Delaware
|
001-33380
|
87-0792558
|
||
(State or Other Jurisdiction
of Incorporation)
|
(Commission
File Number)
|
(IRS Employer
Identification No.)
|
o
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
o
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
o
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
o
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Item 2.02
|
Results of Operations and Financial Condition.
|
Item 9.01
|
Financial Statements and Exhibits.
|
|
99.1
|
Press Release of PharMerica Corporation dated November 3, 2011.
|
PHARMERICA CORPORATION
|
||
|
||
Date: November 3, 2011
|
By:
|
/s/ Michael J. Culotta
|
Michael J. Culotta
|
||
|
Executive Vice President and Chief Financial Officer
|
Exhibit No.
|
Description
|
99.1
|
Press Release of PharMerica Corporation dated November 3, 2011.
|
Ø
|
Key Comparisons of Third Quarters Ended September 30, 2011 and 2010:
|
●
|
Revenues for the third quarter of 2011 were $518.7 million compared with $443.1 million for the third quarter of 2010, an increase of 17.1%. The increase is due to increased prescriptions dispensed as a result of the Chem Rx and other acquisitions.
|
●
|
Net income was $4.8 million, or $0.16 per diluted share, in both periods. Adjusted earnings per diluted share were $0.31 in 2011 compared with $0.21 in 2010, an increase of 47.6%.
|
●
|
Cash flows provided by operating activities were $12.0 million compared with $23.5 million in the prior year. The reduction in cash flows was primarily due to the timing and frequency of payments for drug purchases during the quarter.
|
●
|
Adjusted EBITDA for the quarter was $25.4 million compared with $18.3 million in the prior year, an increase of 38.8%.
|
Ø
|
Key Comparisons of Nine Months Ended September 30, 2011 and 2010:
|
●
|
Revenues for the nine months ended September 30, 2011, were $1,585.5 million compared with $1,355.8 million for the same period of 2010, an increase of 16.9%. The increase is due to increased prescriptions dispensed as a result of the Chem Rx and other acquisitions.
|
●
|
Net income for the first nine months of 2011 was $15.5 million, or $0.53 per diluted share, compared with $14.5 million, or $0.48 per diluted share, for the same period of 2010. Adjusted earnings per diluted share were $0.85 in the first nine months of 2011 compared with $0.73 in 2010, an increase of 16.4%.
|
●
|
Cash flows provided by operating activities were $12.3 million compared with $68.8 million in the prior year. The reduction in cash flows was due primarily to timing changes and frequency of payments for the purchase of inventories, an increase in accounts receivable related to the acquired businesses, and an increase in prepaids and other assets as a result of the renegotiated Prime Vendor Agreement.
|
●
|
Adjusted EBITDA for the nine months was $70.9 million compared with $60.7 million in the prior year, an increase of 16.8%.
|
(in millions, except per share data)
|
Previous Guidance
|
Current Guidance
|
|
Revenues
|
$2,080 - $2,110
|
$2,080 - $2,090
|
|
Adjusted EBITDA
|
$82.0 - $86.0
|
$90.0 - $92.0
|
|
Depreciation and amortization expense
|
$30.9 - $30.4
|
$30.9 - $30.7
|
|
Interest expense, net
|
$9.0 - $8.8
|
$9.0 - $8.8
|
|
Tax rate
|
40.8% - 40.6%
|
40.8% - 40.6%
|
|
Net income
|
$24.9 - $27.8
|
$29.7 - $31.2
|
|
Adjusted diluted earnings per share
|
$0.85 - $0.95
|
$1.01 - $1.06
|
|
Common and common equivalent shares outstanding
|
29.4
|
29.4
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||||||||||||||||||
2010
|
2011
|
2010
|
2011
|
|||||||||||||||||||||||||||||
Amount
|
% of
Revenue
|
Amount
|
% of
Revenue
|
Amount
|
% of
Revenue
|
Amount
|
% of
Revenue
|
|||||||||||||||||||||||||
Revenues
|
$ | 443.1 | 100.0 | % | $ | 518.7 | 100.0 | % | $ | 1,355.8 | 100.0 | % | $ | 1,585.5 | 100.0 | % | ||||||||||||||||
Cost of goods sold
|
386.3 | 87.2 | 443.4 | 85.5 | 1,178.1 | 86.9 | 1,368.1 | 86.3 | ||||||||||||||||||||||||
Gross profit
|
56.8 | 12.8 | 75.3 | 14.5 | 177.7 | 13.1 | 217.4 | 13.7 | ||||||||||||||||||||||||
Selling, general and
administrative
expenses
|
43.3 | 9.7 | 54.7 | 10.5 | 131.1 | 9.6 | 161.4 | 10.2 | ||||||||||||||||||||||||
Amortization expense
|
2.2 | 0.5 | 3.0 | 0.6 | 6.9 | 0.5 | 8.4 | 0.5 | ||||||||||||||||||||||||
Impairment of
intangible assets
|
– | – | 5.1 | 1.0 | – | – | 5.1 | 0.3 | ||||||||||||||||||||||||
Integration, merger
and acquisition
related costs
and other charges
|
2.4 | 0.6 | 1.8 | 0.3 | 12.8 | 1.0 | 11.6 | 0.7 | ||||||||||||||||||||||||
Operating income
|
8.9 | 2.0 | 10.7 | 2.1 | 26.9 | 2.0 | 30.9 | 2.0 | ||||||||||||||||||||||||
Interest expense, net
|
0.9 | 0.2 | 2.6 | 0.5 | 2.6 | 0.2 | 6.3 | 0.4 | ||||||||||||||||||||||||
Income before
income taxes
|
8.0 | 1.8 | 8.1 | 1.6 | 24.3 | 1.8 | 24.6 | 1.6 | ||||||||||||||||||||||||
Provision for income
taxes
|
3.2 | 0.7 | 3.3 | 0.6 | 9.8 | 0.7 | 9.1 | 0.6 | ||||||||||||||||||||||||
Net income
|
$ | 4.8 | 1.1 | % | $ | 4.8 | 1.0 | % | $ | 14.5 | 1.1 | % | $ | 15.5 | 1.0 | % |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2010
|
2011
|
2010
|
2011
|
|||||||||||||
Earnings per common share:
|
||||||||||||||||
Basic
|
$ | 0.16 | $ | 0.16 | $ | 0.48 | $ | 0.53 | ||||||||
Diluted
|
$ | 0.16 | $ | 0.16 | $ | 0.48 | $ | 0.53 | ||||||||
Shares used in computing earnings per common share:
|
||||||||||||||||
Basic
|
30,033,618 | 29,366,998 | 30,282,566 | 29,324,094 | ||||||||||||
Diluted
|
30,122,302 | 29,531,095 | 30,423,035 | 29,423,330 |
(As Adjusted)
Dec. 31,
2010
|
Sept. 30,
2011
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 10.8 | $ | 10.3 | ||||
Accounts receivable, net
|
237.1 | 239.9 | ||||||
Inventory
|
88.5 | 118.4 | ||||||
Deferred tax assets, net
|
23.5 | 38.8 | ||||||
Prepaids and other assets
|
24.6 | 31.4 | ||||||
384.5 | 438.8 | |||||||
Equipment and leasehold improvements
|
136.0 | 143.9 | ||||||
Accumulated depreciation
|
(76.5 | ) | (90.4 | ) | ||||
59.5 | 53.5 | |||||||
Deferred tax assets, net
|
28.7 | 3.6 | ||||||
Goodwill
|
179.1 | 183.4 | ||||||
Intangible assets, net
|
102.2 | 93.1 | ||||||
Other
|
5.7 | 15.2 | ||||||
$ | 759.7 | $ | 787.6 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 74.2 | $ | 53.2 | ||||
Salaries, wages and other compensation
|
22.0 | 35.3 | ||||||
Current portion of long-term debt
|
– | 3.1 | ||||||
Other accrued liabilities
|
7.1 | 10.5 | ||||||
103.3 | 102.1 | |||||||
Long-term debt
|
245.6 | 257.9 | ||||||
Other long-term liabilities
|
26.4 | 23.1 | ||||||
Commitments and contingencies
|
||||||||
Stockholders’ equity:
|
||||||||
Preferred stock, $0.01 par value per share; 1,000,000 shares authorized
and no shares issued at December 31, 2010, and September 30, 2011
|
– | – | ||||||
Common stock, $0.01 par value per share; 175,000,000 shares authorized;
30,696,261 and 30,735,615 shares issued as of December 31, 2010, and
September 30, 2011, respectively
|
0.3 | 0.3 | ||||||
Capital in excess of par value
|
349.7 | 354.4 | ||||||
Retained earnings
|
45.0 | 60.5 | ||||||
Treasury stock at cost, 1,336,817 shares and 1,344,939 shares at
December 31, 2010, and September 30, 2011, respectively
|
(10.6 | ) | (10.7 | ) | ||||
384.4 | 404.5 | |||||||
$ | 759.7 | $ | 787.6 |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2010
|
2011
|
2010
|
2011
|
|||||||||||||
Cash flows provided by (used in) operating activities:
|
||||||||||||||||
Net income
|
$ | 4.8 | $ | 4.8 | $ | 14.5 | $ | 15.5 | ||||||||
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
|
||||||||||||||||
Depreciation
|
4.8 | 4.8 | 14.1 | 14.9 | ||||||||||||
Amortization
|
2.2 | 3.0 | 6.9 | 8.4 | ||||||||||||
Impairment Charge
|
– | 5.1 | – | 5.1 | ||||||||||||
Integration, merger and acquisition related costs
and other charges
|
0.1 | 0.5 | 0.6 | 1.2 | ||||||||||||
Stock-based compensation
|
0.8 | 1.3 | 3.3 | 4.5 | ||||||||||||
Amortization of deferred financing fees
|
0.1 | 0.2 | 0.4 | 0.7 | ||||||||||||
Deferred income taxes
|
3.4 | 2.9 | 9.1 | 9.8 | ||||||||||||
Loss on disposition of equipment
|
0.1 | 0.1 | 0.2 | 0.3 | ||||||||||||
Other
|
– | (0.2 | ) | – | (0.2 | ) | ||||||||||
Change in operating assets and liabilities:
|
||||||||||||||||
Accounts receivable, net
|
6.7 | 6.1 | 21.3 | (2.2 | ) | |||||||||||
Inventory and other assets
|
3.1 | 10.8 | 4.5 | (29.1 | ) | |||||||||||
Prepaids and other assets
|
2.2 | 1.9 | 4.8 | (6.9 | ) | |||||||||||
Accounts payable
|
(4.6 | ) | (28.3 | ) | (9.3 | ) | (21.3 | ) | ||||||||
Salaries, wages and other compensation
|
(0.6 | ) | (0.9 | ) | (5.3 | ) | 11.6 | |||||||||
Other accrued liabilities
|
0.4 | (0.1 | ) | 3.7 | – | |||||||||||
Net cash provided by operating activities
|
23.5 | 12.0 | 68.8 | 12.3 | ||||||||||||
Cash flows provided by (used in) investing activities:
|
||||||||||||||||
Purchases of equipment and leasehold improvements
|
(3.7 | ) | (3.2 | ) | (8.8 | ) | (9.4 | ) | ||||||||
Acquisitions, net of cash acquired
|
(3.5 | ) | – | (3.6 | ) | (8.5 | ) | |||||||||
Proceeds from sale of assets
|
– | 0.1 | – | 0.1 | ||||||||||||
Net cash used in investing activities
|
(7.2 | ) | (3.1 | ) | (12.4 | ) | (17.8 | ) | ||||||||
Cash flows provided by (used in) financing activities:
|
||||||||||||||||
Repayment of long-term debt
|
– | – | – | (240.0 | ) | |||||||||||
Proceeds from long-term debt
|
– | – | – | 250.0 | ||||||||||||
Repayments of long-term revolving credit facility
|
– | (312.1 | ) | – | (897.0 | ) | ||||||||||
Proceeds from long-term revolving credit facility
|
– | 299.1 | – | 902.4 | ||||||||||||
Payments of debt issuance costs
|
– | – | – | (9.8 | ) | |||||||||||
Repayments of capital lease obligations
|
(0.1 | ) | (0.3 | ) | (0.5 | ) | (0.7 | ) | ||||||||
Issuance of common stock
|
– | 0.1 | 0.3 | 0.2 | ||||||||||||
Treasury stock at cost
|
(10.5 | ) | – | (10.5 | ) | (0.1 | ) | |||||||||
Tax shortfall from stock-based compensation
|
(0.2 | ) | – | (0.2 | ) | – | ||||||||||
Net cash provided by (used in) financing activities
|
(10.8 | ) | (13.2 | ) | (10.9 | ) | 5.0 | |||||||||
Change in cash and cash equivalents
|
5.5 | (4.3 | ) | 45.5 | (0.5 | ) | ||||||||||
Cash and cash equivalents at beginning of period
|
91.2 | 14.6 | 51.2 | 10.8 | ||||||||||||
Cash and cash equivalents at end of period
|
$ | 96.7 | $ | 10.3 | $ | 96.7 | $ | 10.3 | ||||||||
Supplemental information:
|
||||||||||||||||
Cash paid for interest
|
$ | 0.8 | $ | 2.6 | $ | 2.3 | $ | 5.1 | ||||||||
Cash paid for taxes
|
$ | 0.1 | $ | (0.2 | ) | $ | 0.4 | $ | 0.1 |
(In millions, except per share amounts)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
2010
|
2011
|
2010
|
2011
|
|||||||||||||
Integration costs and other charges:
|
||||||||||||||||
Pre-Pharmacy Transaction litigation matters
|
$ | – | $ | (2.0 | ) | $ | 5.0 | $ | (2.0 | ) | ||||||
Tender offer costs
|
– | 1.1 | – | 1.1 | ||||||||||||
Professional and advisory fees
|
0.7 | 0.2 | 2.2 | 0.6 | ||||||||||||
General and administrative
|
0.1 | – | 0.5 | 0.1 | ||||||||||||
Employee costs
|
0.2 | – | 0.4 | 0.2 | ||||||||||||
Severance costs
|
0.4 | – | 0.6 | 0.2 | ||||||||||||
Facility costs
|
– | 0.3 | 0.2 | 0.2 | ||||||||||||
Other
|
0.1 | 0.1 | 0.1 | – | ||||||||||||
1.5 | (0.3 | ) | 9.0 | 0.4 | ||||||||||||
Acquisition related costs:
|
||||||||||||||||
Professional and advisory fees
|
0.5 | 0.9 | 1.0 | 4.1 | ||||||||||||
General and administrative
|
0.1 | 0.1 | 1.1 | 0.7 | ||||||||||||
Employee costs
|
– | 0.5 | 0.2 | 2.5 | ||||||||||||
Severance costs
|
– | 0.2 | – | 1.6 | ||||||||||||
Facility costs
|
0.1 | 0.3 | 1.3 | 1.5 | ||||||||||||
Other
|
0.2 | 0.1 | 0.2 | 0.8 | ||||||||||||
0.9 | 2.1 | 3.8 | 11.2 | |||||||||||||
Total integration, merger and acquisition related costs
and other charges
|
$ | 2.4 | $ | 1.8 | $ | 12.8 | $ | 11.6 | ||||||||
Negative effect on earnings per diluted share
|
$ | (0.05 | ) | $ | (0.04 | ) | $ | (0.25 | ) | $ | (0.25 | ) |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
(In whole numbers, except where indicated)
|
2010
|
2011
|
2010
|
2011
|
||||||||||||
Customer licensed beds under contract:
|
||||||||||||||||
Beginning of period
|
298,584 | 353,024 | 313,867 | 362,901 | ||||||||||||
Additions – PharMerica Corporation
|
4,867 | 3,229 | 11,564 | 13,870 | ||||||||||||
Additions – Chem Rx
|
– | 905 | – | 2,295 | ||||||||||||
Losses – PharMerica Corporation
|
(13,703 | ) | (13,561 | ) | (35,683 | ) | (30,287 | ) | ||||||||
Losses – Chem Rx
|
– | (1,498 | ) | – | (6,680 | ) | ||||||||||
End of period
|
289,748 | 342,099 | 289,748 | 342,099 | ||||||||||||
Prescription data:
|
||||||||||||||||
Prescriptions dispensed (in thousands)
|
8,949 | 10,357 | 27,929 | 31,733 | ||||||||||||
Revenue per prescription dispensed
|
$ | 47.79 | $ | 48.57 | $ | 46.97 | $ | 48.49 | ||||||||
Gross profit per prescription dispensed
|
$ | 6.13 | $ | 7.09 | $ | 6.17 | $ | 6.67 |
(In millions)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
2010
|
2011
|
2010
|
2011
|
|||||||||||||
Net income
|
$ | 4.8 | $ | 4.8 | $ | 14.5 | $ | 15.5 | ||||||||
Add:
|
||||||||||||||||
Interest expense, net
|
0.9 | 2.6 | 2.6 | 6.3 | ||||||||||||
Integration, merger and acquisition related costs
and other charges
|
2.4 | 1.8 | 12.8 | 11.6 | ||||||||||||
Provision for income taxes
|
3.2 | 3.3 | 9.8 | 9.1 | ||||||||||||
Impairment of intangible assets
|
– | 5.1 | – | 5.1 | ||||||||||||
Depreciation and amortization expense
|
7.0 | 7.8 | 21.0 | 23.3 | ||||||||||||
Adjusted EBITDA
|
$ | 18.3 | $ | 25.4 | $ | 60.7 | $ | 70.9 | ||||||||
Adjusted EBITDA margin
|
4.1 | % | 4.9 | % | 4.5 | % | 4.5 | % |
(In whole numbers)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
2010
|
2011
|
2010
|
2011
|
|||||||||||||
Earnings per diluted share
|
$ | 0.16 | $ | 0.16 | $ | 0.48 | $ | 0.53 | ||||||||
Diluted earnings per share impact of:
|
||||||||||||||||
Impairment of intangible assets
|
– | 0.11 | – | 0.11 | ||||||||||||
Integration, merger and acquisition related costs
and other charges
|
0.05 | 0.04 | 0.25 | 0.25 | ||||||||||||
Tax accounting matters
|
– | – | – | (0.04 | ) | |||||||||||
Adjusted earnings per diluted share after impact
of above items
|
$ | 0.21 | $ | 0.31 | $ | 0.73 | $ | 0.85 |
(In millions)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
2010
|
2011
|
2010
|
2011
|
|||||||||||||
Adjusted EBITDA
|
$ | 18.3 | $ | 25.4 | $ | 60.7 | $ | 70.9 | ||||||||
Interest expense, net
|
(0.9 | ) | (2.6 | ) | (2.6 | ) | (6.3 | ) | ||||||||
Provision for income taxes
|
(3.2 | ) | (3.3 | ) | (9.8 | ) | (9.1 | ) | ||||||||
Integration, merger and acquisition related costs
and other charges
|
(2.3 | ) | (1.3 | ) | (12.2 | ) | (10.4 | ) | ||||||||
Provision for bad debt
|
4.5 | 6.4 | 12.9 | 17.6 | ||||||||||||
Stock-based compensation
|
0.8 | 1.3 | 3.3 | 4.5 | ||||||||||||
Amortization of deferred financing fees
|
0.1 | 0.2 | 0.4 | 0.7 | ||||||||||||
Deferred income taxes
|
3.4 | 2.9 | 9.1 | 9.8 | ||||||||||||
Loss on disposition of equipment
|
0.1 | 0.1 | 0.2 | 0.3 | ||||||||||||
Other
|
– | (0.2 | ) | – | (0.2 | ) | ||||||||||
Changes in assets and liabilities
|
2.7 | (16.9 | ) | 6.8 | (65.5 | ) | ||||||||||
Net Cash Flows from Operating Activities
|
$ | 23.5 | $ | 12.0 | $ | 68.8 | $ | 12.3 |