☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware
|
87-0792558
|
|
(State or Other Jurisdiction of Incorporation or Organization)
|
(I.R.S. Employer Identification No.)
|
|
1901 Campus Place
Louisville, KY
|
40299
|
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
Large accelerated filer ☒
|
Accelerated filer☐
|
Non-accelerated filer ☐
|
Smaller reporting company ☐
|
(Do not check if a smaller reporting company)
|
Class of Common Stock
|
Outstanding at April 29, 2016
|
|
Common stock, $0.01 par value
|
30,734,415 shares
|
Page
|
||
PART I. FINANCIAL INFORMATION
|
||
Item 1.
|
Financial Statements (Unaudited)
|
|
3
|
||
4
|
||
5
|
||
6
|
||
7
|
||
Item 2.
|
17
|
|
Item 3.
|
32
|
|
Item 4.
|
32
|
|
PART II. OTHER INFORMATION
|
33
|
|
Item 1.
|
33
|
|
Item 1A
|
33
|
|
Item 2.
|
33
|
|
Item 4.
|
33
|
|
Item 6.
|
34
|
|
35
|
||
36
|
Three Months Ended March 31,
|
||||||||
2015
|
2016
|
|||||||
Revenues
|
$
|
511.6
|
$
|
524.5
|
||||
Cost of goods sold
|
423.0
|
442.5
|
||||||
Gross profit
|
88.6
|
82.0
|
||||||
Selling, general and administrative expenses
|
59.0
|
57.0
|
||||||
Amortization expense
|
6.6
|
8.2
|
||||||
Merger, acquisition, integration costs and other charges
|
3.8
|
4.4
|
||||||
Settlement, litigation and other related charges
|
2.3
|
3.1
|
||||||
Restructuring and impairment charges
|
0.1
|
1.4
|
||||||
Operating income
|
16.8
|
7.9
|
||||||
Interest expense, net
|
1.4
|
3.0
|
||||||
Income before income taxes
|
15.4
|
4.9
|
||||||
Provision for income taxes
|
5.8
|
0.8
|
||||||
Net income
|
$
|
9.6
|
$
|
4.1
|
||||
Earnings per common share:
|
||||||||
Basic
|
$
|
0.32
|
$
|
0.13
|
||||
Diluted
|
$
|
0.31
|
$
|
0.13
|
||||
Shares used in computing earnings per common share:
|
||||||||
Basic
|
30,185,230
|
30,527,697
|
||||||
Diluted
|
30,733,381
|
30,917,192
|
(As Adjusted) December 31, 2015
|
March 31, 2016
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
23.1
|
$
|
25.5
|
||||
Accounts receivable, net
|
200.5
|
199.5
|
||||||
Inventory
|
155.2
|
118.5
|
||||||
Deferred tax assets, net
|
41.8
|
42.2
|
||||||
Income taxes receivable
|
10.5
|
12.4
|
||||||
Prepaids and other assets
|
52.4
|
55.3
|
||||||
483.5
|
453.4
|
|||||||
Equipment and leasehold improvements
|
218.5
|
223.9
|
||||||
Accumulated depreciation
|
(144.0
|
)
|
(149.3
|
)
|
||||
74.5
|
74.6
|
|||||||
Goodwill
|
371.0
|
372.1
|
||||||
Intangible assets, net
|
190.2
|
182.1
|
||||||
Other long-term assets (See Note 5)
|
32.4
|
84.4
|
||||||
$
|
1,151.6
|
$
|
1,166.6
|
|||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
71.7
|
$
|
87.2
|
||||
Salaries, wages and other compensation
|
30.6
|
23.8
|
||||||
Current portion of long-term debt
|
11.6
|
11.6
|
||||||
Other accrued liabilities
|
27.5
|
26.9
|
||||||
141.4
|
149.5
|
|||||||
Long-term debt
|
413.6
|
366.0
|
||||||
Other long-term liabilities
|
56.5
|
104.4
|
||||||
Deferred tax liabilities
|
20.7
|
24.3
|
||||||
Commitments and contingencies (See Note 5)
|
||||||||
Stockholders' equity:
|
||||||||
Preferred stock, $0.01 par value per share; 1,000,000 shares authorized and no shares issued, December 31, 2015 and March 31, 2016
|
-
|
-
|
||||||
Common stock, $0.01 par value per share; 175,000,000 shares authorized; 33,237,732 and 33,640,063 shares issued as of December 31, 2015 and March 31, 2016, respectively
|
0.3
|
0.3
|
||||||
Capital in excess of par value
|
404.6
|
406.5
|
||||||
Retained earnings
|
152.1
|
156.2
|
||||||
Treasury stock at cost, 2,776,875 and 2,905,713 shares at December 31, 2015 and March 31, 2016, respectively
|
(37.6
|
)
|
(40.6
|
)
|
||||
519.4
|
522.4
|
|||||||
$
|
1,151.6
|
$
|
1,166.6
|
Three Months Ended
March 31,
|
||||||||
2015
|
2016
|
|||||||
Cash flows provided by (used in) operating activities:
|
||||||||
Net income
|
$
|
9.6
|
$
|
4.1
|
||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
||||||||
Depreciation
|
5.8
|
5.3
|
||||||
Amortization
|
6.6
|
8.2
|
||||||
Stock-based compensation and deferred compensation
|
2.0
|
1.4
|
||||||
Amortization of deferred financing fees
|
0.1
|
0.1
|
||||||
Deferred income taxes
|
2.3
|
3.1
|
||||||
(Gain) Loss on disposition of equipment
|
0.1
|
-
|
||||||
Other
|
-
|
0.1
|
||||||
Change in operating assets and liabilities:
|
||||||||
Accounts receivable, net
|
(2.3
|
)
|
1.0
|
|||||
Inventory
|
13.2
|
34.9
|
||||||
Prepaids and other assets
|
27.4
|
(0.7
|
)
|
|||||
Accounts payable
|
(14.1
|
)
|
14.2
|
|||||
Salaries, wages and other compensation
|
(2.4
|
)
|
(9.7
|
)
|
||||
Other accrued liabilities
|
(2.2
|
)
|
2.2
|
|||||
Change in income taxes payable
|
0.1
|
(0.9
|
)
|
|||||
Excess tax benefit from stock-based compensation
|
(1.9
|
)
|
(1.0
|
)
|
||||
Net cash provided by operating activities
|
44.3
|
62.3
|
||||||
Cash flows provided by (used in) investing activities:
|
||||||||
Purchase of equipment and leasehold improvements
|
(4.6
|
)
|
(5.4
|
)
|
||||
Acquisitions, net of cash acquired
|
(20.5
|
)
|
(6.7
|
)
|
||||
Cash proceeds from dispositions
|
0.1
|
-
|
||||||
Net cash used in investing activities
|
(25.0
|
)
|
(12.1
|
)
|
||||
Cash flows provided by (used in) financing activities:
|
||||||||
Repayments of long-term debt
|
-
|
(2.8
|
)
|
|||||
Net activity of long-term revolving credit facility
|
(25.0
|
)
|
(45.0
|
)
|
||||
Issuance of common stock
|
0.3
|
0.1
|
||||||
Treasury stock at cost
|
(4.4
|
)
|
(3.0
|
)
|
||||
Employee taxes paid on stock award vestings
|
-
|
3.0
|
||||||
Excess tax benefit from stock-based compensation
|
1.9
|
-
|
||||||
Repayments of capital lease obligations
|
(0.2
|
)
|
(0.1
|
)
|
||||
Net cash used in financing activities
|
(27.4
|
)
|
(47.8
|
)
|
||||
Change in cash and cash equivalents
|
(8.1
|
)
|
2.4
|
|||||
Cash and cash equivalents at beginning of period
|
33.3
|
23.1
|
||||||
Cash and cash equivalents at end of period
|
$
|
25.2
|
$
|
25.5
|
||||
Supplemental information:
|
||||||||
Cash paid for interest
|
$
|
2.1
|
$
|
2.6
|
||||
Cash paid for taxes
|
$
|
4.7
|
$
|
-
|
Common Stock
|
Capital in Excess of
|
Retained
|
Treasury
|
|||||||||||||||||||||
Shares
|
Amount
|
Par Value
|
Earnings
|
Stock
|
Total
|
|||||||||||||||||||
Balance at December 31, 2015
|
30,460,857
|
$
|
0.3
|
$
|
404.6
|
$
|
152.1
|
$
|
(37.6
|
)
|
$
|
519.4
|
||||||||||||
Net income
|
4.1
|
4.1
|
||||||||||||||||||||||
Exercise of stock options and tax components of stock-based awards, net
|
90,467
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Vested restricted stock units
|
148,634
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Vested performance stock units
|
163,230
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Treasury stock at cost
|
(128,838
|
)
|
-
|
-
|
-
|
(3.0
|
)
|
(3.0
|
)
|
|||||||||||||||
Stock-based compensation - non-vested restricted stock
|
-
|
-
|
1.9
|
-
|
-
|
1.9
|
||||||||||||||||||
Balance at March 31, 2016
|
30,734,350
|
$
|
0.3
|
$
|
406.5
|
$
|
156.2
|
$
|
(40.6
|
)
|
$
|
522.4
|
Level 1: | Observable inputs such as quoted prices in active markets; |
Level 2: | Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and |
Level 3: | Unobservable inputs for which there is little or no market data, which require the Corporation to develop its own assumptions. |
A. | Market approach: Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. |
B. | Cost approach: Amount that would be required to replace the service capacity of an asset (replacement cost). |
C. | Income approach: Techniques to convert future amounts to a single present amount based upon market expectations (including present value techniques, option-pricing and excess earnings models). |
As of December 31, 2015
|
Liability
|
Level 1
|
Level 2
|
Level 3
|
Valuation
Technique
|
|||||||||||||||
Financial Liability
|
||||||||||||||||||||
Deferred Compensation Plan
|
$
|
(8.2
|
)
|
$
|
-
|
$
|
(8.2
|
)
|
$
|
-
|
A
|
|||||||||
Contingent Consideration
|
(11.5
|
)
|
-
|
-
|
(11.5
|
)
|
C
|
|||||||||||||
Mandatorily Redeemable Interest
|
(5.8
|
)
|
-
|
-
|
(5.8
|
)
|
C
|
As of March 31, 2016
|
Liability
|
Level 1
|
Level 2
|
Level 3
|
Valuation
Technique
|
|||||||||||||||
Financial Liability
|
||||||||||||||||||||
Deferred Compensation Plan
|
$
|
(7.8
|
)
|
$
|
-
|
$
|
(7.8
|
)
|
$
|
-
|
A
|
|||||||||
Contingent Considerations
|
(7.6
|
)
|
-
|
-
|
(7.6
|
)
|
C
|
|||||||||||||
Mandatorily Redeemable Interest
|
(6.0
|
)
|
-
|
-
|
(6.0
|
)
|
C
|
Contingent Consideration
|
Mandatorily Redeemable Interest
|
|||||||
Beginning balance, December 31, 2014
|
$
|
1.1
|
$
|
8.3
|
||||
Additions from business acquisitions
|
11.9
|
-
|
||||||
Subtractions from business acquisitions
|
(1.1
|
)
|
-
|
|||||
Change in fair value
|
(0.4
|
)
|
(2.5
|
)
|
||||
Balance, December 31, 2015
|
11.5
|
5.8
|
||||||
Additions from business acquisitions
|
-
|
-
|
||||||
Contingent consideration payment
|
(3.9
|
)
|
-
|
|||||
Change in fair value
|
-
|
0.2
|
||||||
Balance, March 31, 2016
|
$
|
7.6
|
$
|
6.0
|
December 31,
2015
|
March 31,
2016
|
|||||||
Institutional healthcare providers
|
$
|
145.9
|
$
|
140.6
|
||||
Medicare Part D
|
30.2
|
32.1
|
||||||
Private payer and other
|
26.8
|
24.7
|
||||||
Insured
|
31.1
|
30.7
|
||||||
Medicaid
|
12.6
|
13.6
|
||||||
Medicare
|
3.2
|
2.7
|
||||||
Allowance for doubtful accounts
|
(49.3
|
)
|
(44.9
|
)
|
||||
$
|
200.5
|
$
|
199.5
|
|||||
0 to 60 days
|
62.0
|
%
|
63.5
|
%
|
||||
61 to 120 days
|
15.0
|
%
|
14.7
|
%
|
||||
Over 120 days
|
23.0
|
%
|
21.8
|
%
|
||||
100.0
|
%
|
100.0
|
%
|
Beginning Balance
|
Charges Included in Selling, General & Administrative Expenses
|
Write-offs
|
Ending Balance
|
|||||||||||||
Allowance for doubtful accounts:
|
||||||||||||||||
Year ended December 31, 2015
|
$
|
58.1
|
$
|
7.9
|
$
|
(16.7
|
)
|
$
|
49.3
|
|||||||
Three months ended March 31, 2016
|
$
|
49.3
|
$
|
3.2
|
$
|
(7.6
|
)
|
$
|
44.9
|
Finite Lived Intangible Assets
|
Balance at
December 31, 2015
|
Additions
|
Balance at
March 31, 2016
|
|||||||||
Customer relationships
|
$
|
216.8
|
$
|
0.1
|
$
|
216.9
|
||||||
Trade name
|
63.1
|
-
|
63.1
|
|||||||||
Non-compete agreements
|
20.9
|
-
|
20.9
|
|||||||||
Sub Total
|
300.8
|
0.1
|
300.9
|
|||||||||
Accumulated amortization
|
(110.6
|
)
|
(8.2
|
)
|
(118.8
|
)
|
||||||
Net intangible assets
|
$
|
190.2
|
$
|
(8.1
|
)
|
$
|
182.1
|
(As Adjusted)
|
||||||||
December 31, 2015
|
March 31, 2016
|
|||||||
Term Debt - payable to lenders at LIBOR plus applicable margin (2.43% as of March 31, 2016), matures September 17, 2019
|
$
|
219.4
|
$
|
216.5
|
||||
Revolving Credit Facility payable to lenders, interest at LIBOR plus applicable margin (2.39% of March 31, 2016), matures September 17, 2019
|
207.0
|
162.0
|
||||||
Deferred financing costs, net *
|
(2.1
|
)
|
(1.9
|
)
|
||||
Capital lease obligations
|
0.9
|
1.0
|
||||||
Total debt
|
425.2
|
377.6
|
||||||
Less: Current portion of long-term debt
|
11.6
|
11.6
|
||||||
Total long-term debt
|
$
|
413.6
|
$
|
366.0
|
Year Ending December 31,
|
Term Debt
|
Revolving
Credit
Facility
|
Deferred
Financing
Costs
|
Capital
Lease
Obligations
|
Total
Maturities
|
|||||||||||||||
2016
|
$
|
8.4
|
$
|
-
|
$
|
(0.4
|
)
|
$
|
0.3
|
$
|
8.3
|
|||||||||
2017
|
11.3
|
-
|
(0.6
|
)
|
0.3
|
11.0
|
||||||||||||||
2018
|
11.3
|
-
|
(0.5
|
)
|
0.2
|
11.0
|
||||||||||||||
2019
|
185.5
|
162.0
|
(0.4
|
)
|
0.1
|
347.2
|
||||||||||||||
2020
|
-
|
-
|
-
|
0.1
|
0.1
|
|||||||||||||||
$
|
216.5
|
$
|
162.0
|
$
|
(1.9
|
)
|
$
|
1.0
|
$
|
377.6
|
Balance at December 31, 2015
|
Accrual
|
Utilized Amounts
|
Balance at
March 31, 2016
|
|||||||||||||
Employee Severance and related costs
|
$
|
0.3
|
$
|
1.1
|
$
|
(0.6
|
)
|
$
|
0.8
|
|||||||
Facility costs
|
0.7
|
0.3
|
(0.3
|
)
|
0.7
|
|||||||||||
$
|
1.0
|
$
|
1.4
|
$
|
(0.9
|
)
|
$
|
1.5
|
Number of
Shares
|
Weighted-
Average
Exercise Price
Per Share
|
Weighted-
Average
Remaining
Term
|
Aggregate
Intrinsic Value
(in millions)
|
||||||||||
Outstanding shares at December 31, 2015
|
638,741
|
$
|
14.34
|
1.3 years
|
$
|
13.2
|
|||||||
Exercised
|
(90,467
|
)
|
14.96
|
||||||||||
Canceled
|
(97,688
|
)
|
15.22
|
||||||||||
Expired
|
(804
|
)
|
15.21
|
||||||||||
Outstanding shares at March 31, 2016
|
449,782
|
$
|
14.09
|
1.5 years
|
$
|
3.6
|
|||||||
Exercisable shares at March 31, 2016
|
449,782
|
$
|
14.09
|
1.5 years
|
$
|
3.6
|
Number of Shares
|
Weighted- Average Grant Date Fair Value
|
|||||||
Outstanding shares at December 31, 2015
|
900,866
|
$
|
22.26
|
|||||
Granted - Restricted Stock Units
|
210,690
|
19.99
|
||||||
Granted - Performance Share Units
|
210,690
|
19.99
|
||||||
Forfeited
|
(7,433
|
)
|
21.27
|
|||||
Vested
|
(311,864
|
)
|
18.04
|
|||||
Outstanding shares at March 31, 2016
|
1,002,949
|
$
|
22.62
|
Three Months Ended March 31,
|
||||||||
2015
|
2016
|
|||||||
Provision for income taxes
|
$
|
5.8
|
$
|
0.8
|
||||
Total provision as a percentage of pre-tax income
|
37.9
|
%
|
16.3
|
%
|
Three Months Ended March 31,
|
||||||||
2015
|
2016
|
|||||||
Numerator:
|
||||||||
Numerator for basic and earnings per diluted share - net income
|
$
|
9.6
|
$
|
4.1
|
||||
Denominator:
|
||||||||
Denominator for basic earnings per share - weighted average shares
|
30,185,230
|
30,527,697
|
||||||
Effect of dilutive securities (stock options, restricted stock units and performance share units)
|
548,151
|
389,495
|
||||||
Denominator for earnings per diluted share - adjusted weighted average shares
|
30,733,381
|
30,917,192
|
||||||
Basic earnings per share
|
$
|
0.32
|
$
|
0.13
|
||||
Earnings per diluted share
|
$
|
0.31
|
$
|
0.13
|
||||
Unexercised employee stock options and unvested restricted shares excluded from the effect of dilutive securities above (a)
|
56
|
-
|
Item 2.
|
• | the Corporation's access to capital, credit ratings, indebtedness, and ability to raise additional financings and operate under the terms of the Corporation's debt obligations; |
• | anti-takeover provisions of the Delaware General Corporation Law, which in concert with our certificate of incorporation and our by-laws could delay or deter a change in control; |
• | the effects of adverse economic trends or intense competition in the markets in which we operate; |
• | the Corporation's risk of loss of revenues due to a customer or owner of skilled nursing facility entering the institutional pharmacy business; |
• | the effects of the loss of a large customer and the Corporation's ability to adequately restructure its operations to offset the loss; |
• | the demand for the Corporation's products and services; |
• | the risk of retaining existing customers and service contracts and the Corporation's ability to attract new customers for growth of the Corporation's business; |
• | the effects of renegotiating contract pricing relating to significant customers and suppliers, including the hospital pharmacy business which is substantially dependent on service provided to one customer; |
• | the impacts of cyber security risks and/or incidents; |
• | the effects of a failure in the security or stability of our technology infrastructure, or the infrastructure of one or more of our key vendors, or a significant failure or disruption in service; |
• | the effects of an increase in credit risk, loss or bankruptcy of or default by any significant customer, supplier, or other entity relevant to the Corporation's operations; |
• | the Corporation's ability to successfully pursue the Corporation's development and acquisition activities and successfully integrate new operations and systems, including the realization of anticipated revenues, economies of scale, cost savings, and productivity gains associated with such operations; |
• | the Corporation's ability to control costs, particularly labor and employee benefit costs, rising pharmaceutical costs, and regulatory compliance costs; |
• | the effects of healthcare reform and government regulations, including interpretation of regulations and changes in the nature and enforcement of regulations governing the healthcare and institutional pharmacy services industries including the dispensing of antipsychotic prescriptions; |
• | changes in the reimbursement rates or methods of payment from Medicare and Medicaid and other third party payers to both us and our customers; |
• | the potential impact of state government budget shortfalls and their ability to pay the Corporation and its customers for services provided; |
• | the Corporation's ability, and the ability of the Corporation's customers, to comply with Medicare or Medicaid reimbursement regulations or other applicable laws; |
• | the effects of changes in the interest rate on the Corporation's outstanding floating rate debt instrument and the increases in interest expense, including increases in interest rate terms on any new debt financing; |
• | further consolidation of managed care organizations and other third party payers; |
• | political and economic conditions nationally, regionally, and in the markets in which the Corporation operates; |
• | natural disasters, war, civil unrest, terrorism, fire, floods, tornadoes, earthquakes, hurricanes, epidemic, pandemic, catastrophic event or other matters beyond the Corporation's control; |
• | increases in energy costs, including state and federal taxes, and the impact on the costs of delivery expenses and utility expenses; |
• | elimination of, changes in, or the Corporation's failure to satisfy pharmaceutical manufacturers' rebate programs; |
• | the Corporation's ability to attract and retain key executives, pharmacists, and other healthcare personnel; |
• | the Corporation's risk of loss not covered by insurance; |
• | the outcome of litigation to which the Corporation is a party from time to time, including adverse results in material litigation or governmental inquiries including the possible insufficiency of any accruals established by the Corporation from time to time; |
• | changes in accounting rules and standards, audits, compliance with the Sarbanes-Oxley Act, and regulatory investigations; |
• | changes in market conditions that would result in the impairment of goodwill or other assets of the Corporation; |
• | changes in market conditions in which we operate that would influence the value of the Corporation's stock; |
• | the uncertainty as to the long-term value of the Corporation's common stock; |
• | the Corporation's ability to anticipate a shift in demand for generic drug equivalents and the impact on the financial results including the negative impact on brand drug rebates; |
• | the effect on prescription volumes and the Corporation's net revenues and profitability if the safety risk profiles of drugs increase or if drugs are withdrawn from the market, including as a result of manufacturing issues, or if prescription drugs transition to over-the-counter products; |
• | the effects on the Corporation's results of operations related to interpretations of accounting principles by the SEC staff that may differ from those of management; |
• | the potential impact of the litigation proceedings with ABDC regarding the Previous PVA; |
• | the Corporation's ability to comply with the terms of its Memorandum of Agreement with the DEA and the Corporate Integrity Agreement with the OIG; |
• | the Corporation's ability to collect outstanding receivables; |
• | changes in tax laws and regulations; |
• | the effects of changes to critical accounting estimates; and |
• | other factors, risks and uncertainties referenced in the Corporation's filings with the Commission, including the "Risk Factors" set forth in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2015. |
· | Monthly reviews of each resident's drug regimen to assess the appropriateness and efficiency of drug therapies, including the review of medical records, monitoring drug interactions with other drugs or food, monitoring laboratory test results, and recommending alternative therapies; |
· | Participation on quality assurance and other committees of our customers, as required or requested by such customers; |
· | Monitoring and reporting on facility-wide drug utilization; |
· | Development and maintenance of pharmaceutical policy and procedure manuals; and |
· | Assistance with federal and state regulatory compliance pertaining to resident care. |
· | Real-time access to medication and treatment administration records, physician order sheets and psychotropic drug monitoring sheets; |
· | Online ordering to save time and resources; |
· | A customized database with the medication profiles of each resident's medication safety, efficiency and regulatory compliance; |
· | Web-based individual patient records detailing each prescribed medicine; and |
· | Electronic medical records to improve information to make it more legible and instantaneous. |
2016
|
2017
|
2018
|
2019
|
|||||
Combivent (Q2)
|
Azilect (Q1)
|
Sensipar (Q1)*
|
Renexa (Q1)*
|
|||||
Crestor (Q2)*
|
Vytorin (Q2)
|
|||||||
Cubicin (Q2)*
|
Zetia (Q2)
|
|||||||
Kaletra (Q2)
|
Reyataz (Q4)
|
|||||||
Tamiflu (Q3)
|
Seroquel XR (Q4)*
|
|||||||
Banzel (Q4)
|
||||||||
Norvir (Q4)
|
||||||||
* These represent the most significant brand-to-generic conversions
|
||||||||
(Number in parentheses refers to the expected quarter of conversion)
|
||||||||
• | It requires assumptions to be made that were uncertain at the time the estimate was made; and |
• | Changes in the estimate or different estimates could have a material impact on our condensed consolidated results of operations or financial condition. |
2015
|
2016
|
||||||||||||||||
Amount
|
% of Revenues
|
Amount
|
% of Revenues
|
||||||||||||||
First Quarter
|
$
|
5.0
|
1.0
|
%
|
First Quarter
|
$
|
3.2
|
0.6
|
%
|
||||||||
Second Quarter
|
3.0
|
0.6
|
|||||||||||||||
Third Quarter
|
1.5
|
0.3
|
|||||||||||||||
Fourth Quarter
|
(1.6
|
) *
|
(0.3
|
)
|
2015
|
2016
|
|||||||
First Quarter
|
34.0
|
34.7
|
||||||
Second Quarter
|
35.4
|
|||||||
Third Quarter
|
35.5
|
|||||||
Fourth Quarter
|
34.7
|
2015
|
2016
|
|||||||||||||||||||
First
|
Second
|
Third
|
Fourth
|
First
|
||||||||||||||||
0 to 60 days
|
61.4
|
%
|
60.0
|
%
|
58.9
|
%
|
62.0
|
%
|
63.5
|
%
|
||||||||||
61 to 120 days
|
15.8
|
15.7
|
15.2
|
15.0
|
14.7
|
|||||||||||||||
Over 120 days
|
22.8
|
24.3
|
25.9
|
23.0
|
21.8
|
2015
|
2016
|
||||||||||||||||||||||||
Allowance
|
Gross Accounts Receivable
|
% of Gross Accounts Receivable
|
Allowance
|
Gross Accounts Receivable
|
% of Gross Accounts Receivable
|
||||||||||||||||||||
First Quarter
|
$
|
59.7
|
$
|
259.2
|
23.0
|
%
|
First Quarter
|
$
|
44.9
|
$
|
244.4
|
18.3
|
%
|
||||||||||||
Second Quarter
|
58.8
|
257.9
|
22.8
|
||||||||||||||||||||||
Third Quarter
|
57.7
|
253.5
|
22.8
|
||||||||||||||||||||||
Fourth Quarter
|
49.3
|
249.8
|
19.7
|
||||||||||||||||||||||
Three Months Ended March 31,
|
||||||||||||||||
2015
|
2016
|
|||||||||||||||
Amount
|
% of Revenues
|
Amount
|
% of Revenues
|
|||||||||||||
Medicare Part D
|
$
|
237.2
|
46.3
|
%
|
$
|
244.7
|
46.7
|
%
|
||||||||
Institutional healthcare providers
|
121.9
|
23.9
|
118.3
|
22.6
|
||||||||||||
Medicaid
|
41.2
|
8.1
|
38.3
|
7.3
|
||||||||||||
Private and other
|
23.1
|
4.5
|
19.1
|
3.6
|
||||||||||||
Insured
|
67.6
|
13.2
|
78.3
|
14.9
|
||||||||||||
Medicare
|
5.1
|
1.0
|
6.1
|
1.2
|
||||||||||||
Hospital management fees
|
15.5
|
3.0
|
19.7
|
3.7
|
||||||||||||
Total
|
$
|
511.6
|
100.0
|
%
|
$
|
524.5
|
100.0
|
%
|
2015
|
2016
|
|||||||
First Quarter
|
26.1
|
24.4
|
||||||
Second Quarter
|
29.6
|
|||||||
Third Quarter
|
25.7
|
|||||||
Fourth Quarter
|
32.9
|
Quarter Ended
|
||||||||||||||||||||||||
March 31, 2015
|
Increase (Decrease)
|
March 31, 2016
|
||||||||||||||||||||||
Amount
|
% of Revenues
|
Amount
|
% of Revenues
|
|||||||||||||||||||||
Revenues
|
$
|
511.6
|
100.0
|
%
|
$
|
12.9
|
2.5
|
%
|
$
|
524.5
|
100.0
|
%
|
||||||||||||
Cost of goods sold
|
423.0
|
82.7
|
19.5
|
4.6
|
%
|
442.5
|
84.4
|
|||||||||||||||||
Gross profit
|
$
|
88.6
|
17.3
|
%
|
$
|
(6.6
|
)
|
(7.4
|
)%
|
$
|
82.0
|
15.6
|
%
|
|||||||||||
Pharmacy (in whole numbers except where indicated)
|
||||||||||||||||||||||||
Financial data
|
||||||||||||||||||||||||
Prescriptions dispensed (in thousands)
|
9,053
|
(406
|
)
|
(4.5
|
)%
|
8,647
|
||||||||||||||||||
Revenue per prescription dispensed
|
$
|
56.51
|
$
|
4.15
|
7.3
|
%
|
$
|
60.66
|
||||||||||||||||
Gross profit per prescription dispensed
|
$
|
9.79
|
$
|
(0.31
|
)
|
(3.2
|
)%
|
$
|
9.48
|
|||||||||||||||
Gross profit margin
|
17.3
|
%
|
(1.7
|
)%
|
(9.8
|
)%
|
15.6
|
%
|
||||||||||||||||
Generic dispensing rate
|
85.3
|
%
|
1.3
|
%
|
1.5
|
%
|
86.6
|
%
|
Three Months Ended March 31,
|
||||||||
2015
|
2016
|
|||||||
Net cash provided by operating activities
|
$
|
44.3
|
$
|
62.3
|
||||
Net cash used in investing activities
|
(25.0
|
)
|
(12.1
|
)
|
||||
Net cash used in financing activities
|
(27.4
|
)
|
(47.8
|
)
|
||||
Net change in cash and cash equivalents
|
(8.1
|
)
|
2.4
|
|||||
Cash and cash equivalents at beginning of period
|
33.3
|
23.1
|
||||||
Cash and cash equivalents at end of period
|
$
|
25.2
|
$
|
25.5
|
2015 Quarters
|
2016 Quarter
|
|||||||||||||||||||
First
|
Second
|
Third
|
Fourth
|
First
|
||||||||||||||||
Revenues
|
$
|
511.6
|
$
|
497.5
|
$
|
498.8
|
$
|
520.6
|
$
|
524.5
|
||||||||||
Cost of goods sold
|
423.0
|
416.3
|
420.2
|
433.9
|
442.5
|
|||||||||||||||
Gross profit
|
88.6
|
81.2
|
78.6
|
86.7
|
82.0
|
|||||||||||||||
Selling, general and administrative
|
59.0
|
55.4
|
52.7
|
55.4
|
57.0
|
|||||||||||||||
Amortization expense
|
6.6
|
7.0
|
7.0
|
8.0
|
8.2
|
|||||||||||||||
Merger, acquisition, integration costs, and other charges
|
3.8
|
3.4
|
8.0
|
6.1
|
4.4
|
|||||||||||||||
Settlement, litigation and other related charges
|
2.3
|
6.9
|
2.1
|
2.0
|
3.1
|
|||||||||||||||
Restructuring and impairment charges
|
0.1
|
-
|
0.2
|
0.2
|
1.4
|
|||||||||||||||
Hurricane Sandy disaster costs (recoveries)
|
-
|
-
|
0.1
|
(5.0
|
)
|
-
|
||||||||||||||
Operating income
|
16.8
|
8.5
|
8.5
|
20.0
|
7.9
|
|||||||||||||||
Interest expense, net
|
1.4
|
1.9
|
2.1
|
1.2
|
3.0
|
|||||||||||||||
Income before income taxes
|
15.4
|
6.6
|
6.4
|
18.8
|
4.9
|
|||||||||||||||
Provision (benefit) for income taxes
|
5.8
|
4.3
|
3.4
|
(1.4
|
)
|
0.8
|
||||||||||||||
Net income
|
$
|
9.6
|
$
|
2.3
|
$
|
3.0
|
$
|
20.2
|
$
|
4.1
|
||||||||||
Earnings per share (1):
|
||||||||||||||||||||
Basic
|
$
|
0.32
|
$
|
0.08
|
$
|
0.10
|
$
|
0.66
|
$
|
0.13
|
||||||||||
Diluted
|
$
|
0.31
|
$
|
0.07
|
$
|
0.10
|
$
|
0.66
|
$
|
0.13
|
||||||||||
Adjusted diluted earnings per diluted share (1)(2):
|
$
|
0.57
|
$
|
0.48
|
$
|
0.49
|
$
|
0.56
|
$
|
0.45
|
||||||||||
Shares used in computing earnings per share:
|
||||||||||||||||||||
Basic
|
30.2
|
30.4
|
30.4
|
30.4
|
30.5
|
|||||||||||||||
Diluted
|
30.7
|
30.8
|
30.9
|
31.0
|
30.9
|
|||||||||||||||
Balance sheet data:
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
25.2
|
$
|
21.3
|
$
|
40.0
|
$
|
23.1
|
$
|
25.5
|
||||||||||
Working capital
|
$
|
292.8
|
$
|
293.5
|
$
|
285.1
|
$
|
342.1
|
$
|
303.9
|
||||||||||
Goodwill
|
$
|
341.9
|
$
|
341.9
|
$
|
341.8
|
$
|
371.0
|
$
|
372.1
|
||||||||||
Intangible assets, net
|
$
|
179.2
|
$
|
172.2
|
$
|
165.2
|
$
|
190.2
|
$
|
182.1
|
||||||||||
Total assets (4)
|
$
|
1,042.5
|
$
|
1,060.0
|
$
|
1,057.8
|
$
|
1,151.6
|
$
|
1,166.6
|
||||||||||
Long-term debt (4)
|
$
|
323.1
|
$
|
347.0
|
$
|
335.2
|
$
|
425.2
|
$
|
377.6
|
||||||||||
Total stockholders' equity
|
$
|
487.1
|
$
|
492.1
|
$
|
496.9
|
$
|
519.4
|
$
|
522.4
|
||||||||||
Supplemental information:
|
||||||||||||||||||||
Adjusted EBITDA(2)
|
$
|
35.4
|
$
|
31.5
|
$
|
31.6
|
$
|
34.7
|
$
|
30.3
|
||||||||||
Adjusted EBITDA Margin (2)
|
6.9
|
%
|
6.3
|
%
|
6.3
|
%
|
6.7
|
%
|
5.8
|
%
|
||||||||||
Adjusted EBITDA per prescription dispensed (2)
|
$
|
3.91
|
$
|
3.73
|
$
|
3.85
|
$
|
4.13
|
$
|
3.50
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
44.3
|
$
|
(22.2
|
)
|
$
|
37.5
|
$
|
(41.1
|
)
|
$
|
62.3
|
||||||||
Net cash used in investing activities
|
$
|
(25.0
|
)
|
$
|
(6.5
|
)
|
$
|
(6.8
|
)
|
$
|
(65.8
|
)
|
$
|
(12.1
|
)
|
|||||
Net cash (used in) provided by financing activities
|
$
|
(27.4
|
)
|
$
|
24.8
|
$
|
(12.0
|
)
|
$
|
90.0
|
$
|
(47.8
|
)
|
|||||||
Statistical information (in whole numbers except where indicated)
|
||||||||||||||||||||
Volume information
|
||||||||||||||||||||
Prescriptions dispensed (in thousands)
|
9,053
|
8,452
|
8,208
|
8,411
|
8,647
|
|||||||||||||||
Revenue per prescription dispensed (3)
|
$
|
56.51
|
$
|
58.86
|
$
|
60.77
|
$
|
61.60
|
$
|
60.66
|
||||||||||
Gross profit per prescription dispensed (3)
|
$
|
9.79
|
$
|
9.61
|
$
|
9.58
|
$
|
10.01
|
$
|
9.48
|
||||||||||
Gross profit margin (3)
|
17.3
|
%
|
16.3
|
%
|
15.8
|
%
|
16.3
|
%
|
15.6
|
%
|
||||||||||
Generic drug dispensing rate
|
85.3
|
%
|
86.0
|
%
|
86.5
|
%
|
86.3
|
%
|
86.6
|
%
|
||||||||||
Inventory days on hand
|
26.1
|
29.6
|
25.7
|
32.9
|
24.4
|
|||||||||||||||
Revenue days outstanding
|
34.0
|
35.4
|
35.5
|
34.7
|
34.7
|
(1) | The Corporation has never declared a cash dividend. Earnings per common share in actual cents. |
(2) | See "Use of Non-GAAP Measures for Measuring Quarterly Results" for a definition and Reconciliation of Adjusted Earnings Per Diluted Common Share to Earnings Per Diluted Common Share, and for Reconciliation of Net Income to Adjusted EBITDA and Adjusted EBITDA Margin. |
(3) | The fourth quarter 2015 amounts do not include the $2.5 million California Medicaid recoupment reversal. |
(4) | As adjusted, due to an accounting change for deferred financing costs associated with long-term debt. See Footnote 4. |
2015 Quarters
|
2016 Quarter
|
|||||||||||||||||||
First
|
Second
|
Third
|
Fourth
|
First
|
||||||||||||||||
Net income
|
$
|
9.6
|
$
|
2.3
|
$
|
3.0
|
$
|
20.2
|
$
|
4.1
|
||||||||||
Add:
|
||||||||||||||||||||
Interest expense, net
|
1.4
|
1.9
|
2.1
|
1.2
|
3.0
|
|||||||||||||||
Merger, acquisition, integration costs and other charges
|
3.8
|
3.4
|
8.0
|
6.1
|
4.4
|
|||||||||||||||
Settlement, litigation and other related charges
|
2.3
|
6.9
|
2.1
|
2.0
|
3.1
|
|||||||||||||||
California Medicaid recoupment
|
-
|
-
|
-
|
(2.5
|
)
|
-
|
||||||||||||||
Restructuring and impairment charges
|
0.1
|
-
|
0.2
|
0.2
|
1.4
|
|||||||||||||||
Hurricane Sandy disaster costs (recoveries)
|
-
|
-
|
0.1
|
(5.0
|
)
|
-
|
||||||||||||||
Provision (benefit) for income taxes
|
5.8
|
4.3
|
3.4
|
(1.4
|
)
|
0.8
|
||||||||||||||
Depreciation and amortization expense
|
12.4
|
12.7
|
12.7
|
13.9
|
13.5
|
|||||||||||||||
Adjusted EBITDA
|
$
|
35.4
|
$
|
31.5
|
$
|
31.6
|
$
|
34.7
|
$
|
30.3
|
||||||||||
Adjusted EBITDA Margin
|
6.9
|
%
|
6.3
|
%
|
6.3
|
%
|
6.7
|
%
|
5.8
|
%
|
2015 Quarters
|
2016 Quarter
|
|||||||||||||||||||
First
|
Second
|
Third
|
Fourth
|
First
|
||||||||||||||||
Adjusted EBITDA
|
$
|
35.4
|
$
|
31.5
|
$
|
31.6
|
$
|
34.7
|
$
|
30.3
|
||||||||||
Interest expense, net
|
(1.4
|
)
|
(1.9
|
)
|
(2.1
|
)
|
(1.2
|
)
|
(3.0
|
)
|
||||||||||
Merger, acquisition, integration costs and other charges
|
(6.2
|
)
|
(10.3
|
)
|
(10.4
|
)
|
(0.8
|
)
|
(8.9
|
)
|
||||||||||
Provision for bad debt
|
5.0
|
3.0
|
1.5
|
(1.6
|
)
|
3.2
|
||||||||||||||
Amortization of deferred financing fees
|
0.1
|
0.2
|
0.1
|
0.2
|
0.1
|
|||||||||||||||
Loss (gain) on disposition of equipment
|
0.1
|
-
|
-
|
(0.1
|
)
|
-
|
||||||||||||||
Gain on acquisition
|
-
|
-
|
-
|
(0.4
|
)
|
-
|
||||||||||||||
(Provision) benefit for income taxes
|
(5.8
|
)
|
(4.3
|
)
|
(3.4
|
)
|
1.4
|
(0.8
|
)
|
|||||||||||
Deferred income taxes
|
2.3
|
0.2
|
2.1
|
(0.6
|
)
|
3.1
|
||||||||||||||
Changes in federal and state income tax payable (receivable)
|
0.1
|
(9.1
|
)
|
(1.0
|
)
|
(0.7
|
)
|
(0.9
|
)
|
|||||||||||
Stock-based compensation and deferred compensation
|
2.0
|
1.7
|
1.7
|
2.4
|
1.4
|
|||||||||||||||
Excess tax benefit from stock-based compensation
|
(1.9
|
)
|
(0.2
|
)
|
(0.2
|
)
|
(0.1
|
)
|
(1.0
|
)
|
||||||||||
Changes in assets and liabilities
|
14.6
|
(33.1
|
)
|
17.6
|
(74.2
|
)
|
38.8
|
|||||||||||||
Other
|
-
|
0.1
|
-
|
(0.1
|
)
|
-
|
||||||||||||||
Net Cash Flows Provided by (Used in) Operating Activities
|
$
|
44.3
|
$
|
(22.2
|
)
|
$
|
37.5
|
$
|
(41.1
|
)
|
$
|
62.3
|
2015 Quarters
|
2016 Quarter
|
|||||||||||||||||||
First
|
Second
|
Third
|
Fourth
|
First
|
||||||||||||||||
Diluted earnings per share
|
$
|
0.31
|
$
|
0.07
|
$
|
0.10
|
$
|
0.66
|
$
|
0.13
|
||||||||||
Add:
|
||||||||||||||||||||
Diluted earnings per share impact of:
|
||||||||||||||||||||
Merger, acquisition, integration costs and other charges
|
0.08
|
0.07
|
0.17
|
0.11
|
0.09
|
|||||||||||||||
Settlement, litigation and other related charges
|
0.05
|
0.13
|
0.04
|
0.05
|
0.06
|
|||||||||||||||
California Medicaid Recoupment
|
-
|
-
|
-
|
(0.05
|
)
|
-
|
||||||||||||||
Restructuring and impairment charges
|
-
|
-
|
0.01
|
-
|
0.03
|
|||||||||||||||
Hurricane Sandy disaster costs (recoveries)
|
-
|
-
|
-
|
(0.10
|
)
|
-
|
||||||||||||||
Amortization of intangible assets
|
0.13
|
0.14
|
0.15
|
0.15
|
0.17
|
|||||||||||||||
Impact of discrete items and non-recurring charges on tax provision
|
-
|
0.07
|
0.02
|
(0.26
|
)
|
(0.03
|
)
|
|||||||||||||
Adjusted diluted earnings per share
|
$
|
0.57
|
$
|
0.48
|
$
|
0.49
|
$
|
0.56
|
$
|
0.45
|
Item 1A. | Risk Factors |
Period
|
Total
Number of
Shares
Purchased
|
Weighted
Average
Price Paid
per Share
|
Total Number
of Shares
Purchased as
Part of a
Publicly
Announced
Plans or
Programs (2)
|
Approximate
Dollar Value of
Shares that may
yet be Purchased
under the Plans
or Programs
|
||||||||||||||||
(in millions)
|
||||||||||||||||||||
January 1, 2016 - January 31, 2016
|
579
|
(1
|
)
|
$
|
31.28
|
-
|
$
|
19.7
|
||||||||||||
February 1, 2016 - February 29, 2016
|
33,662
|
(1
|
)
|
27.75
|
-
|
19.7
|
||||||||||||||
March 1, 2016 - March 31, 2016
|
94,597
|
(1
|
)
|
21.54
|
-
|
19.7
|
(1) | The Corporation repurchased 128,838 shares of common stock in connection with the vesting of certain stock awards to cover minimum statutory withholding taxes. |
(2) | On August 24, 2010, the Board of Directors announced a share repurchase program whereby the Corporation is authorized to purchase up to $25.0 million of the Corporation's common stock, of which $10.5 million was used. On July 2, 2012, the Board of Directors authorized an increase to the remaining portion of the existing share repurchase program that allows the Corporation to again repurchase up to a maximum of $25.0 million of the Corporation's common stock. The Corporation did not repurchase any common stock shares under this program during the three months ended March 31, 2016. |
Exhibit No.
|
||
10.33*
|
Summary of 2016 CEO Short-Term Incentive Program and 2016 Short-Term Incentive Program †
|
|
10.34*
|
Summary of 2016 Long-Term Incentive Program †
|
|
31.1*
|
Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
31.2*
|
Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
32.1*
|
Certification of Chief Executive Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
32.2*
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
101.INS
|
XBRL Instance Document.
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document.
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
* | Furnished herewith. |
PHARMERICA CORPORATION
|
|
Date: May 6, 2016
|
/s/ Gregory S. Weishar
|
Gregory S. Weishar
|
|
Chief Executive Officer and
Director
|
|
Date: May 6, 2016
|
/s/ David W. Froesel, Jr.
|
David W. Froesel, Jr.
|
|
Executive Vice President, Chief
Financial Officer and Treasurer
|
|
/s/ Berard E. Tomassetti
|
|
Date: May 6, 2016
|
Berard E. Tomassetti
|
Senior Vice President and
Chief Accounting Officer
|
Exhibit No.
|
Description
|
|
10.33
|
Summary of 2016 CEO Short-Term Incentive Program and 2016 Short-Term Incentive Program †
|
|
10.34
|
Summary of 2016 Long-Term Incentive Program †
|
|
31.1
|
Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
31.2
|
Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
32.1
|
Certification of Chief Executive Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
32.2
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
101.INS
|
XBRL Instance Document.
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document.
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
/s/ Gregory S. Weishar
|
|
Chief Executive Officer and Director
|
|
/S/ David W. Froesel, JR.
|
|
Executive Vice President, Chief Financial Officer
and Treasurer
|
|
/s/ Gregory W. Weishar
|
|
Gregory S. Weishar
Chief Executive Officer and Director
May 6, 2016
|
|
/s/ David W. Froesel, Jr.
|
|
David W. Froesel, Jr.
Executive Vice President, Chief Financial Officer and Treasurer
May 6, 2016
|
|
Adjusted EBITDA Performance Achievement
|
|
Payout Level
|
|
||
< 80.0% of Performance Target
|
|
0.0% of Award Target
|
|
|
|
80.0% of Performance Target
|
|
40.0% of Award Target
|
|
|
|
90.0% of Performance Target
|
|
70.0% of Award Target
|
|
|
|
96.0% of Performance Target
|
|
88.0% of Award Target
|
|
|
|
100.0% of Performance Target
|
|
100.0% of Award Target
|
|
|
|
105.0% of Performance Target
|
|
118.8% of Award Target
|
|
|
|
110.0% of Performance Target
|
|
137.5% of Award Target
|
|
|
|
115.0% of Performance Target
|
|
156.3% of Award Target
|
|
|
|
120.0% of Performance Target
|
|
175.0% of Award Target
|
|
|
|
> 120.0% of Performance Target
|
|
175.0% of Award Target
|
Adjusted Diluted EPS Performance Achievement
|
|
Payout Level
|
|
|
|
< 85.0% of Performance Target
|
|
0.0% of Award Target
|
|
|
|
85.0% of Performance Target
|
|
50.0% of Award Target
|
|
|
|
94.0% of Performance Target
|
|
80.0% of Award Target
|
|
|
|
100.0% of Performance Target
|
|
100.0% of Award Target
|
|
|
|
109.0% of Performance Target
|
|
130.0% of Award Target
|
|
|
|
115.0% of Performance Target
|
|
150.0% of Award Target
|
Executive
|
|
Title
|
|
Bonus Target
|
|
|
|
|
|
David Froesel
|
|
Executive Vice President, Chief Financial Officer and Treasurer
|
|
80% of base salary
|
|
|
|
|
|
Suresh Vishnubhatia
|
Executive Vice President of Long Term Care Operations
|
80% of base salary
|
||
|
|
|
|
|
Robert McKay
|
|
Senior Vice President of Purchasing and Trade Relations
|
|
65% of base salary
|
|
|
|
|
|
Thomas Caneris
|
|
Senior Vice President, General Counsel and Secretary
|
|
70% of base salary
|
Executive
|
Title
|
|
Company
Performance Adjusted EBITDA
|
|
|
Company Performance Adjusted Diluted EPS
|
|
|
Individual/Group
Performance
|
|
||||
David Froesel
|
Executive Vice President, Chief Financial Officer and Treasurer
|
|
|
50
|
%
|
|
|
20
|
%
|
|
|
30
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Suresh Vishnubhatia
|
Executive Vice President of Long Term Care Operations
|
50
|
%
|
|
|
20
|
%
|
|
|
30
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert McKay
|
Senior Vice President of Purchasing and Trade Relations
|
|
|
50
|
%
|
|
|
0
|
%
|
|
|
50
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas Caneris
|
Senior Vice President, General Counsel and Secretary
|
|
|
50
|
%
|
|
|
0
|
%
|
|
|
50
|
%
|
Performance Achievement
|
|
Payout Level
|
|
|
|
< 80.0% of Performance Target
|
|
0.0% of Award Target
|
|
|
|
80.0% of Performance Target
|
|
40.0% of Award Target
|
|
|
|
90.0% of Performance Target
|
|
70.0% of Award Target
|
|
|
|
96.0% of Performance Target
|
|
88.0% of Award Target
|
|
|
|
100.0% of Performance Target
|
|
100.0% of Award Target
|
|
|
|
105.0% of Performance Target
|
|
118.8% of Award Target
|
|
|
|
110.0% of Performance Target
|
|
137.5% of Award Target
|
|
|
|
115.0% of Performance Target
|
|
156.3% of Award Target
|
|
|
|
120.0% of Performance Target
|
|
175.0% of Award Target
|
|
|
|
> 120.0% of Performance Target
|
|
175.0% of Award Target
|
Performance Achievement
|
|
Payout Level
|
|
|
|
< 85.0% of Performance Target
|
|
0.0% of Award Target
|
|
|
|
85.0% of Performance Target
|
|
50.0% of Award Target
|
|
|
|
94.0% of Performance Target
|
|
80.0% of Award Target
|
|
|
|
100.0% of Performance Target
|
|
100.0% of Award Target
|
|
|
|
109.0% of Performance Target
|
|
130.0% of Award Target
|
|
|
|
115.0% of Performance Target
|
|
150.0% of Award Target
|
Executive
|
|
Title
|
|
Bonus Target
|
|
|
|
|
|
Gregory S. Weishar
|
|
Chief Executive Officer
|
|
250% of base salary
|
|
|
|
|
|
David Froesel
|
|
Executive Vice President, Chief Financial Officer and Treasurer
|
|
175% of base salary
|
Suresh Vishnubhatia
|
|
Executive Vice President of Long Term Care Operations
|
|
175% of base salary
|
|
|
|
|
|
Robert McKay
|
|
Senior Vice President of Purchasing and Trade Relations
|
|
115% of base salary
|
|
|
|
|
|
Thomas Caneris
|
|
Senior Vice President, General Counsel and Secretary
|
|
138% of base salary
|
Executive
|
Title
|
|
Restricted Stock
Units
(50% of Bonus
Target)
|
|
||
Gregory S. Weishar
|
Chief Executive Officer
|
|
|
57,841
|
|
|
|
|
|
|
|
|
|
David Froesel
|
Executive Vice President, Chief Financial Officer and Treasurer
|
|
|
22,324
|
|
|
|
|
|
|
|
|
|
Suresh Vishnubhatia
|
Executive Vice President of Long Term Care Operations
|
|
|
16,086
|
|
|
|
|
|
|
|
|
|
Robert McKay
|
Senior Vice President of Purchasing and Trade Relations
|
|
|
8,846
|
|
|
|
|
|
|
|
|
|
Thomas Caneris
|
Senior Vice President, General Counsel and Secretary
|
|
|
11,548
|
|
Performance Level
|
|
Payout Level
|
|
|
|
< 85.0% of Performance Target
|
|
0.0% of Award Target
|
|
|
|
85.0% of Performance Target
|
|
50.0% of Award Target
|
|
|
|
91.0% of Performance Target
|
|
70.0% of Award Target
|
|
|
|
100.0% of Performance Target
|
|
100.0% of Award Target
|
|
|
|
109.0% of Performance Target
|
|
130.0% of Award Target
|
|
|
|
115.0% of Performance Target
|
|
150.0% of Award Target
|
|
|
|
> 115.0% of Performance Target
|
|
150.0% of Award Target
|
Performance Level
|
|
Payout Level
|
|
|
|
< 85.0% of Performance Target
|
|
0.0% of Award Target
|
|
|
|
85.0% of Performance Target
|
|
50.0% of Award Target
|
|
|
|
91.0% of Performance Target
|
|
70.0% of Award Target
|
|
|
|
100.0% of Performance Target
|
|
100.0% of Award Target
|
|
|
|
109.0% of Performance Target
|
|
130.0% of Award Target
|
|
|
|
115.0% of Performance Target
|
|
150.0% of Award Target
|
|
|
|
> 115.0% of Performance Target
|
|
150.0% of Award Target
|
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Apr. 29, 2016 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | PHARMERICA CORP | |
Entity Central Index Key | 0001388195 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 30,734,415 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 |
CONDENSED CONSOLIDATED INCOME STATEMENTS (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2016 |
Mar. 31, 2015 |
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CONDENSED CONSOLIDATED INCOME STATEMENTS (Unaudited) [Abstract] | ||
Revenues | $ 524.5 | $ 511.6 |
Cost of goods sold | 442.5 | 423.0 |
Gross profit | 82.0 | 88.6 |
Selling, general and administrative expenses | 57.0 | 59.0 |
Amortization expense | 8.2 | 6.6 |
Merger, acquisition, integration costs and other charges | 4.4 | 3.8 |
Settlement, litigation and other related charges | 3.1 | 2.3 |
Restructuring and impairment charges | 1.4 | 0.1 |
Operating income | 7.9 | 16.8 |
Interest expense, net | 3.0 | 1.4 |
Income before income taxes | 4.9 | 15.4 |
Provision for income taxes | 0.8 | 5.8 |
Net income | $ 4.1 | $ 9.6 |
Earnings per common share: | ||
Basic (in dollars per share) | $ 0.13 | $ 0.32 |
Diluted (in dollars per share) | $ 0.13 | $ 0.31 |
Shares used in computing earnings per common share: | ||
Basic (in shares) | 30,527,697 | 30,185,230 |
Diluted (in shares) | 30,917,192 | 30,733,381 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares |
Mar. 31, 2016 |
Dec. 31, 2015 |
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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 175,000,000 | 175,000,000 |
Common stock, shares issued (in shares) | 33,640,063 | 33,237,732 |
Treasury stock at cost, shares (in shares) | 2,905,713 | 2,776,875 |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1—ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business PharMerica Corporation together with its subsidiaries, (the "Corporation"), is a pharmacy services company that services healthcare facilities, provides pharmacy management services to hospitals, provides specialty infusion services to patients outside a hospital setting, and offers the only national oncology pharmacy in the United States. The Corporation is the second largest institutional pharmacy services company in the United States based on revenues and customer licensed beds under contract, operating 93 institutional pharmacies, 17 specialty home infusion pharmacies, and 5 specialty oncology pharmacies in 45 states. The Corporation's customers are institutional healthcare providers, such as skilled nursing facilities, assisted living facilities, hospitals, individuals receiving in-home care and patients with cancer. Operating Segments The Corporation consists of three operating segments: institutional pharmacy, specialty infusion services and specialty oncology pharmacy. Management believes the nature of the products and services are similar, the payers for the products and services are common among the segments and all segments operate in the healthcare regulatory environment. In addition, the segments are economically similar. Accordingly, management has aggregated the three operating segments into one reporting segment. Principles of Consolidation All intercompany transactions have been eliminated. The Corporation has an investment in a long-term care pharmacy business that is accounted for by the equity method. This entity is not a variable interest entity and the Corporation's lack of majority voting rights precludes the Corporation from controlling this affiliate. Accordingly, the Corporation does not consolidate this affiliate, but rather applies the equity method of accounting. The Corporation's share of the net income or loss of this unconsolidated affiliate is included in operating expense. Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and do not include all of the information and disclosures required by generally accepted accounting principles in the United States ("U.S. GAAP") for complete financial statements. Accordingly, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Corporation and related footnotes for the year ended December 31, 2015, included in the Corporation's Annual Report on Form 10-K. The balance sheet as of December 31, 2015 has been derived from the audited consolidated financial statements adjusted for acquisition related measurement period adjustments. The results of operations for the interim periods are not necessarily indicative of results of operations for a full year. It is the opinion of management that all necessary adjustments for a fair presentation of the condensed consolidated financial statements for the interim periods have been made and are of a normal recurring nature. Use of Estimates The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP which requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates are involved in collectability of accounts receivable, revenue recognition, inventory valuation, supplier rebates and the valuation of long-lived assets and goodwill. Actual amounts may differ from these estimates. Fair Value of Financial Instruments Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based upon assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the Corporation follows a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Assets and liabilities measured at fair value are based on one or more of the following three valuation techniques:
The financial liabilities recorded at fair value at December 31, 2015 and March 31, 2016 are set forth in the tables below (dollars in millions):
The deferred compensation plan liability represents an obligation associated with the deferred compensation plan offered to eligible employees and members of the Board of Directors of the Corporation. The fair value of the liability associated with the deferred compensation plan is derived using pricing and other relevant information for investments in phantom shares of certain available investment options, primarily mutual funds. This liability is classified as other long-term liabilities in the accompanying condensed consolidated balance sheets. The contingent consideration represents future earn-outs associated with the Corporation's acquisition of an infusion business and a hospital services business both purchased in 2015. The fair values of the liabilities associated with the contingent consideration were derived using the income approach with unobservable inputs, which included future gross profit forecasts and present value assumptions, and there was little or no market data. The Corporation assessed the fair values of the liabilities as of the acquisition date and will assess quarterly thereafter until settlement. These liabilities are classified as other long-term liabilities in the accompanying condensed consolidated balance sheets. The mandatorily redeemable interest represents a future obligation associated with the Corporation's acquisition of a specialty pharmacy business, OncoMed Specialty, LLC ("Onco"), purchased on December 6, 2013. The mandatorily redeemable interest is classified as a long-term liability and measured at fair value. The fair value was derived using the income approach with unobservable inputs, which included a future gross profit forecast and present value assumptions, and there was little or no market data. The Corporation assessed and adjusted the mandatorily redeemable interest liability to estimated value at March 31, 2016. For the year ended December 31, 2015 and the three months ended March 31, 2016, there were no transfers between the valuation hierarchy Levels 1, 2, and 3. The following table summarizes the change in fair value of the Corporation's contingent consideration and mandatorily redeemable interest identified as Level 3 for the year ended December 31, 2015 and the three months ended March 31, 2016 (in millions):
The carrying amounts reported in the accompanying condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, inventory and accounts payable approximate fair value because of the short-term maturity of these instruments. The Corporation's debt approximates fair value due to the terms of the interest being set at variable market interest rates (Level 2). Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable primarily consist of amounts due from Prescription Drug Plans ("PDPs") under Medicare Part D, institutional healthcare providers, the respective state Medicaid programs, third party insurance companies, and private payers. The Corporation's ability to collect outstanding receivables is critical to its results of operations and cash flows. To provide for accounts receivable that could become uncollectible in the future, the Corporation establishes an allowance for doubtful accounts to reduce the carrying value of such receivables to the extent it is probable that a portion or all of a particular account will not be collected. The Corporation has an established process to determine the adequacy of the allowance for doubtful accounts, which relies on analytical tools, specific identification, and benchmarks to arrive at a reasonable allowance. No single statistic or measurement determines the adequacy of the allowance for doubtful accounts. The Corporation monitors and reviews trends by payer classification along with the composition of the Corporation's accounts receivable aging. This review is focused primarily on trends in private and other payers, PDPs, dual eligible co-payments, historic payment patterns of long-term care institutions, and monitoring respective credit risks. In addition, the Corporation analyzes other factors such as revenue days in accounts receivables, denial trends by payer types, payment patterns by payer types, subsequent cash collections, and current events that may impact payment patterns of the Corporation's long-term care institution customers. Accounts receivable are written off after collection efforts have been completed in accordance with the Corporation's policies. The Corporation's accounts receivable and summarized aging categories are as follows (dollars in millions):
The following is a summary of activity in the Corporation's allowance for doubtful accounts (dollars in millions):
In the fourth quarter of 2015, the Corporation reversed an allowance of $4.6 million related to a customer's outstanding receivable for which a settlement payment was received which significantly exceeded the existing net receivable. This reversal is reflected in the "Charges Included in Selling, General & Administrative Expenses" column above. Restructuring Charges Restructuring charges in the condensed consolidated financial statements represent amounts expensed for purposes of realigning corporate and pharmacy locations. Mandatorily Redeemable Interest The Corporation acquired 37.5% of the membership interests of Onco while also obtaining control of the business. The subsidiary is consolidated in the Corporation's condensed consolidated financial statements and the mandatorily redeemable interest is classified as debt within other long-term liabilities in the condensed consolidated balance sheets. Recently Issued Accounting Prouncements In March of 2016, the FASB issued Accounting Standards Update No. 2016-09 (ASU 2016-09) "Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" intended to simplify the accounting for employee share-based payments. Under this guidance all excess tax benefits ("windfalls") and deficiencies ("shortfalls") related to employee stock compensation will be recognized within income tax expense. Under prior guidance windfalls were recognized to additional paid-in capital ("APIC") and shortfalls were only recognized to the extent they exceed the pool of windfall tax benefits. The new standard is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any interim or annual period. The Corporation early adopted ASU 2016-09 effective for the three months ended March 31, 2016. As a result of the adoption a tax benefit of $1.0 million was recorded in the current quarter reflecting the excess tax benefits for the quarter. The adoption was on a prospective basis and therefore had no impact on prior years. |
ACQUISITIONS |
3 Months Ended |
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Mar. 31, 2016 | |
ACQUISITIONS [Abstract] | |
ACQUISITIONS | NOTE 2—ACQUISITIONS 2015 Acquisitions During the year ended December 31, 2015, the Corporation completed acquisitions of two long-term care businesses, two infusion businesses and one hospital services business (collectively the "2015 Acquisitions"), none of which were individually significant to the Corporation. The 2015 Acquisitions had an estimated purchase price of $83.5 million, comprised of a net cash payment of $75.9 million and an estimated fair value of contingent consideration of $7.6 million. The resulting amount of goodwill and identifiable intangibles related to these transactions in the aggregate were $48.5 million and $41.2 million, respectively. The Corporation believes the resulting amount of goodwill reflects the synergistic benefits of the acquisitions. Tax deductible goodwill associated with the acquisitions was $41.4 million as of December 31, 2015. The net assets and operating results of the 2015 Acquisitions have been included in the Corporation's condensed consolidated financial statements from the respective dates of acquisition. Pro forma financial statements are not presented on the 2015 Acquisitions as the results are not material to the Corporation's condensed consolidated financial statements. Other For the three months ended March 31, 2015 and 2016, the Corporation incurred $3.7 million and $4.3 million, respectively, of acquisition-related costs, which have been classified as a component of merger, acquisition, integration costs and other charges. |
GOODWILL AND INTANGIBLES |
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GOODWILL AND INTANGIBLES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND INTANGIBLES | NOTE 3—GOODWILL AND INTANGIBLES As of December 31, 2015 and March 31, 2016 the carrying amount of goodwill was $371.0 million and $372.1 million, respectively. The following table presents the components of the Corporation's finite lived intangible assets (dollars in millions):
Amortization expense relating to finite-lived intangible assets was $6.6 million and $8.2 million for the three months ended March 31, 2015 and 2016, respectively. |
CREDIT AGREEMENT |
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CREDIT AGREEMENT [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CREDIT AGREEMENT | NOTE 4—CREDIT AGREEMENT On September 17, 2014, the Corporation entered into a credit agreement by and among the Corporation, the lenders named therein (the "Lenders"), Bank of America, N.A., as administrative agent, JP Morgan Chase Bank N.A., as syndication agent, and U.S. Bank, National Association, Citibank, N.A., MUFG Union Bank, N.A., BBVA Compass Bank and SunTrust Bank as co-documentation agents (the "Credit Agreement"). The Credit Agreement consists of a $225.0 million term loan facility and a $310.0 million revolving credit facility. The terms and conditions of the Credit Agreement are customary to facilities of this nature. As of March 31, 2016, $216.5 million was outstanding under the term loan facility and $162.0 million was outstanding under the revolving credit facility. Indebtedness under the Credit Agreement matures on September 17, 2019, at which time the commitments of the Lenders to make revolving loans also expire. The table below summarizes the total outstanding debt of the Corporation (dollars in millions):
* The Corporation adopted FASB Accounting Standards Update ("ASU") 2015-03 "Simplifying the Presentation of Debt Issuance Costs". Therefore, debt issuance costs related to the Corporation's debt liability in the condensed consolidated balance sheet is presented as a direct deduction from the carrying amount of the debt obligation. The Corporation retrospectively adjusted prior period amounts, which decreased other long-term assets and decreased long-term debt by $2.1 million in the condensed consolidated balance sheet as of December 31, 2015. The Corporation's indebtedness has the following maturities as of March 31, 2016 (dollars in millions):
The Credit Agreement provides for the issuance of letters of credit which, when issued, reduce availability under the revolving credit facility. The aggregate amount of letters of credit outstanding as of March 31, 2016 was $2.8 million. After giving effect to the letters of credit, total availability under the revolving credit facility was $145.2 million as of March 31, 2016. |
COMMITMENTS AND CONTINGENCIES |
3 Months Ended |
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Mar. 31, 2016 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 5—COMMITMENTS AND CONTINGENCIES The Corporation maintains liabilities for certain of its outstanding investigations and litigation. In accordance with the provisions of U.S. GAAP for contingencies, the Corporation records a liability when it is probable that such a liability has been incurred and the amount of the loss can be reasonably estimated. To the extent that the resolution of contingencies result in actual losses that differ from the Corporation's recorded liabilities, earnings will be charged or credited accordingly. The Corporation cannot know the ultimate outcome of the pending matters described below, and there can be no assurance that the resolution of these matters will not have a material adverse impact on the Corporation's condensed consolidated results of operations, financial position or cash flows. As a part of its ongoing operations, the Corporation is subject to various inspections, audits, inquiries, investigations and similar actions by third parties, as well as by government/regulatory authorities responsible for enforcing the laws and regulations to which the Corporation is subject. Further, under the federal False Claims Act, private parties have the right to bring qui tam, or "whistleblower," suits against companies that submit false claims for payments to, or improperly retain overpayments from, the government. The inherently unpredictable nature of legal proceedings may be impacted by various factors, including: (i) the damages sought in the proceedings are unsubstantiated or indeterminate; (ii) discovery is not complete; (iii) the proceeding is in its early stages; (iv) the matters present legal uncertainties; (v) significant facts are in dispute; (vi) a large number of parties are participating in the proceedings (including where it is uncertain how liability, if any, will be shared among defendants); or (vii) the proceedings present a wide range of potential outcomes. The Corporation is the subject of certain investigations and is a defendant in a number of cases, including those discussed below. On November 20, 2013, the complaint filed by a relator, Robert Gadbois, on behalf of the U.S. Government and various state governments, was unsealed by the United States District Court for the District of Rhode Island against the Corporation alleging that the Corporation dispensed controlled and non-controlled substances in violation of the CSA and in violation of relevant state laws, and that as a result, the dispenses were not eligible for payment and that the claims the Corporation submitted to the Government were false within the meaning of the FCA. The U.S. Government and the various state governments declined to intervene in this case. On October 3, 2014, the Corporation's motion to dismiss was granted by the court. The relator appealed the court's decision and on December 16, 2015, the First Circuit Court of Appeals granted the relator its appeal and remanded the case to the District Court to allow the relator to file a motion to supplement his complaint and to allow the District Court to rule upon that motion. On December 30, 2015, the Corporation filed with the First Circuit Court of Appeals a petition for a re-hearing en banc, which was denied on January 25, 2016. The Corporation filed a petition for certiorari with the U.S. Supreme Court on April 22, 2016 asking the Supreme Court to review the First Circuit's decision. The First Circuit stayed the issuance of its mandate until the proceedings in the Supreme Court are final, effectively staying the case in the District Court until the Supreme Court decides the matter. The Corporation otherwise intends to continue to defend the case vigorously. On March 4, 2011, a relator, Mark Silver, on behalf of the U.S. Government and various state governments, filed a complaint in the United States District Court for the District of New Jersey against the Corporation alleging that the Corporation violated the FCA and Federal Anti-Kickback Statute through its agreements to provide prescription drugs to nursing homes under certain Medicare and Medicaid programs. On February 19, 2013, the U.S. Government declined to intervene in the case. The complaint has been amended several times, most recently on November 12, 2013, and thereafter served upon the Corporation. On December 6, 2013, the Corporation moved to dismiss the amended complaint for failure to state a claim upon which relief may be granted and on September 29, 2014, the court declined to dismiss the case, but limited the relevant time period for which claims could be brought against the Corporation. On December 22, 2015, Silver and the Corporation filed a joint motion with the court for an order dismissing with prejudice all successor liability claims against the Corporation for or regarding the conduct of Chem Rx Corporation. The court has not yet ruled on the motion or entered the order of dismissal. On March 4, 2016 and April 1, 2016, the Corporation filed motions to dismiss and for summary judgment, respectively, for lack of subject matter jurisdiction under the FCA prior public disclosure bar. The court has not yet ruled on the motions. The Corporation intends to vigorously defend itself against the remaining allegations in the case. On September 10, 2014, the Corporation filed a Complaint in Jefferson Circuit Court in Louisville, Kentucky against AmerisourceBergen Drug Corporation ("ABDC") for failure of ABDC to comply with certain pricing and rebate provisions of the Previous Prime Vendor Agreement ("Previous PVA"). The Corporation subsequently filed a First Amended Verified Complaint on September 26, 2014 asserting additional breaches of the Previous PVA. As a result of ABDC's failure to comply with certain pricing and rebate provisions, the Corporation had recorded a receivable of $40.8 million related to these disputes at December 31, 2014. Separately, as of December 31, 2014, the Corporation had recorded $12.2 million for additional rebates owing from ABDC which at that time the Corporation believed were not in dispute and had previously been paid by ABDC in all the prior quarters. These receivables totaled $53.0 million and were included in prepaids and other assets in the accompanying consolidated balance sheet as of December 31, 2014. During the period of January 1, 2015 through March 31, 2015, an additional $19.3 million, net of payments received, of certain rebates and guarantees owed by ABDC under the Previous PVA were recognized, which brought the total gross receivable to $72.3 million at December 31, 2015. On March, 2, 2015, the Corporation notified ABDC of its intent to terminate the Previous PVA effective April 1, 2015. The Corporation also announced that it had entered into the Cardinal Health Prime Vendor Agreement ("Cardinal Health PVA") effective April 1, 2015. On March 3, 2015, the Corporation received a letter from ABDC terminating the Previous PVA effective immediately based upon the Corporation's alleged failure to pay certain disputed miscellaneous charges and the Corporation's signing of the Cardinal Health PVA. The Corporation believes ABDC did not have the right to immediately terminate the contract pursuant to the terms of the Previous PVA. On March 6 and March 13, 2015, the Corporation withheld from ABDC normal recurring payments for drug purchases of approximately $48.8 million. On May 18, 2015, ABDC filed an Amended Counterclaim seeking additional financial damages against the Corporation and asserted claims against two counter-defendants. On November 23, 2015, the Corporation filed its Third Amended Complaint against ABDC for additional financial damages, amounts overcharged by ABDC, and for certain rebates not paid by ABDC under the Previous PVA. On April 1, 2016, the Jefferson Circuit Court ruled that the Corporation could not set-off payment the amounts that ABDC owed the Corporation against amounts that ABDC had invoiced the Corporation. Instead the Corporation must first pay ABDC and continue the litigation against ABDC to collect any amounts owed to the Corporation by ABDC upon the conclusion of the entire lawsuit. As a result, the Corporation owes approximately $48.8 million of payments, along with post-judgment interest for drug purchases in the first quarter of 2015. The Corporation intends to continue the litigation in the Jefferson Circuit Court against ABDC. On April 11, 2016, the Corporation filed a Motion to Alter and Amend the April 1, 2016 order of the Jefferson Circuit Court asking the judge to reconsider the final and appealable aspect of the order. If the April 1, 2016 order is not reconsidered, the Corporation intends to appeal the entire decision of the trial court to the Kentucky Court of Appeals. At its option, if the trial court does not reconsider its ruling, the Corporation may obtain a bond during the pendency to appeal in lieu of paying ABDC. The Jefferson Circuit Court's ruling on the right to set-off does not in any way adversely affect the Corporation's claims against ABDC and the Corporation's ability to pursue all of its claims against ABDC in the Jefferson Circuit Court. Amounts owed to and from ABDC were previously offset resulting in a net receivable of $23.5 million from ABDC in the accompanying condensed consolidated balance sheet at December 31, 2015 classified as long-term assets. As a result of the ruling on the right to set-off, the Corporation has grossed up the receivable from ABDC to $72.3 million and the payable to $48.8 million. Accordingly, the $72.3 million receivable from ABDC is reflected in other long-term assets and the $48.8 million payable is reflected in other long-term liabilities in the accompanying condensed consolidated balance sheet as of March 31, 2016. The Corporation has claims for additional damages resulting from ABDC's breaches of the Previous PVA. The Corporation intends to vigorously pursue its claims. At this time, the Corporation is unable to determine the ultimate impact of these litigation proceedings on its condensed consolidated financial condition, results of operations, or liquidity. The litigation with ABDC could continue for an extended period of time, likely longer than 12 months. The Corporation cannot provide any assurances about the outcome of the litigation. In addition, the Corporation is involved in certain legal actions and regulatory investigations arising in the ordinary course of business. At March 31, 2016, the Corporation had accrued approximately $27.0 million related to the pending legal actions and investigations. |
MERGER, ACQUISITION, INTEGRATION COSTS AND OTHER CHARGES |
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MERGER, ACQUISITION, INTEGRATION COSTS AND OTHER CHARGES [Abstract] | |
MERGER, ACQUISITION, INTEGRATION COST AND OTHER CHARGES | NOTE 6—MERGER, ACQUISITION, INTEGRATION COSTS AND OTHER CHARGES Merger, acquisition, integration costs and other charges combined were $3.8 million and $4.4 million for the three months ended March 31, 2015 and 2016, respectively. These costs primarily relate to costs incurred prior to an acquisition such as professional advisory fees and the costs associated with integrating completed acquisitions into our business, such as IT transition and facility related costs. |
RESTRUCTURING COSTS AND OTHER CHARGES |
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RESTRUCTURING COSTS AND OTHER CHARGES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RESTRUCTURING COSTS AND OTHER CHARGES | NOTE 7—RESTRUCTURING COSTS AND OTHER CHARGES In July 2013, the Corporation commenced the implementation of its restructuring plan as a result of the loss of two of the Corporation's significant customers, Kindred Healthcare Inc. and Golden Living. The plan was a major initiative primarily designed to optimize operational efficiency while ensuring that the Corporation remains well-positioned to serve its clients and achieve sustainable, long-term growth. The Corporation's restructuring plan included steps to right size its cost structure by adjusting its workforce and facility plans to reflect anticipated business needs. In addition, in the year ended December 31, 2015, the Corporation began a restructuring and centralization initiative related to its specialty pharmacy business. The initiative is not expected to be material to the financial statements. The Corporation recorded restructuring costs and other related charges of approximately of $0.1 million and $1.4 million during the three months ended March 31, 2015 and 2016, respectively. The restructuring charges primarily included severance pay, the buy-out of employment agreements, lease terminations, and other exit-related asset disposals, professional fees and facility exit costs. The following table presents the components of the Corporation's restructuring liability (dollars in millions):
The liability at March 31, 2016 represents amounts not yet paid relating to actions taken in connection with the restructuring plan (primarily lease payments and severance costs). |
COMMON STOCK, PREFERRED STOCK, TREASURY STOCK, STOCK-BASED COMPENSATION AND OTHER BENEFITS |
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COMMON STOCK, PREFERRED STOCK, TREASURY STOCK, STOCK-BASED COMPENSATION AND OTHER BENEFITS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMON STOCK, PREFERRED STOCK, TREASURY STOCK, STOCK-BASED COMPENSATION AND OTHER BENEFITS | NOTE 8—COMMON STOCK, PREFERRED STOCK, TREASURY STOCK, STOCK-BASED COMPENSATION AND OTHER BENEFITS Treasury Stock Purchases In August 2010, the Board of Directors authorized a share repurchase of up to $25.0 million of the Corporation's common stock, of which $10.5 million was used. On July 2, 2012, the Board of Directors authorized an increase to the remaining portion of the existing share repurchase program that allows the Corporation to again repurchase up to a maximum of $25.0 million of the Corporation's common stock. Approximately $19.7 million remained available under the program as of March 31, 2016. Share repurchases under this authorization may be made in the open market through unsolicited or solicited privately negotiated transactions, or in such other appropriate manner, and may be funded from available cash or the revolving credit facility. The amount and timing of the repurchases, if any, would be determined by the Corporation's management and would depend on a variety of factors including price, corporate and regulatory requirements, capital availability and other market conditions. Common stock acquired through the share repurchase program would be held as treasury shares and may be used for general corporate purposes, including reissuance in connection with acquisitions, employee stock option exercises or other employee stock plans. The share repurchase program does not have an expiration date and may be limited, terminated or extended at any time without prior notice. During the three months ended March 31, 2016, the Corporation repurchased no shares of common stock. The Corporation may redeem shares from employees upon the vesting of the Corporation's stock awards for minimum statutory tax withholding purposes and to cover option exercise costs. The Corporation redeemed 128,838 shares from the vesting of certain awards and exercise of certain stock options, for an aggregate price of approximately $3.0 million during the three months ended March 31, 2016. These shares have also been designated by the Corporation as treasury stock. Stock Option Activity Stock options were not granted to officers and employees during the three months ended March 31, 2016. The following table summarizes option activity for the periods presented:
Nonvested Shares The following table summarizes nonvested share activity for the periods presented:
The weighted average remaining term and intrinsic value of non-vested shares as of March 31, 2016 was 1.8 years and $22.2 million, respectively. |
INCOME TAXES |
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INCOME TAXES [Abstract] | |||||||||||||||||||||||||||||||||||||
INCOME TAXES | NOTE 9—INCOME TAXES The provision for income taxes is based upon the Corporation's estimate of annual taxable income or loss for each respective accounting period. The following table summarizes our provision for income taxes for the periods presented (dollars in millions):
The decrease in our provision for income taxes as a percentage of pre-tax income for the three months ended March 31, 2016 compared to the comparable 2015 period was due to decreases in pre-tax income as well as certain non-deductible employee compensation costs and discrete events including the Corporation's early adoption of FASB ASU 2016-09 "Improvements to Employee Share-Based Payment Accounting" during the three months ended March 31, 2016, which resulted in a significant decrease to the tax provision for excess tax benefits of approximately $1.0 million. The forecasted annual effective tax rates of 37.9%% and 36.8%% for the three months ended March 31, 2015 and 2016, respectively, are higher than the federal statutory rate largely as a result of the combined impact of state and local taxes and various non-deductible expenses. The Corporation derives a current federal and state income tax benefit from the impact of deductions associated with the amortization of tax deductible goodwill acquired through business combinations. The tax basis of the Corporation's tax deductible goodwill was approximately $171.1 million and $166.6 million at December 31, 2015 and March 31, 2016, respectively. The future tax benefits of the tax-deductible goodwill are included in the Corporation's deferred tax assets. The Corporation recognizes an asset or liability for the deferred tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. These temporary differences will result in taxable or deductible amounts in future years when the reported amounts of the assets are recovered or liabilities are settled. The Corporation also recognizes as deferred tax assets the future tax benefits from net operating loss carryforwards. As of March 31, 2016, the Corporation has $18.0 million ($6.3 million tax benefit) of federal net operating loss carryforwards available. These net operating loss carryforwards resulted from the stock acquisitions the Corporation completed in 2013 and 2014. These net operating loss carryforwards are subject to limitations under IRC Section 382; however, the Corporation expects that it will be able to use the recorded amount which takes into account the limitations of the carryforwards. The Corporation has state net operating loss carryforwards representing a tax benefit of $4.1 million, net of valuation allowances. The net operating losses have carryforward periods ranging from 1 to 20 years depending on the taxing jurisdiction. A valuation allowance is provided for the Corporation's deferred tax assets if it is more likely than not that some portion or all of the net deferred tax assets will not be realized. The Corporation recognized net deferred tax assets totaling $21.1 million and $17.9 million at December 31, 2015 and March 31, 2016, respectively, net of state valuation allowances of $3.8 million. The federal statute of limitations remains open for tax years 2012 through 2014. State tax jurisdictions generally have statutes of limitation ranging from three to five years. The Corporation is generally no longer subject to state and local income tax examinations by tax authorities for years before 2010. The state income tax impact of federal income tax changes remains subject to examination by various states for a period of up to one year after formal notification of IRS settlement to the states. |
EARNINGS PER SHARE |
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EARNINGS PER SHARE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE | NOTE 10—EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share (dollars in millions, except per share amounts):
(a) These unexercised employee stock options, unvested restricted shares and performance shares that have not yet met performance conditions are not included in the computation of diluted earnings per share because to do so would be anti-dilutive for the periods presented. Stock options and restricted shares and units granted by the Corporation are treated as potential common shares outstanding in computing earnings per diluted share. Performance share units are treated as potential common shares outstanding in computing earnings per diluted share only when the performance conditions are met. Common shares repurchased by the Corporation reduce the number of basic shares used in the denominator for basic and diluted earnings per share. |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature of Business | Nature of Business PharMerica Corporation together with its subsidiaries, (the "Corporation"), is a pharmacy services company that services healthcare facilities, provides pharmacy management services to hospitals, provides specialty infusion services to patients outside a hospital setting, and offers the only national oncology pharmacy in the United States. The Corporation is the second largest institutional pharmacy services company in the United States based on revenues and customer licensed beds under contract, operating 93 institutional pharmacies, 17 specialty home infusion pharmacies, and 5 specialty oncology pharmacies in 45 states. The Corporation's customers are institutional healthcare providers, such as skilled nursing facilities, assisted living facilities, hospitals, individuals receiving in-home care and patients with cancer. |
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Operating Segments | Operating Segments The Corporation consists of three operating segments: institutional pharmacy, specialty infusion services and specialty oncology pharmacy. Management believes the nature of the products and services are similar, the payers for the products and services are common among the segments and all segments operate in the healthcare regulatory environment. In addition, the segments are economically similar. Accordingly, management has aggregated the three operating segments into one reporting segment. |
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Principles of Consolidation | Principles of Consolidation All intercompany transactions have been eliminated. The Corporation has an investment in a long-term care pharmacy business that is accounted for by the equity method. This entity is not a variable interest entity and the Corporation's lack of majority voting rights precludes the Corporation from controlling this affiliate. Accordingly, the Corporation does not consolidate this affiliate, but rather applies the equity method of accounting. The Corporation's share of the net income or loss of this unconsolidated affiliate is included in operating expense. |
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Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and do not include all of the information and disclosures required by generally accepted accounting principles in the United States ("U.S. GAAP") for complete financial statements. Accordingly, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Corporation and related footnotes for the year ended December 31, 2015, included in the Corporation's Annual Report on Form 10-K. The balance sheet as of December 31, 2015 has been derived from the audited consolidated financial statements adjusted for acquisition related measurement period adjustments. The results of operations for the interim periods are not necessarily indicative of results of operations for a full year. It is the opinion of management that all necessary adjustments for a fair presentation of the condensed consolidated financial statements for the interim periods have been made and are of a normal recurring nature. |
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Use of Estimates | Use of Estimates The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP which requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates are involved in collectability of accounts receivable, revenue recognition, inventory valuation, supplier rebates and the valuation of long-lived assets and goodwill. Actual amounts may differ from these estimates. |
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Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based upon assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the Corporation follows a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Assets and liabilities measured at fair value are based on one or more of the following three valuation techniques:
The financial liabilities recorded at fair value at December 31, 2015 and March 31, 2016 are set forth in the tables below (dollars in millions):
The deferred compensation plan liability represents an obligation associated with the deferred compensation plan offered to eligible employees and members of the Board of Directors of the Corporation. The fair value of the liability associated with the deferred compensation plan is derived using pricing and other relevant information for investments in phantom shares of certain available investment options, primarily mutual funds. This liability is classified as other long-term liabilities in the accompanying condensed consolidated balance sheets. The contingent consideration represents future earn-outs associated with the Corporation's acquisition of an infusion business and a hospital services business both purchased in 2015. The fair values of the liabilities associated with the contingent consideration were derived using the income approach with unobservable inputs, which included future gross profit forecasts and present value assumptions, and there was little or no market data. The Corporation assessed the fair values of the liabilities as of the acquisition date and will assess quarterly thereafter until settlement. These liabilities are classified as other long-term liabilities in the accompanying condensed consolidated balance sheets. The mandatorily redeemable interest represents a future obligation associated with the Corporation's acquisition of a specialty pharmacy business, OncoMed Specialty, LLC ("Onco"), purchased on December 6, 2013. The mandatorily redeemable interest is classified as a long-term liability and measured at fair value. The fair value was derived using the income approach with unobservable inputs, which included a future gross profit forecast and present value assumptions, and there was little or no market data. The Corporation assessed and adjusted the mandatorily redeemable interest liability to estimated value at March 31, 2016. For the year ended December 31, 2015 and the three months ended March 31, 2016, there were no transfers between the valuation hierarchy Levels 1, 2, and 3. The following table summarizes the change in fair value of the Corporation's contingent consideration and mandatorily redeemable interest identified as Level 3 for the year ended December 31, 2015 and the three months ended March 31, 2016 (in millions):
The carrying amounts reported in the accompanying condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, inventory and accounts payable approximate fair value because of the short-term maturity of these instruments. The Corporation's debt approximates fair value due to the terms of the interest being set at variable market interest rates (Level 2). |
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Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable primarily consist of amounts due from Prescription Drug Plans ("PDPs") under Medicare Part D, institutional healthcare providers, the respective state Medicaid programs, third party insurance companies, and private payers. The Corporation's ability to collect outstanding receivables is critical to its results of operations and cash flows. To provide for accounts receivable that could become uncollectible in the future, the Corporation establishes an allowance for doubtful accounts to reduce the carrying value of such receivables to the extent it is probable that a portion or all of a particular account will not be collected. The Corporation has an established process to determine the adequacy of the allowance for doubtful accounts, which relies on analytical tools, specific identification, and benchmarks to arrive at a reasonable allowance. No single statistic or measurement determines the adequacy of the allowance for doubtful accounts. The Corporation monitors and reviews trends by payer classification along with the composition of the Corporation's accounts receivable aging. This review is focused primarily on trends in private and other payers, PDPs, dual eligible co-payments, historic payment patterns of long-term care institutions, and monitoring respective credit risks. In addition, the Corporation analyzes other factors such as revenue days in accounts receivables, denial trends by payer types, payment patterns by payer types, subsequent cash collections, and current events that may impact payment patterns of the Corporation's long-term care institution customers. Accounts receivable are written off after collection efforts have been completed in accordance with the Corporation's policies. The Corporation's accounts receivable and summarized aging categories are as follows (dollars in millions):
The following is a summary of activity in the Corporation's allowance for doubtful accounts (dollars in millions):
In the fourth quarter of 2015, the Corporation reversed an allowance of $4.6 million related to a customer's outstanding receivable for which a settlement payment was received which significantly exceeded the existing net receivable. This reversal is reflected in the "Charges Included in Selling, General & Administrative Expenses" column above. |
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Restructuring and Impairment Charges | Restructuring Charges Restructuring charges in the condensed consolidated financial statements represent amounts expensed for purposes of realigning corporate and pharmacy locations. |
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Mandatorily Redeemable Interest | Mandatorily Redeemable Interest The Corporation acquired 37.5% of the membership interests of Onco while also obtaining control of the business. The subsidiary is consolidated in the Corporation's condensed consolidated financial statements and the mandatorily redeemable interest is classified as debt within other long-term liabilities in the condensed consolidated balance sheets. |
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Recently Issued Accounting Pronouncements | Recently Issued Accounting Prouncements In March of 2016, the FASB issued Accounting Standards Update No. 2016-09 (ASU 2016-09) "Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" intended to simplify the accounting for employee share-based payments. Under this guidance all excess tax benefits ("windfalls") and deficiencies ("shortfalls") related to employee stock compensation will be recognized within income tax expense. Under prior guidance windfalls were recognized to additional paid-in capital ("APIC") and shortfalls were only recognized to the extent they exceed the pool of windfall tax benefits. The new standard is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any interim or annual period. The Corporation early adopted ASU 2016-09 effective for the three months ended March 31, 2016. As a result of the adoption a tax benefit of $1.0 million was recorded in the current quarter reflecting the excess tax benefits for the quarter. The adoption was on a prospective basis and therefore had no impact on prior years. |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Financial Liabilities and Non-Financial Assets Recorded at Fair Value | The financial liabilities recorded at fair value at December 31, 2015 and March 31, 2016 are set forth in the tables below (dollars in millions):
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Schedule of Contingent Consideration and Mandatorily Redeemable Interest Identified as Level 3 | For the year ended December 31, 2015 and the three months ended March 31, 2016, there were no transfers between the valuation hierarchy Levels 1, 2, and 3. The following table summarizes the change in fair value of the Corporation's contingent consideration and mandatorily redeemable interest identified as Level 3 for the year ended December 31, 2015 and the three months ended March 31, 2016 (in millions):
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Schedule of Accounts Receivable and Summarized Aging Categories | The Corporation's accounts receivable and summarized aging categories are as follows (dollars in millions):
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Schedule of Allowance for Doubtful Accounts | The following is a summary of activity in the Corporation's allowance for doubtful accounts (dollars in millions):
In the fourth quarter of 2015, the Corporation reversed an allowance of $4.6 million related to a customer's outstanding receivable for which a settlement payment was received which significantly exceeded the existing net receivable. This reversal is reflected in the "Charges Included in Selling, General & Administrative Expenses" column above. |
GOODWILL AND INTANGIBLES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND INTANGIBLES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite Lived Intangible Assets | The following table presents the components of the Corporation's finite lived intangible assets (dollars in millions):
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CREDIT AGREEMENT (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CREDIT AGREEMENT [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Term Debt and Revolving Credit Facility | The table below summarizes the total outstanding debt of the Corporation (dollars in millions):
* The Corporation adopted FASB Accounting Standards Update ("ASU") 2015-03 "Simplifying the Presentation of Debt Issuance Costs". Therefore, debt issuance costs related to the Corporation's debt liability in the condensed consolidated balance sheet is presented as a direct deduction from the carrying amount of the debt obligation. The Corporation retrospectively adjusted prior period amounts, which decreased other long-term assets and decreased long-term debt by $2.1 million in the condensed consolidated balance sheet as of December 31, 2015. |
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Schedule of Indebtedness Maturities | The Corporation's indebtedness has the following maturities as of March 31, 2016 (dollars in millions):
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RESTRUCTURING COSTS AND OTHER CHARGES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RESTRUCTURING COSTS AND OTHER CHARGES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Restructuring Liability | The following table presents the components of the Corporation's restructuring liability (dollars in millions):
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COMMON STOCK, PREFERRED STOCK, TREASURY STOCK, STOCK-BASED COMPENSATION AND OTHER BENEFITS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMON STOCK, PREFERRED STOCK, TREASURY STOCK, STOCK-BASED COMPENSATION AND OTHER BENEFITS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Option Activity | Stock options were not granted to officers and employees during the three months ended March 31, 2016. The following table summarizes option activity for the periods presented:
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Schedule of Nonvested Share Activity | The following table summarizes nonvested share activity for the periods presented:
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INCOME TAXES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||
INCOME TAXES [Abstract] | |||||||||||||||||||||||||||||||||||||
Schedule of Provision for Income Taxes | The provision for income taxes is based upon the Corporation's estimate of annual taxable income or loss for each respective accounting period. The following table summarizes our provision for income taxes for the periods presented (dollars in millions):
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EARNINGS PER SHARE (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Computation of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share (dollars in millions, except per share amounts):
(a) These unexercised employee stock options, unvested restricted shares and performance shares that have not yet met performance conditions are not included in the computation of diluted earnings per share because to do so would be anti-dilutive for the periods presented. |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2016
Pharmacy
State
Segment
|
Dec. 31, 2015 |
|
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||
Number of operating institutional pharmacies | 93 | |
Number of specialty infusion pharmacies | 17 | |
Number of specialty oncology pharmacies | 5 | |
Number of states in which there are institutional pharmacies | State | 45 | |
Number of operating segments | Segment | 3 | |
OncoMed Specialty, LLC [Member] | ||
Business Acquisition [Line Items] | ||
Percentage of ownership acquired | 37.50% |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Summary of contingent consideration (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2016 |
Dec. 31, 2015 |
|
Contingent Consideration [Member] | ||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Beginning balance | $ 11.5 | $ 1.1 |
Additions from business acquisitions | 0.0 | 11.9 |
Subtractions from business acquisitions/Contingent consideration payment | (3.9) | (1.1) |
Change in fair value | 0.0 | (0.4) |
Ending balance | 7.6 | 11.5 |
Mandatorily Redeemable Interest [Member] | ||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Beginning balance | 5.8 | 8.3 |
Additions from business acquisitions | 0.0 | 0.0 |
Subtractions from business acquisitions/Contingent consideration payment | 0.0 | 0.0 |
Change in fair value | 0.2 | (2.5) |
Ending balance | $ 6.0 | $ 5.8 |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Allowance for Doubtful Accounts (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2016 |
Dec. 31, 2015 |
|
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||
Allowance for doubtful accounts, Beginning Balance | $ 49.3 | $ 58.1 |
Allowance for doubtful accounts, Charges Included in Selling, General & Administrative Expenses | 3.2 | 7.9 |
Allowance for doubtful accounts, Write-offs | (7.6) | (16.7) |
Allowance for doubtful accounts, Ending Balance | $ 44.9 | $ 49.3 |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Recently Issued Accounting Pronouncements (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Recently Issued Accounting Pronouncements [Abstract] | ||
Provision for income taxes | $ 0.8 | $ 5.8 |
ASU 2016-09 [Member] | ||
Recently Issued Accounting Pronouncements [Abstract] | ||
Provision for income taxes | $ (1.0) |
ACQUISITIONS (Details) $ in Millions |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2016
USD ($)
|
Mar. 31, 2015
USD ($)
|
Dec. 31, 2015
USD ($)
Acquisition
Hospital
|
|
Business Acquisition [Line Items] | |||
Cash payments for acquisitions | $ 6.7 | $ 20.5 | |
Tax deductible goodwill | 166.6 | $ 171.1 | |
Acquisition costs | $ 4.3 | $ 3.7 | |
2015 Acquisitions [Member] | |||
Business Acquisition [Line Items] | |||
Number of acquisitions of long-term care businesses completed | Acquisition | 2 | ||
Number of Acquisitions of Infusion Business Completed | Acquisition | 2 | ||
Number of hospital acquisitions | Hospital | 1 | ||
Estimated purchase price | $ 83.5 | ||
Cash payments for acquisitions | 75.9 | ||
Contingent payable originating from earnout provisions of acquisition | 7.6 | ||
Recorded goodwill in transaction | 48.5 | ||
Identifiable intangibles acquired | 41.2 | ||
Tax deductible goodwill | $ 41.4 |
GOODWILL AND INTANGIBLES (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
|
GOODWILL AND INTANGIBLES [Abstract] | |||
Carrying amount of goodwill | $ 372.1 | $ 371.0 | |
Amortization expense | $ 8.2 | $ 6.6 |
CREDIT AGREEMENT (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Sep. 17, 2014 |
|
Line of Credit Facility [Line Items] | ||
Letters of Credit outstanding | $ 2.8 | |
Term Debt [Member] | ||
Line of Credit Facility [Line Items] | ||
Credit agreement maximum borrowing capacity | $ 225.0 | |
Credit agreement outstanding | $ 216.5 | |
Debt instrument maturity date | Sep. 17, 2019 | |
Debt instrument interest rate | 2.43% | |
Revolving Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Credit agreement maximum borrowing capacity | $ 310.0 | |
Credit agreement outstanding | $ 162.0 | |
Debt instrument maturity date | Sep. 17, 2019 | |
Total availability under the revolving credit facility | $ 145.2 | |
Debt instrument interest rate | 2.39% |
CREDIT AGREEMENT, Schedule of Term Debt and Revolving Credit Facility (Details) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
||
---|---|---|---|---|
Line of Credit Facility [Line Items] | ||||
Total debt | $ 377.6 | $ 425.2 | ||
Less: Current portion of long-term debt | 11.6 | 11.6 | ||
Total long-term debt | 366.0 | 413.6 | ||
Term Debt [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Total debt | 216.5 | |||
Term Debt [Member] | 2014 Credit Agreement [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Total debt | 216.5 | 219.4 | ||
Revolving Credit Facility [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Total debt | 162.0 | |||
Revolving Credit Facility [Member] | 2014 Credit Agreement [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Total debt | 162.0 | 207.0 | ||
Deferred Financing Costs, Net [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Total debt | [1] | (1.9) | (2.1) | |
Capital Lease Obligations [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Total debt | $ 1.0 | $ 0.9 | ||
|
CREDIT AGREEMENT, New Accounting Pronouncements (Details) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Credit Agreement [Abstract] | ||
Other long-term assets | $ 84.4 | $ 32.4 |
Long-term debt | $ 366.0 | 413.6 |
ASU 2015-03 [Member] | ||
Credit Agreement [Abstract] | ||
Other long-term assets | (2.1) | |
Long-term debt | $ (2.1) |
CREDIT AGREEMENT, Schedule of Indebtedness Maturities (Details) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
||
---|---|---|---|---|
Debt Instrument [Line Items] | ||||
2016 | $ 8.3 | |||
2017 | 11.0 | |||
2018 | 11.0 | |||
2019 | 347.2 | |||
2020 | 0.1 | |||
Total debt | 377.6 | $ 425.2 | ||
Term Debt [Member] | ||||
Debt Instrument [Line Items] | ||||
2016 | 8.4 | |||
2017 | 11.3 | |||
2018 | 11.3 | |||
2019 | 185.5 | |||
2020 | 0.0 | |||
Total debt | 216.5 | |||
Revolving Credit Facility [Member] | ||||
Debt Instrument [Line Items] | ||||
2016 | 0.0 | |||
2017 | 0.0 | |||
2018 | 0.0 | |||
2019 | 162.0 | |||
2020 | 0.0 | |||
Total debt | 162.0 | |||
Deferred Financing Costs [Member] | ||||
Debt Instrument [Line Items] | ||||
2016 | (0.4) | |||
2017 | (0.6) | |||
2018 | (0.5) | |||
2019 | (0.4) | |||
2020 | 0.0 | |||
Total debt | [1] | (1.9) | (2.1) | |
Capital Lease Obligations [Member] | ||||
Debt Instrument [Line Items] | ||||
2016 | 0.3 | |||
2017 | 0.3 | |||
2018 | 0.2 | |||
2019 | 0.1 | |||
2020 | 0.1 | |||
Total debt | $ 1.0 | $ 0.9 | ||
|
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2016 |
Dec. 31, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
|
COMMITMENTS AND CONTINGENCIES [Abstract] | ||||
Rebate receivable - ABDC litigation | $ 23.5 | |||
ABDC litigation period | 12 months | |||
Gain Contingencies [Line Items] | ||||
Accrual Settlement, litigation and other related charges | $ 27.0 | |||
ABDC litigation [Member] | ||||
Gain Contingencies [Line Items] | ||||
Accrual Settlement, litigation and other related charges | $ 40.8 | |||
Billed contracts receivable | $ 19.3 | 12.2 | ||
Total rebate receivable end of period | $ 72.3 | $ 53.0 | ||
Gross liability offset to the condensed consolidated balance sheet | 48.8 | |||
Net rebate receivable | $ 23.5 |
MERGER, ACQUISITION, INTEGRATION COSTS AND OTHER CHARGES (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
MERGER, ACQUISITION, INTEGRATION COSTS AND OTHER CHARGES [Abstract] | ||
Merger, acquisition, integration costs and other charges | $ 4.4 | $ 3.8 |
RESTRUCTURING COSTS AND OTHER CHARGES (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and impairment charges | $ 1.4 | $ 0.1 |
Restructuring Reserve [Roll Forward] | ||
Beginning Balance | 1.0 | |
Accrual | 1.4 | |
Utilized amounts | (0.9) | |
Ending Balance | 1.5 | |
Employee Severance and Related Costs [Member] | ||
Restructuring Reserve [Roll Forward] | ||
Beginning Balance | 0.3 | |
Accrual | 1.1 | |
Utilized amounts | (0.6) | |
Ending Balance | 0.8 | |
Facility Costs [Member] | ||
Restructuring Reserve [Roll Forward] | ||
Beginning Balance | 0.7 | |
Accrual | 0.3 | |
Utilized amounts | (0.3) | |
Ending Balance | $ 0.7 |
COMMON STOCK, PREFERRED STOCK, TREASURY STOCK, STOCK-BASED COMPENSATION AND OTHER BENEFITS (Details) - USD ($) $ in Millions |
1 Months Ended | 3 Months Ended | |
---|---|---|---|
Aug. 31, 2010 |
Mar. 31, 2016 |
Jul. 02, 2012 |
|
Class of Stock [Line Items] | |||
Weighted average remaining term of nonvested shares | 1 year 9 months 18 days | ||
Intrinsic value of nonvested shares | $ 22.2 | ||
Treasury Stock [Member] | |||
Class of Stock [Line Items] | |||
Common stock shares repurchased | $ 10.5 | ||
Common stock shares repurchase authorized, value that remains available | 19.7 | ||
Aggregate price of shares redeemed | $ 3.0 | ||
Vested awards redeemed (in shares) | 128,838 | ||
Treasury Stock [Member] | Maximum [Member] | |||
Class of Stock [Line Items] | |||
Common stock shares repurchase authorized, value | $ 25.0 | $ 25.0 |
INCOME TAXES, Schedule of Provision for Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
|
INCOME TAXES [Abstract] | |||
Provision for income taxes | $ 0.8 | $ 5.8 | |
Total provision as a percentage of pre-tax income | 16.30% | 37.90% | |
Tax deductible goodwill | $ 166.6 | $ 171.1 |
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