FLINT, Mich., Jan. 9, 2017 /PRNewswire/ -- Diplomat Pharmacy,
Inc. (NYSE: DPLO), the nation's largest independent specialty
pharmacy, announced updated 2016 financial guidance. The company
now expects 2016 revenue and adjusted EBITDA will be at or near the
low end of previously announced ranges.
Phil Hagerman, chairman and CEO
of Diplomat, commented, "This was a tough year for Diplomat, and as
a result of the various industry challenges we faced throughout
2016, we anticipate our full-year financial results to be at or
near the low end of our previous expectations. Looking forward,
overall industry challenges, continued competition, and weaker than
expected FDA approvals in 2016 will ultimately result in a softer
2017 than we previously discussed on our third quarter earnings
call. Additionally, we saw a more modest rise in inflation in the
fourth quarter of the year, and we expect that trend to continue in
2017."
Mr. Hagerman further commented, "While we expect 2017 to be a
slower growth year, I'm pleased with the progress we have made and
will continue to make in cost savings and restructuring initiatives
across all sectors of our business. Over the course of 2017, we
will continue to pursue further direct contracting opportunities
with healthplans and maintain our selectivity when renewing
contracts that are not economically beneficial. We also see
multiple organic and acquisition opportunities in the higher margin
specialty infusion business and additional opportunities in
technology and services business segments."
Diplomat further announced today that it has signed a definitive
agreement to acquire Affinity Biotech, Inc., a specialty pharmacy,
and infusion services company that provides treatments and nursing
services for patients with hemophilia based in Houston, Texas. Under the terms of the
agreement, Diplomat will purchase Affinity Biotech for $16 million cash, and up to an additional
$4 million in contingent
consideration. The closing of the transaction is expected to occur
in February 2017. In 2016, Affinity
Biotech generated an estimated $27
million in revenue and $3
million in adjusted EBITDA.
Commenting on the acquisition, Mr. Hagerman remarked, "We are
very excited to expand Diplomat's infusion services with the
acquisition of Affinity Biotech. This partnership opens growth
opportunities with a licensed New
York facility to enable brick and mortar presence for the
State of New York Medicaid program. According to a 2014 report by
the New York State Department of
Health, New York Medicaid serves 4.8 million patients. Further, the
purchase of a second Texas
facility builds upon our service to the state's 3.7 million
Medicaid patients. By adding the Houston and New York
City locations we now have a presence in two of the nation's
five largest metro areas. These new resources strengthen Diplomat's
footprint in main geographic markets and make our organic growth
opportunities and our services stronger in the evolving specialty
pharmacy landscape."
Presentation Information
As previously announced, Phil
Hagerman, Chairman and CEO of Diplomat Pharmacy, is
scheduled to present at the 35th Annual J.P. Morgan
Healthcare conference on Wednesday, Jan. 11,
2017, at 8:30 a.m. PT. The
related presentation materials are available on the investor
relations section of the company's website at ir.diplomat.is.
A live, audio-only webcast of the presentation will also be
available on the investor relations section of the company's
website at ir.diplomat.is. The archived webcast and
presentation materials will be available for 90 days at the same
URL.
About Diplomat
Diplomat Pharmacy, Inc. (NYSE: DPLO) serves patients and
physicians in all 50 states. Headquartered in Flint, Michigan, the Company focuses on
medication management programs for individuals with complex chronic
diseases, including oncology, immunology, hepatitis, multiple
sclerosis, specialized infusion therapy and many other serious or
long-term conditions. 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 and clinical
adherence. For more information, visit www.diplomat.is.
Non-GAAP Information
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
income). Adjusted EBITDA is not in accordance with, or an
alternative to, accounting principles generally accepted in
the United States ("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 to be supplemental measures of our
operating performance. We discuss adjusted EBITDA because it
is 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
differently than we do and these calculations may not be comparable
to our adjusted EBITDA metrics.
Due to the inherent difficulty of forecasting the timing and
amount of certain items that would impact net income, we are unable
to reasonably estimate the related impact of such items to net
income, the GAAP financial measure most directly comparable to
adjusted EBITDA. Accordingly, we are unable to provide a
reconciliation of adjusted EBITDA to net income with respect to the
updated and forward-looking guidance provided herein. For the same
reasons, we are unable to address the probable significance of the
unavailable information, which could have a significant impact on
our full-year 2017 GAAP financial results.
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, adjusted EBITDA, cost-saving
efforts, and expectations regarding acquisitions. The
forward-looking statements contained in this press release are
based on management's good-faith belief and reasonable judgment
based on current information, and 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; our relationships with 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; our ability
to maintain relationships with a specified wholesaler and
pharmaceutical manufacturer; increasing consolidation in the
healthcare industry; managing our growth effectively; our ability
to estimate the impact of DIR fees amid considerable uncertainty
due to current regulatory efforts and current and future payor
disputes; limited experience with acquisitions and our ability to
recognize the expected benefits therefrom on a timely basis or at
all; and the additional factors set forth in "Risk Factors" in
Diplomat's Annual Report on Form 10-K for the year ended
December 31, 2015 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.
INVESTOR CONTACT:
Bob East, Westwicke Partners
443-213-0500 | Diplomat@westwicke.com
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SOURCE Diplomat Pharmacy, Inc.