FLINT, Mich. — Diplomat Pharmacy is considering a sale or merger after seeing revenue declines in its PBM and specialty segments in the second quarter ended June 30.
The company’s board ordered the exploration of “strategic alternatives” after Diplomat’s quarterly revenue dropped 9% from the year-ago period to $1.29 billion.
Besides a sale or merger, the company could pursue value-enhancing initiatives as a stand-alone company, capital structure changes, or the divestment or other disposition of certain businesses or assets. Diplomat has retained Foros Securities as financial advisor and Sidley Austin as legal advisor to assist with its 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 chairman and chief executive officer Brian 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,” he added.
Specialty segment revenue was $1.22 billion, compared to $1.23 billion in the year-ago period, while revenue from the PBM segment amounted to $90 million, compared to $189 million. The decrease in the specialty segment was primarily driven by payer reimbursement compression and the conversion of brand name drugs to generics.
“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 Griffin.