Diplomat Pharmacy Tanks on Weak Earnings

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Diplomat Pharmacy, Inc. (NYSE: DPLO) is one of the worst performing stocks in Thursday’s session. The company recently reported its third-quarter earnings which in turn cratered shares. The company said that it had $0.21 in earnings per share (EPS) and $1.18 billlion in revenue. The consensus estimates from Thomson Reuters called for $0.24 in EPS and $1.26 billion in revenue. The same period from last year had $0.26 in EPS on $946.91 million in revenue.

A couple of the highlights from the report were that revenues grew organically by 12% and that the company issued 266,000 prescriptions, up 9% year over year. Gross profit per prescription dispensed was $289, compared to $301 last year.

Despite pressure felt during the third quarter, the firm’s largest therapeutic category, oncology, continued to lead growth. Driven by strong trends such as limited distribution, the oncology business increased 57% year over year, and 36% on an organic basis.

On the books, cash and cash equivalents totaled $17.1 million at the end of the quarter, versus a total market cap of $866 million.

Phil Hagerman, CEO and Chairman of Diplomat, commented:

We are disappointed with our third quarter results, which were significantly impacted by the softness in the hepatitis C business nationwide, as well as by DIR fees. The methodology and transparency around how PBMs are applying these DIR fees changed materially in 2016, and while we cannot reverse the impact they had on this quarter, we are working with our partners in the specialty pharmacy industry and with legislators to achieve an amicable solution to this problem.

He continued:

We also have confidence in Diplomat’s future prospects as we see continued growth in the robust drug development pipeline, a number of early wins from our strategy of marketing directly to payors and health plans, and our ability to make strategic acquisitions in the core specialty pharmacy industry, as well as in expanding complementary service areas.

Shares of Diplomat Pharmacy were last trading down about 42% at $13.03, also hitting a new low. The stock has a consensus analyst price target of $35.90 and a 52-week trading range of $12.71 to $38.94.