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PharMerica Reports Results For The Second Quarter Of 2012 And Six Months Ended June 30, 2012

PharMerica Corporation (NYSE: PMC), a national provider of institutional pharmacy and hospital pharmacy management services, today reported its financial results for the second quarter of 2012 and six months ended June 30, 2012.

Commenting on the Company’s results, Gregory S. Weishar, PharMerica Corporation’s Chief Executive Officer, said, “The Company’s strong performance reflects the fifth consecutive quarter of year over year growth in gross profit and adjusted EBITDA margins. Bed retention rates continue to progress, driven by improved customer service. Service related bed losses have decreased by more than 33%.

“Looking forward, we see continued improvements in bed retention and organic growth as we accelerate the rollout of on-site dispensing technology and cost containment products. Cash flow from operations remains strong with quarterly and year to date increases of $37 million and $52 million, respectively, versus the same periods in 2011, primarily driven by better receivables and inventory management. We will utilize this cash for acquisitions and the share buyback program.

“Based on the Company’s financial and operational performance, we anticipate increased shareholder value over the coming months.”

The results for the second quarter and six months are set forth below:

  • Key Comparisons of Six Months Ended June 30, 2012 and 2011:
    • Net income for the six months ended June 30, 2012, was $13.2 million, or $0.44 diluted earnings per share, compared with $10.7 million, or $0.36 diluted earnings per share, for the same period in 2011. Adjusted diluted earnings per share were $0.61 in the first half of 2012 compared with $0.54 diluted earnings per share in the same period in 2011, an increase of 13.0%.
    • Adjusted EBITDA for the first half of 2012 was $50.5 million compared with $45.5 million in the first half of 2011, an increase of 11.0%.
    • Gross profit for the six months ended June 30, 2012, was $148.7 million, or 15.5% of revenue, compared with $143.1 million, or 13.4% of revenue, in the same period of 2011. Gross profit expanded as the consolidated generic dispensing rate increased 140 basis points to 78.9% in the first half of 2012 compared with 77.5% in the first half of 2011.
    • Revenues for the six months ended June 30, 2012, were $957.4 million compared with $1,066.8 million for the same period of 2011, a decrease of 10.3% driven in part by higher generic dispensing.
    • Cash flows provided by operating activities were $51.8 million compared with $0.3 million in the same period of 2011.
  • Key Comparisons of Second Quarters Ended June 30, 2012 and 2011:
    • During the second quarter of 2011, there was a one-time favorable adjustment of $2.0 million relating to the amended and restated Prime Vendor Agreement that impacted gross profit, adjusted EBITDA and adjusted diluted earnings per share.
    • Net income for the second quarter of 2012 was $7.6 million, or $0.26 diluted earnings per share, compared with $7.4 million, or $0.25 diluted earnings per share, for the same period in 2011. Adjusted diluted earnings per share were $0.32 in 2012 compared with $0.33 diluted earnings per share in 2011. After consideration of the one-time adjustment, adjusted diluted earnings per share would have been $0.28 for the second quarter of 2011 and therefore the adjusted diluted earnings per share for second quarter of 2012 would have increased 14.3% over the same period in 2011.
    • Adjusted EBITDA for the second quarter of 2012 was $25.5 million compared with $26.3 million in the second quarter of 2011. After consideration of the one-time adjustment, adjusted EBITDA for the second quarter of 2011 would have been $24.3 million and therefore adjusted EBITDA for the second quarter of 2012 would have increased 4.9% over the same period in 2011.
    • Gross profit for the second quarter of 2012 was $76.1 million, or 16.6% of revenue, compared with $77.0 million, or 14.5% of revenue, in the second quarter of 2011. Gross profit expanded as the consolidated generic dispensing rate increased 120 basis points to 79.1% in the second quarter of 2012 compared with 77.9% in the second quarter of 2011. After consideration of the one-time adjustment, gross profit for the second quarter of 2011 would have been $75.0 million and therefore gross profit for the second quarter of 2012 would have increased 1.5% over the same period in 2011.
    • Revenues for the second quarter of 2012 were $458.5 million compared with $531.7 million for the second quarter of 2011, a decrease of 13.8% driven in part by higher generic dispensing.
    • Cash flows provided by operating activities were $31.9 million compared with cash flows used in operating activities of $5.1 million in the second quarter of 2011.

Fiscal 2012 Earnings Guidance

The Company updates its fiscal 2012 earnings guidance range as follows:

 
(in millions, except per share data)    

Previous Guidance

   

Current Guidance

Revenues $1,915.0 - $1,950.0 $1,815.0 - $1,845.0
Adjusted EBITDA $93.0 - $102.0 $93.0 - $102.0
Depreciation and amortization expense $31.0 - $29.0 $31.0 - $29.0
Interest expense, net $9.8 - $9.6 $9.8 - $9.6
Tax rate 40.6% - 40.4% 40.3% - 40.1%
Net income $31.0 - $37.8 $31.2 - $38.0
Adjusted diluted earnings per share $1.05 - $1.28 $1.05 - $1.28
Common and common equivalent shares outstanding 29.6 29.6
 

As is normal practice, the fiscal 2012 earnings guidance does not consider any benefits from future acquisitions nor does it consider any merger, acquisition, integration costs and other charges the Company may incur, including but not limited to the application of new accounting pronouncements or other non-recurring charges. Also, the guidance does not consider the potential impact of any future acquisitions or the expected conversion to Average Manufacturers Price (“AMP”) because the effect of these items cannot be reasonably estimated at this time. The reduction in the revenue guidance is related to the continuation of lower generic reimbursement.

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