Shares of Diplomat Pharmacy (NYSE:DPLO) took a beating last month when the specialty pharmacy said it had to delay the release of its fourth-quarter earnings results. It needed extra time to figure out a noncash impairment charge related to the acquisition of its pharmacy benefit management (PBM) business because it had lost so many clients.
Since that 56% haircut, shares had risen a little going into today's release of the actual results, but investors decided they weren't good enough to justify the bounce and sent shares down 13.6% on Friday.
The impairment charge for the PBMs ended up being $262 million. The company also booked a $46 million noncash goodwill impairment charge related to its specialty pharmacy segment. Together, the charges resulted in a $298 million loss for the quarter.
These are noncash charges related to the valuation of the business, so the larger quarterly loss isn't a major problem for the company; despite the paper loss, Diplomat Pharmacy still generated $1.8 million in cash from operations during the quarter.
But the changes in valuation that caused the charges show how much management was off in its estimations of Diplomat Pharmacy's future. Today, management updated its 2019 revenue guidance to between $4.7 billion and $5 billion, versus a previous range of $5.6 million to $5.8 billion. On the bottom line, management now expects to lose between $0.34 and $0.50 per share in 2019.
CEO Brian Griffin called 2019 a "rebuilding year." With much of its PBM business on annual contracts, it'll take that full year before investors can expect to see a potential turnaround.