Diplomat accompanies solid Q3 results with another acquisition
FLINT, Mich. — Diplomat Pharmacy this week is demonstrating how it is continuing its growth — both organically and through acquisitions. Alongside its solid third-quarter results, the company announced its acquisition of Pharmaceutical Technologies, which does business as National Pharmaceutical Services.
The Omaha-based pharmacy benefits manager has a proprietary claims-processing system and offers mail-order services through its Integrated HMO Pharmacy. According to its current CEO Shellie Schoenig, the company was founded by pharmacists to address such issues as inefficiency and high costs as a way to differentiate itself.
Diplomat’s CEO and chairman, Phil Hagerman, said the acquisition — which will see Diplomat paying $31 million in cash and $16 million in stock — is a way of responding to patient and employer demands for flexible methods aimed at improving outcomes and reduced costs.
“Enhancing our managed markets strategy with PBM services expands Diplomat’s service offerings from a specialty pharmacy provider to a broader health care company,” Hagerman said. “This further positions us to offer necessary services to our partners throughout the industry. hese services impact outcomes and cost as the industry pushes toward value-based care.”
Diplomat’s move toward an expanded scope as a company comes as it posted increased gross margin, even as it saw a slight dip in sales and prescriptions. For the quarter ended Sept. 30, Diplomat dispensed 222,000 prescriptions — down from the prior-year period, which saw 266,000 prescriptions dispensed. However, the company’s gross margin increased to 7.6%, compared with 6.6% a year ago, with gross profit per prescription hitting $360, compared with $289. Total revenue was $1.13 billion, compared with 1.18 billion a year ago.
“Diplomat’s third quarter results were solid as we achieved financial results in-line with our expectations, experienced continued growth in our oncology and infusion businesses and expansion in our access to limited distribution drugs, as well as encouraging trends within the specialty pharmacy industry,” Hagerman said.
The company also settled arbitration with CVS Health, moving to a direct contract with the healthcare company. Besides the NPS acquisition, Diplomat acquired 8th Software, which Hagerman said also broadened the company’s service offerings, and helped build out an executive team to implement the company’s growth strategy (Diplomat named 8th Day Software founder Dave Loschinskey its chief information officer as part of the acquisition).