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PharMerica Corporation (NYSE: PMC), a national provider of institutional pharmacy, specialty infusion services, and hospital pharmacy management services, today reported its financial results for the fourth quarter of 2012 and year ended December 31, 2012.
Commenting on the Company’s results, Gregory S. Weishar, PharMerica Corporation’s Chief Executive Officer, said, “PharMerica’s solid performance in the fourth quarter and full year demonstrates accelerating financial and operating momentum. Operating profits and gross margins improved due to increased generic dispensing. Over 85% of our prescriptions are now dispensed generically. We also saw improved bed retention. Customer and client satisfaction levels are at all time highs as we benefit from the organization’s focus on the customer and strategic investments in service technologies. Today, PharMerica’s service levels are better than they have been in over a decade.
“Looking forward, we enter 2013 well positioned to capitalize on industry demand. We have strengthened the sales and service team. We have improved purchasing terms. We have solidified operations. And, we have unique products and services that save our clients money. All of this leads to a stronger market presence. We are fast approaching the point where we will achieve the goal of organic growth in LTC services.
“We are also optimistic that we can grow Amerita, our most recent acquisition. Amerita is a leading regional supplier of specialty infusion services. Amerita extends the Company’s market reach into the home, a strategic imperative, as we see a significant segment of the senior population aging in their home. There are meaningful operating and market synergies between the infusion and LTC operating segments, and we are confident that Amerita will emerge as a national player in the home infusion industry and position PharMerica Corporation to serve an expanded senior population.”
The results for the fourth quarter and year are set forth below:
Key Comparisons of Years Ended December 31, 2012 and 2011:
Adjusted EBITDA for the year ended December 31, 2012, was $104.1 million compared with $98.5 million for 2011, an increase of 5.7%.
Cash flows provided by operating activities were $85.7 million compared with $26.8 million in the same period of 2011, an increase of 220%.
Gross profit for the year ended December 31, 2012, was $300.2 million compared with $294.9 million in 2011. Gross margin expanded 220 basis points to 16.4% for the year ended December 31, 2012, compared with 14.2% for the year ended December 31, 2011. The increase in gross margin was primarily a result of the generic dispensing rate increasing 370 basis points to 83.3% for the year ended December 31, 2012, compared with 79.6% for 2011.
Net income for the year ended December 31, 2012, was $22.9 million, or $0.77 diluted earnings per share, compared with $23.4 million, or $0.79 diluted earnings per share, for the same period in 2011. Adjusted diluted earnings per share were $1.27 for the year ended 2012 compared with $1.20 diluted earnings per share for 2011, an increase of 5.8%.
Revenues for the year ended December 31, 2012, were $1,832.6 million compared with $2,081.1 million for the same period of 2011, a decrease of 11.9%, driven in part by higher generic dispensing.
Key Comparisons of Fourth Quarters Ended December 31, 2012 and 2011:
Adjusted EBITDA for the fourth quarter of 2012 was $27.4 million compared with $27.6 million in the fourth quarter of 2011, a decrease of 0.7%.
Cash flows used in operating activities for the fourth quarter of 2012 were $17.5 million compared with cash flows provided by operating activities of $14.5 million in the fourth quarter of 2011. Cash flows in the fourth quarter were negatively impacted by higher levels of inventory purchasing, the impact of Hurricane Sandy and an increase in taxes paid.
Gross profit for the fourth quarter of 2012 was $75.6 million compared with $76.2 million in the fourth quarter of 2011. Gross margin expanded 210 basis points to 17.5% in the fourth quarter of 2012 compared with 15.4% in the fourth quarter of 2011. The increase in gross margin was a result of the generic dispensing rate increasing 480 basis points to 84.8% in the fourth quarter of 2012 compared with 80.0% in the fourth quarter of 2011.
Net income for the fourth quarter of 2012 was $3.7 million, or $0.12 diluted earnings per share, compared with $7.9 million, or $0.27 diluted earnings per share, for the same period in 2011. Adjusted diluted earnings per share were $0.33 in 2012 compared with $0.35 diluted earnings per share in 2011, a decrease of 5.7%.
Revenues for the fourth quarter of 2012 were $433.2 million compared with $495.6 million for the fourth quarter of 2011, a decrease of 12.6%, driven in part by higher generic dispensing.
Fiscal 2013 Earnings Guidance
The Company announced its fiscal 2013 earnings guidance range as follows:
(In millions, except per share data)
$1,567.0 - $1,694.0
$113.2 - $121.2
Stock-based compensation and deferred compensation
Depreciation and amortization expense
Interest expense, net
$37.3 - $42.0
Adjusted diluted earnings per share*
$1.39 - $1.55
Common and common equivalent shares outstanding
*Adjusted EBITDA and adjusted diluted earnings per share include an add back for expected expenses incurred related to stock-based compensation and deferred compensation, which has not historically been a part of Adjusted EBITDA and adjusted diluted earnings per share. Such amount is approximately $4.3 million (pre-tax $7.2 million), or $0.14 diluted earnings per share. See the supplemental information schedules at the end of this press release for recasted historical information under this definition.