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It's been a rough few months for Diplomat Pharmacy, (NYSE:DPLO). The specialty pharmacy's stock plunged more than 40% from July to the beginning of November. That drop stemmed partially from the broader market pullback, but the bigger issue related to the general uncertainty about payer push-back over specialty drug prices. Diplomat announced its third-quarter financial results after the market closed on Tuesday. Were those results enough to help with a comeback?

By the numbers
The short answer is "probably so." Diplomat's third-quarter results were impressive. The company announced revenue of $947 million -- up 59% compared with the $596 million from the prior-year period. 

Diplomat's bottom line looked even better. Third-quarter earnings came in at $15.7 million, or $0.25 per share. That's a whopping 249% jump over the $4.5 million, or $0.12 per share, reported in the same quarter of 2014.

To add icing to the cake, Diplomat bumped up its outlook for the full year. The specialty pharmacy now projects earnings to be between $27 million and $29 million, up from its previous guidance of $11 million to $13 million. Adjusted earnings per share are expected to be in the $0.69-$0.73 range, higher than the $0.56-$0.60 range given earlier. Diplomat also narrowed its full-year revenue guidance to $3.25 billion-$3.4 billion from the earlier guidance of $3.2 billion-$3.4 billion.

Behind the numbers
What drove the tremendous third-quarter revenue growth? Acquisitions played the biggest role, accounting for 45% of new revenue. Diplomat completed its buyout of BioRx in April and bought Burman's Specialty Pharmacy in June. CEO Phil Hagerman noted that these acquisitions were "performing well ahead" of the company's expectations.

The introduction of several new drugs was also important. Diplomat reported that $119 million (roughly 34% of total new revenue) stemmed from drugs newly on the market or new to Diplomat. That leaves around 21% of new revenue coming in large part from price increases and payer mix changes.

While expenses grew also, Diplomat actually decreased its sales, general, and administrative costs as a percentage of total revenue. A couple of factors helped on this front -- a positive adjustment to the company's allowance for doubtful accounts and operational efficiencies.  

Looking ahead
In some respects, Diplomat's future appears to be intertwined with the success of one of its largest competitors, Express Scripts (NASDAQ:ESRX). Accredo, which is owned by Express Scripts, ranked as the second-largest specialty pharmacy in the U.S. in 2014. Diplomat came in at No. 5 overall -- but it was the biggest independent specialty pharmacy.

The challenge for Diplomat isn't just about direct competition from Accredo. A bigger issue is Express Scripts' status as the nation's largest pharmacy benefits manager. This role makes Express Scripts very concerned about controlling drug costs -- especially with trends of skyrocketing specialty drug prices. Express Scripts' management team has been quite vocal about keeping a lid on these costs.

Diplomat acknowledges that its performance could be significantly affected by increased pricing pressure from third-party payers. The degree to which Express Scripts and others are successful in applying pricing pressure could greatly affect Diplomat's financial results in the months and years ahead.

Keith Speights owns shares of Express Scripts. The Motley Fool owns shares of and recommends Express Scripts. The Motley Fool recommends Diplomat Pharmacy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.