant on March 31, [removed: 2018] [added: 2019] based upon the closing price of such stock on the New York Stock Exchange on March 31, [removed: 2018] [added: 2019] was [removed: $11,568,943,708.][added: $9,817,515,026.]

The number of shares of common stock of AmerisourceBergen Corporation outstanding as of October 31, [removed: 2018] [added: 2019] was [removed: 211,933,493.][added: 205,922,186.]

[removed: Documents] [added: Documents] Incorporated by [removed: Reference][added: Reference]

Part III — Registrant's Proxy Statement for the [removed: 2019] [added: 2020] Annual Meeting of Stockholders.

[removed: TABLE] [added: TABLE] OF [removed: CONTENTS][added: CONTENTS]

| [removed: Item] [added: Item] | | [removed: Page] [added: Page] |

[removed: | [PART I](#s2AE4828D229745691AC4811AEBCDCA7F) | | |][added: PART I]

| [1A. Risk [removed: Factors](#s080A41FBF3AA419108B7811AEBF6F3E1)] [added: Factors](#s36F730AEE0485688AED1A3C4728980AD)] | | [removed: [8](#s080A41FBF3AA419108B7811AEBF6F3E1)] [added: [8](#s36F730AEE0485688AED1A3C4728980AD)] |

| [1B. Unresolved Staff [removed: Comments](#s3A8024EAB2219193EC5E811AEC19B282)] [added: Comments](#s490AA0C8970B5F509F25A3A71B7FDA7D)] | | [removed: [17](#s3A8024EAB2219193EC5E811AEC19B282)] [added: [18](#s490AA0C8970B5F509F25A3A71B7FDA7D)] |

| [3. Legal [removed: Proceedings](#s4B19C132C8CBF9CA9125811AEC97B68F)] [added: Proceedings](#s930FF7243DB05E2CAFD326AE1AD402DE)] | | [removed: [18](#s4B19C132C8CBF9CA9125811AEC97B68F)] [added: [18](#s930FF7243DB05E2CAFD326AE1AD402DE)] |

| [4. Mine Safety [removed: Disclosures](#sEF2542E97884CCB18C23811AEC9F05E4)] [added: Disclosures](#s24E14BCC314256F29A5E45CC41B4B64F)] | | [removed: [18](#sEF2542E97884CCB18C23811AEC9F05E4)] [added: [18](#s24E14BCC314256F29A5E45CC41B4B64F)] |

| [5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity [removed: Securities](#s0D77813096E922D7F947811ADF398791)] [added: Securities](#s54E9BC8036C75751AD61BFAA3FC04D56)] | | [removed: [21](#s0D77813096E922D7F947811ADF398791)] [added: [21](#s54E9BC8036C75751AD61BFAA3FC04D56)] |

| [6. Selected Financial [removed: Data](#sEAE22A385325E2CCADFE811AE024F7EF)] [added: Data](#s96D3C475AE765FE582C3A807ADBBDD63)] | | [removed: [24](#sEAE22A385325E2CCADFE811AE024F7EF)] [added: [24](#s96D3C475AE765FE582C3A807ADBBDD63)] |

| [7. Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sE983315F17EDB520BFC7811AD8FDADC6)] [added: Operations](#s0344D91605D15E20BE38FB4471AB6DAB)] | | [removed: [25](#sE983315F17EDB520BFC7811AD8FDADC6)] [added: [25](#s0344D91605D15E20BE38FB4471AB6DAB)] |

| [7A. Quantitative and Qualitative Disclosures About Market [removed: Risk](#sD97967EB2FF4F2DF8AC9811AEE43D7E8)] [added: Risk](#s9DB7497E0F3A56D19C73982B1A4AA1CE)] | | [removed: [43](#sD97967EB2FF4F2DF8AC9811AEE43D7E8)] [added: [43](#s9DB7497E0F3A56D19C73982B1A4AA1CE)] |

| [8. Financial Statements and Supplementary [removed: Data](#sA8F4BAB49542C69762A1811AEE44BB01)] [added: Data](#s8FAA530EC85F5B0B81659ACB20F3B006)] | | [removed: [44](#sA8F4BAB49542C69762A1811AEE44BB01)] [added: [44](#s8FAA530EC85F5B0B81659ACB20F3B006)] |

| [9. Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#s487BB34B3D6E91BF3189811AF3C76041)] [added: Disclosure](#s11C1CE1A94305C168B62AA895E07EB69)] | | [removed: [82](#s487BB34B3D6E91BF3189811AF3C76041)] [added: [82](#s11C1CE1A94305C168B62AA895E07EB69)] |

| [9A. Controls and [removed: Procedures](#sE6C2CD8C61EAA5D9863B811AF4108170)] [added: Procedures](#sFC366665D0015C529AEC7EA0DE9AD817)] | | [removed: [82](#sE6C2CD8C61EAA5D9863B811AF4108170)] [added: [82](#sFC366665D0015C529AEC7EA0DE9AD817)] |

| [9B. Other [removed: Information](#sBA95132F024FC8E819BA811AF4434245)] [added: Information](#s4F93A6A3EF01595AAB40811285A01DB3)] | | [removed: [85](#sBA95132F024FC8E819BA811AF4434245)] [added: [84](#s4F93A6A3EF01595AAB40811285A01DB3)] |

| [removed: [PART III](#s7DACBD41FE74B62C3F8F811AF446F188)] [added: [PART III](#sCAD97B6D8731544D84B49026B3C80167)] | | |

| [10. Directors, Executive Officers, and Corporate [removed: Governance](#s013CD15A95DA6B9008F9811AF46D9CB4)] [added: Governance](#s1232CA2234C5560AA51CBE91DCEAFD88)] | | [removed: [85](#s013CD15A95DA6B9008F9811AF46D9CB4)] [added: [84](#s1232CA2234C5560AA51CBE91DCEAFD88)] |

| [11. Executive [removed: Compensation](#sD190EE7D26136452B4AE811AF4B8FE48)] [added: Compensation](#sF2B106C289F358D9BB42D649F8CF61B7)] | | [removed: [85](#sD190EE7D26136452B4AE811AF4B8FE48)] [added: [84](#sF2B106C289F358D9BB42D649F8CF61B7)] |

| [12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#sD9AFFA751C4265F56392811AF4EA4A19)] [added: Matters](#sB5321D5F2CB351D98B0BDE0FA848B5AA)] | | [removed: [85](#sD9AFFA751C4265F56392811AF4EA4A19)] [added: [84](#sB5321D5F2CB351D98B0BDE0FA848B5AA)] |

| [13. Certain Relationships and Related Transactions, and Director [removed: Independence](#sA8C2231849ED7DCE4214811AF4EDAB4C)] [added: Independence](#s28B51FABE77E5FC3BF574DEAC541026B)] | | [removed: [85](#sA8C2231849ED7DCE4214811AF4EDAB4C)] [added: [84](#s28B51FABE77E5FC3BF574DEAC541026B)] |

Commission file number 1-16671

AMERISOURCEBERGEN CORPORATION

| Delaware | | | | 23-3079390 |

| (State or other jurisdiction of | | | | (I.R.S. Employer |

| incorporation or organization) | | | | Identification No.) |

| | | | | |

| (Address of principal executive offices) | | | | (Zip Code) |

(610) 727-7000

(Registrant’s telephone number, including area code)

| | | | |

| --- | --- | --- | --- |

| | | | |

| Title of each class | Trading Symbol(s) | Name of exchange on which registered | |

| Common stock | ABC | New York Stock Exchange | (NYSE) |

_________________________________________________

| [1. Business](#s8B0AC30FD9E25056807A9B7993B0D9A4) | | [1](#s8B0AC30FD9E25056807A9B7993B0D9A4) |

| [2. Properties](#sEFE39F5C78F7557BA0E41C8AAA8852E4) | | [18](#sEFE39F5C78F7557BA0E41C8AAA8852E4) |

| [Information about our Executive Officers](#s8F12475D3C105B04954CC351D94FAF9C) | | [19](#s8F12475D3C105B04954CC351D94FAF9C) |

| [PART II](#sE02F8DB6476C5F338C98F1B791FD05C9) | | |

| [PART IV](#s4D86B850A563500B8D4EB94B8D10F26D) | | |

| [16. Form 10-K Summary](#sac35d01dd06540719af02442830a29de) | | [90](#sac35d01dd06540719af02442830a29de) |

| [Signatures](#sE96AA36A396E5977974347AF14C76E9E) | | [91](#sE96AA36A396E5977974347AF14C76E9E) |

10-K 1 a10-kx9302018.htm 10-K

| | | |

| --- | --- | --- |

| OR | | |

_________________________________________________

AMERISOURCEBERGEN CORPORATION

| Commission File Number | | Registrant, State of Incorporation Address and Telephone Number | | I.R.S. Employer Identification Number |

| 1-16671 | | AmerisourceBergen Corporation | | 23-3079390 |

Common Stock, $0.01 par value per share Registered on New York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act:

None

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| [1. Business](#sBB12A1342BCCC6B41359811AEBDEF331) | | [1](#sBB12A1342BCCC6B41359811AEBDEF331) |

| [2. Properties](#sF33DBE83882DF96ED2EF811AEC74A763) | | [17](#sF33DBE83882DF96ED2EF811AEC74A763) |

| [Executive Officers of the Registrant](#s74A300DDC7813C357FA6811AECBFED4C) | | [19](#s74A300DDC7813C357FA6811AECBFED4C) |

| [PART II](#sE1E05238BA800B93B82A811AED194FA3) | | |

| [PART IV](#sE995BBDF57CCBDA2A937811AF5602E9C) | | |

| [Signatures](#sF8976467A4CA8BE6390C811AD3ADD484) | | [92](#sF8976467A4CA8BE6390C811AD3ADD484) |

As of September 30, [removed: 2018,] [added: 2019,] we conducted our business from office and operating facilities at owned and leased locations throughout the United States (including Puerto Rico) and select global markets.

We lease [removed: approximately 185,000 square feet] [added: facilities] in Chesterbrook, Pennsylvania and [removed: approximately 106,000 square feet] in Conshohocken, Pennsylvania for our corporate headquarters.

Pharmaceutical Distribution Services has a robust distribution facility network in the United [removed: States, ranging in size from approximately 53,000 square feet to 408,000 square feet.][added: States.]

As of September 30, [removed: 2018,] [added: 2019,] the Consulting Group's operations were conducted in leased locations.

As of September 30, [removed: 2018,] [added: 2019,] World Courier's office and operating facilities are located in over 50 countries.

As of September 30, [removed: 2018,] [added: 2019,] MWI's operations were conducted in the United States and in the United Kingdom.

In the aggregate, our facilities occupy approximately 15 million square feet of office and warehouse space, which is either owned or leased under agreements that expire from time to time.

The operations of Pharmaceutical Distribution Services comprise approximately 8.7 million square feet.

Significant owned facilities are located in New York, and internationally in Germany, Japan, Singapore, and South Africa.

The following is a list of our executive officers and their ages and positions as of November 15, [removed: 2018.][added: 2019.]

| [removed: Name] [added: Name] | | [removed: Age] [added: Age] | | [removed: Current] [added: Current] Position with the [removed: Company] [added: Company] |

| Steven H. Collis | | [removed: 57] [added: 58] | | Chairman, President, and Chief Executive Officer |

| John G. Chou | | [removed: 62] [added: 63] | | Executive Vice [removed: President and] [added: President,] Chief Legal [removed: & Business] Officer [added: and Secretary] |

| Gina K. Clark | | [removed: 61] [added: 62] | | Executive Vice President and Chief Communications & Administration Officer |

| James F. [removed: Cleary, Jr.] [added: Cleary] | | [removed: 55] [added: 56] | | Executive Vice President and Chief Financial Officer |

| [removed: Dale Danilewitz] [added: Leslie E. Donato] | | [removed: 56] [added: 50] | | Executive Vice President and Chief [removed: Information] [added: Strategy] Officer |

| Kathy H. Gaddes | | [removed: 55] [added: 56] | | Executive Vice President and Chief Compliance Officer |

| Robert P. Mauch | | [removed: 51] [added: 52] | | Executive Vice President and Group [removed: President, Pharmaceutical Distribution & Strategic Global Sourcing] [added: President] |

Mr. Collis has been employed by the Company or one of its predecessors for [removed: 24] [added: 25] years.

Mr. Chou has been Executive Vice President [removed: of the Company] since August 2011 and became the Chief Legal [removed: & Business] Officer [added: and Secretary] in [removed: June 2017.][added: September 2019.]

Mr. Chou has been employed by the Company for [removed: 16] [added: 17] years.

She served as Executive Vice President and Chief Human Resources Officer from April 2016 to [removed: October 2018.][added: January 2019.]

She served as Assistant General Counsel, Corporate and Securities from [removed: December] [added: October] 2011 to May 2012.

Mr. Mauch has been Executive Vice President since February 2015 and became Group [removed: President, Pharmaceutical Distribution & Strategic Global Sourcing] [added: President] in [removed: June 2017.][added: February 2019.]

[removed: He] [added: Mr. Mauch] previously served as Senior Vice President Chief Operating Officer, AmerisourceBergen Drug Corporation from March 2014 to February 2015.

He was Senior Vice President of Sales and Marketing, AmerisourceBergen Drug Corporation [added: from April 2011 to April 2012.]

Mr. Mauch has been employed by the Company or one of its predecessors for [removed: 24] [added: 25] years.

[removed: PART II][added: PART II]

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

| Silvana Battaglia | | 52 | | Executive Vice President and Chief Human Resources Officer |

Ms. Battaglia has been Executive Vice President and Chief Human Resources Officer since January 2019.

Prior to joining the Company, she worked at Aramark as Senior Vice President of Global Compensation, Benefits, and Labor Relations from August 2017 to December 2018 and as Senior Vice President, Global Field Human Resources from May 2011 to August 2017.

She also previously worked for Day & Zimmerman and Merck Corporation.

He served as Chief Legal & Business Officer of the Company from May 2017 to September 2019.

Ms. Donato has been Executive Vice President and Chief Strategy Officer since July 2019.

Prior to joining the Company, she held various leadership roles at Bayer from May 2009 to May 2019, including Vice President of Strategy, Pharmaceuticals Division, Vice President of Strategy, Bayer Healthcare US, and Vice President & General Manager of Neurology & Hematology.

She also worked for McKinsey & Company where she was a Partner in the Healthcare Practice.

He served as Group President, Pharmaceutical Distribution & Strategic Global Sourcing from June 2017 to February 2019.

EXECUTIVE OFFICERS OF THE REGISTRANT

Mr. Danilewitz became Executive Vice President and Chief Information Officer in November 2014.

He served as Senior Vice President and Chief Information Officer from June 2012 to November 2014.

He served as Chief Information Officer of AmerisourceBergen Specialty Group from March 1999 to May 2012.

Prior to joining the Company, he held management positions within American Airlines and The Sabre Group.

He also worked for Whirlpool Corporation in the Advanced Technology Group.

from April 2011 to April 2012.

The Company's common stock is traded on the New York Stock Exchange under the trading symbol "ABC." As of October 31, [removed: 2018,] [added: 2019,] there were [removed: 2,564] [added: 2,459] record holders of the Company's common stock.

Computershare can be reached at (mail) AmerisourceBergen Corporation c/o Computershare, P.O. Box 50500, Louisville, KY 40233-500; (telephone): Domestic 1-800-522-6645, International 1-201-680-6578, and (internet) [removed: www.computershare.com/investor.][added: *www.computershare.com/investor.*]

[removed: ISSUER] [added: ISSUER] PURCHASES OF EQUITY [removed: SECURITIES][added: SECURITIES]

The following sets forth the total number of shares purchased, the average price paid per share, the total number of shares purchased as part of publicly announced programs, and the approximate dollar value of shares that may yet be purchased under the programs during each month in the fiscal year ended September 30, [removed: 2018.][added: 2019.]

| [removed: Period] [added: Period] | | [removed: Total Number of Shares Purchased] [added: Total Number of Shares Purchased] | | | [removed: Average Price Paid Per Share] [added: Average Price Paid Per Share] | | | | [removed: Total] [added: Total] Number [removed: of Shares Purchased as] [added: of Shares Purchased as] Part of [removed: Publicly Announced Programs] [added: Publicly Announced Programs] | | | [removed: Approximate Dollar] [added: Approximate Dollar] Value [removed: of Shares] [added: of Shares] that [removed: May Yet] [added: May Yet] Be [removed: Purchased Under the Programs] [added: Purchased Under the Programs] | | |

| (a) | In November 2016, the Company's board of directors authorized a share repurchase program allowing the Company to purchase up to $1.0 billion of its outstanding shares of common stock, subject to market conditions. During the fiscal year ended September 30, [removed: 2018,] [added: 2019,] the Company purchased [removed: 7.7] [added: 1.4] million shares of its common stock for a total of [removed: $663.1 million under this program,] [added: $125.8 million,] which [removed: included] [added: excluded] $24.0 million of September 2018 purchases that cash settled in October [removed: 2018. As of September 30,] 2018, [removed: the Company had $125.8 million of availability remaining] [added: to complete its authorization] under [removed: the November 2016 share repurchase] [added: this] program. |

| (b) | In October 2018, the Company's board of directors authorized a new share repurchase program allowing the Company to purchase up to $1.0 billion of its outstanding shares of common stock, subject to market conditions. [added: During the fiscal year ended September 30, 2019, the Company purchased 6.7 million shares of its common stock for a total of $538.9 million under this program, which included $14.8 million of September 2019 purchases that cash settled in October 2019. As of September 30, 2019, the Company had $461.1 million of availability under this program.] |

| (c) | Employees surrendered [removed: 103,476] [added: 67,171] shares during the fiscal year ended September 30, [removed: 2018] [added: 2019] to meet minimum tax-withholding obligations upon vesting of restricted stock. |

[removed: STOCK] [added: STOCK] PERFORMANCE [removed: GRAPH][added: GRAPH]

This graph depicts the Company's five year cumulative total stockholder returns relative to the performance of the Standard and Poor's 500 Composite Stock Index, the S&P Health Care Index, and an index of peer companies selected by the Company from the market close on September 30, [removed: 2013] [added: 2014] to September 30, [removed: 2018.][added: 2019.]

The graph assumes $100 invested at the closing price of the common stock of the Company and of each of the other indices on the New York Stock Exchange on September 30, [removed: 2013.][added: 2014.]

[removed: ][added: ]

* $100 invested on September 30, [removed: 2013] [added: 2014] in stock or index, including reinvestment of dividends.

| October 1 to October 31 | | 1,386,835 | | | $ | 90.72 | | | 1,386,835 | | | $ | 1,000,000,000 | |

| November 1 to November 30 | | 62,923 | | | $ | 89.85 | | | — | | | $ | 1,000,000,000 | |

| December 1 to December 31 | | 1,319,378 | | | $ | 75.79 | | | 1,319,378 | | | $ | 900,000,064 | |

| January 1 to January 31 | | — | | | $ | — | | | — | | | $ | 900,000,064 | |

| February 1 to February 28 | | 157 | | | $ | 82.79 | | | — | | | $ | 900,000,064 | |

| March 1 to March 31 | | 1,252,495 | | | $ | 78.33 | | | 1,252,495 | | | $ | 801,896,921 | |

| April 1 to April 30 | | 116 | | | $ | 75.35 | | | — | | | $ | 801,896,921 | |

| May 1 to May 31 | | 1,038,138 | | | $ | 79.56 | | | 1,034,499 | | | $ | 719,581,614 | |

| June 1 to June 30 | | 1,111,252 | | | $ | 83.29 | | | 1,111,252 | | | $ | 627,021,288 | |

| July 1 to July 31 | | 139,217 | | | $ | 84.95 | | | 139,217 | | | $ | 615,195,472 | |

| August 1 to August 31 | | 752,384 | | | $ | 82.85 | | | 752,048 | | | $ | 552,888,358 | |

| September 1 to September 30 | | 1,101,040 | | | $ | 83.33 | | | 1,101,040 | | | $ | 461,135,868 | |

| Total | | 8,163,935 | | | $ | 82.15 | | | 8,096,764 | | | | | |

In November 2016, our board of directors increased the quarterly dividend by 7% from $0.340 per share to $0.365 per share.

| October 1 to October 31 | | — | | | $ | — | | | — | | | $ | 788,906,335 | |

| November 1 to November 30 | | 93,799 | | | $ | 78.58 | | | — | | | $ | 788,906,335 | |

| December 1 to December 31 | | 251,815 | | | $ | 89.33 | | | 251,786 | | | $ | 766,413,737 | |

| January 1 to January 31 | | — | | | $ | — | | | — | | | $ | 766,413,737 | |

| February 1 to February 28 | | 1,380 | | | $ | 96.17 | | | — | | | $ | 766,413,737 | |

| March 1 to March 31 | | 400,442 | | | $ | 94.16 | | | 400,442 | | | $ | 728,709,857 | |

| April 1 to April 30 | | — | | | $ | — | | | — | | | $ | 728,709,857 | |

| May 1 to May 31 | | 2,335,748 | | | $ | 85.28 | | | 2,335,748 | | | $ | 529,512,016 | |

| June 1 to June 30 | | 773,375 | | | $ | 85.36 | | | 773,058 | | | $ | 463,524,420 | |

| July 1 to July 31 | | 580,578 | | | $ | 86.13 | | | 580,578 | | | $ | 413,520,007 | |

| August 1 to August 31 | | 1,727,572 | | | $ | 83.61 | | | 1,719,621 | | | $ | 269,785,073 | |

| September 1 to September 30 | | 1,615,394 | | | $ | 89.13 | | | 1,615,394 | | | $ | 125,810,091 | |

| Total | | 7,780,103 | | | $ | 86.29 | | | 7,676,627 | | | | | |

| | | [removed: As] [added: As] of or for the Fiscal Year Ended September [removed: 30,] [added: 30,] | | | | | | | | | | | | | | | | | | |

| [removed: (Amounts] [added: (Amounts] in thousands, except per share [removed: amounts)] [added: amounts)] | | [removed: 2018(a)] [added: 2019(a)] | | | | [removed: 2017(b)] [added: 2018(b)] | | | | [removed: 2016(c)] [added: 2017(c)] | | | | [removed: 2015(d)] [added: 2016(d)] | | | | [removed: 2014(e)] [added: 2015(e)] | | |

| [removed: Statement] [added: Statement] of Operations [removed: Data:] [added: Data:] | | | | | | | | | | | | | | | | | | | | |

| Revenue | | $ | [removed: 167,939,635] [added: 179,589,121] | | | $ | [removed: 153,143,826] [added: 167,939,635] | | | $ | [removed: 146,849,686] [added: 153,143,826] | | | $ | [removed: 135,961,803] [added: 146,849,686] | | | $ | [removed: 119,569,127] [added: 135,961,803] | |

| Gross profit | | [removed: 4,612,317] [added: 5,138,312] | | | | [removed: 4,546,002] [added: 4,612,317] | | | | [removed: 4,272,606] [added: 4,546,002] | | | | [removed: 3,529,313] [added: 4,272,606] | | | | [removed: 2,982,366] [added: 3,529,313] | | |

| Operating expenses | | [removed: 3,168,632] [added: 4,026,389] | | | | [removed: 3,485,660] [added: 3,168,632] | | | | [removed: 2,746,832] [added: 3,485,660] | | | | [removed: 3,107,093] [added: 2,746,832] | | | | [removed: 2,200,275] [added: 3,107,093] | | |

| Operating income | | [removed: 1,443,685] [added: 1,111,923] | | | | [removed: 1,060,342] [added: 1,443,685] | | | | [removed: 1,525,774] [added: 1,060,342] | | | | [removed: 422,220] [added: 1,525,774] | | | | [removed: 782,091] [added: 422,220] | | |

| Interest expense, net | | [removed: 174,699] [added: 157,769] | | | | [removed: 145,185] [added: 174,699] | | | | [removed: 139,912] [added: 145,185] | | | | [removed: 109,036] [added: 139,912] | | | | [removed: 83,634] [added: 109,036] | | |

| [removed: Income] [added: Net income] (loss) [removed: from continuing operations] | | [added: 854,135 | | | |] 1,615,892 | | | | 364,484 | | | | 1,427,929 | | | | (138,165 | | ) | [removed: | 281,776 | | |]

| Net income (loss) [added: attributable to AmerisourceBergen Corporation] | | [removed: 1,615,892] [added: $] | [added: 855,365] | | | [removed: 364,484] [added: $] | [added: 1,658,405] | | | [removed: 1,427,929] [added: $] | [added: 364,484] | | | [removed: (138,165] [added: $] | [added: 1,427,929] | [removed: )] | | [removed: 274,230] [added: $] | [added: (138,165] | [added: )] |

| Earnings per share [removed: from continuing operations] — diluted | | $ | [removed: 7.53] [added: 4.04] | | | $ | [removed: 1.64] [added: 7.53] | | | $ | [removed: 6.32] [added: 1.64] | | | $ | [removed: (0.63] [added: 6.32] | [removed: )] | | $ | [removed: 1.20] [added: (0.63] | [added: )] |

| Cash dividends declared per common share | | $ | [removed: 1.52] [added: 1.60] | | | $ | [removed: 1.46] [added: 1.52] | | | $ | [removed: 1.36] [added: 1.46] | | | $ | [removed: 1.16] [added: 1.36] | | | $ | [removed: 0.94] [added: 1.16] | |

| Weighted average common shares outstanding — diluted | | [removed: 220,336] [added: 211,840] | | | | [removed: 221,602] [added: 220,336] | | | | [removed: 225,959] [added: 221,602] | | | | [removed: 217,786] [added: 225,959] | | | | [removed: 235,405] [added: 217,786] | | |

| [removed: Balance] [added: Balance] Sheet [removed: Data:] [added: Data:] | | | | | | | | | | | | | | | | | | | | |

| Cash and cash equivalents | | $ | [removed: 2,492,516] [added: 3,374,194] | | | $ | [removed: 2,435,115] [added: 2,492,516] | | | $ | [removed: 2,741,832] [added: 2,435,115] | | | $ | [removed: 2,167,442] [added: 2,741,832] | | | $ | [removed: 1,808,513] [added: 2,167,442] | |

| Accounts receivable, net | | [removed: 11,314,226] [added: 12,386,879] | | | | [removed: 10,303,324] [added: 11,314,226] | | | | [removed: 9,175,876] [added: 10,303,324] | | | | [removed: 8,222,951] [added: 9,175,876] | | | | [removed: 6,312,883] [added: 8,222,951] | | |

| [removed: Merchandise inventories] [added: Inventories] | | [removed: 11,918,508] [added: 11,060,254] | | | | [removed: 11,461,428] [added: 11,918,508] | | | | [removed: 10,723,920] [added: 11,461,428] | | | | [removed: 9,755,094] [added: 10,723,920] | | | | [removed: 8,593,852] [added: 9,755,094] | | |

| Property and equipment, net | | [removed: 1,892,424] [added: 1,770,516] | | | | [removed: 1,797,945] [added: 1,892,424] | | | | [removed: 1,530,682] [added: 1,797,945] | | | | [removed: 1,192,510] [added: 1,530,682] | | | | [removed: 1,044,831] [added: 1,192,510] | | |

| Total assets | | [removed: 37,669,838] [added: 39,171,980] | | | | [removed: 35,316,470] [added: 37,669,838] | | | | [removed: 33,637,501] [added: 35,316,470] | | | | [removed: 27,962,982] [added: 33,637,501] | | | | [removed: 21,677,432] [added: 27,962,982] | | |

| Accounts payable | | [removed: 26,836,873] [added: 28,385,074] | | | | [removed: 25,404,042] [added: 26,836,873] | | | | [removed: 23,926,320] [added: 25,404,042] | | | | [removed: 20,886,439] [added: 23,926,320] | | | | [removed: 15,592,834] [added: 20,886,439] | | |

| Total debt | | [removed: 4,310,189] [added: 4,172,892] | | | | [removed: 3,442,055] [added: 4,310,189] | | | | [removed: 4,186,703] [added: 3,442,055] | | | | [removed: 3,493,048] [added: 4,186,703] | | | | [removed: 1,995,632] [added: 3,493,048] | | |

| Total equity | | [removed: 3,049,961] [added: 2,993,206] | | | | [removed: 2,064,461] [added: 3,049,961] | | | | [removed: 2,129,404] [added: 2,064,461] | | | | [removed: 616,386] [added: 2,129,404] | | | | [removed: 1,943,043] [added: 616,386] | | |

| Total liabilities and stockholders' equity | | $ | [removed: 37,669,838] [added: 39,171,980] | | | $ | [removed: 35,316,470] [added: 37,669,838] | | | $ | [removed: 33,637,501] [added: 35,316,470] | | | $ | [removed: 27,962,982] [added: 33,637,501] | | | $ | [removed: 21,677,432] [added: 27,962,982] | |

| [removed: (a)] [added: (b)] | Includes $61.3 million of employee severance, litigation, and other costs, net of income tax benefit of $122.2 million; a $59.7 million goodwill impairment with no income tax benefit; $48.6 million of LIFO expense, net of income tax benefit of $18.7 million; $47.8 million of PharMEDium remediation costs, net of income tax benefit of $18.4 million; a $42.3 million loss on consolidation of equity investments with no income tax benefit; a $30.0 million impairment on a non-customer note receivable with no income tax benefit; a $25.9 million gain from antitrust litigation settlements, net of income tax expense of $10.0 million; a $17.2 million loss on early retirement of debt, net of income tax benefit of $6.6 million; and $15.9 million of expense for an estimated assessment related to the New York State Opioid Stewardship Act, net of income tax benefit of $6.1 million. |

| [removed: (b)] [added: (c)] | Includes $101.1 million of LIFO credit, net of income tax expense of $56.7 million; a $0.9 million gain from antitrust litigation settlements, net of income tax expense of $0.5 million; and $937.4 million of employee severance, litigation, and other costs, net of income tax benefit of $21.9 million. |

| [removed: (c)] [added: (d)] | Includes $367.2 million of Warrants income, net of income tax benefit of $507.5 million; $120.9 million of LIFO expense, net of income tax benefit of $79.3 million; an $80.8 million gain from antitrust litigation settlements, net of income tax expense of $53.0 million; $62.1 million of employee severance, litigation, and other costs, net of income tax benefit of $40.8 million; and a $28.7 million pension settlement charge, net of income tax benefit of $18.9 million. |

| [removed: (d)] [added: (e)] | Includes $887.5 million of Warrants expense, net of income tax benefit of $25.3 million; $336.2 million of LIFO expense, net of income tax benefit of $206.6 million; a $40.6 million gain from antitrust litigation settlements, net of income tax expense [removed: of $24.9] [added: of$24.9] million; a $30.6 million impairment charge on an equity investment, with no income tax benefit; and $23.5 million of employee severance, litigation, and other costs, net of income tax benefit of $14.4 million. |

| (a) | Includes a $421.3 million impairment of PharMEDium's long-lived assets, net of income tax benefit of $148.7 million; $245.8 million of employee severance, litigation, and other costs, net of income tax benefit of $84.6 million; a $107.8 million gain from antitrust litigation settlements, net of income tax expense of $38.1 million; $51.3 million of PharMEDium remediation costs, net of income tax benefit of $18.1 million; $16.7 million of LIFO credit, net of income tax expense of $5.9 million; a $16.3 million reversal of an estimated assessment related to the New York State Opioid Stewardship Act, net of income tax expense of $5.7 million; and a $10.1 million gain on the sale of an equity investment, net of income tax expense of $3.6 million. |

| Net income attributable to AmerisourceBergen Corporation | | 1,658,405 | | | | 364,484 | | | | 1,427,929 | | | | (138,165 | | ) | | 274,230 | | |

| Earnings per share — diluted | | $ | 7.53 | | | $ | 1.64 | | | $ | 6.32 | | | $ | (0.63 | ) | | $ | 1.16 | |

| (e) | Includes $397.5 million of Warrants expense, net of income tax benefit of $25.2 million; $214.6 million of LIFO expense, net of income tax benefit of $133.4 million; $20.3 million of loss on early retirement of debt, net of income tax benefit of $12.7 million; a $15.1 million gain from antitrust litigation settlements, net of income tax expense of $9.3 million; and $5.1 million of employee severance, litigation, and other costs, net of income tax benefit of $3.1 million. |

| | | [removed: Page] [added: Page] |

[removed: | [Report of Independent Registered Public Accounting Firm](#s244022CE09BAA2FD81D1811AEE4798E9) | | [45](#s244022CE09BAA2FD81D1811AEE4798E9) |][added: REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM]

| [Consolidated Financial [removed: Statements:](#s8345767A51F59E06E592811AEE61CB56)] [added: Statements:](#s1BEAE592A3E253AE8D38FE85B1B4B6ED)] | | |

| [Consolidated Balance Sheets as of September 30, [removed: 2018] [added: 2019] and [removed: 2017](#sCB41CCF86E9EF8361DDD811ACD95667F)] [added: 2018](#sCAE2CB3EF74C5B4B898AFD8E902B313D)] | | [removed: [46](#sCB41CCF86E9EF8361DDD811ACD95667F)] [added: [49](#sCAE2CB3EF74C5B4B898AFD8E902B313D)] |

| [Consolidated Statements of Operations for the fiscal years ended September 30, [added: 2019,] 2018, [removed: 2017,] and [removed: 2016](#s2DB6E80CEC16953940DC811ACDD3C918)] [added: 2017](#sA8DB892F5A6855DD92D4675FA64590F7)] | | [removed: [47](#s2DB6E80CEC16953940DC811ACDD3C918)] [added: [50](#sA8DB892F5A6855DD92D4675FA64590F7)] |

| [Consolidated Statements of Comprehensive Income for the fiscal years ended September 30, [added: 2019,] 2018, [removed: 2017,] and [removed: 2016](#sEBB19EAF8BE82F373865811ACE02A532)] [added: 2017](#s7C8AE9914AB25319A79E3B4AFD159490)] | | [removed: [48](#sEBB19EAF8BE82F373865811ACE02A532)] [added: [51](#s7C8AE9914AB25319A79E3B4AFD159490)] |

| [Consolidated Statements of Changes in Stockholders' Equity for the fiscal years ended September 30, [added: 2019,] 2018, [removed: 2017,] and [removed: 2016](#s57EA91F0558E40246EDC811ACE12BD93)] [added: 2017](#sFCC0B031D2C75B489A5271AC183172C6)] | | [removed: [49](#s57EA91F0558E40246EDC811ACE12BD93)] [added: [52](#sFCC0B031D2C75B489A5271AC183172C6)] |

| [Consolidated Statements of Cash Flows for the fiscal years ended September 30, [added: 2019,] 2018, [removed: 2017,] and [removed: 2016](#s40BC7BAA3AC467C86BE6811ACEAEDF4B)] [added: 2017](#s78A0410F2AB05BFC97083F9A8CB2D842)] | | [removed: [50](#s40BC7BAA3AC467C86BE6811ACEAEDF4B)] [added: [53](#s78A0410F2AB05BFC97083F9A8CB2D842)] |

[removed: | [Notes to Consolidated Financial Statements](#s09950951D083A1916426811AF0014832) | | [51](#s09950951D083A1916426811AF0014832) |][added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS]

[removed: REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM][added: | [Report of Independent Registered Public Accounting Firm](#s06AE8849479A59928A821039816E2F16) | | [45](#s06AE8849479A59928A821039816E2F16) |]

The [added: Stockholders and] Board of Directors [removed: and Stockholders] of AmerisourceBergen Corporation

[removed: Opinion] [added: Opinion] on the Financial [removed: Statements][added: Statements]

We have audited the accompanying consolidated balance sheets of AmerisourceBergen Corporation and subsidiaries (the Company) as of September 30, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended September 30, [removed: 2018,] [added: 2019,] and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the results of its operations and its cash flows for each of the three years in the period ended September 30, [removed: 2018,] [added: 2019,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of September 30, [removed: 2018,] [added: 2019,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated November [removed: 20, 2018] [added: 19, 2019] expressed an unqualified opinion thereon.

[removed: Basis] [added: Basis] for [removed: Opinion][added: Opinion]

| [removed: | |] /s/ Ernst & Young LLP | | | [added: | |]

[removed: AMERISOURCEBERGEN] [added: AMERISOURCEBERGEN] CORPORATION AND [removed: SUBSIDIARIES][added: SUBSIDIARIES]

[removed: CONSOLIDATED] [added: CONSOLIDATED] BALANCE [removed: SHEETS][added: SHEETS]

| | | [removed: September 30,] [added: September 30,] | | | | | | |

| [removed: (in] [added: (in] thousands, except share and per share [removed: data)] [added: data)] | | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | |

| [removed: ASSETS] [added: ASSETS] | | | | | | | | |

| Cash and cash equivalents [removed: |] [added: at beginning of year] | [removed: $] | 2,492,516 | | | [removed: $] | 2,435,115 | | [added: | | 2,741,832 | | |]

| Accounts receivable, less allowances for returns and doubtful accounts: [removed: 2018] [added: 2019] — [removed: $1,036,333; 2017] [added: $1,222,906; 2018] — [removed: $1,050,361] [added: $1,036,333] | | [removed: 11,314,226] [added: 12,386,879] | | | | [removed: 10,303,324] [added: 11,314,226] | | |

| Prepaid expenses and other | | [removed: 169,122] [added: 163,244] | | | | [removed: 103,432] [added: 169,122] | | |

| Total current assets | | [removed: 25,894,372] [added: 28,132,054] | | | | [removed: 24,303,299] [added: 25,894,372] | | |

| Land | | [removed: 39,875] [added: 44,142] | | | | [removed: 40,302] [added: 39,875] | | |

| Buildings and improvements | | [removed: 1,086,909] [added: 942,129] | | | | [removed: 979,589] [added: 1,086,909] | | |

| Machinery, equipment, and other | | [removed: 2,281,124] [added: 2,362,869] | | | | [removed: 2,071,314] [added: 2,281,124] | | |

| Total property and equipment | | [removed: 3,407,908] [added: 3,349,140] | | | | [removed: 3,091,205] [added: 3,407,908] | | |

| Less accumulated depreciation | | [removed: (1,515,484] [added: (1,578,624] | | ) | | [removed: (1,293,260] [added: (1,515,484] | | ) |

| Property and equipment, net | | [removed: 1,892,424] [added: 1,770,516] | | | | [removed: 1,797,945] [added: 1,892,424] | | |

| Goodwill | | [removed: 6,664,272] [added: 6,705,507] | | | | [removed: 6,044,281] [added: 6,664,272] | | |

| Other intangible assets | | [removed: 2,947,828] [added: 2,294,836] | | | | [removed: 2,833,281] [added: 2,947,828] | | |

| Other assets | | [removed: 270,942] [added: 269,067] | | | | [removed: 337,664] [added: 270,942] | | |

| [removed: TOTAL ASSETS] [added: Total assets] | | $ | [added: 39,171,980 | | | $ |] 37,669,838 | | | $ | 35,316,470 | |

| [removed: LIABILITIES] [added: LIABILITIES] AND STOCKHOLDERS' [removed: EQUITY] [added: EQUITY] | | | | | | | | |

| Accounts payable | | $ | [removed: 26,836,873] [added: 28,385,074] | | | $ | [removed: 25,404,042] [added: 26,836,873] | |

| Accrued expenses and other | | [removed: 881,157] [added: 1,057,208] | | | | [removed: 1,402,002] [added: 881,157] | | |

| Short-term debt | | [removed: 151,657] [added: 139,012] | | | | [removed: 12,121] [added: 151,657] | | |

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

| | Legal Contingencies |

| *Description of the Matter* | As discussed in Note 13 of the consolidated financial statements, the Company is involved in lawsuits, administrative proceedings, government subpoenas, government investigations and other disputes. The Company recognizes a liability for those legal contingencies for which it is probable that a liability has been incurred at the date of the consolidated financial statements and the amount is reasonably estimable. The Company also performs an assessment of the materiality of legal contingencies where a loss is either reasonably possible or it is reasonably possible that an exposure to loss exists in excess of the amount accrued. If it is reasonably possible that such a loss or an additional loss may have been incurred and the effect on the consolidated financial statements is material, the Company discloses the nature of the loss contingency and an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made within the notes to the consolidated financial statements. |

| | |

| | For example, as of September 30, 2019, a significant number of counties, municipalities, and other governmental entities in a majority of U.S. states and Puerto Rico, as well as several states and tribes, have filed lawsuits in various federal, state and other courts against pharmaceutical wholesale distributors (including the Company and its subsidiary AmerisourceBergen Drug Corporation ("ABDC")), pharmaceutical manufacturers, retail chains, medical practices, and physicians relating to the distribution of prescription opioid pain medications ("opioid matters"). Other lawsuits regarding the distribution of prescription opioid pain medications have been filed by other parties. While the Company is currently engaged in negotiations with plaintiffs’ representatives regarding a potential settlement framework, it continues to litigate the opioid matters. The Company has not recognized a liability related to the potential framework as of September 30, 2019. |

| | |

| | Auditing management's determination of whether a loss for a legal contingency is probable and reasonably estimable, reasonably possible or remote, and the related disclosures, is highly subjective and requires significant judgment. For instance, auditing management's judgments related to the opioid matters was challenging due to the significant judgment applied in determining the likelihood of resolution of the opioid matters through settlement or litigation given the current status of negotiations with plaintiffs' representatives and the complexity and uncertainty associated with any potential settlement. |

| | |

| *How We Addressed the Matter in Our Audit* | We tested the Company's internal controls that address the risks of material misstatement related to the completeness, valuation, presentation and disclosure of legal contingencies. This included testing controls related to the Company's process for identification, recognition, measurement and disclosure of legal contingencies, including the opioid matters. For example, we tested controls over management’s review of correspondence from external legal counsel, historical legal settlements executed by the Company and those executed by other defendants, actions and statements made by the Company, and communications with the plaintiffs to determine the completeness and accuracy of legal contingencies and the related financial statement footnote disclosures. We also tested controls over management's assessment of the likelihood of the resolution of the opioid matters through settlement or litigation. |

| | |

| | To test the Company's legal contingencies, our substantive audit procedures included, among others, testing the completeness of the legal contingencies subject to evaluation by the Company and evaluating the Company's analysis of its assessment of the probability of outcome for each material legal contingency through inspection of responses to inquiry letters sent to both internal and external legal counsel, discussions with internal and external legal counsel to confirm our understanding of the allegations, and obtaining written representations from executives of the Company. We also compared the Company's assessment with its relevant history of similar legal contingencies that have been settled or otherwise resolved to evaluate the consistency of the Company's assessment for outstanding legal contingencies at the balance sheet date. For example, for the opioid matters, we considered the litigation, claims or assessments, progress of the respective legal cases, communications with plaintiffs and the experience of other similar entities when evaluating the Company's conclusions. |

| | |

| | For those legal contingencies for which the Company has determined that a loss is probable and reasonably estimable and is therefore required to be recognized, and for those legal contingencies for which the Company has determined that a loss is either probable or reasonably possible, but the Company is unable to estimate the range of loss, and is therefore required to be disclosed, we evaluated the method of measuring the amounts of the recorded and disclosed contingencies. We assessed the Company’s estimate of the amount of the loss, for both contingencies that are probable and reasonably possible, through inspection of responses to inquiry letters sent to both internal and external legal counsel, direct discussions with internal and external legal counsel, inspection of court rulings, and inspection of settlement agreements. We also obtained written representations from executives of the Company. |

| | |

| | |

| | |

| | Goodwill - Identification of Reporting Units |

| *Description of the Matter* | The Company tests goodwill for impairment at the level of reporting referred to as a reporting unit. As discussed in Note 1 of the consolidated financial statements, the Company identified its reporting units based upon its management reporting structure. Goodwill arising from acquisitions has been assigned to the reporting unit or units as of the acquisition date that are expected to benefit from the synergies of the combination. When identifying its reporting units, the Company has aggregated two or more components within an operating segment that have similar economic characteristics. |

| | |

| | The determination of whether two or more components within an operating segment have similar economic characteristics requires the Company to evaluate the characteristics of the respective components, which include the similarity of long-term gross margins, the nature of the products and services, the nature of the production processes, the type or class of customer, the methods used to distribute products or provide their services, and the nature of the regulatory environment. However, not each of these factors must be met for two components to be considered economically similar, and the considerations are not limited to these factors. |

| | |

| | Auditing management's determination of reporting units is highly subjective and significant judgment is involved when evaluating whether two or more components have similar economic characteristics for purposes of aggregation into a single reporting unit. A change in the judgment used in the determination of a reporting unit could result in goodwill impairment. |

| | |

| *How We Addressed the Matter in Our Audit* | We tested the Company's internal controls related to management's identification of its reporting units. For example, we tested controls over management's review of documentation of the criteria assessed when determining whether one or more components within an operating segment have similar economic characteristics. |

| | |

| | To test the Company's aggregation of two or more components within an operating segment into a single reporting unit, our substantive audit procedures included, among others, evaluating whether the aggregated components have similar economic characteristics. As part of our evaluation, we considered (i) the similarity of long-term gross margins of the aggregated components; (ii) the similarity of the nature of the regulatory environments of the aggregated components; (iii) the similarity of the products and services of the aggregated components; (iv) the similarity of the types or classes of customer of the aggregated components, and (v) the methods used to distribute products or provide services of the aggregated components. We corroborated the Company’s assessment of aggregation of components by reviewing reports used by segment management, including the financial performance of the respective components, to assess the aggregation criteria. |

| | |

| | PharMEDium long-lived asset impairment |

| *Description of the Matter* | As discussed in Note 1 of the consolidated financial statements, the Company recognized an impairment loss on PharMEDium's long-lived assets. The continued suspension of production activities at PharMEDium’s compounding facility in Memphis, Tennessee, and further negotiations with the FDA and DOJ regarding a potential consent decree resulted in the Company revising its long-range plan and identifying an impairment indicator of the asset group. At March 31, 2019, the Company evaluated the PharMEDium long-lived assets for recoverability utilizing undiscounted cash flows that were based on the weighted average of multiple strategic alternatives and determined that the assets were not recoverable and were therefore impaired. As a result, the Company recognized a $570 million impairment loss, which represented the amount by which the carrying value exceeded the estimated fair value of these assets. |

| | |

| | Auditing the Company's impairment loss on PharMEDium's long-lived assets was complex due to the significant estimation uncertainty in determining the fair value of the PharMEDium asset group. Significant assumptions used in the Company's fair value estimate of the PharMEDium asset group included (i) the discount rate; (ii) the period in which PharMEDium will resume production at or near capacity; (iii) estimated revenue growth rates; (iv) the estimated EBITDA (earnings before interest, taxes, depreciation, and amortization) margins when considering the likelihood of higher operating and compliance costs; and (v) future economic conditions and demand. Each of these assumptions was forward-looking and could have been affected by the outcome of the negotiations with the FDA and DOJ, the provisions of the final consent decree, the results of the third-party audits, and future economic conditions and demand. |

| | |

| | |

| *How We Addressed the Matter in Our Audit* | We tested the Company's internal controls over the process for the recognition and measurement of the long-lived asset impairment. For example, we tested controls over management’s review of the forecasted cash flows and their review of the significant assumptions and other inputs used in the fair value measurement, such as the discount rate. |

| | |

| | To test the PharMEDium long-lived asset impairment loss, our substantive audit procedures included, among others, the performance of a sensitivity analysis of the assumptions to evaluate the change in the fair value of the PharMEDium asset group resulting from changes in the assumptions and therefore identify the assumptions that have the most significant impact on the fair value calculation. We involved valuation specialists to assist with our evaluation of the methodology used by the Company and significant assumptions used in the fair value measurement of the PharMEDium asset group, including the evaluation of the reasonableness of the discount rate selected by the Company. We compared the forecasted cash flows to business plans, current industry, market and economic trends, and information from discussions with management and external legal counsel about the status of negotiations with the FDA and DOJ, reviewed the provisions of the final consent decree and compared previous forecasts to actual results to assess the forecasted cash flows utilized in the fair value measurement. |

| | |

November 19, 2019

| | | | | |

| --- | --- | --- | --- | --- |

November 20, 2018

| Merchandise inventories | | 11,918,508 | | | | 11,461,428 | | |

| Warrants | | — | | | | — | | | | 140,342 | | |

| Pension settlement | | — | | | | — | | | | 47,607 | | |

| Pension plan adjustment, net of tax of $19,054 | | — | | | | — | | | | 31,538 | | |

| September 30, 2015 | | $ | 2,750 | | | $ | 3,736,477 | | | $ | 1,164,489 | | | $ | (136,333 | ) | | $ | (4,150,997 | ) | | $ | — | | | $ | 616,386 | |

| Net income | | — | | | | — | | | | 1,427,929 | | | | — | | | | — | | | | — | | | | 1,427,929 | | |

| Other comprehensive income | | — | | | | — | | | | — | | | | 22,025 | | | | — | | | | — | | | | 22,025 | | |

| Common stock purchases for employee stock purchase plan | | — | | | | (548 | | ) | | — | | | | — | | | | — | | | | — | | | | (548 | | ) |

| Warrants expense | | — | | | | 140,342 | | | | — | | | | — | | | | — | | | | — | | | | 140,342 | | |

| Exercises of warrants | | — | | | | 336,998 | | | | — | | | | — | | | | 2,023,481 | | | | — | | | | 2,360,479 | | |

| Accelerated share repurchase transaction | | — | | | | (20,000 | | ) | | — | | | | — | | | | (380,000 | | ) | | — | | | | (400,000 | | ) |

| Other | | 6 | | | | (6 | | ) | | — | | | | — | | | | — | | | | — | | | | — | | |

| Warrants expense | | — | | | | — | | | | 140,342 | | |

| (Gain) loss on the sale of assets | | (6,444 | | ) | | 1,314 | | | | 2,234 | | |

| Gain on sale of business | | — | | | | (3,677 | | ) | | — | | |

| Other | | (12,634 | | ) | | 10,107 | | | | (7,405 | | ) |

| Accrued expenses | | (537,905 | | ) | | 661,174 | | | | (43,267 | | ) |

| Other liabilities | | (13,215 | | ) | | (18,899 | | ) | | 33,056 | | |

| Exercises of warrants | | — | | | | — | | | | 2,360,479 | | |

| Cash and cash equivalents at beginning of year | | 2,435,115 | | | | 2,741,832 | | | | 2,167,442 | | |

ASU 2014-09 was originally scheduled to be effective for annual reporting periods beginning after December 15, 2016, including interim periods within those reporting periods.

In July 2015, the FASB deferred the effective date of ASU 2014-09 by one year.

The Company completed its evaluation of the impact of adopting ASU 2016-08, ASU 2016-10, and ASU 2014-09, collectively Accounting Standards Codification 606 or "ASC 606".

Entities are permitted to adopt the standard early, and a modified retrospective application is required.

The Company anticipates that the adoption of this new accounting standard will have a material impact on the Company's Consolidated Balance Sheets.

However, the Company continues to evaluate the impact of adopting this new accounting guidance and, therefore, cannot reasonably estimate the impact on the results of operations or cash flows at this time.

The Company expects to adopt this standard in the first quarter of fiscal 2020.

The Company has one foreign currency denominated contract outstanding that hedges the foreign currency exchange risk of a C$17.5 million note outstanding as of September 30, 2018.

The Company may elect to perform the qualitative annual assessment in future periods.

could differ significantly resulting in future impairment charges related to recorded goodwill balances.

PharMEDium Healthcare Holdings, Inc.'s ("PharMEDium") long-lived assets were also tested for recoverability in fiscal 2018 due to the existence of an impairment indicator.

The Company concluded that the suspension of production activity represented an impairment indicator of PharMEDium's long-lived assets and, therefore, performed a recoverability assessment of PharMEDium's long-lived assets.

The recoverability assessment was based on the carrying value of the PharMEDium asset group, excluding goodwill.

The Company concluded that PharMEDium's long-lived assets are recoverable as of September 30, 2018; however, the forecasted undiscounted cash flows used to perform the recoverability assessment are inherently uncertain and include assumptions, such as the timing of resumed production activities and profitability, that could differ from actual results in future periods.

Investment Securities Available-For-Sale

The Company's marketable debt securities have been classified and accounted for as available-for-sale.

Management determines the appropriate classification of its investments at the time of purchase and evaluates the classifications at each balance sheet date.

[removed: Evaluation] [added: Evaluation] of Disclosure Controls and [removed: Procedures][added: Procedures]

[removed: Changes] [added: Changes] in Internal Control over Financial [removed: Reporting][added: Reporting]

There were no changes during the fiscal quarter ended September 30, [removed: 2018] [added: 2019] in the Company's internal control over financial reporting that materially affected, or are reasonably likely to materially affect, those controls.

[removed: MANAGEMENT'S] [added: MANAGEMENT'S] REPORT ON INTERNAL CONTROL OVER FINANCIAL [removed: REPORTING][added: REPORTING]

AmerisourceBergen's management assessed the effectiveness of AmerisourceBergen's internal control over financial reporting as of September 30, [removed: 2018.][added: 2019.]

Based on management's assessment and those criteria, management has concluded that AmerisourceBergen's internal control over financial reporting was effective as of September 30, [removed: 2018.][added: 2019.]

[removed: REPORT] [added: REPORT] OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING [removed: FIRM ON INTERNAL][added: FIRM]

[removed: CONTROL OVER FINANCIAL REPORTING][added: Opinion on Internal Control over Financial Reporting]

[removed: The] [added: To the Stockholders and the] Board of Directors [removed: and Stockholders] of AmerisourceBergen Corporation

[removed: Opinion on] [added: Definition and Limitations of] Internal Control [removed: over] [added: Over] Financial [removed: Reporting][added: Reporting]

We have audited AmerisourceBergen Corporation and [removed: subsidiaries’] [added: subsidiaries'] internal control over financial reporting as of September 30, [removed: 2018,] [added: 2019,] based on criteria established in Internal [removed: Control- Integrated] [added: Control-Integrated] Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, AmerisourceBergen Corporation and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of September 30, [removed: 2018,] [added: 2019,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the [removed: 2018] [added: 2019] consolidated financial statements of the Company and our report dated November [removed: 20, 2018] [added: 19, 2019] expressed an unqualified opinion thereon.

[removed: Basis] [added: Basis] for [removed: Opinion][added: Opinion]

November 19, 2019

During the second quarter of fiscal 2018, the Company acquired H.D. Smith Holding Company ("H.D. Smith") and consolidated Profarma Distribuidora de Produtos Farmacêuticos S.A. ("Profarma") and Cannes RJ Participações S.A. (the "specialty joint venture with with Profarma").

As permitted by related SEC staff interpretive guidance for newly acquired businesses, these have been excluded from management's assessment of the effectiveness of the Company's internal control over financial reporting as of September 30, 2018.

In the aggregate, these businesses represented 5% of the total assets and 2% of total revenue of the Company as of and for the fiscal year ended September 30, 2018.

As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of H.D. Smith Holding Company, Profarma Distribuidora de Produtos Farmacêuticos S.A., and Cannes RJ Participações S.A., which are included in the 2018 consolidated financial statements of the Company and constituted 5% of total assets, as of September 30, 2018 and 2% and 3% of revenues and net income, respectively, for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of H.D. Smith Holding Company, Profarma Distribuidora de Produtos Farmacêuticos S.A., and Cannes RJ Participações S.A.

Definition and Limitations of Internal Control Over Financial Reporting

November 20, 2018

[removed: PART III][added: PART III]

Information appearing in our Notice of Annual Meeting of Stockholders and Proxy Statement for the [removed: 2019] [added: 2020] Annual Meeting of [removed: stockholders] [added: Stockholders] (the [removed: "2019] [added: "2020] Proxy Statement"), including information appearing under "Proxy Statement Highlights - Director Nominees and Board Summary," "Corporate Governance and Related Matters," "Audit Committee Matters," and [removed: "Section] [added: "Delinquent Section] 16(a) [removed: Beneficial Owner Reporting Compliance,"] [added: Reports,"] is incorporated herein by reference.

We will file the [removed: 2019] [added: 2020] Proxy Statement with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the close of the fiscal year.

A copy of this Code of Ethics is posted on our Internet website, which is [removed: investor.amerisourcebergen.com.][added: *investor.amerisourcebergen.com*.]

Information contained in the [removed: 2019] [added: 2020] Proxy Statement, including information appearing under "Corporate Governance and Related Matters" and "Executive Compensation and Related Matters" in the [removed: 2019] [added: 2020] Proxy Statement, is incorporated herein by reference.

Information contained in the [removed: 2019] [added: 2020] Proxy Statement, including information appearing under "Beneficial Ownership of Common Stock" and "Equity Compensation Plan Information" in the [removed: 2019] [added: 2020] Proxy Statement, is incorporated herein by reference.

Information contained in the [removed: 2019] [added: 2020] Proxy Statement, including information appearing under "Corporate Governance and Related Matters" and "Related Person Transactions" in the [removed: 2019] [added: 2020] Proxy Statement, is incorporated herein by reference.

Information contained in the [removed: 2019] [added: 2020] Proxy Statement, including information appearing under "Audit Committee Matters" in the [removed: 2019] [added: 2020] Proxy Statement, is incorporated herein by reference.

[removed: PART IV][added: PART IV]

[removed: (a)] [added: (a)] (1) and (2) List of Financial Statements and [removed: Schedules.][added: Schedules.]

[removed: Financial] [added: *Financial] Statements: The following consolidated financial statements are submitted in response to Item [removed: 15(a)(1):][added: 15(a)(1):*]

| | [removed: Page] [added: Page] |

| [Report of Ernst & Young LLP, Independent Registered Public Accounting [removed: Firm](#s244022CE09BAA2FD81D1811AEE4798E9)] [added: Firm](#s06AE8849479A59928A821039816E2F16)] | [removed: [45](#s244022CE09BAA2FD81D1811AEE4798E9)] [added: [45](#s06AE8849479A59928A821039816E2F16)] |

| [Consolidated Balance Sheets as of September 30, [removed: 2018] [added: 2019] and [removed: 2017](#sCB41CCF86E9EF8361DDD811ACD95667F)] [added: 2018](#sCAE2CB3EF74C5B4B898AFD8E902B313D)] | [removed: [46](#sCB41CCF86E9EF8361DDD811ACD95667F)] [added: [49](#sCAE2CB3EF74C5B4B898AFD8E902B313D)] |

| [Consolidated Statements of Operations for the fiscal years ended September 30, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016](#s2DB6E80CEC16953940DC811ACDD3C918)] [added: 2017](#sA8DB892F5A6855DD92D4675FA64590F7)] | [removed: [47](#s2DB6E80CEC16953940DC811ACDD3C918)] [added: [50](#sA8DB892F5A6855DD92D4675FA64590F7)] |

| [Consolidated Statements of Comprehensive Income for the fiscal years ended September 30, [added: 2019,] 2018, [removed: 2017,] and [removed: 2016](#sEBB19EAF8BE82F373865811ACE02A532)] [added: 2017](#s7C8AE9914AB25319A79E3B4AFD159490)] | [removed: [48](#sEBB19EAF8BE82F373865811ACE02A532)] [added: [51](#s7C8AE9914AB25319A79E3B4AFD159490)] |

| [Consolidated Statements of Changes in Stockholders' Equity for the fiscal years ended September 30, [added: 2019,] 2018, [removed: 2017,] and [removed: 2016](#s57EA91F0558E40246EDC811ACE12BD93)] [added: 2017](#sFCC0B031D2C75B489A5271AC183172C6)] | [removed: [49](#s57EA91F0558E40246EDC811ACE12BD93)] [added: [52](#sFCC0B031D2C75B489A5271AC183172C6)] |

| [Consolidated Statements of Cash Flows for the fiscal years ended September 30, [added: 2019,] 2018, [removed: 2017,] and [removed: 2016](#s40BC7BAA3AC467C86BE6811ACEAEDF4B)] [added: 2017](#s78A0410F2AB05BFC97083F9A8CB2D842)] | [removed: [50](#s40BC7BAA3AC467C86BE6811ACEAEDF4B)] [added: [53](#s78A0410F2AB05BFC97083F9A8CB2D842)] |

| [Notes to Consolidated Financial [removed: Statements](#s09950951D083A1916426811AF0014832)] [added: Statements](#s93CFDDB5864D5444882EB049EA9BAEDD)] | [removed: [51](#s09950951D083A1916426811AF0014832)] [added: [54](#s93CFDDB5864D5444882EB049EA9BAEDD)] |

| [removed: Financial] [added: *Financial] Statement Schedule: The following financial statement schedule is submitted in response [removed: to Item 15(a)(2):] [added: to* *Item 15(a)(2):*] | |

| [Schedule II — Valuation and Qualifying [removed: Accounts](#s50A62FAE8C86E1608518811AD3AD777F)] [added: Accounts](#s8592653ECA7A56AA95B79AEE18DAC016)] | [removed: [94](#s50A62FAE8C86E1608518811AD3AD777F)] [added: [93](#s8592653ECA7A56AA95B79AEE18DAC016)] |

[removed: (a)] [added: (a)] (3) List of [removed: Exhibits.*][added: Exhibits.*]