Diplomat Pharmacy, Inc. (DPLO) Falls on Lower Forward Guidance
Shares of Flint, Michigan, based Diplomat, Inc. (DPLO) fell on Tuesday, against the backdrop of a powerful upsurge in stocks overall. Diplomat's stock closed down 24.34%, falling $8.67 per share, to close at $26.95, on volume of 8,582,529 shares. Despite disclosing much higher revenues in the fourth quarter and for all of 2015, the stock fell hard on lower forward guidance for 2016, and an analyst’s downgrade of the stock.
Founded in 1975, Diplomat Pharmacy, Inc. operates as an independent specialty pharmacy, stocking, dispensing and distributing prescriptions for various biotechnology and specialty pharmaceutical manufacturers across the US.
On Monday after the market closed, Diplomat announced its fourth quarter and full year 2015 results. The company reported revenue of $987 million for the fourth quarter ended December 31. This represents a 61% increase over fourth quarter 2014 revenues of $375 million. The company also announced total prescriptions dispensed in the quarter of 238,000, up 14% over one year earlier. Adjusted earnings per share came in at $0.21, compared to $0.08 per share for the fourth quarter of 2014.
For the full year 2015, revenue was $3,367 million, compared with $1,152 million for all of 2014, representing an increase of 52%. For the full year, the company dispensed 911,000 total prescriptions, which again was a 14% increase over the prior year. Adjusted earnings per share were $0.75 for the full year, a nearly 50% increase over the $0.51 per share adjusted earnings per share for all 2014.
But JP Morgan analyst Lisa C. Gill downgraded the company's rating for Diplomat from "Overweight" to "Neutral". She also lowered the price target on Diplomat's stock from $52 to $30 per share, noting that initial guidance for fiscal 2016 is below expectations. The midpoint of adjusted EBITDA and earnings per share guidance range of both come in below consensus, in spite of what she termed "a strong fundamental backdrop." Gill also noted that the political environments as well as a slowdown within hepatitis C category are "likely to remain overhangs in the near-term."
Forward guidance provided by Diplomat for 2016 projected revenues of between $4.3 billion and $4.6 billion. Adjusted earnings per share were projected at between $0.84 and $0.89, based on expectations of approximately 67.5 million weighted average common shares outstanding for the full year.
“During the fourth quarter, we delivered our strongest organic and overall revenue growth quarter of the year." Said Diplomat Chairman and CEO, Phil Hagerman, "At the same time, we continued to meaningfully improve margins and to deliver growth from multiple diverse areas within our business including: growing prescription volume and revenue from existing drugs, continuing to win access to nearly all meaningful specialty drug approvals, and generating additional revenue synergies from our recent acquisitions. 2015 was a record year for drug approvals from the FDA, and this recent influx of approvals, combined with the remaining rich pipeline of drugs in development, keeps us very confident in our ability to deliver solid growth for the foreseeable future.”
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