Editor's Note

Recovering from an undeserved earnings drop. Diplomat reported breakeven earnings and the stock declined despite positive details.


New positions are only added on Wednesday and Saturday except in special circumstances.


DPLO - Diplomat Pharmacy - Company Profile

Diplomat Pharmacy, Inc. operates as an independent specialty pharmacy in the United States. The company stocks, dispenses, and distributes prescriptions for various biotechnology and specialty pharmaceutical manufacturers. It also provides specialty infusion pharmacy, patient care coordination, clinical, compliance and persistency program, patient financial assistance, specialty pharmacy training/consulting, benefits investigation, prior authorization, risk evaluation and medication strategy, retail specialty, and hub services, as well as clinical and administrative support services to hospitals and health systems. The company's primary focus is on medication management programs for individuals with complex chronic diseases, including oncology, immunology, hepatitis, multiple sclerosis, specialized infusion therapy, and various other serious or long-term conditions. The company was founded in 1975 and is headquartered in Flint, Michigan. Company description from FinViz.com.

Diplomat reported breakeven earnings and the stock fell -30%. However, revenue rose 22% to $1.373 billion. Prescriptions dispensed rose from 222,000 to 230,000. PBM segment volume rose to 1,931,000 adjusted to a 30-day equivalent. Adjusted EBITDA nearly doubled from $23.2 million to $41.9 million. Gross profit was $93.4 million at 6.8% margin compared to $65.1 million and 5.8% margin in the year ago period.

They guided for 2018 revenue of $5.5-$5.7 billion. Adjusted EBITDA of $164-$170 million. Earnings range of -.10 to +.03 up from -.15 to +.01.

These are not numbers to get anyone really excited but they are moving in the right direction and did not deserve a 30% decline in the stock price.

Earnings February 5th.

Buy February $17.50 call, currently $1.15, stop loss $13.85.


No New Bearish Plays