What happened

Shares of Diplomat Pharmacy (NYSE:DPLO), a specialty pharmaceutical company, are getting hammered after the company told investors it would have to reschedule its annual earnings report conference call until March 15, 2018, due to customer losses from the pharmacy benefits manager (PBM) business it took on recently. The stock has fallen 42.9% as of 11:56 a.m. on Friday. 

So what 

It's a tough time to be a PBM of any size, and investors weren't pleased with Diplomat Pharmacy's acquisition of LDI Integrated Pharmacy Services for $595 million at the deal's outset. The stock is getting hammered today because Diplomat lost so many PBM clients recently that it needs extra time to account for a non-cash impairment charge of an undetermined amount.   

Frustrated investor holding his head while looking at a falling stock chart.

Image source: Getty Images.

Diplomat also withdrew the outlook management laid out for investors in early January, which wasn't great to begin with. The company was expecting a revenue increase of just 3% and flat to low-single-digit growth in adjusted EBITDA. Results this year have been significantly below expectations for its PBM and specialty pharmaceutical business.

Now what

Diplomat Pharmacy's plan to integrate a PBM with a pharmacy operation is a well-worn path that worked out well for the likes of UnitedHealthCVS Health, and Express Scripts before Cigna acquired it in 2017. Now that the PBM industry's biggest players are also integrating physical locations that offer care services, Diplomat is likely going to find it even harder to retain clients. 

When Diplomat reports 2018 results in March, total adjusted EBITDA is still expected to fall in a range between $167 million and $170 million, from total revenue between $5.5 billion and $5.6 billion. With such a slim profit margin, there's a good chance Diplomat will lose money in 2019.