Delaware
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001-33380
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87-0792558
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(State or Other Jurisdiction
of Incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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o
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
o
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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o
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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o
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 2.02
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Results of Operations and Financial Condition.
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Item 9.01
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Financial Statements and Exhibits.
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99.1
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Press Release of PharMerica Corporation dated May 4, 2011.
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PHARMERICA CORPORATION
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||
Date: May 4, 2011
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By:
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/s/ Michael J. Culotta
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Michael J. Culotta
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||
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Executive Vice President and Chief Financial Officer
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Exhibit No. | Description |
99.1
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Press Release of PharMerica Corporation dated May 4, 2011.
|
Ø
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Key Comparisons of First Quarters Ended March 31, 2011 and 2010:
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●
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Revenues for the first quarter of 2011 were $535.1 million compared with $462.2 million for the first quarter of 2010, an increase of 15.8%. Revenues increased as a result of the Chem Rx and Lone Star acquisitions.
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●
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Net income for the first quarter of 2011 was $3.3 million, or $0.11 per diluted share, compared with $8.4 million, or $0.27 per diluted share, for the first quarter of 2010. Adjusted earnings per diluted share were $0.21 in 2011 compared with $0.29 in 2010, reflecting the adjustment for integration, merger and acquisition related costs and other charges and the impact of the tax accounting matters.
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●
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Cash flow provided by operating activities was $5.4 million compared with $24.7 million in the prior year. The reduction in cash flow was due to an increase in inventory related to a change in purchasing strategy, an increase in accounts receivable as a result of the acquisitions and an increase in prepaids and other assets as result of the rebate structure under the amended ABC agreement.
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●
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Adjusted EBITDA was $19.2 million compared with $23.1 million in the prior year.
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Ø
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On May 2, 2011, the Company entered into a New Credit Agreement providing borrowing capacity of up to $450 million and as a result increases its previous adjusted diluted earnings per share guidance for 2011 to a range of $0.76 to $0.91 from a range of $0.72 to $0.87.
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(in millions, except per share data)
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Previous
Guidance
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Current
Guidance
|
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Revenues
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$2,097 - $2,133
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$2,097 - $2,133
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Adjusted EBITDA
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$77.0 - $83.0
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$77.0 - $83.0
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Depreciation and amortization expense
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$30.3 - $29.3
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$30.3 - $29.3
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Interest expense, net
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$10.9 - $10.7
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$9.0 - $8.8
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Tax rate
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40.5% - 40.3%
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40.8% - 40.6%
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Net income
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$21.3 - $25.7
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$22.3 - $26.7
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Adjusted diluted earnings per share
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$0.72 - $0.87
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$0.76 - $0.91
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Common and common equivalent shares outstanding
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29.5
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29.4
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Quarter Ended March 31,
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||||||||||||||||
2010
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2011
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|||||||||||||||
Amount
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% of
Revenue
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Amount
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% of
Revenue
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|||||||||||||
Revenues
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$ | 462.2 | 100.0 | % | $ | 535.1 | 100.0 | % | ||||||||
Cost of goods sold
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398.9 | 86.3 | 469.4 | 87.7 | ||||||||||||
Gross profit
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63.3 | 13.7 | 65.7 | 12.3 | ||||||||||||
Selling, general and administrative expenses
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44.8 | 9.7 | 51.6 | 9.6 | ||||||||||||
Amortization expense
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2.3 | 0.5 | 2.7 | 0.5 | ||||||||||||
Integration, merger and acquisition related costs
and other charges
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1.2 | 0.3 | 4.7 | 0.9 | ||||||||||||
Operating income
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15.0 | 3.2 | 6.7 | 1.3 | ||||||||||||
Interest expense, net
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0.9 | 0.2 | 1.1 | 0.3 | ||||||||||||
Income before income taxes
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14.1 | 3.0 | 5.6 | 1.0 | ||||||||||||
Provision for income taxes
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5.7 | 1.2 | 2.3 | 0.4 | ||||||||||||
Net income
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$ | 8.4 | 1.8 | % | $ | 3.3 | 0.6 | % |
Quarter Ended
March 31,
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||||||||
2010
|
2011
|
|||||||
Earnings per common share:
|
||||||||
Basic
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$ | 0.28 | $ | 0.11 | ||||
Diluted
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$ | 0.27 | $ | 0.11 | ||||
Shares used in computing earnings per common share:
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||||||||
Basic
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30,396,520 | 29,272,481 | ||||||
Diluted
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30,571,049 | 29,362,134 |
Dec. 31,
2010
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March 31,
2011
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|||||||
ASSETS
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||||||||
Current assets:
|
||||||||
Cash and cash equivalents
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$ | 10.8 | $ | 12.3 | ||||
Accounts receivable, net
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226.5 | 235.8 | ||||||
Inventory
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88.6 | 103.5 | ||||||
Deferred tax assets
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23.5 | 38.3 | ||||||
Prepaids and other assets
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24.3 | 30.3 | ||||||
373.7 | 420.2 | |||||||
Equipment and leasehold improvements
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136.0 | 138.1 | ||||||
Accumulated depreciation
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(76.5 | ) | (81.4 | ) | ||||
59.5 | 56.7 | |||||||
Deferred tax assets, net
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24.9 | 7.8 | ||||||
Goodwill
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193.9 | 193.9 | ||||||
Intangible assets, net
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102.2 | 100.3 | ||||||
Other
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5.7 | 5.8 | ||||||
$ | 759.9 | $ | 784.7 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
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||||||||
Current liabilities:
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||||||||
Accounts payable
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$ | 74.5 | $ | 84.9 | ||||
Salaries, wages and other compensation
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22.0 | 31.9 | ||||||
Other accrued liabilities
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7.0 | 7.9 | ||||||
103.5 | 124.7 | |||||||
Long-term debt
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245.6 | 244.3 | ||||||
Other long-term liabilities
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26.4 | 26.5 | ||||||
Commitments and contingencies
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||||||||
Stockholders’ equity:
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||||||||
Preferred stock, $0.01 par value per share; 1,000,000 shares authorized
and no shares issued at December 31, 2010 and March 31, 2011
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– | – | ||||||
Common stock, $0.01 par value per share; 175,000,000 shares authorized; 30,696,261 and 30,699,831 shares issued as of December 31, 2010 and March 31, 2011, respectively
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0.3 | 0.3 | ||||||
Capital in excess of par value
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349.7 | 351.2 | ||||||
Retained earnings
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45.0 | 48.3 | ||||||
Treasury stock at cost, 1,336,817 shares
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(10.6 | ) | (10.6 | ) | ||||
384.4 | 389.2 | |||||||
$ | 759.9 | $ | 784.7 |
Quarter Ended
March 31,
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||||||||
2010
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2011
|
|||||||
Cash flows provided (used in) by operating activities:
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||||||||
Net income
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$ | 8.4 | $ | 3.3 | ||||
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
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||||||||
Depreciation
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4.6 | 5.1 | ||||||
Amortization
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2.3 | 2.7 | ||||||
Integration, merger and acquisition related costs and other charges
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0.1 | 0.3 | ||||||
Stock-based compensation
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0.8 | 1.4 | ||||||
Amortization of deferred financing fees
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0.2 | 0.2 | ||||||
Deferred income taxes
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4.8 | 2.3 | ||||||
Loss on disposition of equipment
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– | 0.1 | ||||||
Other
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0.1 | – | ||||||
Change in operating assets and liabilities:
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||||||||
Accounts receivable, net
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11.1 | (9.4 | ) | |||||
Inventory
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2.6 | (15.0 | ) | |||||
Prepaids and other assets
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3.8 | (6.2 | ) | |||||
Accounts payable
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(11.5 | ) | 10.4 | |||||
Salaries, wages and other compensation
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(2.8 | ) | 9.3 | |||||
Other accrued liabilities
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0.2 | 0.9 | ||||||
Net cash provided by operating activities
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24.7 | 5.4 | ||||||
Cash flows provided by (used in) investing activities:
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||||||||
Purchases of equipment and leasehold improvements
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(2.2 | ) | (2.4 | ) | ||||
Other
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(0.1 | ) | – | |||||
Net cash used in investing activities
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(2.3 | ) | (2.4 | ) | ||||
Cash flows provided by (used in) financing activities:
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||||||||
Repayments of capital lease obligations
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(0.2 | ) | (0.2 | ) | ||||
Net repayment of revolving credit facility
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– | (1.3 | ) | |||||
Issuance of common stock
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0.1 | – | ||||||
Net cash used in financing activities
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(0.1 | ) | (1.5 | ) | ||||
Change in cash and cash equivalents
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22.3 | 1.5 | ||||||
Cash and cash equivalents at beginning of period
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51.2 | 10.8 | ||||||
Cash and cash equivalents at end of period
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$ | 73.5 | $ | 12.3 | ||||
Supplemental information:
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||||||||
Cash paid for interest
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$ | 0.8 | $ | 1.0 | ||||
Cash refund for taxes
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$ | (0.2 | ) | $ | – | |||
Supplemental schedule of non-cash activities:
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||||||||
Capital lease obligations
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$ | 0.4 | $ | – | ||||
Integrity working capital adjustment
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$ | 0.5 | $ | – |
(In millions, except per share amounts)
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Quarter Ended
March 31,
|
|||||||
2010
|
2011
|
|||||||
Integration costs and other charges:
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||||||||
Professional and advisory fees
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$ | 0.2 | $ | 0.1 | ||||
General and administrative
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0.2 | 0.1 | ||||||
Employee costs
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0.1 | – | ||||||
Severance costs
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0.1 | – | ||||||
Facility costs
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– | (0.1 | ) | |||||
0.6 | 0.1 | |||||||
Acquisition related costs:
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||||||||
Professional and advisory fees
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0.2 | 1.3 | ||||||
General and administrative
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0.4 | 0.3 | ||||||
Employee costs
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– | 1.1 | ||||||
Severance costs
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– | 0.4 | ||||||
Facility costs
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– | 0.8 | ||||||
Other Costs
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– | 0.7 | ||||||
0.6 | 4.6 | |||||||
Total integration, merger and acquisition related costs and other charges
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$ | 1.2 | $ | 4.7 | ||||
Negative effect on earnings per diluted share
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$ | (0.02 | ) | $ | (0.09 | ) |
(In whole numbers, except where indicated)
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March 31,
2010
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March 31, 2011
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||||||||||||||
PharMerica
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Chem Rx
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Total
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||||||||||||||
Customer licensed beds:
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||||||||||||||||
Beginning of period
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313,867 | 301,128 | 61,773 | 362,901 | ||||||||||||
Additions
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4,111 | 4,481 | 998 | 5,479 | ||||||||||||
Losses
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(10,470 | ) | (7,173 | ) | (3,538 | ) | (10,711 | ) | ||||||||
Transfers
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– | 2,518 | (2,518 | ) | – | |||||||||||
End of period
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307,508 | 300,954 | 56,715 | 357,669 | ||||||||||||
Prescription data:
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||||||||||||||||
Prescriptions dispensed (in thousands)
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9,664 | 10,769 | ||||||||||||||
Revenue per prescription dispensed
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$ | 46.39 | $ | 48.25 | ||||||||||||
Gross profit per prescription dispensed
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$ | 6.36 | $ | 5.92 |
(In millions)
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Quarter Ended
March 31,
|
|||||||
2010
|
2011
|
|||||||
Net income
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$ | 8.4 | $ | 3.3 | ||||
Add:
|
||||||||
Interest expense, net
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0.9 | 1.1 | ||||||
Integration, merger and acquisition related costs and other charges
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1.2 | 4.7 | ||||||
Provision for income taxes
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5.7 | 2.3 | ||||||
Depreciation and amortization expense
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6.9 | 7.8 | ||||||
Adjusted EBITDA
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$ | 23.1 | $ | 19.2 | ||||
Adjusted EBITDA margin
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5.0 | % | 3.6 | % |
(In whole numbers)
|
Quarter Ended
March 31,
|
|||||||
2010
|
2011
|
|||||||
Earnings per diluted common share
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$ | 0.27 | $ | 0.11 | ||||
Add:Integration, merger and acquisition related costs and other charges
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0.02 | 0.09 | ||||||
Add: Tax accounting matters
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– | 0.01 | ||||||
Adjusted earnings per diluted common share after impact of above items
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$ | 0.29 | $ | 0.21 |
(In millions)
|
Quarter Ended
March 31,
|
|||||||
2010
|
2011
|
|||||||
Adjusted EBITDA
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$ | 23.1 | $ | 19.2 | ||||
Interest expense, net
|
(0.9 | ) | (1.1 | ) | ||||
Provision for income taxes
|
(5.7 | ) | (2.3 | ) | ||||
Integration, merger and acquisition related costs and other charges
|
(1.1 | ) | (4.4 | ) | ||||
Provision for bad debt
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3.8 | 5.4 | ||||||
Stock-based compensation
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0.8 | 1.4 | ||||||
Amortization of deferred financing fees
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0.2 | 0.2 | ||||||
Deferred income taxes
|
4.8 | 2.3 | ||||||
Loss on disposition of equipment
|
– | 0.1 | ||||||
Other
|
0.1 | – | ||||||
Changes in assets and liabilities
|
(0.4 | ) | (15.4 | ) | ||||
Net Cash Flows from Operating Activities
|
$ | 24.7 | $ | 5.4 |