Diplomat Announces 2nd Quarter Financial Results

Published: Aug 06, 2018

 

2nd Quarter Revenue of $1,416 Million, an increase of 26%, Net (Loss) Income Attributable to Diplomat of $(4.0) Million compared to $3.6 Million, Adjusted EBITDA of $42.7 Million, an increase of 70%

FLINT, Mich., Aug. 6, 2018 /PRNewswire/ -- Diplomat Pharmacy, Inc. (NYSE: DPLO), the nation's largest independent provider of specialty pharmacy services, announced financial results for the quarter ended June 30, 2018. All comparisons, unless otherwise noted, are to the quarter ended June 30, 2017. Prior period financials have been recast to include certain direct expenses as part of cost of sales instead of selling, general and administrative expense ("SG&A") for our specialty segment. This change is a reclassification only and has no impact on overall results.

Second Quarter 2018 Highlights include:

  • Revenue of $1,416 million, compared to $1,126 million, an increase of 26%
    • Specialty segment revenue of $1,234 million, compared to $1,126 million
    • PBM segment revenue of $189 million, which was not part of the business in the prior year period
  • Specialty segment total prescriptions dispensed of 236,000, compared to 220,000
  • PBM segment total volume, adjusted to 30-day equivalent, of 2,123,000
  • Gross margin of 6.9% versus 5.9%
    • Specialty segment gross margin of 5.9% versus 5.9%
    • PBM segment gross margin of 13.7%
  • EPS of $(0.05) per diluted common share versus $0.05
    • Adjusted EPS of $0.17 versus $0.25
  • Adjusted EBITDA of $42.7 million, compared to $25.2 million
    • Adjusted EBITDA margin of 3.0% versus 2.2%
  • Net cash provided by operating activities was $18.1 million, compared to $23.0 million
  • Net debt, including contingent consideration, reduced to $609.2 million, from $618.2 million at March 31, 2018

Brian Griffin, Chairman and CEO of Diplomat, commented "The Diplomat team delivered another great quarter with record revenue and adjusted EBITDA, driven by continued solid execution of our plan. Our PBM integration is reaching its conclusion with CastiaRx demonstrating strong results in the quarter, as well as continued momentum on our growth and profitability initiatives across the entire enterprise. I am truly excited to join such a highly energized organization and look forward to exploring our growth potential for the benefit of all of our stakeholders."

Second Quarter Financial Summary:

Revenue for the second quarter of 2018 was $1,416 million, compared to $1,126 million in the second quarter of 2017, an increase of $290 million or 26%. Revenue was comprised of $1,234 million and $189 million from our Specialty segment and our Pharmacy Benefit Management ("PBM") segment, respectively. There was a $6.4 million inter-company elimination of revenue, and associated cost of sales, between the segments. The increase in our Specialty segment revenue was primarily driven by $29 million of revenue from our acquisitions. The remaining increase in our Specialty segment was driven by manufacturer price increases, access to dispense drugs that were new in the past year and increased volume due to both payor and physician relationships.

Gross profit in the second quarter of 2018 was $98.4 million and generated an 6.9% gross margin, compared to $66.7 million gross profit and 5.9% gross margin in the second quarter of 2017. Gross profit was comprised of $72.5 million and $25.9 million from our Specialty segment and PBM segment, respectively. The gross margin increase in the quarter was primarily due to the impact of our PBM acquisitions, as well as the impact of the acquired entities in our Specialty segment versus the prior year period.

SG&A for the second quarter of 2018 were $90.6 million, an increase of $28.8 million, compared to $61.9 million in the second quarter of 2017. This increase is primarily driven by approximately $12.7 million related to employee cost, including employee cost for our acquired entities, a $4.1 million increase in share-based compensation, and approximately $0.6 million of non-recurring severance expense. Also contributing to the SG&A expense increase was a $7.3 million increase in amortization expense from definite-lived intangible assets, including capitalized software for internal use, and a $2.3 million increase in the fair value of contingent consideration, both of which are associated with our acquired entities. We also experienced increases in other SG&A; including, building and equipment with the addition of our Chandler, Arizona facility, recruiting primarily related to our CEO search, travel, and other miscellaneous expenses.

Net (loss) income attributable to Diplomat for the second quarter of 2018 was $(4.0) million compared to $3.6 million in the second quarter of 2017. This decrease was primarily driven by an $8.5 million increase in interest expense due to a significant increase in outstanding debt to fund our PBM acquisitions. Adjusted EBITDA for the second quarter of 2018 was $42.7 million compared to $25.2 million in the second quarter of 2017, an increase of $17.5 million.

Earnings per share for the second quarter of 2018 was $(0.05) per basic/diluted common share, compared to $0.05 per basic/diluted common share for the second quarter of 2017. Diluted non-GAAP adjusted earnings per share ("Adjusted EPS") was $0.17 in the second quarter of this year compared to $0.25 in the second quarter of 2017.

2018 Financial Outlook

For the full-year 2018, we are updating our previous financial guidance:

  • Revenue between $5.5 and $5.9 billion, no change to previous range
  • Net (loss) income attributable to Diplomat between $(11.0) and $0.5 million, versus the previous range of $4.5 and $13.0 million
  • Adjusted EBITDA between $164 and $170 million, no change to previous range
  • Diluted EPS between $(0.15) and $0.01, versus the previous range of $0.06 and $0.17

Our EPS expectations assume approximately 74,300,000 weighted average common shares outstanding on a diluted basis and a tax rate of (5)% and 32%, for the low- and high-end of the range, respectively, for the full year 2018, each of which could differ materially.

Earnings Conference Call Information

As previously announced, the Company will hold a conference call to discuss its second quarter performance this evening, August 6, 2018, at 5:00 p.m. Eastern Time. Shareholders and interested participants may listen to a live broadcast of the conference call by dialing 833-286-5805 (647-689-4450 for international callers) and referencing participant code 1842529 approximately 15 minutes prior to the call. A live webcast of the conference call and associated slide presentation will be available on the investor relations section of the Company's website for approximately 90 days at ir.diplomat.is.

About Diplomat

Diplomat (NYSE: DPLO) is the nation's largest independent provider of specialty pharmacy services--helping people with complex health conditions in all 50 states. Rooted in this patient care expertise, Diplomat also provides industry-focused specialty solutions through two brands: CastiaRx, which serves payers as a leading specialty benefit manager, and EnvoyHealth, which offers tailored solutions for healthcare innovators. Diplomat opened its doors in 1975 as a neighborhood pharmacy with one essential tenet: "Take good care of patients and the rest falls into place." Today, that tradition continues--always focused on improving patient care. For more information, visit diplomat.is.

Non-GAAP Information

Adjusted EPS adds back, net of income taxes, the impact of all merger and acquisition related expenses, including amortization of intangible assets, the change in fair value of contingent consideration, as well as transaction-related costs. We exclude merger and acquisition-related expenses from Adjusted EPS because we believe the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and such expenses can vary significantly between periods as a result of new acquisitions, full amortization of previously acquired intangible assets, or ultimate realization of contingent consideration. Investors should note that acquisitions, once consummated, contribute to revenue in the periods presented as well as future periods and should also note that amortization and contingent consideration expenses may recur in future periods. A reconciliation of Adjusted EPS, a non-GAAP measure, to EPS as prepared in accordance with accounting principles generally accepted in the United States ("GAAP") can be found below. Please note that going forward Diplomat will no longer present, or provide guidance with respect to, Adjusted EPS.

We define Adjusted EBITDA as net income (loss) attributable to Diplomat before interest expense, income taxes, depreciation and amortization, share-based compensation, change in fair value of contingent consideration and other merger and acquisition-related expenses, restructuring and impairment charges, and certain other items that we do not consider indicative of our ongoing operating performance (which are itemized below in the reconciliation to net (loss) income attributable to Diplomat). Adjusted EBITDA is not in accordance with, or an alternative to, GAAP. In addition, this non-GAAP measure is not based on any comprehensive set of accounting rules or principles. You should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in the presentation, and we do not infer that our future results will be unaffected by unusual or non-recurring items.

We consider Adjusted EBITDA and Adjusted EPS to be supplemental measures of our operating performance. We present Adjusted EBITDA and Adjusted EPS because they are used by our Board of Directors and management to evaluate our operating performance. Adjusted EBITDA is also used as a factor in determining incentive compensation, for budgetary planning and forecasting overall financial and operational expectations, for identifying underlying trends, and for evaluating the effectiveness of our business strategies. Further, we believe they assist us, as well as investors, in comparing performance from period-to-period on a consistent basis. Other companies in our industry may calculate Adjusted EBITDA and Adjusted EPS differently than we do and these calculations may not be comparable to our Adjusted EBITDA and Adjusted EPS metrics. A reconciliation of Adjusted EBITDA, a non-GAAP measure, to net (loss) income attributable to Diplomat can be found below.

Forward Looking Statements

This press release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give current expectations or forecasts of future events or our future financial or operating performance, and include Diplomat's expectations regarding revenues, net (loss) income attributable to Diplomat, Adjusted EBITDA, EPS, market share, the expected benefits and performance of acquisitions and growth strategies. The forward-looking statements contained in this press release are based on management's good-faith belief and reasonable judgment based on current information. These statements are qualified by important risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from those forecasted or indicated by such forward-looking statements. These risks and uncertainties include: our ability to adapt to changes or trends within the specialty pharmacy industry; significant and increasing pricing pressure from third-party payors; the amount of direct and indirect remuneration fees, as well as the timing of assessing such fees and the methodology used to calculate such fees; the outcome of material legal proceedings; our relationships with wholesalers and key pharmaceutical manufacturers; bad publicity about, or market withdrawal of, specialty drugs we dispense; a significant increase in competition from a variety of companies in the health care industry; our ability to expand the number of specialty drugs we dispense and related services; maintaining existing patients; revenue concentration of the top specialty drugs we dispense; increasing consolidation in the healthcare industry; managing our growth effectively; our ability to drive volume through a refreshed marketing strategy in traditional specialty pharmacy; our capability to penetrate the fragmented infusion market; the success of our strategy in the PBM space; our ability to effectively execute our acquisition strategy or successfully integrate acquired businesses, including any delays or difficulties in integrating the combined businesses, and the ability to achieve cost savings and operating synergies and the timing thereof; the dependence on our senior management and key employees and managing recent turnover among key employees; and the additional factors set forth in "Risk Factors" in Diplomat's Annual Report on Form 10-K for the year ended December 31, 2017 and in subsequent reports filed with or furnished to the Securities and Exchange Commission. Except as may be required by any applicable laws, Diplomat assumes no obligation to publicly update such forward-looking statements, which are made as of the date hereof or the earlier date specified herein, whether as a result of new information, future developments, or otherwise.

CONTACT:
Terri Anne Powers
Vice President, Investor Relations
312.889.5244 | tpowers@diplomat.is

 

                                                                     DIPLOMAT PHARMACY, INC.

                                                        Condensed Consolidated Balance Sheets (Unaudited)

                                                                      (Dollars in thousands)


                                                                                 June 30,                                        December 31,

                      ASSETS                                                                                          2018                 2017
                                                                                                                      ----                 ----

    Current assets:

                                               Cash and equivalents                                                                     $7,360           $84,251

                                               Receivables, net                                                                        349,845           332,091

                                               Inventories                                                                             170,175           206,603

                                               Prepaid expenses and other current assets                                                18,012            11,125


                                                                                                                                     545,392           634,070



                                                         Total current assets

    Property and equipment, net                                                                                     38,838               38,990

    Capitalized software for internal use, net                                                                      33,865               36,520

    Goodwill                                                                                                       836,427              832,624

    Definite-lived intangible assets, net                                                                          357,841              392,011

    Other noncurrent assets                                                                                          5,507                6,208

                                                                                                                                  $1,817,870        $1,940,423



                                                         Total assets



       LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities:

                                               Accounts payable                                                                       $383,969          $384,719

                                               Rebates payable                                                                          25,257            28,744

                                               Borrowings on line of credit                                                            135,100           188,250

                                               Short-term debt, including current portion of long-term debt                             11,500            11,500

                                               Accrued expenses:

                                                                                                                                      13,641             9,584

                                                    Compensation and benefits

                                                                                                                                       5,300             8,100

                                                    Contingent consideration

                                                                                                                                      22,005            20,560

                                                    Other


                                                                                                                                     596,772           651,457



                                                         Total current liabilities

    Long-term debt, less current portion                                                                           442,734              521,098

    Deferred income taxes                                                                                           13,515               14,367

    Contingent consideration                                                                                         5,870                4,000

    Other                                                                                                                  1,507                  -
                                                                                                                           -----                ---

                                                                                                                                   1,060,398         1,190,922



                                                         Total liabilities

    Commitments and contingencies

    Shareholders' equity:

                                               Preferred stock (10,000,000 shares authorized; none issued and outstanding)                   -                -

                                                Common stock (no par value, 590,000,000 shares authorized; 74,282,135 and
                                                73,871,424

                                                                                                                                     625,354           619,235

                                                    shares issued and outstanding at June 30, 2018 and December 31, 2017,
                                                     respectively)

                                               Additional paid-in capital                                                               45,804            38,450

                                               Retained earnings                                                                        87,276            91,816

                                               Accumulated other comprehensive loss                                                      (962)                -


                                                                                                                                     757,472           749,501



                                                         Total shareholders' equity


                                                                                                                                  $1,817,870        $1,940,423



                                                         Total liabilities and shareholders' equity

 

 

                                                                                                                    DIPLOMAT PHARMACY, INC.

                                                                                                  Condensed Consolidated Statements of Operations (Unaudited)

                                                                                                        (dollars in thousands, except per share amounts)




                                                                                                                                Three Months Ended                                         Six Months Ended

                                                                                                                                     June 30,                                                June 30,
                                                                                                                                     --------                                                --------

                                                                                                                                                    2018                            2017                                     2018                   2017
                                                                                                                                                    ----                            ----                                     ----                   ----

    Net sales                                                                                                                             $1,416,078                      $1,126,464                               $2,758,562             $2,205,204

    Cost of sales                                                                                                                       (1,317,662)                    (1,059,750)                             (2,569,768)           (2,068,728)

                                                                                  98,416           66,714                                                     188,794                    136,476

                                               Gross profit

    Selling, general and administrative expenses                                                                                         (90,642)                       (61,871)                               (172,329)             (123,085)
                                                                                                                                          -------                         -------                                 --------               --------

                                                                                   7,774            4,843                                                      16,465                     13,391

                                               Income from operations


    Other (expense) income:

                                          Interest expense                               (10,392)             (1,931)                                                        (20,819)              (3,980)

                                          Other                                                                     394                                             34                                     811                    66

    Total other expense                                                                                                                   (9,998)                        (1,897)                                (20,008)               (3,914)
                                                                                                                                           ------                          ------                                  -------                 ------

                                                                                 (2,224)           2,946                                                     (3,543)                     9,477

                                               (Loss) income before income taxes

    Income tax (expense) benefit                                                                                                          (1,740)                            544                                    (871)               (1,763)

                                                                                 (3,964)           3,490                                                     (4,414)                     7,714

                                               Net (loss) income

    Less: net loss attributable to noncontrolling interest                                                                                      -                          (101)                                       -                 (244)
                                                                                                                                              ---                           ----                                      ---                  ----

    Net (loss) income attributable to Diplomat Pharmacy, Inc.                                                                             $(3,964)                         $3,591                                 $(4,414)                $7,958



    Net (loss) income per common share:
    -----------------------------------

    Basic                                                                                                                                     $(0.05)                          $0.05                                  $(0.06)                 $0.12
                                                                                                                                               ======                           =====                                   ======                  =====

    Diluted                                                                                                                                   $(0.05)                          $0.05                                  $(0.06)                 $0.12
                                                                                                                                               ======                           =====                                   ======                  =====


    Weighted average common shares outstanding:
    -------------------------------------------

    Basic                                                                                                                                  74,158,622                      67,528,151                               74,077,916             67,209,280

    Diluted                                                                                                                                74,158,622                      68,211,882                               74,077,916             67,997,929

 

 

                                                                                                                                             DIPLOMAT PHARMACY, INC.

                                                                                                      Condensed Consolidated Statements of Operations, Inclusive of Reportable Segment Breakout (Unaudited)

                                                                                                                                 (dollars in thousands, except per share amounts)




                                                                                                                                                     Three Months Ended                                                             Six Months Ended

                                                                                                                                                          June 30,                                                                      June 30,
                                                                                                                                                          --------                                                                      --------

                                                                                                                                                                          2018                                             2017                                             2018                     2017
                                                                                                                                                                          ----                                             ----                                             ----                     ----

    Net sales - Specialty                                                                                                                                     $1,233,746                                       $1,126,464                                       $2,386,725               $2,205,204

    Net sales - PBM                                                                                                                                              188,747                                                -                                         380,215                        -

    Inter-segment elimination                                                                                                                                   (6,415)                                               -                                         (8,378)                       -
                                                                                                                                                                 ------                                              ---                                          ------                      ---

                                                                                   1,416,078                        1,126,464                                                      2,758,562                                        2,205,204

                                               Net sales


    Cost of sales - Specialty                                                                                                                               (1,161,206)                                     (1,059,750)                                     (2,241,365)             (2,068,728)

    Cost of sales - PBM                                                                                                                                       (162,871)                                               -                                       (336,781)                       -

    Inter-segment elimination                                                                                                                                     6,415                                                -                                           8,378                        -
                                                                                                                                                                  -----                                              ---                                           -----                      ---

                                                                                 (1,317,662)                     (1,059,750)                                                   (2,569,768)                                      (2,068,728)

                                               Cost of sales


    Gross profit - Specialty                                                                                                                                     72,540                                           66,714                                          145,360                  136,476

    Gross profit - PBM                                                                                                                                           25,876                                                -                                          43,434                        -

                                                                                      98,416                           66,714                                                        188,794                                          136,476

                                               Gross profit

    Selling, general and administrative expenses                                                                                                               (90,642)                                        (61,871)                                       (172,329)               (123,085)
                                                                                                                                                                -------                                          -------                                         --------                 --------

                                                                                       7,774                            4,843                                                         16,465                                           13,391

                                               Income from operations

    Other (expense) income:

                                          Interest expense                                   (10,392)                             (1,931)                                                                           (20,819)                    (3,980)

                                          Other                                                                                         394                                                34                                                           811                      66

    Total other expense                                                                                                                                         (9,998)                                         (1,897)                                        (20,008)                 (3,914)
                                                                                                                                                                 ------                                           ------                                          -------                   ------

                                                                                     (2,224)                           2,946                                                        (3,543)                                           9,477

                                               (Loss) income before income taxes

    Income tax (expense) benefit                                                                                                                                (1,740)                                             544                                            (871)                 (1,763)

                                                                                     (3,964)                           3,490                                                        (4,414)                                           7,714

                                               Net (loss) income

    Less: net loss attributable to noncontrolling interest                                                                                                            -                                           (101)                                               -                   (244)
                                                                                                                                                                    ---                                            ----                                              ---                    ----

    Net (loss) income attributable to Diplomat Pharmacy, Inc.                                                                                                   $(3,964)                                          $3,591                                         $(4,414)                  $7,958



    Net (loss) income per common share:
    -----------------------------------

    Basic                                                                                                                                                           $(0.05)                                           $0.05                                          $(0.06)                   $0.12
                                                                                                                                                                     ======                                            =====                                           ======                    =====

    Diluted                                                                                                                                                         $(0.05)                                           $0.05                                          $(0.06)                   $0.12
                                                                                                                                                                     ======                                            =====                                           ======                    =====


    Weighted average common shares outstanding:
    -------------------------------------------

    Basic                                                                                                                                                        74,158,622                                       67,528,151                                       74,077,916               67,209,280
                                                                                                                                                                 ==========                                       ==========                                       ==========               ==========

    Diluted                                                                                                                                                      74,158,622                                       68,211,882                                       74,077,916               67,997,929
                                                                                                                                                                 ==========                                       ==========                                       ==========               ==========

 

 

                                                                                                                                DIPLOMAT PHARMACY, INC.

                                                                                                              Condensed Consolidated Statements of Cash Flows (Unaudited)

                                                                                                                                (dollars in thousands)



                                                                                                                                                                                   Six Months Ended June 30,
                                                                                                                                                                                   -------------------------

                                                                                                                                                                                          2018                        2017
                                                                                                                                                                                          ----                        ----

    Cash flows from operating activities:

                                                       Net (loss) income                                                                                                  $(4,414)                      $7,714

                                                        Adjustments to reconcile net (loss) income to net cash provided by
                                                        operating activities:

                                                                      Depreciation and amortization                                                                           48,170                       31,935

                                                                      Share-based compensation expense                                                                        10,122                        3,798

                                                                      Net provision for doubtful accounts                                                                      3,919                        5,401

                                                                      Amortization of debt issuance costs                                                                      2,742                          595

                                                                      Changes in fair values of contingent consideration                                                                2,339                            -

                                                                      Contingent consideration payments                                                                      (2,704)                           -

                                                                      Deferred income tax expense                                                                              (632)                         979

                                                                      Other                                                                                                                    -                          6

                                                                       Changes in operating assets and liabilities, net of business
                                                                       acquisitions:

                                                                                     Accounts receivable                                                                      (22,732)                     (3,024)

                                                                                     Inventories                                                                                36,407                       37,179

                                                                                     Accounts payable                                                                          (8,013)                    (14,353)

                                                                                     Other assets and liabilities                                                                1,448                      (2,977)
                                                                                                                                                                                 -----                       ------

                                                                                                                    Net cash provided by operating activities                                 66,652                      67,253

    Cash flows from investing activities:

                                                       Expenditures for capitalized software for internal use                                                              (5,878)                     (2,459)

                                                       Expenditures for property and equipment                                                                             (5,487)                     (2,289)

                                                       Payments to acquire businesses, net of cash acquired                                                                (1,289)                    (53,571)

                                                       Other                                                                                                                    46                         (43)


                                                                                                                    Net cash used in investing activities                                   (12,608)                   (58,362)

    Cash flows from financing activities:

                                                       Net payments on line of credit                                                                                     (53,150)                    (36,734)

                                                       Payments on long-term debt                                                                                         (79,750)                     (3,313)

                                                       Proceeds from long-term debt                                                                                                          -                     25,000

                                                       Proceeds from issuance of stock upon stock option exercises                                                                3,351                        6,007

                                                       Payments of debt issuance costs                                                                                       (821)                           -

                                                       Contingent consideration payments                                                                                     (565)                           -

                                                                                                                    Net cash used in financing activities                                  (130,935)                    (9,040)
                                                                                                                                                                                            --------                      ------

                                                                                                                    Net decrease in cash and equivalents                                    (76,891)                      (149)

    Cash and equivalents at beginning of period                                                                                                                                         84,251                       7,953
                                                                                                                                                                                        ------                       -----

    Cash and equivalents at end of period                                                                                                                                                $7,360                      $7,804


    Supplemental disclosures of cash flow information:

                                                       Cash paid for interest                                                                                              $18,589                       $3,386

                                                       Cash paid for income taxes                                                                                            1,741                        4,458

 

 

Adjusted EBITDA

The table below presents a reconciliation of net (loss) income attributable to Diplomat Pharmacy, Inc. to Adjusted EBITDA for the periods indicated.

                                                                      For the three months ended June 30,                       For the six months ended June 30,
                                                                      -----------------------------------                       ---------------------------------

                                                                                  2018                         2017                          2018                     2017
                                                                                  ----                         ----                          ----                     ----

                                                                                             (dollars in thousands) (unaudited)

    Net (loss) income attributable to Diplomat Pharmacy, Inc.                 $(3,964)                      $3,591                      $(4,414)                  $7,958

    Depreciation and amortization                                               24,219                       16,538                        48,170                   31,935

    Interest expense                                                            10,392                        1,931                        20,819                    3,980

    Income tax expense (benefit)                                                 1,740                        (544)                          871                    1,763

    EBITDA                                                                     $32,387                      $21,516                       $65,446                  $45,636
                                                                               -------                      -------                       -------                  -------


    Contingent consideration and other merger and acquisition expense           $3,122                         $569                        $5,123                   $1,117

    Share-based compensation expense                                             6,961                        2,826                        10,122                    3,798

    Employer payroll taxes - option repurchases and exercises                       63                          100                           141                      185

    Severance and related fees                                                     611                           40                         1,950                      702

    Other items                                                                  (440)                         116                         (440)                     544

    Adjusted EBITDA                                                            $42,704                      $25,167                       $82,342                  $51,982
                                                                               =======                      =======                       =======                  =======

 

 

Adjusted EPS (diluted)

Below is a reconciliation of net (loss) income attributable to Diplomat Pharmacy, Inc. per diluted share to Adjusted EPS for the periods indicated. Please note that this will be the last time this table is provided, going forward Diplomat will no longer present, or provide guidance with respect to, Adjusted EPS.

 

                                                                              For the three months ended June 30,                                  For the six months ended June 30,
                                                                              -----------------------------------                                  ---------------------------------

                                                                                                 2018                                 2017                                 2018            2017
                                                                                                 ----                                 ----                                 ----            ----

                                                                                                   (dollars in thousands, except per share amounts) (unaudited)

    Net (loss) income attributable to Diplomat Pharmacy, Inc.                                $(3,964)                              $3,591                             $(4,414)         $7,958

    Amortization of acquisition-related definite-lived intangible assets                       17,072                               10,927                               34,082          20,612

    Amortization of acquisition-related capitalized software for internal use                   2,511                                2,017                                4,722           4,033

    Contingent consideration and other merger and acquisition expense                           3,122                                  569                                5,123           1,117

    Income tax impact of adjustments (1)                                                      (6,130)                               (362)                            (11,860)        (4,288)

    Adjusted non-GAAP net income                                                              $12,611                              $16,742                              $27,653         $29,432
                                                                                              =======                              =======                              =======         =======


    Net (loss) income attributable to Diplomat Pharmacy, Inc.                                 $(0.05)                               $0.05                              $(0.06)          $0.12

    Amortization of acquisition-related definite-lived intangible assets                         0.23                                 0.16                                 0.46            0.30

    Amortization of acquisition-related capitalized software for internal use                    0.03                                 0.03                                 0.06            0.06

    Contingent consideration and other merger and acquisition expense                            0.04                                 0.01                                 0.07            0.02

    Income tax impact of adjustments                                                           (0.08)                              (0.01)                              (0.16)         (0.06)

    Adjusted EPS                                                                                $0.17                                $0.25                                $0.37           $0.43
                                                                                                =====                                =====                                =====           =====


    Weighted average common shares outstanding:
    -------------------------------------------

    Basic                                                                                  74,158,622                           67,528,151                           74,077,916      67,209,280

    Diluted                                                                                74,532,702                           68,211,882                           74,475,967      67,997,929

 


    (1)          27 percent tax rate
                 used for the three
                 months and six months
                 ended June 30, 2018;
                 2.7 percent used in
                 the three months
                 ended June 30, 2017;
                 16.6 percent used in
                 the six months ended
                 June 30, 2017.

 

 

2018 Full Year Guidance: GAAP to Non-GAAP Reconciliation

The table below presents a reconciliation of net income attributable to Diplomat Pharmacy, Inc. to Adjusted EBITDA for the year ended December 31, 2018.

 

                                                                      Reconciliation of GAAP to Adjusted EBITDA

                                                                          (dollars in thousands) (unaudited)

                                                                                                                Range
                                                                                                                -----

                                                                                                                 Low            High
                                                                                                                 ---            ----

    Net (loss) income attributable to Diplomat Pharmacy, Inc.                                                         $(11,000)         $500

    Depreciation and amortization                                                                                        98,000        97,000

    Interest expense                                                                                                     42,000        40,000

    Income tax expense (1)                                                                                                  540           240

    EBITDA                                                                                                             $129,540      $137,740
                                                                                                                       --------      --------


    Contingent consideration and other merger and acquisition expense                                                    $7,000        $6,000

    Share-based compensation expense                                                                                     24,500        24,000

    Employer payroll taxes - option repurchases and exercises                                                               500           300

    Severance and related fees                                                                                            2,900         2,400

    Other items                                                                                                           (440)        (440)

    Adjusted EBITDA                                                                                                    $164,000      $170,000
                                                                                                                       ========      ========

 


    (1)          Assumes a tax rate of (5) and 32
                 percent, for the low- and
                 high-end, respectively.

 

 

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SOURCE Diplomat Pharmacy, Inc.

Company Codes: NYSE:DPLO

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