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 February 24, 2017.
|
PHARMERICA CORPORATION
|
|||
Date: February 24, 2017
|
By:
|
/s/ Robert E. Dries
|
|
Robert E. Dries
|
|||
Executive Vice President, Chief Financial Officer and Treasurer
|
Exhibit No.
|
Description
|
Press Release of PharMerica Corporation dated February 24, 2017.
|
4Q’16 Results
|
Comparison to
4Q’15
|
Comparison to
3Q’16
|
|
Revenue
|
$534.4 million
|
Increase of 2.7%
|
Increase of 4.3%
|
Gross profit
|
$83.7 million
|
Decrease of 3.5%
|
Increase of 6.6%
|
Selling, general and administrative
|
$54.8 million
|
Decrease of 1.1%
|
Increase of 3.2%
|
Net income
|
$7.7 million
|
Decrease of 61.9%
|
Increase of 5.5%
|
Diluted earnings per common share
|
$0.25
|
Decrease of 62.1%
|
Increase of 8.7%
|
Adjusted EBITDA
|
$35.6 million
|
Increase of 2.6%
|
Increase of 13.0%
|
Adjusted diluted earnings per share
|
$0.58
|
Increase of 3.6%
|
Increase of 31.8%
|
Generic drug dispensing rate
|
85.3%
|
Decrease of 100 basis points
|
Decrease of 30 basis points
|
· |
Revenue in the range of $2.3 billion to $2.4 billion;
|
· |
Adjusted EBITDA in the range of $132.0 million to $142.0 million; and
|
· |
Adjusted diluted earnings per share in the range of $1.75 to $1.95.
|
Ø |
Key Comparisons of Fourth Quarters Ended December 31, 2016 and 2015:
|
· |
Revenues for the fourth quarter of 2016 were $534.4 million compared with $520.6 million for the fourth quarter of 2015; an increase of 2.7%. The increase in revenues of $13.8 million was driven by significant organic growth and acquisitions in the Company’s diversified pharmacy businesses, partially offset by a 6.7% reduction in prescription volumes in the Institutional Pharmacy business, lower Medicare Part D reimbursement and the impact of 2015 brand-to-generic conversions.
|
· |
Gross profit for the fourth quarter of 2016 was $83.7 million compared with $86.7 million in the fourth quarter of 2015.
|
· |
Selling, general and administrative expenses were $54.8 million, or 10.3% of revenues, for the three months ended December 31, 201,6 compared to $55.4 million, or 10.6% of revenues, for the three months ended December 31, 2015. The decrease of $0.6 million was primarily the result of decreases in labor and benefits and professional fees partially offset by an increase in bad debt expense.
|
· |
Net income for the fourth quarter of 2016 was $7.7 million, or $0.25 diluted earnings per share, compared to $20.2 million, or $0.66 diluted earnings per share, for the same period in 2015. Adjusted diluted earnings per share was $0.58 in the fourth quarter of 2016 compared to $0.56 in the fourth quarter of 2015.
|
· |
Adjusted EBITDA for the fourth quarter of 2016 was $35.6 million compared to $34.7 million in the fourth quarter of 2015.
|
· |
Cash flows used in operating activities for the fourth quarter of 2016 were $49.5 million compared with $41.1 million in the fourth quarter of 2015. The Company has historically used significant cash flows in the fourth quarter of each year as it executes its strategic purchasing strategies.
|
Ø |
Key Comparisons of the Years Ended December 31, 2016 and 2015:
|
2016 Results
|
Comparison to 2015
|
|
Revenue
|
$2,091.1 million
|
Increase of 3.1%
|
Gross profit
|
$326 million
|
Decrease of 2.7%
|
Selling, general and administrative
|
$220.6 million
|
Decrease of 0.9%
|
Net income
|
$21.6 million
|
Decrease of 38.5%
|
Diluted earnings per common share
|
$0.69
|
Decrease of 39.5%
|
Adjusted EBITDA
|
$129.2 million
|
Decrease of 3.0%
|
Adjusted diluted earnings per share
|
$1.94
|
Decrease of 7.6%
|
Generic drug dispensing rate
|
86.0%
|
Unchanged
|
· |
Revenues for the year ended December 31, 2016 were $2,091.1 million compared with $2,028.5 million for the year ended December 31, 2015, an increase of 3.1%. The increase was driven by recent acquisitions, growth in the Company’s diversified pharmacy businesses and branded drug inflation partially offset by a 4.5% reduction in prescription volumes in the Institutional Pharmacy business, lower Medicare Part D reimbursement and the impact of 2015 brand-to-generic conversions.
|
· |
Gross profit for the year ended December 31, 2016 was $326.0 million compared with $335.1 million for the year ended December 31, 2015, a decrease of 2.7%. The decrease in gross profit was due to lower prescription volumes in the Company’s Institutional Pharmacy business and lower Medicare Part D reimbursement partially offset by higher gross profit associated with the Company’s diversified pharmacy businesses.
|
· |
Selling, general and administrative expenses were $220.6 million, or 10.5% of revenues, for the year ended December 31, 2016, compared to $222.5 million, or 11.0% of revenues, for the year ended December 31, 2015. The decrease of $1.9 million was due to a decrease in professional fees and bad debt expense partially offset by an increase in labor and benefits.
|
· |
Net income for the year ended December 31, 2016 was $21.6 million, or $0.69 diluted earnings per share, compared to $35.1 million, or $1.14 diluted earnings per share, for the same period in 2015. Adjusted diluted earnings per share was $1.94 for the year ended December 31, 2016 compared to $2.10 for the year ended December 31, 2015.
|
· |
Adjusted EBITDA for the year ended December 31, 2016 was $129.2 million compared with $133.2 million for the year ended December 31, 2015, a decrease of 3.0%.
|
· |
Cash flows provided by operating activities for the year ended December 31, 2016 were $30.8 million compared with $18.5 million for the year ended December 31, 2015. The increase in cash provided by operating activities was primarily due to an increase in accounts payable and a reduction in income taxes receivable, offset by inventory increases as a result of the Company’s purchasing strategies and increases in accounts receivable.
|
Three Months Ended December 31,
|
Year Ended
|
|||||||||||||||||||||||||||||||
2015
|
2016
|
2015
|
2016
|
|||||||||||||||||||||||||||||
Amount
|
% of
Revenues
|
Amount
|
% of
Revenues
|
Amount
|
% of
Revenues
|
Amount
|
% of
Revenues
|
|||||||||||||||||||||||||
Revenues
|
$
|
520.6
|
100.0
|
%
|
$
|
534.4
|
100.0
|
%
|
$
|
2,028.5
|
100.0
|
%
|
$
|
2,091.1
|
100.0
|
%
|
||||||||||||||||
Cost of goods sold
|
433.9
|
83.3
|
450.7
|
84.3
|
1,693.4
|
83.5
|
1,765.1
|
84.4
|
||||||||||||||||||||||||
Gross profit
|
86.7
|
16.7
|
83.7
|
15.7
|
335.1
|
16.5
|
326.0
|
15.6
|
||||||||||||||||||||||||
Selling, general and administrative expenses
|
55.4
|
10.6
|
54.8
|
10.3
|
222.5
|
11.0
|
220.6
|
10.5
|
||||||||||||||||||||||||
Amortization expense
|
8.0
|
1.5
|
9.0
|
1.7
|
28.6
|
1.4
|
33.7
|
1.6
|
||||||||||||||||||||||||
Merger, acquisition, integration costs and other charges
|
6.1
|
1.2
|
6.7
|
1.3
|
21.3
|
1.0
|
20.8
|
0.9
|
||||||||||||||||||||||||
Settlement, litigation and other related charges
|
2.0
|
0.4
|
2.4
|
0.4
|
13.3
|
0.7
|
9.6
|
0.5
|
||||||||||||||||||||||||
Restructuring and impairment charges
|
0.2
|
-
|
(0.2
|
)
|
-
|
0.5
|
-
|
2.9
|
0.1
|
|||||||||||||||||||||||
Hurricane Sandy disaster costs (recoveries)
|
(5.0
|
)
|
(1.0
|
)
|
-
|
-
|
(4.9
|
)
|
(0.2
|
)
|
-
|
-
|
||||||||||||||||||||
Operating income
|
20.0
|
3.9
|
11.0
|
2.0
|
53.8
|
2.6
|
38.4
|
1.8
|
||||||||||||||||||||||||
Interest expense, net
|
1.2
|
0.3
|
0.2
|
-
|
6.6
|
0.3
|
9.5
|
0.4
|
||||||||||||||||||||||||
Income before income taxes
|
18.8
|
3.6
|
10.8
|
2.0
|
47.2
|
2.3
|
28.9
|
1.4
|
||||||||||||||||||||||||
Provision (benefit) for income taxes
|
(1.4
|
)
|
(0.3
|
)
|
3.1
|
0.6
|
12.1
|
0.6
|
7.3
|
0.4
|
||||||||||||||||||||||
Net income
|
$
|
20.2
|
3.9
|
%
|
$
|
7.7
|
1.4
|
%
|
$
|
35.1
|
1.7
|
%
|
$
|
21.6
|
1.0
|
%
|
Three Months Ended
December 31,
|
Year Ended
December 31,
|
|||||||||||||||
2015
|
2016
|
2015
|
2016
|
|||||||||||||
Earnings per common share:
|
||||||||||||||||
Basic
|
$
|
0.66
|
$
|
0.25
|
$
|
1.16
|
$
|
0.70
|
||||||||
Diluted
|
$
|
0.66
|
$
|
0.25
|
$
|
1.14
|
$
|
0.69
|
||||||||
Shares used in computing earnings per common share:
|
||||||||||||||||
Basic
|
30,447,228
|
30,769,641
|
30,363,588
|
30,695,411
|
||||||||||||
Diluted
|
31,009,368
|
31,205,964
|
30,767,366
|
31,157,836
|
Dec. 31,
2015
|
Dec. 31,
2016
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
23.1
|
$
|
5.4
|
||||
Accounts receivable, net
|
200.5
|
235.4
|
||||||
Inventory
|
155.2
|
214.7
|
||||||
Deferred tax assets, net
|
41.8
|
35.7
|
||||||
Income taxes receivable
|
10.5
|
4.7
|
||||||
Prepaids and other assets
|
52.4
|
56.5
|
||||||
483.5
|
552.4
|
|||||||
Equipment and leasehold improvements
|
218.5
|
250.9
|
||||||
Accumulated depreciation
|
(144.0
|
)
|
(165.1
|
)
|
||||
74.5
|
85.8
|
|||||||
Goodwill
|
371.0
|
392.3
|
||||||
Intangible assets, net
|
190.2
|
187.6
|
||||||
Other long-term assets
|
32.4
|
81.4
|
||||||
$
|
1,151.6
|
$
|
1,299.5
|
|||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
71.7
|
$
|
107.1
|
||||
Salaries, wages and other compensation
|
30.6
|
32.5
|
||||||
Current portion of long-term debt
|
11.6
|
15.6
|
||||||
Other accrued liabilities
|
27.5
|
27.1
|
||||||
141.4
|
182.3
|
|||||||
Long-term debt
|
413.6
|
457.8
|
||||||
Other long-term liabilities
|
56.5
|
88.7
|
||||||
Deferred tax liabilities
|
20.7
|
26.5
|
||||||
Commitments and contingencies
|
||||||||
Stockholders' equity:
|
||||||||
Preferred stock, $0.01 par value per share; 1,000,000 shares authorized and no shares issued, December 31, 2015 and 2016
|
-
|
-
|
||||||
Common stock, $0.01 par value per share; 175,000,000 shares authorized; 33,237,732 and 33,698,269 shares issued as of December 31, 2015 and 2016, respectively
|
0.3
|
0.3
|
||||||
Capital in excess of par value
|
404.6
|
411.1
|
||||||
Retained earnings
|
152.1
|
173.7
|
||||||
Treasury stock at cost, 2,776,875 and 2,916,906 shares at December 31, 2015 and 2016, respectively
|
(37.6
|
)
|
(40.9
|
)
|
||||
519.4
|
544.2
|
|||||||
$
|
1,151.6
|
$
|
1,299.5
|
Three Months Ended
December 31,
|
Year Ended
December 31,
|
|||||||||||||||
2015
|
2016
|
2015
|
2016
|
|||||||||||||
Cash flows provided by (used in) operating activities:
|
||||||||||||||||
Net income
|
$
|
20.2
|
$
|
7.7
|
$
|
35.1
|
$
|
21.6
|
||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
||||||||||||||||
Depreciation
|
5.9
|
6.6
|
23.1
|
23.8
|
||||||||||||
Amortization
|
8.0
|
9.0
|
28.6
|
33.7
|
||||||||||||
Stock-based compensation and deferred compensation
|
2.4
|
0.6
|
7.8
|
6.9
|
||||||||||||
Amortization of deferred financing fees
|
0.2
|
0.2
|
0.6
|
0.6
|
||||||||||||
Deferred income taxes
|
(0.6
|
)
|
1.0
|
4.0
|
9.0
|
|||||||||||
Gain on disposition of equipment
|
(0.1
|
)
|
(0.1
|
)
|
-
|
-
|
||||||||||
Gain on acquisition/disposition
|
(0.4
|
)
|
(0.6
|
)
|
(0.4
|
)
|
(0.6
|
)
|
||||||||
Other
|
(0.1
|
)
|
0.1
|
-
|
0.2
|
|||||||||||
Change in operating assets and liabilities:
|
||||||||||||||||
Accounts receivable, net
|
(3.6
|
)
|
(19.9
|
)
|
(2.4
|
)
|
(34.3
|
)
|
||||||||
Inventory
|
(34.0
|
)
|
(93.2
|
)
|
(15.9
|
)
|
(56.7
|
)
|
||||||||
Prepaids and other assets
|
(8.1
|
)
|
(1.1
|
)
|
4.2
|
(1.8
|
)
|
|||||||||
Accounts payable
|
(12.1
|
)
|
34.1
|
(24.0
|
)
|
36.4
|
||||||||||
Salaries, wages and other compensation
|
(3.8
|
)
|
4.3
|
(4.7
|
)
|
1.8
|
||||||||||
Other accrued and long-term liabilities
|
(14.2
|
)
|
(2.2
|
)
|
(24.4
|
)
|
(15.6
|
)
|
||||||||
Income taxes payable (receivable)
|
(0.7
|
)
|
4.1
|
(10.7
|
)
|
7.2
|
||||||||||
Excess tax benefit from stock-based compensation
|
(0.1
|
)
|
(0.1
|
)
|
(2.4
|
)
|
(1.4
|
)
|
||||||||
Net cash (used in) provided by operating activities
|
(41.1
|
)
|
(49.5
|
)
|
18.5
|
30.8
|
||||||||||
Cash flows provided by (used in) investing activities:
|
||||||||||||||||
Purchase of equipment and leasehold improvements
|
(6.3
|
)
|
(7.9
|
)
|
(23.9
|
)
|
(34.2
|
)
|
||||||||
Hurricane Sandy insurance recovery
|
3.3
|
-
|
3.3
|
-
|
||||||||||||
Acquisitions, net of cash acquired
|
(62.7
|
)
|
(26.3
|
)
|
(83.6
|
)
|
(57.6
|
)
|
||||||||
Cash proceeds from sale of assets
|
(0.1
|
)
|
-
|
0.1
|
0.1
|
|||||||||||
Net cash used in investing activities
|
(65.8
|
)
|
(34.2
|
)
|
(104.1
|
)
|
(91.7
|
)
|
||||||||
Cash flows provided by (used in) financing activities:
|
||||||||||||||||
Repayments of long-term debt
|
(2.8
|
)
|
(2.9
|
)
|
(5.6
|
)
|
(11.3
|
)
|
||||||||
Proceeds from long-term debt
|
-
|
89.1
|
-
|
89.1
|
||||||||||||
Net activity of long-term revolving credit facility
|
92.0
|
(3.0
|
)
|
82.0
|
(30.5
|
)
|
||||||||||
Payment of debt issuance costs
|
-
|
(0.5
|
)
|
-
|
(0.5
|
)
|
||||||||||
Net activity of capital lease obligations
|
0.6
|
(0.1
|
)
|
0.1
|
(0.5
|
)
|
||||||||||
Issuance of common stock
|
0.1
|
-
|
0.8
|
0.2
|
||||||||||||
Treasury stock, for employee taxes on stock awards
|
-
|
-
|
(4.3
|
)
|
(3.3
|
)
|
||||||||||
Excess tax benefit from stock-based compensation
|
0.1
|
-
|
2.4
|
-
|
||||||||||||
Net cash used in financing activities
|
90.0
|
82.6
|
75.4
|
43.2
|
||||||||||||
Change in cash and cash equivalents
|
(16.9
|
)
|
(1.1
|
)
|
(10.2
|
)
|
(17.7
|
)
|
||||||||
Cash and cash equivalents at beginning of period
|
40.0
|
6.5
|
33.3
|
23.1
|
||||||||||||
Cash and cash equivalents at end of period
|
$
|
23.1
|
$
|
5.4
|
$
|
23.1
|
$
|
5.4
|
||||||||
Supplemental information:
|
||||||||||||||||
Cash paid for interest
|
$
|
2.3
|
$
|
2.7
|
$
|
8.5
|
$
|
10.6
|
||||||||
Cash paid (received) for taxes
|
$
|
-
|
$
|
-
|
$
|
19.4
|
$
|
(4.8
|
)
|
Three Months Ended
December 31,
|
Year Ended
December 31,
|
|||||||||||||||
2015
|
2016
|
2015
|
2016
|
|||||||||||||
Pharmacy data:
|
||||||||||||||||
Prescriptions dispensed (in thousands)
|
8,411
|
7,861
|
34,124
|
32,623
|
||||||||||||
Revenue per prescription dispensed
|
$
|
61.60
|
$
|
67.98
|
$
|
59.37
|
$
|
64.10
|
||||||||
Gross profit per prescription dispensed
|
$
|
10.01
|
$
|
10.65
|
$
|
9.75
|
$
|
9.99
|
(In millions)
|
Three Months Ended
December 31,
|
Year Ended
December 31,
|
||||||||||||||
2015
|
2016
|
2015
|
2016
|
|||||||||||||
Net income
|
$
|
20.2
|
$
|
7.7
|
$
|
35.1
|
$
|
21.6
|
||||||||
Add:
|
||||||||||||||||
Interest expense, net
|
1.2
|
0.2
|
6.6
|
9.5
|
||||||||||||
Merger, acquisition, integration costs and other charges
|
6.1
|
6.7
|
21.3
|
20.8
|
||||||||||||
Settlement, litigation and other related charges
|
2.0
|
2.4
|
13.3
|
9.6
|
||||||||||||
California Medicaid recoupment
|
(2.5
|
)
|
-
|
(2.5
|
)
|
-
|
||||||||||
Restructuring and impairment charges
|
0.2
|
(0.2
|
)
|
0.5
|
2.9
|
|||||||||||
Hurrican Sandy disaster recoveries
|
(5.0
|
)
|
-
|
(4.9
|
)
|
-
|
||||||||||
Provision (benefit) for income taxes
|
(1.4
|
)
|
3.1
|
12.1
|
7.3
|
|||||||||||
Depreciation and amortization expense
|
13.9
|
15.7
|
51.7
|
57.5
|
||||||||||||
Adjusted EBITDA
|
$
|
34.7
|
$
|
35.6
|
$
|
133.2
|
$
|
129.2
|
||||||||
Adjusted EBITDA margin
|
6.7
|
%
|
6.7
|
%
|
6.6
|
%
|
6.2
|
%
|
(In whole numbers)
|
Three Months Ended
December 31,
|
Year Ended
December 31
|
||||||||||||||
2015
|
2016
|
2015
|
2016
|
|||||||||||||
Diluted earnings per share
|
$
|
0.66
|
$
|
0.25
|
$
|
1.14
|
$
|
0.69
|
||||||||
Add:
|
||||||||||||||||
Diluted earnings per share impact of:
|
||||||||||||||||
Merger, acquisition, integration costs and other charges
|
0.11
|
0.13
|
0.43
|
0.42
|
||||||||||||
Settlement, litigation and other related charges
|
0.05
|
0.05
|
0.27
|
0.19
|
||||||||||||
California Medicaid recoupment
|
(0.05
|
)
|
-
|
(0.05
|
)
|
-
|
||||||||||
Restructuring and impairment charges
|
-
|
-
|
0.01
|
0.06
|
||||||||||||
Hurricane Sandy disaster recoveries
|
(0.10
|
)
|
-
|
(0.10
|
)
|
-
|
||||||||||
Amortization of intangible assets
|
0.15
|
0.18
|
0.57
|
0.69
|
||||||||||||
Tax impact of the above adjustment on tax provision
|
(0.26
|
)
|
(0.03
|
)
|
(0.17
|
)
|
(0.11
|
)
|
||||||||
Adjusted diluted earnings per share
|
$
|
0.56
|
$
|
0.58
|
$
|
2.10
|
$
|
1.94
|
(In millions)
|
Three Months Ended
December 31,
|
Year Ended
December 31,
|
||||||||||||||
2015
|
2016
|
2015
|
2016
|
|||||||||||||
Adjusted EBITDA
|
$
|
34.7
|
$
|
35.6
|
$
|
133.2
|
$
|
129.2
|
||||||||
Interest expense, net
|
(1.2
|
)
|
(0.2
|
)
|
(6.6
|
)
|
(9.5
|
)
|
||||||||
Merger, acquisition, integration costs and other charges
|
(0.8
|
)
|
(8.7
|
)
|
(27.7
|
)
|
(33.3
|
)
|
||||||||
Provision for bad debt
|
(1.6
|
)
|
2.3
|
7.9
|
6.3
|
|||||||||||
Amortization of deferred financing fees
|
0.2
|
0.2
|
0.6
|
0.6
|
||||||||||||
(Gain) Loss on disposition of equipment
|
(0.1
|
)
|
(0.1
|
)
|
-
|
-
|
||||||||||
Gain on acquisition
|
(0.4
|
)
|
(0.6
|
)
|
(0.4
|
)
|
(0.6
|
)
|
||||||||
(Provision) benefit for income taxes
|
1.4
|
(3.1
|
)
|
(12.1
|
)
|
(7.3
|
)
|
|||||||||
Deferred income taxes
|
(0.6
|
)
|
1.0
|
4.0
|
9.0
|
|||||||||||
Changes in federal and state income tax payable (receivable)
|
(0.7
|
)
|
4.1
|
(10.7
|
)
|
7.2
|
||||||||||
Stock-based compensation and deferred compensation
|
2.4
|
0.6
|
7.8
|
6.9
|
||||||||||||
Excess tax benefit from stock-based compensation
|
(0.1
|
)
|
(0.1
|
)
|
(2.4
|
)
|
(1.4
|
)
|
||||||||
Changes in assets and liabilities
|
(74.2
|
)
|
(80.6
|
)
|
(75.1
|
)
|
(76.5
|
)
|
||||||||
Other
|
(0.1
|
)
|
0.1
|
-
|
0.2
|
|||||||||||
Net cash flows provided by operating activities
|
$
|
(41.1
|
)
|
$
|
(49.5
|
)
|
$
|
18.5
|
$
|
30.8
|