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·

Revenue in the range of $2.125 billion to $2.150 billion;

·

Adjusted diluted earnings per share in the range of $1.95 to $2.05; and

·

Adjusted EBITDA in the range of $130.3 million to $135.3 million.

Ø	Key Comparisons of Fourth Quarters Ended December 31, 2015 and 2014:

·

Revenues for the fourth quarter of 2015 were $520.6 million compared with $523.5 million for the fourth quarter of 2014. The decrease in revenues was driven by a decline of 1.1 million in prescriptions dispensed offset by significant growth in the Company’s specialty pharmacy businesses.

·

Gross profit for the fourth quarter of 2015 was $86.7 million compared with $94.4 million in the fourth quarter of 2014. The decrease in gross profit was driven by the decrease in prescriptions dispensed mentioned above partially offset by an increase in gross profit from the Company’s specialty pharmacy businesses.

·

Selling, general and administrative expenses were $55.4 million, or 10.6% of revenues, for the three months ended December 31, 2015, compared to $65.2 million, or 12.5% of revenues, for the three months ended December 31, 2014. The decrease of $9.8 million was due to cost improvements and a reduction in bad debt expense as the Company improved its client mix.

·

Adjusted EBITDA for the fourth quarter of 2015 was $37.1 million compared with $37.3 million in the fourth quarter of 2014, a decrease of 0.5%.

PMC Reports Results for the Fourth Quarter and Year Ended 2015

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February 26, 2016

·

Net income for the fourth quarter of 2015 was $20.2 million, or $0.66 diluted earnings per share, compared to net income of $3.2 million, or $0.10 diluted earnings per share, for the same period in 2014.  Adjusted diluted earnings per share was $0.45 in the fourth quarter of 2015 compared to $0.46 in the fourth quarter of 2014.

·

Cash flows used in operating activities for the fourth quarter of 2015 were $41.1 million compared with cash flows provided by operating activities for the fourth quarter of 2014 of $50.8 million.

Ø	Key Comparisons of the Years Ended December 31, 2015 and 2014:

 

·

Revenues for the year ended December 31, 2015, were $2,028.5 million compared with $1,894.5 million for the year ended December 31, 2014. The increase was driven by recent acquisitions, growth in the Company’s specialty pharmacy businesses and branded drug inflation.

·

Gross profit for the year ended December 31, 2015, was $335.1 million compared with $339.3 million for the year ended December 31, 2014. The decrease in gross profit was driven by higher drug costs under the Company’s prime vendor agreement with Cardinal Health and volume decreases in the long-term care pharmacy business.

·

Selling, general and administrative expenses were $222.5 million, or 11.0% of revenues, for the year ended December 31, 2015, compared to $236.3 million, or 12.5% of revenues, for the year ended December 31, 2014. The decrease of $13.8 million is due to cost improvements and a reduction in bad debt expense as the Company improved its client mix.

·

Adjusted EBITDA for the year ended December 31, 2015, was $141.0 million compared with $130.6 million for the year ended December 31, 2014, an increase of 8.0%.

·

Net income for the year ended December 31, 2015, was $35.1 million, or $1.14 diluted earnings per share, compared to net income of $6.8 million, or $0.22 diluted earnings per share, for the same period in 2014. Net income for the years ended December 31, 2015 and 2014 was adversely impacted by $13.3 million and $37.3 million of pre-tax charges for settlement and litigation matters, respectively.  Adjusted diluted earnings per share was $1.69 for both years ended December 31, 2015 and 2014.

PMC Reports Results for the Fourth Quarter and Year Ended 2015

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February 26, 2016

·

Cash provided by operating activities aggregated $18.5 million for the year ended December 31, 2015 compared to $48.4 million for the year ended December 31, 2014. The $29.9 million decrease in cash provided by operating activities is due to legal settlement payments of $23.4 million that were made in 2015, a slight increase in trade accounts receivable and an increase in income tax receivables. Additionally, the prime vendor payment to Cardinal Health is payable every Friday.  The payment due on New Year’s Day, Friday, January 1, 2016, of $21.0 million was accelerated to Thursday, December 31, 2015, in accordance with the terms of the contract.  These decreases were partially offset by $48.8 million in AmerisourceBergen drug purchase payments withheld in the first quarter of 2015 and an increase in net income for the year ended December 31, 2015.

PharMerica Corporation is a leading provider of pharmacy services.  PharMerica serves the long-term care, hospital pharmacy management services, specialty home infusion and oncology pharmacy markets.

As of the date of this release, PharMerica operates 94 institutional pharmacies, 17 specialty home infusion pharmacies and 5 specialty oncology pharmacies in 45 states. PharMerica’s customers are institutional healthcare providers, such as skilled nursing facilities, assisted living facilities, hospitals, individuals receiving in-home care and patients with cancer.

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect the Company’s current estimates, expectations and projections about its future results, performance, prospects and opportunities. Forward-looking statements include, among other matters, the information concerning the Company’s “guidance” and possible future results of operations and future potential acquisitions, the Company’s expectation about the growth of diversified revenues and the contribution of non-core businesses to the Company’s EBITDA, the Company’s expectations about the headwinds with respect to the core institutional pharmacy business, the strength of the Company’s financial and operational performance during 2016 and beyond, the expected revenues from the specialty infusion and oncology businesses, the Company’s ability to identify and consummate future acquisitions, the Company’s acquisition goal of $100 million in annualized revenues, the Company’s focus on competing aggressively for market share, the Company’s expectation that the generic drugs dispensing rate will continue to increase in 2016, the Company’s ability to deliver outstanding value to its shareholders, clients and patients, the Company’s continued pursuit of its strategic and operational initiatives including those focused on client retention, driving organic growth, diversifying the revenue base, disciplined acquisitions, building scale and operating margins, the Company’s expectation to deliver improved financial results in 2016 and beyond and the Company’s ability to achieve organic growth and topline revenue growth. Forward-looking statements include statements that are not historical facts and can be identified by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “plan,” “may,” “should,” “will,” “would,” “project” and similar expressions.

PMC Reports Results for the Fourth Quarter and Year Ended 2015

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February 26, 2016

These forward-looking statements are based upon information currently available to us and are subject to a number of risks, uncertainties and other factors that could cause the Company’s actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. Important factors that could cause the Company’s actual results to differ materially from the results referred to in the forward-looking statements we make in this press release include our ability to consummate our strategic and operational initiatives, our ability to identify and consummate future acquisitions, the adequacy of our litigation-related reserves, and our ability to collect the receivables due from AmerisourceBergen Drug Corporation under the terms of our prime vendor agreement, and those included in the Risk Factors section set forth in the Company’s Annual Report on Form 10-K filed with the SEC and in other reports, including Quarterly Reports on Form 10-Q filed with the SEC by the Company.

You are cautioned not to place undue reliance on any forward-looking statements, all of which speak only as of the date of this press release. Except as required by law, we undertake no obligation to publicly update or release any revisions to these forward-looking statements to reflect any events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events. All subsequent written and oral forward-looking statements attributable to us or any person acting on the Company’s behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this press release and in the Risk Factors section set forth in the Company’s Annual Report on Form 10-K filed with the SEC and in other reports filed with the SEC by the Company.

PMC Reports Results for the Fourth Quarter and Year Ended 2015

Page 6

February 26, 2016

PHARMERICA CORPORATION

CONSOLIDATED INCOME STATEMENTS

(In millions, except share and per share amounts)

 

PMC Reports Results for the Fourth Quarter and Year Ended 2015

Page 7

February 26, 2016

PHARMERICA CORPORATION

CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share amounts)

 

		(As Adjusted) Dec. 31, 2014				Dec. 31, 2015
ASSETS
Current assets:
Cash and cash equivalents		$	33.3			$	23.1
Accounts receivable, net			195.4				200.5
Inventory			135.5				155.2
Deferred tax assets, net			42.8				41.8
Income taxes receivable			-				10.5
Prepaids and other assets			90.3				52.4
			497.3				483.5
Equipment and leasehold improvements			196.4				218.5
Accumulated depreciation			(125.0	)			(144.0	)
			71.4				74.5
Goodwill			323.6				371.0
Intangible assets, net			177.6				190.2
Other			4.1				34.5
		$	1,074.0			$	1,153.7
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	96.0			$	71.7
Salaries, wages and other compensation			35.1				30.6
Current portion of long-term debt			6.3				11.6
Income taxes payable			2.3				-
Other accrued liabilities			38.5				27.5
			178.2				141.4
Long-term debt			344.4				415.7
Other long-term liabilities			57.6				56.5
Deferred tax liabilities			15.7				20.7
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value per share; 1,000,000 shares authorized and no shares issued, December 31, 2014 and 2015			-				-
Common stock, $0.01 par value per share; 175,000,000 shares authorized; 32,725,786 and 33,237,732 shares issued as of December 31, 2014 and 2015, respectively			0.3				0.3
Capital in excess of par value			394.1				404.6
Retained earnings			117.0				152.1
Treasury stock at cost, 2,617,305 and 2,776,875 shares at December 31, 2014 and 2015, respectively			(33.3	)			(37.6	)
			478.1				519.4
		$	1,074.0			$	1,153.7

PMC Reports Results for the Fourth Quarter and Year Ended 2015

Page 8

February 26, 2016

PHARMERICA CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

 

PMC Reports Results for the Fourth Quarter and Year Ended 2015

Page 9

February 26, 2016

PHARMERICA CORPORATION

SUPPLEMENTAL INFORMATION

RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA

RECONCILIATION OF DILUTED EARNINGS PER SHARE

TO ADJUSTED DILUTED EARNINGS PER SHARE

 

(In whole numbers)		Three Months Ended December 31,								Year Ended December 31,
		2014				2015				2014				2015
Diluted earnings per share		$	0.10			$	0.66			$	0.22			$	1.14
Add:
Diluted earnings per share impact of:
Merger, acquisition, integration costs and other charges			0.08				0.11				0.27				0.43
Settlement, litigation and other related charges			0.11				0.05				0.77				0.27
California Medicaid recoupment (reversal)			-				(0.05	)			-				(0.05	)
Loss on extinguishment of debt			-				-				0.09				-
Restructuring and impairment charges			-				-				0.07				0.01
Hurricane Sandy disaster recoveries			(0.04	)			(0.10	)			(0.04	)			(0.10	)
Stock-based compensation and deferred compensation			0.05				0.04				0.17				0.16
Impact of discrete items and non-recurring charges on tax provision			0.16				(0.26	)			0.14				(0.17	)
Adjusted diluted earnings per share		$	0.46			$	0.45			$	1.69			$	1.69

PMC Reports Results for the Fourth Quarter and Year Ended 2015

Page 10

February 26, 2016

PHARMERICA CORPORATION

SUPPLEMENTAL INFORMATION (Continued)

RECONCILIATION OF ADJUSTED EBITDA

TO NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES

 

 

PharMerica calculates Adjusted EBITDA as provided in the reconciliation above and calculates Adjusted EBITDA Margin by taking Adjusted EBITDA and dividing it by revenues. PharMerica calculates and uses Adjusted EBITDA as a performance measure.  The measurement is used in concert with net income and cash flows from operations, which measure actual cash generated in the period.  In addition, PharMerica believes that Adjusted EBITDA and Adjusted EBITDA Margin are supplemental measurement tools used by analysts and investors to help evaluate overall operating performance and the ability to incur and service debt and make capital expenditures.  In addition, Adjusted EBITDA, as defined in the Credit Agreement, is used in conjunction with the Corporation’s debt leverage ratio and this calculation sets the applicable margin for the quarterly interest charge.  Adjusted EBITDA, as defined in the Credit Agreement, is not the same calculation as these unaudited reconciliation tables.  Adjusted EBITDA does not represent funds available for PharMerica’s discretionary use and is not intended to represent or to be used as a substitute for net income or cash flows from operations data as measured under U.S. generally accepted accounting principles (“GAAP”).  The items excluded from Adjusted EBITDA but included in the calculation of PharMerica’s reported net income and cash flows from operations are significant components of the accompanying consolidated income statements and cash flows and must be considered in performing a comprehensive assessment of overall financial performance.  PharMerica’s calculation of Adjusted EBITDA may not be consistent with calculations of EBITDA used by other companies.

PMC Reports Results for the Fourth Quarter and Year Ended 2015

Page 11

February 26, 2016

PharMerica calculates and uses adjusted diluted earnings per share, exclusive of the impact of merger, acquisition, integration costs and other charges, settlement, litigation and other related charges, restructuring and impairment charges, loss on extinguishment of debt, Hurricane Sandy disaster recoveries, California Medicaid recoupment (reversal), stock-based and deferred compensation, and the impact of discrete items and non-recurring charges on the tax provision as an indicator of its core operating results.  The measurement is used in concert with net income and diluted earnings per share, which measure actual earnings per share generated in the period.  PharMerica believe the exclusion of these charges in expressing adjusted diluted earnings per share provides management with a useful measure to assess period to period comparability and is useful to investors in evaluating PharMerica’s operating results from period to period.  Adjusted diluted earnings per share, exclusive of the impact of merger, acquisition, integration costs and other charges, settlement, litigation and other related charges, restructuring and impairment charges, loss on extinguishment of debt, Hurricane Sandy disaster recoveries, California Medicaid recoupment (reversal), stock-based and deferred compensation, and the impact of discrete items and non-recurring charges on the tax provision do not represent the amount that effectively accrues directly to stockholders (i.e., such costs are a reduction in earnings and stockholders’ equity) and is not intended to represent or to be used as a substitute for diluted earnings per share as measured under GAAP.  The impact of merger, acquisition, integration costs and other charges, settlement, litigation and other related charges, restructuring and impairment charges, Hurricane Sandy disaster costs, loss on debt extinguishment, stock-based and deferred compensation and the impact of discrete items on the tax provision excluded from the diluted earnings per share are significant components of the accompanying consolidated income statements and must be considered in performing a comprehensive assessment of overall financial performance.

 

 

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