James F. Cleary
Chief Financial Officer and Executive Vice President at Cencora
Thanks, Steve. Good morning, everyone. Before I discuss our third quarter results, I want to comment on the Pharmaceutical Distribution industry's continued progress towards reaching a negotiated resolution to substantially address the nationwide opioid litigation. The proposed settlement agreement represents an important step towards achieving a broad resolution of governmental opioid claims and aligns with the legal accrual the company recorded in the fourth quarter of its fiscal year ended September 30, 2020. AmerisourceBergen appreciates the enormity of the opioid epidemic, and this broad industry resolution is an important step towards delivering a meaningful relief to communities across the United States.
Turning now to our business. AmerisourceBergen remains focused on our differentiated and innovative value proposition to deliver long-term growth and value creation to our stakeholders. Powered by our purpose-driven team members, we will continue to execute on our pharmaceutical-centric strategy on an enhanced global platform to serve both upstream partners and downstream customers. As we recently completed the acquisition of Alliance Healthcare in the quarter, I would like to welcome the Alliance Healthcare team to AmerisourceBergen. Having joined AmerisourceBergen myself through an acquisition and experience several acquisitions during my tenure, I have seen firsthand a thoughtful and strategic approach AmerisourceBergen takes to successfully integrate acquired companies.
We enjoy working with our incredibly talented new team members and learning more not only about their businesses, but also about how much we culturally have in common. As we have said since announcing the acquisition, Alliance Healthcare is a strong and efficient business, and we look forward to working together to continue to provide innovative solutions to our customers and stakeholders. My remarks today will focus on our adjusted non-GAAP financial results unless otherwise stated. Growth rates and comparisons are made against the prior year June quarter. For a detailed discussion of our GAAP results, please refer to our earnings release. I will provide commentary in two main areas this morning. First, I will review our adjusted quarterly consolidated results and our segment performance.
Second, I will cover the upward revision to our fiscal 2021 guidance. Turning now to discuss our third quarter results. We finished the quarter with adjusted diluted EPS of $2.16, an increase of 17%, which was driven by the continued strong performance across AmerisourceBergen's businesses and also benefited from the one month contribution from the Alliance Healthcare acquisition. Our consolidated revenue was $53.4 billion, up 18%, driven by revenue growth in both the Pharmaceutical Distribution Services segment and Other, which includes Alliance Healthcare and our Global Commercialization Services and Animal Health businesses.
Consolidated gross profit increased 32% to $1.6 billion, driven by increases in gross profit in each operating segment. In the quarter, gross profit margin increased 33 basis points from the prior year quarter to 3.05%. This was primarily due to the acquisition of Alliance Healthcare, which has a higher gross profit margin and increase in sales of specialty products in Pharmaceutical Distribution Services and growth in some of our higher-margin businesses. Regarding consolidated operating expenses, operating expenses were $996 million, up 38% year-over-year due to the addition of the Alliance Healthcare business and also includes the internal investments we are making across our business with a focus on continuing to offer innovative services and solutions to our partners.
These investments are important as they ensure we continue to create differentiated value and support our long-term growth. Turning now to consolidated operating income. Our operating income was $631 million, up 24% compared to the prior year quarter. This increase was driven by increases in both the Pharmaceutical Distribution Services segment and Other, which I will discuss in more detail when I review segment-level performance. Operating income margin grew six basis points to 1.18% as a result of the contribution from the Alliance Healthcare acquisition and growth in higher-margin businesses. Moving now to our net interest expense and effective tax rate for the third quarter.
The net interest expense was $51 million, up 36% due to debt related to the Alliance Healthcare acquisition. Our effective income tax rate was 21%, up from 18.8% in the third quarter of fiscal 2020, which benefited from a discrete tax item. Our diluted share count was 208.9 million shares, a 1.6% increase due to the dilution related to employee stock comp and the weighted average saving impact of the June issuance of two million shares delivered to Walgreens as a part of the Alliance Healthcare acquisition. Turning now to adjusted free cash flow and cash. Our adjusted free cash flow was strong in our fiscal third quarter, bringing our year-to-date free cash flow number to $1.2 billion, while our cash balance was $2.6 billion. This completes the review of our consolidated results. Now I'll turn to our segment results. Pharmaceutical Distribution Services segment revenue was $49.3 billion, up 13% for the quarter driven by increased sales of specialty products and solid performance broadly across our Pharmaceutical Distribution businesses.
Across our distribution businesses, we are seeing better and earlier-than-expected utilization trends as there have been more normalized physician interaction patterns leading to new patient starts. Pharmaceutical Distribution Services segment's operating income increased about 13% to $484 million. AmerisourceBergen continues to benefit in the quarter from our leadership in specialty, where there has been a notable return to pre-COVID strength and continued positive biosimilar trends.
I will now turn to Other, which includes Alliance Healthcare MWI, World Courier and AmerisourceBergen Consulting. Alliance Healthcare is in our results for the month of June and had strong performance out of the gate. In the quarter, Other segment's revenue was $4.1 billion, up 128%, driven by the Alliance Healthcare acquisition and growth across the remaining operating segments. Excluding the impact of Alliance Healthcare, Global Commercialization Services and Animal Health revenue was up 22%. Other segment's operating income was $147 million, up 77% primarily due to the Alliance Healthcare acquisition and strong performance at both MWI and World Courier. Excluding the impact of Alliance Healthcare, Global Commercialization Services and Animal Health operating income was up 21%, reflecting the solid fundamentals of the businesses. World Courier has continued its exceptional performance, providing high- specialty logistics around the globe. Despite challenges in global logistics due to limited international cargo space, the team has delivered industry-leading solutions and expertise to support our customers and partners.
Looking ahead, the business is highly complementary to Alliance Healthcare's Alloga and Alcura businesses, and we are excited to offer an integrated suite of solutions on our enhanced global platform to serve our manufacturer customers. Turning now to MWI. The pandemic has truly encouraged all of us to focus on the health and wellbeing of our communities and families. And this includes our animal companions. Over 12 million families in the U.S. have gained pets since the pandemic began, and since pet owners view their pets as family members, the focus on health and wellbeing is a positive market trend for our MWI companion business.
In the production animal market, our investments in technology solutions and the unique offering of value-added services position the business to support long-term global demand for protein. MWI's strong execution and customer relationships have allowed the business to remain a best-in-class provider that is well positioned to capture these positive market trends. That concludes our segment-level discussion, and I will now turn to our 2021 guidance. Following the closing of the Alliance Healthcare acquisition back in June, we updated our 2021 guidance for revenue, adjusted diluted EPS and weighted average shares to reflect the expected contribution from Alliance Healthcare and the weighted average share count impacted the two million shares of stock that we delivered to Walgreens. Given the continued strong performance of AmerisourceBergen's businesses, we are again raising our EPS guidance from a range of $8.90 to $9.10, up to a range of $9.15 to $9.30, reflecting growth of 16% to 18% from the previous fiscal year. We are also updating other financial guidance metrics for fiscal 2021, including a meaningful increase to our expectations for consolidated and segment adjusted operating income. First, I'll begin with operating expenses.
Operating expenses are now expected to be approximately $3.9 billion due to the Alliance Healthcare acquisition. As a reminder, when you consider your models, Alliance Healthcare has higher margins for gross profit, operating expenses and operating income as evidenced by the update to our fiscal 2021 guidance for consolidated operating expenses to reflect the four months of Alliance Healthcare. Next, turning to operating income. We now expect operating income to be approximately $2.6 billion. This is a result of raising our Pharmaceutical Distribution operating income guidance to the low double-digit growth range given the strong trends we have continued to see in our business, including specialty, which was further bolstered by patient referral activity this quarter.
This rate also reflects our expectation for operating income in Other of approximately $610 million to $620 million. Excluding the contribution from Alliance Healthcare, operating income growth for Global Commercialization Services and Animal Health group is expected to be in the low double-digit range for fiscal 2021, driven by the strong performance of the World Courier and MWI. Finally, turning to free cash flow, we have raised our free cash flow guidance to be approximately $1.7 billion, up from approximately $1.5 billion. As it pertains to fiscal 2022, our corporate planning process remains unchanged. We will provide comprehensive financial guidance at the end of our current fiscal year.
This approach allows for guidance to be fully informed by the output of our year-end business planning process. That being said, we want to remind you three important items from fiscal 2021 as you consider your models. First, through the end of June, the financial contribution from sales of COVID-19 therapies has declined in line with the expectations we have shared since the first quarter. COVID therapy distribution contributes roughly $0.25 to our fiscal 2021 adjusted EPS guidance, and the benefit from that exclusivity is not expected to repeat in fiscal 2022. Second, we will have higher interest expense in fiscal 2022 driven by the debt related to the Alliance Healthcare acquisition. Third, for the fourth quarter of fiscal 2021, we expect our weighted average shares to be almost 211 million shares due primarily to the fully planned impact of the two million shares of our stock delivered to Walgreens at the close of the Alliance Healthcare acquisition.
Our share count will continue to tick higher in 2022 due to normal employee stock comp-related solution and the fact that we have committed to prioritize paying down $2 billion in total debt over the next two years and [lower] shareholder purchases. Moving past these modeling reminders. The strength of AmerisourceBergen is undeniable and is exemplified by our continued exceptional results quarter-after-quarter. This is the sixth quarter since the pandemic began and our results demonstrate the resilience and strength of our company. I am thoroughly impressed by the execution and performance across our businesses that has positioned us for continued success.
Our pharmaceutical-centric foundation, market-leading talent and competitive positioning enable us to capitalize on market trends and continue to deliver strong results. Before I conclude my prepared remarks this morning, I would like to touch on our ESG and diversity and inclusion numbers. AmerisourceBergen remains focused on creating long-term financial value, and we continue to work diligently to build our corporate stewardship initiatives to ensure the work we are doing benefits all stakeholders.
We are focused on continuing to build robust talent development programs so that all our team members feel they have opportunities to grow and learn. In our communities, we're supporting nonprofit partners through our foundation to expand access to quality healthcare, promote health equity and provide resources to ensure prescription drug safety. In addition, we aim to be environmental stewards in the communities where we live and work through initiatives like our commitment to using sustainable packaging to reduce the use of single-use plastics and working closely with our partners to optimize delivery routes to minimize our greenhouse gas emission footprint.
We look forward to providing further updates on our ESG progress as we continue to find ways to make a positive impact on the people, planet and communities where we live and work. As we focus in on the end of our fiscal year with strong momentum and continued outperformance across our business, it is important to take a moment to reflect on the important accomplishments we have already had this year. First, our teams continue to execute and leverage our capabilities to create differentiated value for our stakeholders. Second, our future growth has been further solidified by our acquisition of Alliance Healthcare. Third, our purpose-driven culture continues to empower our team members that think, plan and act decisively to do what is right for our people, partners and communities.
And finally, we continue our long-term commitment to strategically invest in our businesses and talent to ensure that AmerisourceBergen will continue to deliver long-term sustainable value for all our stakeholders. As we look to the future, I'm proud of the resilient foundation we have built while we facilitate pharmaceutical innovation and remain united in our responsibility to create healthier futures. Thank you for your interest in AmerisourceBergen.
Now I will turn the call over to the operator to start our Q&A. Operator?