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 February 9, 2012.
|
PHARMERICA CORPORATION
|
||
Date: February 9, 2012
|
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 February 9, 2012.
|
Ø
|
Key Comparisons of Fourth Quarters Ended December 31, 2011 and 2010:
|
|
●
|
Revenues for the fourth quarter of 2011 were $495.6 million compared with $491.5 million for the fourth quarter of 2010, an increase of 0.8%.
|
|
●
|
Net income for the fourth quarter of 2011 was $7.9 million, or $0.27 per diluted common share, compared with $4.7 million, or $0.16 per diluted common share, for the same period in 2010. Adjusted earnings per diluted common share were $0.35 in 2011 compared with $0.20 in 2010, an increase of 75.0%.
|
|
●
|
Cash flows provided by operating activities were $14.5 million compared with $29.4 million in the prior year. The reduction in cash flows was primarily due to timing changes for the purchase of inventories and an increase in rebate receivables due to the renegotiated Prime Vendor Agreement. After consideration of these two factors, adjusted cash provided by operating activities would have been $31.8 million in the fourth quarter of 2011, an increase of $2.4 million from the prior year.
|
|
●
|
Adjusted EBITDA for the quarter was $27.6 million compared with $17.8 million in the prior year, an increase of 55.1%.
|
Ø
|
Key Comparisons of Years Ended December 31, 2011 and 2010:
|
|
●
|
Revenues for the year ended December 31, 2011, were $2,081.1 million compared with $1,847.3 million for the same period of 2010, an increase of 12.7%.
|
|
●
|
Net income for the year ended December 31, 2011, was $23.4 million, or $0.79 per diluted common share, compared with $19.2 million, or $0.64 per diluted common share, for the same period of 2010. Adjusted earnings per diluted common share were $1.20 for the year ended December 31, 2011, compared with $0.93 in 2010, an increase of 29.0%.
|
|
●
|
Cash flows provided by operating activities were $26.8 million compared with $98.2 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 rebate receivables as a result of the renegotiated Prime Vendor Agreement and an adjustment to Chem Rx’s payment terms. Adjusted cash provided by operating activities would have been $126.5 million on a comparable basis.
|
|
●
|
Adjusted EBITDA for 2011 was $98.5 million compared with $78.5 million in the prior year, an increase of 25.5%.
|
(in millions, except per share data)
|
Ranges
|
Revenues
|
$1,915.0 – $1,950.0
|
Adjusted EBITDA
|
$93.0 – $102.0
|
Depreciation and amortization expense
|
$31.0 - $29.0
|
Interest expense, net
|
$9.8 - $9.6
|
Tax rate
|
40.6% - 40.4%
|
Adjusted net income
|
$31.0 - $37.8
|
Adjusted diluted earnings per common share
|
$1.05 - $1.28
|
Common and common equivalent shares outstanding
|
29.6
|
Three Months Ended December 31,
|
Year Ended December 31,
|
|||||||||||||||||||||||||||||||
2010
|
2011
|
2010
|
2011
|
|||||||||||||||||||||||||||||
Amount
|
% of
Revenue
|
Amount
|
% of
Revenue
|
Amount
|
% of
Revenue
|
Amount
|
% of
Revenue
|
|||||||||||||||||||||||||
Revenues
|
$ | 491.5 | 100.0 | % | $ | 495.6 | 100.0 | % | $ | 1,847.3 | 100.0 | % | $ | 2,081.1 | 100.0 | % | ||||||||||||||||
Cost of goods sold
|
428.9 | 87.3 | 419.7 | 84.7 | 1,607.0 | 87.0 | 1,787.8 | 85.9 | ||||||||||||||||||||||||
Gross profit
|
62.6 | 12.7 | 75.9 | 15.3 | 240.3 | 13.0 | 293.3 | 14.1 | ||||||||||||||||||||||||
Selling, general and administrative expenses
|
49.5 | 10.1 | 53.5 | 10.8 | 180.6 | 9.8 | 214.9 | 10.3 | ||||||||||||||||||||||||
Amortization expense
|
2.4 | 0.5 | 2.6 | 0.5 | 9.3 | 0.5 | 11.0 | 0.5 | ||||||||||||||||||||||||
Impairment of intangible assets
|
– | – | – | – | – | – | 5.1 | 0.3 | ||||||||||||||||||||||||
Integration, merger and acquisition related costs and other charges
|
1.8 | 0.3 | 3.7 | 0.7 | 14.6 | 0.8 | 15.3 | 0.8 | ||||||||||||||||||||||||
Operating income
|
8.9 | 1.8 | 16.1 | 3.3 | 35.8 | 1.9 | 47.0 | 2.2 | ||||||||||||||||||||||||
Interest expense, net
|
1.0 | 0.2 | 2.5 | 0.5 | 3.6 | 0.2 | 8.8 | 0.4 | ||||||||||||||||||||||||
Income before income taxes
|
7.9 | 1.6 | 13.6 | 2.8 | 32.2 | 1.7 | 38.2 | 1.8 | ||||||||||||||||||||||||
Provision for income taxes
|
3.2 | 0.6 | 5.7 | 1.2 | 13.0 | 0.7 | 14.8 | 0.7 | ||||||||||||||||||||||||
Net income
|
$ | 4.7 | 1.0 | % | $ | 7.9 | 1.6 | % | $ | 19.2 | 1.0 | % | $ | 23.4 | 1.1 | % |
Three Months Ended
December 31,
|
Year Ended
December 31,
|
|||||||||||||||
2010
|
2011
|
2010
|
2011
|
|||||||||||||
Earnings per common share:
|
||||||||||||||||
Basic
|
$ | 0.16 | $ | 0.27 | $ | 0.64 | $ | 0.80 | ||||||||
Diluted
|
$ | 0.16 | $ | 0.27 | $ | 0.64 | $ | 0.79 | ||||||||
Shares used in computing earnings per common share:
|
||||||||||||||||
Basic
|
29,190,351 | 29,399,978 | 30,007,268 | 29,343,221 | ||||||||||||
Diluted
|
29,291,435 | 29,638,296 | 30,133,031 | 29,468,452 |
(As Adjusted)
Dec. 31,
2010
|
Dec. 31,
2011
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 10.8 | $ | 17.4 | ||||
Accounts receivable, net
|
236.9 | 232.4 | ||||||
Inventory
|
88.4 | 130.5 | ||||||
Deferred tax assets, net
|
23.5 | 36.5 | ||||||
Prepaids and other assets
|
24.6 | 34.5 | ||||||
384.2 | 451.3 | |||||||
Equipment and leasehold improvements
|
136.0 | 145.0 | ||||||
Accumulated depreciation
|
(76.5 | ) | (92.6 | ) | ||||
59.5 | 52.4 | |||||||
Deferred tax assets, net
|
28.7 | 0.6 | ||||||
Goodwill
|
179.4 | 214.2 | ||||||
Intangible assets, net
|
102.2 | 100.2 | ||||||
Other
|
5.7 | 14.7 | ||||||
$ | 759.7 | $ | 833.4 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 74.2 | $ | 54.1 | ||||
Salaries, wages and other compensation
|
22.0 | 35.1 | ||||||
Current portion of long-term debt
|
– | 6.3 | ||||||
Other accrued liabilities
|
7.1 | 6.7 | ||||||
103.3 | 102.2 | |||||||
Long-term debt
|
245.6 | 293.7 | ||||||
Other long-term liabilities
|
26.4 | 23.7 | ||||||
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 December 31, 2011
|
– | – | ||||||
Common stock, $0.01 par value per share; 175,000,000 shares authorized;
30,696,261 and 30,794,000 shares issued as of December 31, 2010, and
December 31, 2011, respectively
|
0.3 | 0.3 | ||||||
Capital in excess of par value
|
349.7 | 355.9 | ||||||
Retained earnings
|
45.0 | 68.4 | ||||||
Treasury stock at cost, 1,336,817 shares and 1,350,128 shares at
December 31, 2010, and December 31, 2011, respectively
|
(10.6 | ) | (10.8 | ) | ||||
384.4 | 413.8 | |||||||
$ | 759.7 | $ | 833.4 |
Three Months Ended
December 31,
|
Year Ended
December 31,
|
|||||||||||||||
2010
|
2011
|
2010
|
2011
|
|||||||||||||
Cash flows provided by (used in) operating activities:
|
||||||||||||||||
Net income
|
$ | 4.7 | $ | 7.9 | $ | 19.2 | $ | 23.4 | ||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
||||||||||||||||
Depreciation
|
4.7 | 5.2 | 18.8 | 20.1 | ||||||||||||
Amortization
|
2.4 | 2.6 | 9.3 | 11.0 | ||||||||||||
Impairment charge
|
– | – | – | 5.1 | ||||||||||||
Integration, merger and acquisition related costs and other charges
|
– | 0.3 | 0.6 | 1.5 | ||||||||||||
Stock-based compensation
|
1.5 | 1.4 | 4.8 | 5.9 | ||||||||||||
Amortization of deferred financing fees
|
0.2 | 0.1 | 0.6 | 0.8 | ||||||||||||
Deferred income taxes
|
3.2 | 4.1 | 12.3 | 13.9 | ||||||||||||
Loss on disposition of equipment
|
0.1 | (0.2 | ) | 0.3 | 0.1 | |||||||||||
Other
|
– | 0.4 | – | 0.2 | ||||||||||||
Change in operating assets and liabilities:
|
||||||||||||||||
Accounts receivable, net
|
7.1 | 11.3 | 28.4 | 9.1 | ||||||||||||
Inventory
|
3.6 | (9.2 | ) | 8.1 | (38.3 | ) | ||||||||||
Prepaids and other assets
|
(0.2 | ) | (2.8 | ) | 4.6 | (9.7 | ) | |||||||||
Accounts payable
|
10.8 | (3.7 | ) | 1.5 | (25.0 | ) | ||||||||||
Salaries, wages and other compensation
|
(5.9 | ) | (0.5 | ) | (11.2 | ) | 11.1 | |||||||||
Other accrued liabilities
|
(2.8 | ) | (2.4 | ) | 0.9 | (2.4 | ) | |||||||||
Net cash provided by operating activities
|
29.4 | 14.5 | 98.2 | 26.8 | ||||||||||||
Cash flows provided by (used in) investing activities:
|
||||||||||||||||
Purchases of equipment and leasehold improvements
|
(3.8 | ) | (3.8 | ) | (12.6 | ) | (13.2 | ) | ||||||||
Acquisitions, net of cash acquired
|
(117.1 | ) | (42.5 | ) | (120.7 | ) | (51.0 | ) | ||||||||
Cash proceeds from sale of assets
|
0.1 | 0.1 | 0.1 | 0.2 | ||||||||||||
Net cash used in investing activities
|
(120.8 | ) | (46.2 | ) | (133.2 | ) | (64.0 | ) | ||||||||
Cash flows provided by (used in) financing activities:
|
||||||||||||||||
Repayments of long-term debt
|
– | – | – | (240.0 | ) | |||||||||||
Proceeds from long-term debt
|
– | – | – | 250.0 | ||||||||||||
Net activity of long-term revolving credit facility
|
5.6 | 39.0 | 5.6 | 44.4 | ||||||||||||
Payment of debt issuance costs
|
– | – | – | (9.8 | ) | |||||||||||
Repayments of capital lease obligations
|
(0.2 | ) | (0.1 | ) | (0.7 | ) | (0.8 | ) | ||||||||
Issuance of common stock
|
– | – | 0.3 | 0.2 | ||||||||||||
Treasury stock at cost
|
(0.1 | ) | (0.1 | ) | (10.6 | ) | (0.2 | ) | ||||||||
Tax benefit from stock-based compensation
|
0.2 | – | – | – | ||||||||||||
Net cash provided by (used in) financing activities
|
5.5 | 38.8 | (5.4 | ) | 43.8 | |||||||||||
Change in cash and cash equivalents
|
(85.9 | ) | 7.1 | (40.4 | ) | 6.6 | ||||||||||
Cash and cash equivalents at beginning of period
|
96.7 | 10.3 | 51.2 | 10.8 | ||||||||||||
Cash and cash equivalents at end of period
|
$ | 10.8 | $ | 17.4 | $ | 10.8 | $ | 17.4 | ||||||||
Supplemental information:
|
||||||||||||||||
Cash paid for interest
|
$ | 0.9 | $ | 2.5 | $ | 3.2 | $ | 7.6 | ||||||||
Cash paid for taxes
|
$ | – | $ | 0.4 | $ | 0.4 | $ | 0.5 |
(In millions, except per share amounts)
|
Three Months Ended
December 31,
|
Year Ended
December 31,
|
||||||||||||||
2010
|
2011
|
2010
|
2011
|
|||||||||||||
Integration costs and other charges:
|
||||||||||||||||
Pre-Pharmacy Transaction litigation matters
|
$ | – | $ | – | $ | 5.0 | $ | (2.0 | ) | |||||||
Tender offer costs
|
– | 1.7 | – | 2.8 | ||||||||||||
Professional and advisory fees
|
0.1 | 0.3 | 2.3 | 0.9 | ||||||||||||
General and administrative
|
0.2 | – | 0.7 | 0.1 | ||||||||||||
Employee costs
|
0.1 | – | 0.5 | 0.2 | ||||||||||||
Severance costs
|
– | – | 0.6 | 0.2 | ||||||||||||
Facility costs
|
0.2 | – | 0.3 | 0.2 | ||||||||||||
Other
|
(0.1 | ) | – | – | – | |||||||||||
0.5 | 2.0 | 9.4 | 2.4 | |||||||||||||
Acquisition related costs:
|
||||||||||||||||
Professional and advisory fees
|
2.4 | 0.8 | 3.5 | 4.9 | ||||||||||||
General and administrative
|
0.4 | 0.1 | 1.5 | 0.8 | ||||||||||||
Employee costs
|
0.2 | 0.4 | 0.4 | 2.9 | ||||||||||||
Severance costs
|
– | 0.1 | – | 1.7 | ||||||||||||
Facility costs
|
– | 0.2 | 1.3 | 1.7 | ||||||||||||
Contingent consideration
|
(1.7 | ) | – | (1.7 | ) | – | ||||||||||
Other
|
– | 0.1 | 0.2 | 0.9 | ||||||||||||
1.3 | 1.7 | 5.2 | 12.9 | |||||||||||||
Total integration, merger and acquisition related costs and other charges
|
$ | 1.8 | $ | 3.7 | $ | 14.6 | $ | 15.3 | ||||||||
Negative effect on earnings per diluted common share
|
$ | (0.04 | ) | $ | (0.07 | ) | $ | (0.29 | ) | $ | (0.32 | ) |
Three Months Ended
December 31,
|
Year Ended
December 31,
|
|||||||||||||||
(In whole numbers, except where indicated)
|
2010
|
2011
|
2010
|
2011
|
||||||||||||
Customer licensed beds under contract:
|
||||||||||||||||
Beginning of period
|
289,748 | 342,099 | 313,867 | 362,901 | ||||||||||||
Additions – PharMerica Corporation
|
22,612 | 13,348 | 34,176 | 27,218 | ||||||||||||
Additions – Chem Rx
|
61,773 | 947 | 61,773 | 3,242 | ||||||||||||
Losses – PharMerica Corporation
|
(11,232 | ) | (14,617 | ) | (46,915 | ) | (44,904 | ) | ||||||||
Losses – Chem Rx
|
– | (2,279 | ) | – | (8,959 | ) | ||||||||||
End of period
|
362,901 | 339,498 | 362,901 | 339,498 | ||||||||||||
Prescription data:
|
||||||||||||||||
Prescriptions dispensed (in thousands)
|
9,897 | 9,944 | 37,826 | 41,677 | ||||||||||||
Revenue per prescription dispensed
|
$ | 48.25 | $ | 48.27 | $ | 47.31 | $ | 48.43 | ||||||||
Gross profit per prescription dispensed
|
$ | 6.12 | $ | 7.45 | $ | 6.15 | $ | 6.85 |
(In millions)
|
Three Months Ended
December 31,
|
Year Ended
December 31,
|
||||||||||||||
2010
|
2011
|
2010
|
2011
|
|||||||||||||
Net income
|
$ | 4.7 | $ | 7.9 | $ | 19.2 | $ | 23.4 | ||||||||
Add:
|
||||||||||||||||
Interest expense, net
|
1.0 | 2.5 | 3.6 | 8.8 | ||||||||||||
Integration, merger and acquisition related costs and other charges
|
1.8 | 3.7 | 14.6 | 15.3 | ||||||||||||
Provision for income taxes
|
3.2 | 5.7 | 13.0 | 14.8 | ||||||||||||
Impairment of intangible assets
|
– | – | – | 5.1 | ||||||||||||
Depreciation and amortization expense
|
7.1 | 7.8 | 28.1 | 31.1 | ||||||||||||
Adjusted EBITDA
|
$ | 17.8 | $ | 27.6 | $ | 78.5 | $ | 98.5 | ||||||||
Adjusted EBITDA margin
|
3.6 | % | 5.6 | % | 4.2 | % | 4.7 | % |
(In whole numbers)
|
Three Months Ended
December 31,
|
Year Ended
December 31,
|
||||||||||||||
2010
|
2011
|
2010
|
2011
|
|||||||||||||
Earnings per diluted common share
|
$ | 0.16 | $ | 0.27 | $ | 0.64 | $ | 0.79 | ||||||||
Diluted earnings per common share impact of:
|
||||||||||||||||
Impairment of intangible assets
|
– | – | – | 0.11 | ||||||||||||
Integration, merger and acquisition related costs and other charges
|
0.04 | 0.07 | 0.29 | 0.32 | ||||||||||||
Tax accounting matters
|
– | 0.01 | – | (0.02 | ) | |||||||||||
Adjusted earnings per diluted common share after impact of above items
|
$ | 0.20 | $ | 0.35 | $ | 0.93 | $ | 1.20 |
(In millions)
|
Three Months Ended
December 31,
|
Year Ended
December 31,
|
||||||||||||||
2010
|
2011
|
2010
|
2011
|
|||||||||||||
Adjusted EBITDA
|
$ | 17.8 | $ | 27.6 | $ | 78.5 | $ | 98.5 | ||||||||
Interest expense, net
|
(1.0 | ) | (2.5 | ) | (3.6 | ) | (8.8 | ) | ||||||||
Provision for income taxes
|
(3.2 | ) | (5.7 | ) | (13.0 | ) | (14.8 | ) | ||||||||
Integration, merger and acquisition related costs and other charges
|
(1.8 | ) | (3.4 | ) | (14.0 | ) | (13.8 | ) | ||||||||
Provision for bad debt
|
5.6 | 7.2 | 18.5 | 24.8 | ||||||||||||
Stock-based compensation
|
1.5 | 1.4 | 4.8 | 5.9 | ||||||||||||
Amortization of deferred financing fees
|
0.2 | 0.1 | 0.6 | 0.8 | ||||||||||||
Deferred income taxes
|
3.2 | 4.1 | 12.3 | 13.9 | ||||||||||||
Loss on disposition of equipment
|
0.1 | (0.2 | ) | 0.3 | 0.1 | |||||||||||
Other
|
– | 0.4 | – | 0.2 | ||||||||||||
Changes in assets and liabilities
|
7.0 | (14.5 | ) | 13.8 | (80.0 | ) | ||||||||||
Net Cash Flows from Operating Activities
|
$ | 29.4 | $ | 14.5 | $ | 98.2 | $ | 26.8 |
(In millions)
|
Three Months Ended
December 31,
|
Year Ended
December 31,
|
||||||||||||||
2010
|
2011
|
2010
|
2011
|
|||||||||||||
Net cash provided by operating activities
|
$ | 29.4 | $ | 14.5 | $ | 98.2 | $ | 26.8 | ||||||||
Additional payment to AmerisourceBergen due to additional Friday
|
– | – | – | 29.6 | ||||||||||||
Increase in inventory due to branded pharmaceutical | ||||||||||||||||
purchasing practices and rebate receivables due | ||||||||||||||||
from AmerisourceBergen
|
– | 17.3 | – | 57.4 | ||||||||||||
Adjustment of Chem Rx’s payment terms with AmerisourceBergen to existing contract
|
– | – | – | 12.7 | ||||||||||||
Adjusted cash provided by operating activities
|
$ | 29.4 | $ | 31.8 | $ | 98.2 | $ | 126.5 |