Delaware
|
001-33380
|
87-0792558
|
(State or Other Jurisdiction of Incorporation)
|
(Commission File Number)
|
(IRS Employer Identification No.)
|
1901 Campus Place
Louisville, Kentucky
|
40299
|
|
(Address of principal executive offices)
|
(Zip Code)
|
☐
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
☐
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
☐
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
☐
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Item 2.02 | Results of Operations and Financial Condition. |
Item 9.01 | Financial Statements and Exhibits. |
99.1
|
Press Release of PharMerica Corporation dated November 6, 2015.
|
PHARMERICA CORPORATION
|
|||
Date: November 6, 2015
|
By:
|
/s/ David W. Froesel, Jr.
|
|
David W. Froesel, Jr.
|
|||
Executive Vice President, Chief Financial Officer and Treasurer
|
Exhibit No.
|
Description
|
Press Release of PharMerica Corporation dated November 6, 2015.
|
3Q’15 Results
|
Comparison to
3Q’14
|
Comparison to
2Q’15
|
|
Revenue
|
$498.8 million
|
Increase of 6.1%
|
Increase of 0.3%
|
Adjusted EBITDA
|
$33.3 million
|
Increase of 0.9%
|
Increase of 0.3%
|
Adjusted diluted earnings per share
|
$0.39
|
Decrease of 13.3%
|
Increase of 5.4%
|
Gross profit
|
$78.6 million
|
Decrease of 5.3%
|
Decrease of 3.2%
|
Selling, general and administrative
|
$52.7 million
|
Improvement of 5.9%
|
Improvement of 4.9%
|
Generic drug dispensing rate
|
86.5%
|
Increase of 140 basis points
|
Increase of 50 basis points
|
· | Revenue in the range of $1.950 billion to $2.050 billion; |
· | Adjusted diluted earnings per share in the range of $1.55 to $1.65; and |
· | Adjusted EBITDA in the range of $137 million to $142 million. |
Ø | Key Comparisons of Third Quarters Ended September 30, 2015 and 2014: |
· | Revenues for the third quarter of 2015 were $498.8 million compared with $470.2 million for the third quarter of 2014, an increase of 6.1%. The increase in revenues was driven by recent acquisitions, growth in the Company’s specialty pharmacy businesses, and branded drug inflation. |
· | Gross profit for the third quarter of 2015 was $78.6 million compared with $83.0 million in the third quarter of 2014, a decrease of 5.3%. The decrease in gross profit was driven by lower volumes resulting from an improvement in the Company’s client mix and higher drug costs under the Company’s Prime Vendor Agreement. |
· | Selling, general and administrative expenses were $52.7 million, or 10.6% of revenues, for the three months ended September 30, 2015, compared to $56.0 million, or 11.9% of revenues, for the three months ended September 30, 2014. The decrease of $3.3 million was due to cost improvements and a reduction in bad debt expense as the Company improved its client mix. |
· | Adjusted EBITDA for the third quarter of 2015 was $33.3 million compared with $33.0 million in the third quarter of 2014, an increase of 0.9%. |
· | Net income for the third quarter of 2015 was $3.0 million, or $0.10 diluted earnings per share, compared to net income of $8.5 million, or $0.28 diluted earnings per share, for the same period in 2014. Adjusted diluted earnings per share was $0.39 in the third quarter of 2015 compared to $0.45 in the third quarter of 2014. |
· | Cash flows provided by operating activities for the third quarter of 2015 were $37.5 million compared with $19.7 million in the third quarter of 2014. |
Ø | Key Comparisons of the Nine Months Ended September 30, 2015 and 2014: |
YTD 3Q’15 Results
|
Comparison to
YTD 3Q’14
|
|
Revenue
|
$1,507.8 million
|
Increase of 10.0%
|
Adjusted EBITDA
|
$103.9 million
|
Increase of 11.4%
|
Adjusted diluted earnings per share
|
$1.24
|
Increase of 1.6%
|
Gross profit
|
$248.4 million
|
Increase of 1.4%
|
Selling, general and administrative
|
$167.1 million
|
Improvement of 2.3%
|
Generic drug dispensing rate
|
85.9%
|
Increase of 100 basis points
|
· | Revenues for the nine months ended September 30, 2015, were $1,507.8 million compared with $1,371.0 million for the nine months ended September 30, 2014, an increase of 10.0%. The increase was driven by recent acquisitions, growth in the Company’s specialty pharmacy businesses and branded drug inflation. |
· | Gross profit for the nine months ended September 30, 2015, was $248.4 million compared with $244.9 million for the nine months ended September 30, 2014, an increase of 1.4%. The increase in gross profit was driven by recent acquisitions, growth in the Company’s specialty pharmacy businesses and branded drug inflation; this was partially offset by volume decreases in the long-term care pharmacy business and higher drug costs under the Company’s Prime Vendor Agreement. |
· | Selling, general and administrative expenses were $167.1 million, or 11.1% of revenues, for the nine months ended September 30, 2015, compared to $171.1 million, or 12.5% of revenues, for the nine months ended September 30, 2014. The decrease of $4.0 million is due to cost improvements and a reduction in bad debt expense as the Company improved its client mix. |
· | Adjusted EBITDA for the nine months ended September 30, 2015, was $103.9 million compared with $93.3 million for the nine months ended September 30, 2014, an increase of 11.4%. |
· | Net income for the nine months ended September 30, 2015, was $14.9 million, or $0.48 diluted earnings per share, compared to net income of $3.6 million, or $0.12 diluted earnings per share, for the same period in 2014. Net income for the nine months ended September 30, 2015, and September 30, 2014, was adversely impacted by $11.3 and $28.9 million of pre-tax charges for settlement and litigation matters, respectively. Adjusted diluted earnings per share was $1.24 for the nine months ended September 30, 2015, compared to $1.22 for the nine months ended September 30, 2014. |
· | Cash flows provided by operating activities for the nine months ended September 30, 2015, were $59.6 million compared with cash flows used in operating activities of $2.4 million for the nine months ended September 30, 2014. The increase in cash from operating activities was due primarily to the $48.8 million in AmerisourceBergen Drug Corporation drug purchase payments withheld, the Corporation’s inventory purchasing strategy and an increase in net income, which were partially offset by an increase in AmerisourceBergen Drug Corporation rebates receivable. |
Ø | Additional Sequential Quarterly Comparisons: |
· | The Company’s generic dispensing rate increased 50 basis points from the prior quarter to 86.5%. |
· | On a sequential basis, prescriptions dispensed in the institutional pharmacy business declined 2.9%. The decline was partially associated with planned terminations of clients to improve the Company’s profitability. |
· | The 3.2% decrease in gross profit in the third quarter compared to the second quarter was primarily the result of reduced script volume partially associated with planned terminations of clients to improve the Company’s profitability. |
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||||||||||||||||||
2014
|
2015
|
2014
|
2015
|
|||||||||||||||||||||||||||||
Amount
|
% of Revenues
|
Amount
|
% of Revenues
|
Amount
|
% of Revenues
|
Amount
|
% of Revenues
|
|||||||||||||||||||||||||
Revenues
|
$
|
470.2
|
100.0
|
%
|
$
|
498.8
|
100.0
|
%
|
$
|
1,371.0
|
100.0
|
%
|
$
|
1,507.8
|
100.0
|
%
|
||||||||||||||||
Cost of goods sold
|
387.2
|
82.3
|
420.2
|
84.2
|
1,126.1
|
82.1
|
1,259.4
|
83.5
|
||||||||||||||||||||||||
Gross profit
|
83.0
|
17.7
|
78.6
|
15.8
|
244.9
|
17.9
|
248.4
|
16.5
|
||||||||||||||||||||||||
Selling, general and administrative expenses
|
56.0
|
11.9
|
52.7
|
10.6
|
171.1
|
12.5
|
167.1
|
11.1
|
||||||||||||||||||||||||
Amortization expense
|
4.9
|
1.1
|
7.0
|
1.4
|
13.6
|
1.0
|
20.6
|
1.4
|
||||||||||||||||||||||||
Merger, acquisition, integration costs and other charges
|
3.8
|
0.8
|
8.0
|
1.6
|
10.3
|
0.8
|
15.2
|
1.0
|
||||||||||||||||||||||||
Settlement, litigation and other related charges
|
1.1
|
0.2
|
2.1
|
0.4
|
28.9
|
2.1
|
11.3
|
0.7
|
||||||||||||||||||||||||
Restructuring and impairment charges
|
0.1
|
0.1
|
0.2
|
0.1
|
3.2
|
0.2
|
0.3
|
-
|
||||||||||||||||||||||||
Hurricane Sandy disaster costs
|
-
|
-
|
0.1
|
-
|
0.1
|
-
|
0.1
|
-
|
||||||||||||||||||||||||
Operating income
|
17.1
|
3.6
|
8.5
|
1.7
|
17.7
|
1.3
|
33.8
|
2.3
|
||||||||||||||||||||||||
Interest expense, net
|
2.1
|
0.4
|
2.1
|
0.4
|
6.9
|
0.5
|
5.4
|
0.4
|
||||||||||||||||||||||||
Loss on extinguishment of debt
|
4.3
|
0.9
|
-
|
-
|
4.3
|
0.3
|
-
|
-
|
||||||||||||||||||||||||
Income before income taxes
|
10.7
|
2.3
|
6.4
|
1.3
|
6.5
|
0.5
|
28.4
|
1.9
|
||||||||||||||||||||||||
Provision for income taxes
|
2.2
|
0.5
|
3.4
|
0.7
|
2.9
|
0.2
|
13.5
|
0.9
|
||||||||||||||||||||||||
Net income
|
$
|
8.5
|
1.8
|
%
|
$
|
3.0
|
0.6
|
%
|
$
|
3.6
|
0.3
|
%
|
$
|
14.9
|
1.0
|
%
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2014
|
2015
|
2014
|
2015
|
|||||||||||||
Earnings per common share:
|
||||||||||||||||
Basic
|
$
|
0.28
|
$
|
0.10
|
$
|
0.12
|
$
|
0.49
|
||||||||
Diluted
|
$
|
0.28
|
$
|
0.10
|
$
|
0.12
|
$
|
0.48
|
||||||||
Shares used in computing earnings per common share:
|
||||||||||||||||
Basic
|
30,073,133
|
30,431,845
|
29,944,875
|
30,336,548
|
||||||||||||
Diluted
|
30,595,302
|
30,896,294
|
30,502,928
|
30,798,834
|
(As Adjusted)
|
||||||||
Dec. 31,
2014
|
Sept. 30,
2015
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
33.3
|
$
|
40.0
|
||||
Accounts receivable, net
|
195.4
|
195.8
|
||||||
Inventory
|
135.5
|
117.5
|
||||||
Deferred tax assets, net
|
42.8
|
37.2
|
||||||
Income taxes receivable
|
-
|
9.2
|
||||||
Prepaids and other assets
|
90.3
|
52.6
|
||||||
497.3
|
452.3
|
|||||||
Equipment and leasehold improvements
|
196.4
|
210.3
|
||||||
Accumulated depreciation
|
(125.0
|
)
|
(138.8
|
)
|
||||
71.4
|
71.5
|
|||||||
Goodwill
|
323.6
|
341.8
|
||||||
Intangible assets, net
|
177.6
|
165.2
|
||||||
Other
|
4.1
|
29.2
|
||||||
$
|
1,074.0
|
$
|
1,060.0
|
|||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
96.0
|
$
|
83.3
|
||||
Salaries, wages and other compensation
|
35.1
|
34.3
|
||||||
Current portion of long-term debt
|
6.3
|
11.4
|
||||||
Income taxes payable
|
2.3
|
-
|
||||||
Other accrued liabilities
|
38.5
|
38.2
|
||||||
178.2
|
167.2
|
|||||||
Long-term debt
|
344.4
|
326.0
|
||||||
Other long-term liabilities
|
57.6
|
55.7
|
||||||
Deferred tax liabilities
|
15.7
|
14.2
|
||||||
Commitments and contingencies
|
||||||||
Stockholders' equity:
|
||||||||
Preferred stock, $0.01 par value per share; 1,000,000 shares authorized and no shares issued, December 31, 2014 and September 30, 2015
|
-
|
-
|
||||||
Common stock, $0.01 par value per share; 175,000,000 shares authorized; 32,725,786 and 33,227,551 shares issued as of December 31, 2014 and September 30, 2015, respectively
|
0.3
|
0.3
|
||||||
Capital in excess of par value
|
394.1
|
402.3
|
||||||
Retained earnings
|
117.0
|
131.9
|
||||||
Treasury stock at cost, 2,617,305 and 2,774,268 shares at December 31, 2014 and September 30, 2015, respectively
|
(33.3
|
)
|
(37.6
|
)
|
||||
478.1
|
496.9
|
|||||||
$
|
1,074.0
|
$
|
1,060.0
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2014
|
2015
|
2014
|
2015
|
|||||||||||||
Cash flows provided by (used in) operating activities:
|
||||||||||||||||
Net income
|
$
|
8.5
|
$
|
3.0
|
$
|
3.6
|
$
|
14.9
|
||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
||||||||||||||||
Depreciation
|
4.9
|
5.7
|
14.5
|
17.2
|
||||||||||||
Amortization
|
4.9
|
7.0
|
13.6
|
20.6
|
||||||||||||
Merger, acquisition, integration costs and other charges
|
-
|
-
|
2.5
|
-
|
||||||||||||
Stock-based compensation and deferred compensation
|
1.8
|
1.7
|
5.7
|
5.4
|
||||||||||||
Amortization of deferred financing fees
|
0.5
|
0.1
|
1.8
|
0.4
|
||||||||||||
Deferred income taxes
|
(4.0
|
)
|
2.1
|
(3.3
|
)
|
4.6
|
||||||||||
(Gain) loss on disposition of equipment
|
-
|
-
|
(0.1
|
)
|
0.1
|
|||||||||||
Loss (gain) on acquisition/ disposition
|
0.1
|
-
|
(0.2
|
)
|
-
|
|||||||||||
Loss on extinguishment of debt
|
4.3
|
-
|
4.3
|
-
|
||||||||||||
Other
|
-
|
-
|
0.1
|
0.1
|
||||||||||||
Change in operating assets and liabilities:
|
||||||||||||||||
Accounts receivable, net
|
(1.7
|
)
|
3.4
|
10.4
|
1.2
|
|||||||||||
Inventory
|
14.9
|
17.5
|
(16.3
|
)
|
18.1
|
|||||||||||
Prepaids and other assets
|
(15.1
|
)
|
(7.7
|
)
|
(26.2
|
)
|
12.3
|
|||||||||
Accounts payable
|
(2.4
|
)
|
3.6
|
(22.9
|
)
|
(11.9
|
)
|
|||||||||
Salaries, wages and other compensation
|
5.2
|
2.1
|
(2.7
|
)
|
(0.9
|
)
|
||||||||||
Other accrued and long-term liabilities
|
(5.7
|
)
|
0.2
|
16.6
|
(10.2
|
)
|
||||||||||
Change in income taxes payable (receivable)
|
3.7
|
(1.0
|
)
|
(0.4
|
)
|
(10.0
|
)
|
|||||||||
Excess tax benefit from stock-based compensation
|
(0.2
|
)
|
(0.2
|
)
|
(3.4
|
)
|
(2.3
|
)
|
||||||||
Net cash provided by (used in) operating activities
|
19.7
|
37.5
|
(2.4
|
)
|
59.6
|
|||||||||||
Cash flows provided by (used in) investing activities:
|
||||||||||||||||
Purchase of equipment and leasehold improvements
|
(6.2
|
)
|
(6.6
|
)
|
(19.0
|
)
|
(17.6
|
)
|
||||||||
Acquisitions, net of cash acquired
|
(107.2
|
)
|
(0.3
|
)
|
(124.8
|
)
|
(20.9
|
)
|
||||||||
Cash proceeds from sale of assets
|
-
|
0.1
|
0.1
|
0.2
|
||||||||||||
Cash proceeds from dispositions
|
-
|
-
|
0.4
|
-
|
||||||||||||
Net cash used in investing activities
|
(113.4
|
)
|
(6.8
|
)
|
(143.3
|
)
|
(38.3
|
)
|
||||||||
Cash flows provided by (used in) financing activities:
|
||||||||||||||||
Repayments of long-term debt
|
(225.0
|
)
|
(2.8
|
)
|
(231.3
|
)
|
(2.8
|
)
|
||||||||
Borrowings from long-term debt
|
225.0
|
-
|
225.0
|
-
|
||||||||||||
Net activity of long-term revolving credit facility
|
92.0
|
(9.0
|
)
|
135.9
|
(10.0
|
)
|
||||||||||
Payment of debt issuance costs
|
(2.7
|
)
|
-
|
(2.7
|
)
|
-
|
||||||||||
Issuance of common stock
|
0.4
|
-
|
3.4
|
0.7
|
||||||||||||
Purchase of treasury stock
|
(0.2
|
)
|
(0.4
|
)
|
(5.1
|
)
|
(4.3
|
)
|
||||||||
Excess tax benefit from stock-based compensation
|
0.2
|
0.2
|
3.4
|
2.3
|
||||||||||||
Repayments of capital lease obligations
|
-
|
-
|
-
|
(0.5
|
)
|
|||||||||||
Net cash provided by (used in) financing activities
|
89.7
|
(12.0
|
)
|
128.6
|
(14.6
|
)
|
||||||||||
Change in cash and cash equivalents
|
(4.0
|
)
|
18.7
|
(17.1
|
)
|
6.7
|
||||||||||
Cash and cash equivalents at beginning of period
|
11.1
|
21.3
|
24.2
|
33.3
|
||||||||||||
Cash and cash equivalents at end of period
|
$
|
7.1
|
$
|
40.0
|
$
|
7.1
|
$
|
40.0
|
||||||||
Supplemental information:
|
||||||||||||||||
Cash paid for interest
|
$
|
1.9
|
$
|
3.2
|
$
|
5.6
|
$
|
6.2
|
||||||||
Cash paid for taxes
|
$
|
1.0
|
$
|
2.4
|
$
|
5.7
|
$
|
19.4
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2014
|
2015
|
2014
|
2015
|
|||||||||||||
Pharmacy data:
|
||||||||||||||||
Prescriptions dispensed (in thousands)
|
8,492
|
8,208
|
25,511
|
25,713
|
||||||||||||
Revenue per prescription dispensed
|
$
|
55.37
|
$
|
60.77
|
$
|
53.74
|
$
|
58.64
|
||||||||
Gross profit per prescription dispensed
|
$
|
9.77
|
$
|
9.58
|
$
|
9.60
|
$
|
9.66
|
(In millions)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
2014
|
2015
|
2014
|
2015
|
|||||||||||||
Net income
|
$
|
8.5
|
$
|
3.0
|
$
|
3.6
|
$
|
14.9
|
||||||||
Add:
|
||||||||||||||||
Interest expense, net
|
2.1
|
2.1
|
6.9
|
5.4
|
||||||||||||
Merger, acquisition, integration costs and other charges
|
3.1
|
8.0
|
9.6
|
15.2
|
||||||||||||
Settlement, litigation and other related charges
|
1.1
|
2.1
|
28.9
|
11.3
|
||||||||||||
Restructuring and impairment charges
|
0.1
|
0.2
|
3.2
|
0.3
|
||||||||||||
Loss on extinguishment of debt
|
4.3
|
-
|
4.3
|
-
|
||||||||||||
Hurricane Sandy disaster costs
|
-
|
0.1
|
0.1
|
0.1
|
||||||||||||
Stock-based compensation and deferred compensation
|
1.8
|
1.7
|
5.7
|
5.4
|
||||||||||||
Provision for income taxes
|
2.2
|
3.4
|
2.9
|
13.5
|
||||||||||||
Depreciation and amortization expense
|
9.8
|
12.7
|
28.1
|
37.8
|
||||||||||||
Adjusted EBITDA
|
$
|
33.0
|
$
|
33.3
|
$
|
93.3
|
$
|
103.9
|
||||||||
Adjusted EBITDA margin
|
7.0
|
%
|
6.7
|
%
|
6.8
|
%
|
6.9
|
%
|
(In whole numbers)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
2014
|
2015
|
2014
|
2015
|
|||||||||||||
Diluted earnings per share
|
$
|
0.28
|
$
|
0.10
|
$
|
0.12
|
$
|
0.48
|
||||||||
Add:
|
||||||||||||||||
Diluted earnings per share impact of:
|
||||||||||||||||
Merger, acquisition, integration costs and other charges
|
0.06
|
0.17
|
0.19
|
0.32
|
||||||||||||
Settlement, litigation and other related charges
|
0.02
|
0.04
|
0.66
|
0.22
|
||||||||||||
Restructuring and impairment charges
|
-
|
0.01
|
0.07
|
0.01
|
||||||||||||
Loss on extinguishment of debt
|
0.09
|
-
|
0.09
|
-
|
||||||||||||
Stock-based compensation and deferred compensation
|
0.04
|
0.04
|
0.12
|
0.12
|
||||||||||||
Impact of discrete items on tax provision
|
(0.04
|
)
|
0.03
|
(0.03
|
)
|
0.09
|
||||||||||
Adjusted diluted earnings per share
|
$
|
0.45
|
$
|
0.39
|
$
|
1.22
|
$
|
1.24
|
(In millions)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
2014
|
2015
|
2014
|
2015
|
|||||||||||||
Adjusted EBITDA
|
$
|
33.0
|
$
|
33.3
|
$
|
93.3
|
$
|
103.9
|
||||||||
Interest expense, net
|
(2.1
|
)
|
(2.1
|
)
|
(6.9
|
)
|
(5.4
|
)
|
||||||||
Merger, acquisition, integration costs and other charges
|
(4.3
|
)
|
(10.4
|
)
|
(39.3
|
)
|
(26.9
|
)
|
||||||||
Provision for bad debt
|
5.3
|
1.5
|
16.6
|
9.5
|
||||||||||||
Amortization of deferred financing fees
|
0.5
|
0.1
|
1.8
|
0.4
|
||||||||||||
Loss (gain) on disposition of equipment
|
-
|
-
|
(0.1
|
)
|
0.1
|
|||||||||||
Loss (gain) on acquisition
|
0.1
|
-
|
(0.2
|
)
|
-
|
|||||||||||
Provision (benefit) for income taxes
|
(2.2
|
)
|
(3.4
|
)
|
(2.9
|
)
|
(13.5
|
)
|
||||||||
Deferred income taxes
|
(4.0
|
)
|
2.1
|
(3.3
|
)
|
4.6
|
||||||||||
Changes in federal and state income tax payable (receivable)
|
3.7
|
(1.0
|
)
|
(0.4
|
)
|
(10.0
|
)
|
|||||||||
Excess tax benefit from stock-based compensation
|
(0.2
|
)
|
(0.2
|
)
|
(3.4
|
)
|
(2.3
|
)
|
||||||||
Changes in assets and liabilities
|
(10.1
|
)
|
17.6
|
(57.7
|
)
|
(0.9
|
)
|
|||||||||
Other
|
-
|
-
|
0.1
|
0.1
|
||||||||||||
Net cash flows provided by (used in) operating activities
|
$
|
19.7
|
$
|
37.5
|
$
|
(2.4
|
)
|
$
|
59.6
|