Revenue for the second quarter of 2019 was $1,288 million, compared to $1,416 million in the second quarter of 2018, a decrease of $128 million or 9%. The chain’s Specialty segment revenue amounted to $1,216 million, compared to $1,234 million in the prior year quarter, while revenue from its PBM segment amounted to $90 million, compared to $189 million in the prior year quarter. The decrease in our Specialty segment was primarily driven by payor reimbursement compression and the conversion of brand name drugs to their generic equivalent. The decrease was partially offset by the benefit of manufacturer price increases and growth in infusion therapies. The company said the decrease in their PBM segment was due to previously disclosed contract losses.
“We continue to believe in our business model and long-term prospects and we remain encouraged by our pipeline for 2020, despite our reduced guidance for 2019,” said Brian Griffin, chairman and chief executive officer of Diplomat. “We are pleased that infusion therapies continue to demonstrate strength and we are taking actions to improve our core specialty pharmacy business, rebuild our PBM and enhance our financial flexibility. At the same time, our board has concluded that a broad review of strategic alternatives is in the best interests of the company and our shareholders. While this is taking place, we intend to maintain our focus on executing our strategic plan, improving our businesses and supporting our shareholders, patients and their providers, payers, as well as our manufacturer partners and our employees,” he added.
The company also announced that its board of directors is reviewing strategic alternatives.
At the direction of its board of directors, the company is reviewing strategic alternatives focused on maximizing shareholder value. The strategic alternatives expected to be considered include, but are not limited to, a sale or merger of the company, continuing to pursue value-enhancing initiatives as a standalone company, capital structure changes, or the sale or other disposition of certain of the company’s businesses or assets. Diplomat has retained Foros Securities as financial advisor and Sidley Austin as legal advisor to assist with its strategic alternatives review.
“We are focused on growing our Specialty business with health plans and hospital systems, positioning the PBM business for growth and improving operating efficiency, while maintaining high standards of patient and customer care,” said Griffin. “At the same time, the Board believes that a broad review of strategic alternatives is in the best interests of the Company and our shareholders.”
“Diplomat remains committed to supporting our patients, physicians and manufacturer partners, as well as clients and team members during this process,” he added.