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PharMerica Reports Results For The Third Quarter Of 2012 And Nine Months Ended September 30, 2012

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

Commenting on the Company’s results, Gregory S. Weishar, PharMerica Corporation’s Chief Executive Officer, said, “We are seeing the rewards of past and ongoing initiatives to improve the customer experience, which is leading to gains in bed retention rates and early signs of improved sales productivity. Gross margins have also shown improvement, driven primarily by brand to generic conversions. This quarter, we dispensed an industry leading 84% generic prescriptions. We are confident we can build upon this momentum and expect further gains in bed retention rates, sales productivity and margin improvement over the coming quarters.

“Finally, we expect the fourth quarter will lead to the culmination of a solid year end. Therefore, we are tightening our 2012 guidance.”

The results for the third quarter and nine months are set forth below:
  • Key Comparisons of Nine Months Ended September 30, 2012 and 2011:
    • Net income for the nine months ended September 30, 2012, was $19.2 million, or $0.64 diluted earnings per share, compared with $15.5 million, or $0.53 diluted earnings per share, for the same period in 2011. Adjusted diluted earnings per share were $0.93 during the first nine months of 2012 compared with $0.85 diluted earnings per share in the same period in 2011, an increase of 9.4%.
    • Adjusted EBITDA for the nine months ended September 30, 2012, was $76.7 million compared with $70.9 million for the same period in 2011, an increase of 8.2%.
    • Gross profit for the nine months ended September 30, 2012, was $224.3 million compared with $218.8 million in the same period of 2011. Gross margin expanded 220 basis points to 16.0% in the first nine months of 2012 compared with 13.8% in the first nine months of 2011. The increase in gross margin was a result of the generic dispensing rate increasing 330 basis points to 82.8% in the first nine months of 2012 compared with 79.5% in the first nine months of 2011.
    • Revenues for the nine months ended September 30, 2012, were $1,399.4 million compared with $1,585.5 million for the same period of 2011, a decrease of 11.7%, driven in part by higher generic dispensing.
    • Cash flows provided by operating activities were $103.2 million compared with $12.3 million in the same period of 2011.
  • Key Comparisons of Third Quarters Ended September 30, 2012 and 2011:
    • Net income for the third quarter of 2012 was $6.0 million, or $0.20 diluted earnings per share, compared with $4.8 million, or $0.16 diluted earnings per share, for the same period in 2011. Adjusted diluted earnings per share were $0.33 in 2012 compared with $0.31 diluted earnings per share in 2011, an increase of 6.5%.
    • Adjusted EBITDA for the third quarter of 2012 was $26.2 million compared with $25.4 million in the third quarter of 2011, an increase of 3.2%.
    • Gross profit for the third quarter of 2012 was $75.6 million compared with $75.7 million in the third quarter of 2011. Gross margin expanded 250 basis points to 17.1% in the third quarter of 2012 compared with 14.6% in the third quarter of 2011. The increase in gross margin was a result of the generic dispensing rate increasing 480 basis points to 84.4% in the third quarter of 2012 compared with 79.6% in the third quarter of 2011.
    • Revenues for the third quarter of 2012 were $442.0 million compared with $518.7 million for the third quarter of 2011, a decrease of 14.8%, driven in part by higher generic dispensing.
    • Cash flows provided by operating activities for the third quarter of 2012 were $51.4 million compared with cash flows provided by operating activities of $12.0 million in the third 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 $1,815.0 - $1,845.0 $1,825.0 - $1,835.0
Adjusted EBITDA $93.0 - $102.0 $98.0 - $102.0
Depreciation and amortization expense $31.0 - $29.0 $30.5 - $30.3
Interest expense, net $9.8 - $9.6 $10.2 - $10.0
Tax rate 40.3% - 40.1% 40.0%
Net income $31.2 - $38.0 $34.4 - $37.0
Adjusted diluted earnings per share $1.05 - $1.28 $1.15 - $1.24
Common and common equivalent shares outstanding 29.6 29.9
 

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.

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