REVENUE

9 Months Ended

Sep. 30, 2019

REVENUE

REVENUE

9.  REVENUE

The following table disaggregates net sales by therapeutic categories for the Specialty segment and by product and service distribution channels for the PBM segment:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Specialty Segment:
Oncology	$	718,859	$	701,206	$	2,123,574	$	2,094,394
Specialty infusion		209,767		178,890		580,254		525,857
Immunology		135,740		135,397		412,268		413,948
Other		179,082		196,805		511,486		564,824
Total Specialty segment		1,243,448		1,212,298		3,627,582		3,599,023
PBM Segment:
Retail networks		48,604		126,082		173,800		417,370
Specialty pharmacy		23,156		22,470		57,323		67,784
Mail order		7,976		16,019		30,758		50,029
Other		2,764		5,362		8,849		14,965
Total PBM segment		82,500		169,933		270,730		550,148
Inter-segment eliminations		(24,751)		(8,897)		(52,683)		(17,275)
Total net sales	$	1,301,197	$	1,373,334	$	3,845,629	$	4,131,896

Rebates retained, which represents the difference between the manufacturers’ rebates earned and rebates incurred to customers, approximated (5.5%) and 22.1% of total gross profit for the three months ended September 30, 2019 and 2018,

respectively and 5.9% and 17.2% of total gross profit for the nine months ended September 30, 2019 and 2018, respectively.

Rebates retained was negatively impacted for the three and nine months ended September 30, 2019.  In the third quarter of 2019, manufacturers’ rebates earned, recorded in Cost of sales, includes an approximate $9,000 adjustment due to the Company’s inability to meet certain contractual membership level requirements in 2019, as included in the PBM aggregator’s contract, necessary to maintain contractual rebate rates.  The Company had met the membership requirements for this standard contract for the years 2017 and 2018.  At the end of the second quarter of 2019, the Company was in negotiations with the aggregator, as required by the contract, regarding contract renewals (including the potential for adjustments to rebate pricing in the future and retroactively to January 1, 2019). In late August 2019, negotiations concluded with the aggregator assessing a rebate penalty of approximately $9,000 of which approximately $6,000 related to the six months ended June 30, 2019.  The aggregator began withholding from monthly rebate payments in September and October of 2019 to recover the penalty amount.  

Additionally, as of September 30, 2019, the Company recorded against Net sales, the recognition of an accrual for litigation of $3,900 relating to a rebate dispute with a terminated customer.