Diplomat Pharmacy Inc (NYSE:DPLO)’s Third Quarter a Bitter Pill to Swallow


Shares in Diplomat Pharmacy Inc (NYSE:DPLO) were battered to the ground Thursday after the specialty pharmaceuticals distributor missed on earnings and revenue estimates and lowered its guidance.

Shares fell a crushing 42.14% to close at $12.95, with nearly 17 million changing hands. That’s 23X the stock’s average volume!

Diplomat offers medication management programs for individuals with complex chronic diseases, including oncology, immunology, hepatitis, multiple sclerosis, specialized infusion therapy and many other serious or long-term conditions.

Diplomat Pharmacy Inc (NYSE:DPLO) technical picture

Actually, investors should have braced for impact after the stock cracked through the 200-day moving average on September 9, and the gap down loss on October 26, when the company churned its top management just a week before the quarterly results.

The death crosses on September 20 and October 13 were further red flags.

With yesterday’s fall the stock has also violated the $22 level, a long term support line.

The stock is extremely weak, by all accounts.

Diplomat Pharmacy Inc (NYSE:DPLO)’s Q3 debacle

Diplomat reported Q3 EPS of $0.21 which missed by $0.03, and revenue of $1.18 billion which missed by $80 million but was nevertheless up 24.6% year on year.

However, net income of $5.4 million was down 66% year on year. Also, a lot of the revenue growth was added by the TNH Advanced Specialty Pharmacy acquisition.

Phil Hagerman, CEO and Chairman of Diplomat, said in a statement:  “We are disappointed with our third quarter results, which were significantly impacted by the softness in the hepatitis C business nationwide, as well as by DIR fees.” (DIR = “Direct and Indirect Fees”)

Diplomat Pharmacy Inc (NYSE:DPLO)’s Q3 impacts annual guidance

As a result of its performance during the third quarter, Diplomat now expects full-year earnings in the range of $0.83 to $0.87 (down from $0.90 and $0.95) per share, with revenue in the range of $4.4 billion to $4.6 billion (earlier $4.5 billion to $4.9 billion).

Analysts de-rate Diplomat Pharmacy Inc (NYSE:DPLO)

Analysts responded to the quarterly results by downgrading ratings and/or price targets.

Leerink partners lowered their take from Outperform to Market Perform.

Avondale de-rated from Market Outperform to Market Perform.

Mizuho reiterated their rating of Neutral but chopped their price target by more than half from $39 to $17.


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