Diplomat Pharmacy (DPLO) 10-Q 2 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 01, 2016
Document and Entity Information
Entity Registrant Name	Diplomat Pharmacy, Inc.
Entity Central Index Key	1,610,092
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		66,730,999
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q3

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash and equivalents	$ 17,092	$ 27,600
Accounts receivable, net	289,162	254,682
Inventories	197,025	165,950
Deferred income taxes	17,992	5,311
Prepaid expenses and other current assets	7,528	7,427
Total current assets	528,799	460,970
Property and equipment, net	20,059	16,538
Capitalized software for internal use, net	51,659	37,250
Goodwill	315,373	256,318
Definite-lived intangible assets, net	208,722	224,644
Investment in non-consolidated entity	4,959	4,959
Other noncurrent assets	783	900
Total assets	1,130,354	1,001,579
Current liabilities:
Accounts payable	331,979	296,587
Borrowings on line of credit	45,519
Short-term debt, including current portion of long-term debt	6,750	6,000
Accrued expenses:
Compensation and benefits	7,115	5,563
Contingent consideration		52,665
Other	11,371	11,087
Total current liabilities	402,734	371,902
Long-term debt, less current portion	102,179	106,706
Deferred income taxes	12,027	7,425
Total liabilities	516,940	486,033
Commitments and contingencies
Shareholders' equity:
Preferred stock (10,000,000 shares authorized; none issued and outstanding)
Common stock (no par value; 590,000,000 shares authorized; 66,711,874 and 64,523,864 issued and outstanding at September 30, 2016 and December 31, 2015, respectively)	502,695	451,620
Additional paid-in capital	32,807	29,221
Retained earnings	77,404	31,130
Total Diplomat Pharmacy shareholders' equity	612,906	511,971
Noncontrolling interests	508	3,575
Total shareholders' equity	613,414	515,546
Total liabilities and shareholders' equity	$ 1,130,354	$ 1,001,579

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
Consolidated Balance Sheets (Unaudited)
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common shares, par value (in dollars per share)	$ 0	$ 0
Common shares, authorized shares	590,000,000	590,000,000
Common shares, issued shares	66,711,874	64,523,864
Common shares, outstanding shares	66,711,874	64,523,864

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Consolidated Statements of Operations (Unaudited)
Net sales	$ 1,181,173	$ 946,913	$ 3,265,549	$ 2,379,807
Cost of products sold	(1,102,661)	(871,150)	(3,024,529)	(2,193,233)
Gross profit	78,512	75,763	241,020	186,574
Selling, general and administrative expenses	(77,138)	(48,860)	(200,748)	(147,637)
Income from operations	1,374	26,903	40,272	38,937
Other (expense) income:
Interest expense	(1,831)	(1,542)	(4,787)	(3,766)
Other	49	90	262	270
Total other expense	(1,782)	(1,452)	(4,525)	(3,496)
(Loss) income before income taxes	(408)	25,451	35,747	35,441
Income tax benefit (expense)	3,236	(9,768)	(9,443)	(13,973)
Net income	2,828	15,683	26,304	21,468
Less net loss attributable to noncontrolling interest	(2,580)	(278)	(3,067)	(742)
Net income attributable to Diplomat Pharmacy, Inc.	$ 5,408	$ 15,961	$ 29,371	$ 22,210
Net income per common share:
Basic (in dollars per share)	$ 0.08	$ 0.25	$ 0.45	$ 0.37
Diluted (in dollars per share)	$ 0.08	$ 0.24	$ 0.43	$ 0.36
Weighted average common shares outstanding:
Basic (in shares)	66,511,118	63,890,060	65,714,727	59,507,347
Diluted (in shares)	68,359,611	65,513,055	68,082,564	61,758,979

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities:
Net income	$ 26,304	$ 21,468
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	36,085	20,823
Change in fair value of contingent consideration	(8,922)	(1,660)
Contingent consideration payments	(4,174)	(3,738)
Net provision for doubtful accounts	6,378	3,307
Share-based compensation expense	4,508	2,502
Deferred income tax expense	8,824	1,185
Impairment expense	4,804	150
Amortization of debt issuance costs	878	665
Excess tax benefits related to share-based awards		(14,348)
Other	1	60
Changes in operating assets and liabilities, net of business acquisitions:
Accounts receivable	(23,639)	(43,513)
Inventories	(26,194)	(28,379)
Accounts payable	5,390	18,644
Other assets and liabilities	1,162	25,366
Net cash provided by operating activities	31,405	2,532
Cash flows from investing activities:
Payments to acquire businesses, net of cash acquired	(69,172)	(299,534)
Expenditures for capitalized software for internal use	(9,797)	(9,145)
Expenditures for property and equipment	(5,012)	(2,374)
Other	1	8
Net cash used in investing activities	(83,980)	(311,045)
Cash flows from financing activities:
Net proceeds from line of credit	45,519	21,756
Payments on long-term debt	(4,500)	(1,500)
Proceeds from issuance of stock upon stock option exercises	3,758	8,745
Contingent consideration payments	(2,681)	(3,012)
Payments of debt issuance costs	(29)	(5,056)
Proceeds from follow-on public offering, net of transaction costs		187,238
Proceeds from long-term debt		120,000
Payments made to repurchase stock options		(36,298)
Excess tax benefits related to share-based awards		14,348
Net cash provided by financing activities	42,067	306,221
Net decrease in cash and equivalents	(10,508)	(2,292)
Cash and equivalents at beginning of period	27,600	17,957
Cash and equivalents at end of period	17,092	15,665
Supplemental disclosures of cash flow information:
Cash paid for interest	(3,793)	(2,730)
Net cash refunded (paid) for income taxes	$ 1,291	$ (346)

Condensed Consolidated Stateme6

Condensed Consolidated Statement of Changes in Stockholders' Equity - 9 months ended Sep. 30, 2016 - USD ($) $ in Thousands	Common stock	Additional Paid-in Capital	Retained Earnings	Diplomat Pharmacy, Inc. Shareholders' Equity	Noncontrolling Interest	Total
Balance at the beginning of the period at Dec. 31, 2015	$ 451,620	$ 29,221	$ 31,130	$ 511,971	$ 3,575	$ 515,546
Balance at the beginning of the period (in shares) at Dec. 31, 2015	64,523,864					64,523,864
Changes in Shareholders' Equity (Deficit)
Adoption of ASU 2016-09 (Note 3)			16,903	16,903		$ 16,903
Net income (loss)			29,371	29,371	(3,067)	26,304
Issuance of common stock upon full contingent consideration payout	$ 36,888			36,888		36,888
Issuance of common stock upon full contingent consideration payout (in shares)	1,346,282
Issuance of common stock as partial consideration of Valley Campus Pharmacy, Inc.	$ 9,507			9,507		9,507
Issuance of common stock as partial consideration of Valley Campus Pharmacy, Inc. (in shares)	324,244
Stock issued upon stock option exercises	$ 4,680	(922)		3,758		3,758
Stock issued upon stock option exercises (in shares)	511,719
Share-based compensation expense		4,508		4,508		4,508
Restricted stock awards (in shares)	5,765
Balance at the end of the period at Sep. 30, 2016	$ 502,695	$ 32,807	$ 77,404	$ 612,906	$ 508	$ 613,414
Balance at the end of the period (in shares) at Sep. 30, 2016	66,711,874					66,711,874

DESCRIPTION OF BUSINESS

DESCRIPTION OF BUSINESS	9 Months Ended
	Sep. 30, 2016
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS	1. DESCRIPTION OF BUSINESS Diplomat Pharmacy, Inc. and its consolidated subsidiaries (the “Company”) operate a specialty pharmacy business that stocks, dispenses, and distributes prescriptions for various biotechnology and specialty pharmaceutical manufacturers. Its primary focus is on medication management programs for individuals with complex chronic diseases. Disease states covered include hepatitis, immunology, multiple sclerosis, oncology, and specialized infusion therapy. The Company has its corporate headquarters and main distribution facility in Flint, Michigan, and maintains 19 other pharmacy locations in Arizona, California, Connecticut, Florida, Illinois, Iowa, Maryland, Massachusetts, Michigan, Minnesota, North Carolina, Ohio, Pennsylvania, and Texas. The Company also has centralized call centers to effectively deliver services to customers located in all 50 states in the United States of America (“U.S.”) and U.S. territories. The Company operates as one reportable segment. Follow-On Public Offering In March 2015, the Company completed a follow-on public offering, in which 9,821,125 shares of common stock were sold at a public offering price of $29.00 per share. The Company sold 6,821,125 shares of common stock, and certain shareholders sold 3,000,000 shares of common stock. The Company did not receive any proceeds from the sale of common stock by the shareholders. The Company received net proceeds of $187,238. The Company used $36,298 of the net proceeds to repurchase options to purchase common stock held by a number of current and former employees, including certain executive officers, with the remainder of the proceeds used to pay a portion of the cash consideration for the BioRx, LLC (“BioRx”) acquisition (Note 4). The purchase price for each stock option repurchased was based on the public offering price per share, net of the underwriting discount and exercise price.

BASIS OF PRESENTATION

BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2016
BASIS OF PRESENTATION
BASIS OF PRESENTATION	2. BASIS OF PRESENTATION Interim Unaudited Condensed Consolidated Financial Statements The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, the interim financial statements include all adjustments of a normal recurring nature necessary for a fair presentation of the financial position, results of operations, cash flows, and changes in shareholders’ equity. The results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2015 included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on February 29, 2016.

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 2016
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The condensed consolidated financial statements include the accounts of Diplomat Pharmacy, Inc., its wholly owned subsidiaries, and a 51 percent owned subsidiary, formed in August 2014, which the Company controls (see Note 6). An investment in an entity in which the Company owns less than 20 percent and does not have the ability to exercise significant influence is accounted for under the cost method. Noncontrolling interest in a consolidated subsidiary in the condensed consolidated balance sheets represents the minority shareholders’ proportionate share of the equity in such subsidiary. Consolidated net income (loss) is allocated to the Company and noncontrolling interests (i.e., minority shareholders) in proportion to their percentage ownership. All intercompany transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported therein. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be based upon amounts that differ from these estimates. Inventories Inventories consist of prescription and over-the-counter medications and are stated at the lower of cost or market. Cost is determined using the first-in, first-out method. Prescription medications are returnable to the Company’s vendors and fully refundable before six months of expiration, and any remaining expired medication is relieved from inventory on a quarterly basis. Revenue Recognition The Company recognizes revenue from prescription drug sales for home delivery at the time the drugs are shipped. At the time of shipment, the Company has performed substantially all of its obligations under its payor contracts and does not experience a significant level of returns or reshipments. Revenues from dispensing specialty prescriptions that are picked up by patients at an open-door or retail pharmacy location are recorded at prescription adjudication, which approximates the fill date. Sales taxes are presented on a net basis (excluded from revenues and costs). Revenues generated from prescription drug sales were $1,175,169 and $941,533 for the three months ended September 30, 2016 and 2015, respectively, and $3,247,401 and $2,365,860 for the nine months ended September 30, 2016 and 2015, respectively. The Company accrues an estimate of fees, including direct and indirect remuneration (“DIR”) fees, which are assessed or expected to be assessed by payors at some point after adjudication of a claim. In the third quarter of 2016, the Company was assessed and recorded approximately $4,000 of retroactive DIR fees that increased its previous estimates by approximately $1,700 and $2,300 for the first and second quarters of 2016, respectively. The Company recognizes revenue from service, data, and consulting services when the services have been performed and the earnings process is therefore complete. Revenues generated from service, data and consulting services were $6,004 and $5,380 for the three months ended September 30, 2016 and 2015, respectively, and $18,148 and $13,947 for the nine months ended September 30, 2016 and 2015, respectively. Accounting Standards Update (“ASU”) Adoption — Debt Issuance Cost Presentation In April 2015, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2015-03 , Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”), and, in August 2015, the FASB issued ASU No. 2015-15 , Interest — Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements - Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting (“ASU 2015-15”). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-15 then clarified that the SEC staff would not object to debt issuance costs related to a line-of-credit arrangement being presented as an asset on the balance sheet, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. These ASUs were effective for annual periods beginning after December 15, 2015, and for interim periods within those annual periods. Upon adoption, these ASUs were to be applied on a retrospective basis and disclosed as a change in an accounting principle. Effective January 1, 2016, the Company adopted the accounting guidance contained within ASU 2015-03 and 2015-15. The following December 31, 2015 condensed consolidated balance sheet line items were adjusted due to this adoption: As Previously Reported Adjustment As Adjusted Other noncurrent assets $ $ ) $ Total assets ) Long-term debt, less current portion ) Total liabilities ) Total liabilities and shareholders’ equity ) Debt issuance costs of $719 related to the Company’s line of credit arrangement remained classified within “Other noncurrent assets” as of December 31, 2015. ASU Adoption — Employee Share-Based Payment Accounting In March 2016, the FASB issued ASU No. 2016-09 , Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). The intent of ASU 2016-09 is to simplify several aspects of the accounting for employee share-based payment award transactions, including: recognition of excess tax benefits irrespective of whether the benefit reduces taxes payable in the current period; recognition of excess tax benefits as a reduction to income taxes on the statement of operations; changes to the determination of award classification as being either an equity or liability award; and the cessation of classifying excess tax benefits as a decrease to operating cash flows and an increase to financing cash flows on the statement of cash flows. ASU 2016-09 is effective for annual periods beginning on or after December 15, 2016, including interim periods within those annual periods. Early adoption is permitted. Effective January 1, 2016, the Company adopted the accounting guidance contained within ASU 2016-09. As a result, the Company recorded a $16,903 current deferred tax asset and a $16,903 increase to retained earnings on January 1, 2016 to recognize the Company’s excess tax benefits that existed as of December 31, 2015 (modified retrospective application). Beginning January 1, 2016, the Company recognizes all newly arising excess tax benefits as a reduction to income taxes in its condensed consolidated statements of operations, which resulted in the Company’s recognition of $3,076 and $4,454 in benefits to income taxes during the three and nine months ended September 30, 2016, respectively. Also beginning January 1, 2016, the Company elected the prospective transition method such that excess tax benefits will no longer be reflected as a decrease to cash flows from operating activities and as an increase to cash flows from financing activities on the condensed consolidated statement of cash flows. Finally, effective January 1, 2016, the Company elected to account for share-based compensation forfeitures when they occur. There was no impact of this election because prior to the adoption the Company did not have adequate historical information to estimate forfeitures. No prior period amounts have been adjusted as a result of the adoption of ASU 2016-09. ASU Adoption — Transition to the Equity Method of Accounting In March 2016, the FASB issued ASU No. 2016-07 , Investments — Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting (“ASU 2016-07”), eliminating the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. Instead, ASU 2016-07 requires that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment qualifies for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. ASU 2016-07 is effective for annual periods beginning on or after December 15, 2016, including interim periods within those annual periods. Early adoption is permitted. Effective January 1, 2016, the Company adopted the accounting guidance contained within ASU 2016-07. There was no current impact to the Company as a result of this adoption. New Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09 , Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which will supersede the existing revenue recognition guidance under U.S. GAAP. ASU 2014-09 focuses on creating a single source of revenue guidance for revenue arising from contracts with customers for all industries. The objective of the new standard is for companies to recognize revenue when it transfers the promised goods or services to its customers at an amount that represents what the company expects to be entitled to in exchange for those goods or services. In July 2015, the FASB issued ASU No. 2015-14 , Revenue from Contracts with Customers (Topic 606) Deferral of the Effective Date, which deferred the effective date of ASU 2014-09 by one year to annual reporting periods beginning after December 15, 2017 for public entities. ASU 2014-09 may be applied either retrospectively or as a cumulative effect adjustment as of the date of adoption. Early adoption is not permitted. The Company is currently assessing the method under which it will adopt and the potential impact of adopting ASU 2014-09 on its financial position, results of operations, cash flows and/or disclosures, although the Company does not expect the impact to be significant. In July 2015, the FASB issued ASU No. 2015-11 , Inventory (Topic 330): Simplifying the Measurement of Inventory , requiring that inventory be measured at the lower of cost and net realizable value. Net realizable value is defined as estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This ASU is effective for annual periods beginning on or after December 15, 2016, including interim periods within those annual periods. The Company is currently evaluating the impact, if any, that the adoption of this guidance will have on its financial position, results of operations, cash flows, and/or disclosures. In November 2015, the FASB issued ASU No. 2015-17 , Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes , eliminating the current requirement for companies to present deferred tax assets and liabilities as current and noncurrent. Instead, companies will be required to classify all deferred tax assets and liabilities as noncurrent. This ASU is effective for annual periods beginning on or after December 15, 2016, including interim periods within those annual periods. The adoption of this guidance will result in a balance sheet reclassification and require related disclosure revisions in the Company’s financial statements and notes thereto. In February 2016, the FASB issued ASU No. 2016-02 , Leases (Topic 842) , requiring lessees to recognize a right-of-use asset and a lease liability for all leases (with the exception of short-term leases) at the lease commencement date. This ASU is effective for annual periods beginning on or after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted. The Company is currently evaluating whether to early adopt and the impact that the adoption of this guidance will have on its financial position, results of operations, cash flows, and/or disclosures.

BUSINESS ACQUISITIONS

BUSINESS ACQUISITIONS	9 Months Ended
	Sep. 30, 2016
BUSINESS ACQUISITIONS
BUSINESS ACQUISITIONS	4. BUSINESS ACQUISITIONS The Company accounts for its business acquisitions using the acquisition method as required by FASB Accounting Standards Codification Topic 805, Business Combinations . The Company ascribes significant value to the synergies and other benefits that do not meet the recognition criteria of acquired identifiable intangible assets. Accordingly, the value of these components is included within goodwill. The Company’s business acquisitions described below, except for one subsidiary of BioRx, were treated as asset purchases for income tax purposes and the related goodwill resulting from these business acquisitions is deductible for income tax purposes. The results of operations for acquired businesses are included in the Company’s consolidated financial statements from their respective acquisition dates. The assets acquired and liabilities assumed in the business combinations described below, including identifiable intangible assets, were based on their estimated fair values as of the acquisition date. The excess of purchase price over the estimated fair value of the net tangible and identifiable intangible assets acquired was recorded as goodwill. The allocation of the purchase price required management to make significant estimates in determining the fair values of assets acquired and liabilities assumed, especially with respect to intangible assets. These estimated fair values were based on information obtained from management of the acquired companies and historical experience and, with respect to the long-lived tangible and intangible assets, were made with the assistance of an independent valuation firm. These estimates included, but were not limited to, the cash flows that an asset is expected to generate in the future, and the cost savings expected to be derived from acquiring an asset, discounted at rates commensurate with the risks and uncertainties involved. For acquisitions that involved contingent consideration, the Company recognized a liability equal to the fair value of the contingent consideration obligation as of the acquisition date. The estimate of fair value of a contingent consideration obligation required subjective assumptions regarding future business results, discount rates, and probabilities assigned to various potential business result scenarios. Valley Campus Pharmacy, Inc. On June 1, 2016, the Company acquired Valley Campus Pharmacy, Inc., doing business as TNH Advanced Specialty Pharmacy (“TNH”). TNH, a specialty pharmacy based in Van Nuys, California, provides medication management programs for individuals with complex chronic diseases, including oncology, hepatitis, and immunology. The Company acquired TNH to expand its existing business, enhance its proprietary technology, and increase its geographic presence, particularly in California and Texas. The following table summarizes the consideration transferred to acquire TNH: Cash $ 324,244 restricted common shares Post-close adjustment receivable ) $ The above share consideration at closing is based on 324,244 shares, in accordance with the purchase agreement, multiplied by the per share closing market price of the Company’s common stock as of May 31, 2016 ($32.58), and multiplied by 90 percent to account for the restricted nature of the shares. Approximately $3,800 of the purchase consideration was deposited into an escrow account to be held for two years after the closing date to satisfy any indemnification claims that may be made by the Company. The Company incurred acquisition-related costs of $40 and $399 which were charged to “Selling, general and administrative expenses” during the three and nine months ended September 30, 2016, respectively. The following table summarizes the preliminary fair values of identifiable assets acquired and liabilities assumed at the acquisition date: Cash $ Accounts receivable Inventories Prepaid expenses and other current assets Property and equipment Capitalized software for internal use Definite-lived intangible assets Other noncurrent assets Accounts payable ) Accrued expenses — compensation and benefits ) Accrued expenses — other ) Total identifiable net assets Goodwill $ Definite-lived intangible assets that were acquired and their respective useful lives are as follows: Useful Amount Physician relationships 10 years $ Noncompete employment agreements 5 years Trade names and trademarks 1 year $ Burman’s Apothecary, LLC On June 19, 2015, the Company acquired all of the outstanding equity interests of Burman’s Apothecary, LLC (“Burman’s”). Burman’s, located in the greater Philadelphia area of Pennsylvania, is a provider of individualized patient care with a primary focus on those infected with the hepatitis C virus. The Company acquired Burman’s to expand its existing hepatitis business, enhance its proprietary technology, and increase its national presence. The following table summarizes the consideration transferred to acquire Burman’s: Cash $ 253,036 restricted common shares $ The above share consideration at closing is based on 253,036 shares, in accordance with the purchase agreement, multiplied by the per share closing market price of the Company’s common stock as of June 18, 2015 ($42.06), and multiplied by 90 percent to account for the restricted nature of the shares. Approximately $5,000 of the purchase consideration was deposited into an escrow account to be held for two years after the closing date to satisfy any indemnification claims that may be made by the Company. The Company incurred acquisition-related costs of $532 and $735 which were charged to “Selling, general and administrative expenses” during the three and nine months ended September 30, 2015, respectively. The following table summarizes the fair values of identifiable assets acquired and liabilities assumed at the acquisition date: Accounts receivable $ Inventories Prepaid expenses and other current assets Property and equipment Capitalized software for internal use Definite-lived intangible assets Accounts payable ) Accrued expenses — compensation and benefits ) Accrued expenses — other ) Total identifiable net assets Goodwill $ Definite-lived intangible assets that were acquired and their respective useful lives are as follows: Useful Life Amount Physician relationships 10 years $ Noncompete employment agreements 5 years Favorable supply agreement 1 year $ BioRx On April 1, 2015, the Company acquired BioRx, a highly specialized pharmacy and infusion services company based in Cincinnati, Ohio. BioRx provides treatments for patients with ultra-orphan and rare, chronic diseases — predominately administered in the home and often via intravenous infusion. The Company acquired BioRx to expand its existing specialty infusion business and increase its national presence. The following table summarizes the consideration transferred to acquire BioRx: Cash $ 4,038,853 restricted common shares Contingent consideration at fair value $ The above share consideration at closing is based on 4,038,853 shares, in accordance with the purchase agreement, multiplied by the per share closing market price of the Company’s common stock as of March 31, 2015 ($34.58), and multiplied by 90 percent to account for the restricted nature of the shares. The purchase price included a contingent consideration arrangement that required the Company to issue up to 1,350,309 shares of its restricted common stock, as computed in accordance with the purchase agreement, to the former holders of BioRx’s equity interests based upon the achievement of a certain earnings before interest, taxes, depreciation and amortization target in the 12-month period ending March 31, 2016. An independent valuation firm assisted with the Company’s determination of the fair value of the contingent consideration utilizing a Monte Carlo simulation. The Company issued 1,346,282 shares of its common stock, with a fair value of $36,888, along with $105 in cash, in full payout of the contingent consideration arrangement in April 2016. The fair value of the contingent consideration liability was $46,208 as of December 31, 2015. Approximately $10,000 of the purchase consideration was deposited into an escrow account to be held for two years after the closing date to satisfy any indemnification claims that may be made by the Company. The Company incurred acquisition-related costs of $40 and $1,394 which were charged to “Selling, general and administrative expenses” during the three and nine months ended September 30, 2015, respectively. The following table summarizes the fair values of identifiable assets acquired and liabilities assumed at the acquisition date: Cash and cash equivalents $ Accounts receivable Inventories Deferred income taxes Prepaid expenses and other current assets Property and equipment Definite-lived intangible assets Other noncurrent assets Accounts payable ) Accrued expenses — compensation and benefits ) Accrued expenses — other ) Deferred income taxes ) Total identifiable net assets Goodwill $ Definite-lived intangible assets that were acquired and their respective useful lives are as follows: Useful Amount Patient relationships 10 years $ Noncompete employment agreements 5 years Trade names and trademarks 8 years $ Pro Forma Operating Results The following 2016 unaudited pro forma summary presents consolidated financial information as if the TNH acquisition had occurred on January 1, 2015. The following 2015 unaudited pro forma summary presents consolidated financial information as if the TNH acquisition had occurred on January 1, 2015 and the BioRx and Burman’s acquisitions had occurred on January 1, 2014. The unaudited pro forma results reflect certain adjustments related to the acquisitions, such as amortization expense resulting from intangible assets acquired and adjustments to reflect the Company’s borrowings and tax rates. Accordingly, such pro forma operating results were prepared for comparative purposes only and do not purport to be indicative of what would have occurred had the acquisitions been made as of the as if dates or of results that may occur in the future. Three Months Ended Nine Months Ended 2016 2015 2016 2015 Net sales $ $ $ $ Net income attributable to Diplomat Pharmacy, Inc. $ $ $ $ Net income per common share — basic $ $ $ $ Net income per common share — diluted $ $ $ $

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	9 Months Ended
	Sep. 30, 2016
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS	5. FAIR VALUE MEASUREMENTS The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based upon assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a three-tier fair value hierarchy was established, which prioritizes the inputs used in measuring fair value as follows: Level 1: Observable inputs such as quoted prices in active markets; Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. An asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. Assets and liabilities measured at fair value are based on one or more of the following three valuation techniques: A. Market approach: Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. B. Cost approach: Amount that would be required to replace the service capacity of an asset (replacement cost). C. Income approach: Techniques to convert future amounts to a single present amount based upon market expectations (including present value techniques, option-pricing and excess earnings models). The following table presents the placement in the fair value hierarchy of assets and liabilities that were measured and disclosed at fair value on a recurring basis at December 31, 2015: Asset / Valuation (Liability) Level 3 Technique Contingent consideration $ ) $ ) C The following table sets forth a roll forward of the Level 3 measurements: Contingent Balance at January 1, 2016 $ ) Change in fair value Payments Balance at September 30, 2016 $ — The carrying amounts of the Company’s financial instruments — consisting primarily of cash and cash equivalents, accounts receivable, accounts payable, and other liabilities — approximate their estimated fair values due to the relative short-term nature of the amounts. The carrying amount of debt approximates fair value due to variable interest rates at customary terms and rates the Company could obtain in current financing.

GOODWILL AND DEFINITE-LIVED INT

GOODWILL AND DEFINITE-LIVED INTANGIBLE ASSETS	9 Months Ended
	Sep. 30, 2016
GOODWILL AND DEFINITE-LIVED INTANGIBLE ASSETS
GOODWILL AND DEFINITE-LIVED INTANGIBLE ASSETS	6. GOODWILL AND DEFINITE-LIVED INTANGIBLE ASSETS The following table sets forth a roll forward of goodwill for the nine months ended September 30, 2016: Balance at January 1, 2016 $ TNH acquisition Miscellaneous Balance at September 30, 2016 $ At September 30, 2016 and December 31, 2015, definite-lived intangible assets consisted of the following: September 30, 2016 December 31, 2015 Gross Accumulated Net Gross Net Carrying Amortization Carrying Carrying Accumulated Carrying Amount /Impairment Amount Amount Amortization Amount Patient relationships $ $ ) $ $ $ ) $ Noncompete employment agreements ) ) Physician relationships ) ) Trade names and trademarks ) ) Software licensing agreement ) — — Intellectual property ) — — Favorable supply agreement ) — ) $ $ ) $ $ $ ) $ On August 28, 2014, the Company and two unrelated third party entities entered into a contribution agreement to form a new company, Primrose Healthcare, LLC (“Primrose”). Primrose functions as a management company, managing a network of physicians and medical professionals providing continuum care for patients infected with the hepatitis C virus. The Company contributed $5,000 for its 51% ownership interest, of which $2,000 and $3,000 were contributed during the years ended December 31, 2015 and 2014, respectively. The unrelated third party entities contributed a software licensing agreement valued at $2,647 and intellectual property valued at $2,157. During the third quarter of 2016, primarily due to updated projections of continuing losses into the foreseeable future, the Company fully impaired Primrose’s intangible assets. The $4,804 impairment is contained within “Selling, general and administrative expenses” for the three and nine months ended September 30, 2016. Primrose’s post-impairment balance sheet consists primarily of cash and cash equivalents as of September 30, 2016.

INVESTMENT IN NON-CONSOLIDATED

INVESTMENT IN NON-CONSOLIDATED ENTITIES	9 Months Ended
	Sep. 30, 2016
INVESTMENT IN NON-CONSOLIDATED ENTITIES
INVESTMENT IN NON-CONSOLIDATED ENTITIES	7. INVESTMENTS IN NON-CONSOLIDATED ENTITIES The Company maintains a 25 percent minority interest in WorkSmart MD, LLC, also known as Ageology, though it fully impaired its investment during the fourth quarter of 2014. In transactions unrelated to the Company, an affiliated entity of the Company’s chief executive officer has personally loaned $14,351 to Ageology through September 30, 2016. In December 2014, the Company invested $3,500 in Physician Resource Management, Inc. (“PRM”) in exchange for a 15.0 percent equity position. In October 2015, the Company invested an additional $1,459, which increased its equity position in PRM to 19.9 percent. The Company accounts for this investment under the cost method, as the Company does not have significant influence over its operations. In transactions unrelated to the Company, the Company’s chief executive officer has personally loaned $250 to PRM through September 30, 2016.

DEBT

DEBT	9 Months Ended
	Sep. 30, 2016
DEBT
DEBT	8. DEBT On April 1, 2015, the Company entered into a Second Amended and Restated Credit Agreement with Capital One, as agent and as a lender, the other lenders party thereto and the other credit parties party thereto, providing for a line of credit of $175,000, a fully drawn Term Loan A for $120,000, and a deferred draw term loan for an additional $25,000 (collectively, the “credit facility”). The credit facility matures April 1, 2020, and provides for the issuance of letters of credit up to $10,000 and swingline loans up to $15,000, the issuance and incurrence of which will reduce the availability under the line of credit. The Company had $112,500 and $117,000 outstanding on Term Loan A as of September 30, 2016 and December 31, 2015, respectively. Unamortized debt issuance costs of $3,571 and $4,294 as of September 30, 2016 and December 31, 2015, respectively, are presented in the condensed consolidated balance sheets as direct deductions from the outstanding debt balances (see Note 3). The Company had $45,519 and $0 outstanding on its line of credit as of September 30, 2016 and December 31, 2015, respectively. The Company had $129,481 and $166,691 available to borrow on its line of credit at September 30, 2016 and December 31, 2015, respectively. At September 30, 2016, the Company’s Term Loan A interest rate options were (i) LIBOR (as defined) plus 2.50 percent or (ii) Base Rate (as defined) plus 1.50 percent, and the Company’s line of credit and swingline loan interest rate options were (i) LIBOR (as defined) plus 2.00 percent or (ii) Base Rate (as defined) plus 1.00 percent. The Company’s Term Loan A interest rates were 3.02 percent and 2.74 percent at September 30, 2016 and December 31, 2015, respectively. The Company’s line of credit interest rate was 4.50 percent at September 30, 2016. In addition, the Company is charged a monthly unused commitment fee ranging from 0.25 percent to 0.50 percent on its average unused daily balance on its $175,000 line of credit and from 0.50 percent to 0.75 percent on its $25,000 deferred draw term loan. The Company’s credit facility contains certain financial and non-financial covenants. The Company was in compliance with all such covenants as of September 30, 2016 and December 31, 2015.

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION	9 Months Ended
	Sep. 30, 2016
SHARE-BASED COMPENSATION.
SHARE-BASED COMPENSATION	9. SHARE-BASED COMPENSATION A summary of the Company’s stock option activity as of and for the nine months ended September 30, 2016 is as follows: Weighted Weighted Average Average Remaining Aggregate Number Exercise Contractual Intrinsic of Options Price Life Value (Years) Outstanding at January 1, 2016 $ $ Granted Exercised ) Expired/cancelled ) Outstanding at September 30, 2016 $ $ Exercisable at September 30, 2016 $ $ The Company recorded share-based compensation expense associated with stock options of $1,236 and $1,232 for the three months ended September 30, 2016 and 2015, respectively, and $4,230 and $2,389 for the nine months ended September 30, 2016 and 2015, respectively. The Company recorded share-based compensation expense associated with restricted stock awards of $120 and $38 for the three months ended September 30, 2016 and 2015, respectively, and $278 and $113 for the nine months ended September 30, 2016 and 2015, respectively. The Company granted service-based awards of 465,000 options to purchase common stock to key employees under its 2014 Omnibus Incentive Plan during the nine months ended September 30, 2016. The options become exercisable in installments of 25 percent per year, beginning on the first anniversary of the grant date and each of the three anniversaries thereafter, and have a maximum term of 10 years. The Company also granted performance-based awards of 381,532 options to purchase common stock to key employees under its 2014 Omnibus Incentive Plan during the first quarter of 2016. Such options will be earned or forfeited based upon the Company’s performance relative to specified revenue and adjusted earnings before interest, taxes, depreciation and amortization goals for the year ended December 31, 2016. The earned options, if any, will vest in four installments of 25%, with the first installment vesting upon the earlier of the date that the Company files its Annual Report on Form 10-K or Audit Committee confirmation of the satisfaction of the applicable performance goals, with the remaining installments vesting annually thereafter. These options also have a maximum term of 10 years. The 846,532 options to purchase common stock that were granted during the nine months ended September 30, 2016 have a weighted average grant date fair value of $7.91 per option. The grant date fair values of these stock option awards were estimated using the Black-Scholes-Merton option-pricing model using the assumptions set forth in the following table: Exercise price $25.92 - $36.60 Expected volatility 23.90% - 24.76% Expected dividend yield Risk-free rate over the estimated expected life 1.23% - 1.64% Expected life (in years) Estimating grant date fair values for employee stock options requires management to make assumptions regarding expected volatility of value of those underlying shares, the risk-free rate over the expected life of the stock options and the date on which share-based payments will be settled. Expected volatility is based on an implied volatility for a group of industry-relevant health care companies as of the measurement date. Risk-free rate is determined based upon U.S. Treasury rates over the estimated expected option lives. Expected dividend yield is zero, as the Company does not anticipate that any dividends will be declared during the expected term of the options. The expected term of options granted is calculated using the simplified method (the midpoint between the end of the vesting period and the end of the maximum term) because the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term due to the limited period of time its awards have been outstanding. If actual results differ significantly from these estimates and assumptions, share-based compensation expense and excess tax benefits, primarily with respect to future share-based awards, could be materially impacted. In March 2015, the Company repurchased vested stock options to buy 1,641,387 shares of common stock from certain current employees, including certain executive officers, for cash consideration totaling $36,298. All repurchased stock options were granted under the Company’s 2007 Stock Option Plan. No incremental compensation expense was recognized as a result of these repurchases. For U.S. GAAP purposes, share-based compensation expense associated with stock options is based upon recognition of the grant date fair value over the vesting period of the option. For income tax purposes, share-based compensation tax deductions associated with nonqualified stock option exercises and repurchases are based upon the difference between the stock price and the exercise price at time of exercise or repurchase. Prior to the Company’s adoption of ASU 2016-09 (see Note 3), in instances where share-based compensation expense for tax purposes was in excess of share-based compensation expense for U.S. GAAP purposes, which has predominately been the case for the Company, U.S. GAAP required that the tax benefit associated with this excess expense be recorded to shareholders’ equity to the extent that it reduced cash taxes payable. During the nine months ended September 30, 2015, the Company recorded excess tax benefits related to share-based awards of $14,348 as an increase to shareholders’ equity. Prior to the Company’s adoption of ASU 2016-09 (see Note 3), U.S. GAAP also required that excess tax benefits related to share-based awards be reported as a decrease to cash flows from operating activities and as an increase to cash flows from financing activities. The Company reported $14,348 of excess tax benefits related to share-based awards as a decrease to cash flows from operating activities and as an increase to cash flows from financing activities for the nine months ended September 30, 2015.

CONTINGENCIES

CONTINGENCIES	9 Months Ended
	Sep. 30, 2016
CONTINGENCIES
CONTINGENCIES	10. CONTINGENCIES The Company is subject to claims and lawsuits that arise primarily in the ordinary course of business. Management believes that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

INCOME PER COMMON SHARE

INCOME PER COMMON SHARE	9 Months Ended
	Sep. 30, 2016
INCOME PER COMMON SHARE
INCOME PER COMMON SHARE	11. INCOME PER COMMON SHARE The following table sets forth the computation of basic and diluted income per common share: Three Months Ended Nine Months Ended 2016 2015 2016 2015 Numerator: Net income attributable to Diplomat Pharmacy, Inc. $ $ $ $ Denominator: Weighted average common shares outstanding, basic Weighted average dilutive effect of stock options and restricted stock awards Weighted average dilutive effect of contingent consideration — — — Weighted average common shares outstanding, diluted Net income per common share: Basic $ $ $ $ Diluted $ $ $ $ Stock options to purchase a weighted average of 1,603,375 and 615,504 common shares for the three months ended September 30, 2016 and 2015, respectively, and 1,504,739 and 270,421 common shares for the nine months ended September 30, 2016 and 2015, respectively, were excluded from the computation of diluted weighted average common shares outstanding as inclusion of such options would be anti-dilutive. Performance-based stock options to purchase up to a weighted average of 381,532 and 678,234 common shares for the three months ended September 30, 2016 and 2015, respectively, and 269,728 and 550,512 common shares for the nine months ended September 30, 2016 and 2015, respectively, were excluded from the computation of diluted weighted average common shares outstanding as all performance conditions were not satisfied. Contingent consideration to issue up to 1,350,309 common shares was excluded from the computation of diluted weighted average common shares outstanding for both the three and nine months ended September 30, 2015, as none of the necessary conditions were satisfied. All outstanding restricted stock awards were dilutive for each of the three- and nine-month periods ended September 30, 2016 and 2015.

SUMMARY OF SIGNIFICANT ACCOUN18

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 2016
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation	Principles of Consolidation The condensed consolidated financial statements include the accounts of Diplomat Pharmacy, Inc., its wholly owned subsidiaries, and a 51 percent owned subsidiary, formed in August 2014, which the Company controls (see Note 6). An investment in an entity in which the Company owns less than 20 percent and does not have the ability to exercise significant influence is accounted for under the cost method. Noncontrolling interest in a consolidated subsidiary in the condensed consolidated balance sheets represents the minority shareholders’ proportionate share of the equity in such subsidiary. Consolidated net income (loss) is allocated to the Company and noncontrolling interests (i.e., minority shareholders) in proportion to their percentage ownership. All intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported therein. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be based upon amounts that differ from these estimates.
Inventories	Inventories Inventories consist of prescription and over-the-counter medications and are stated at the lower of cost or market. Cost is determined using the first-in, first-out method. Prescription medications are returnable to the Company’s vendors and fully refundable before six months of expiration, and any remaining expired medication is relieved from inventory on a quarterly basis.
Revenue Recognition	Revenue Recognition The Company recognizes revenue from prescription drug sales for home delivery at the time the drugs are shipped. At the time of shipment, the Company has performed substantially all of its obligations under its payor contracts and does not experience a significant level of returns or reshipments. Revenues from dispensing specialty prescriptions that are picked up by patients at an open-door or retail pharmacy location are recorded at prescription adjudication, which approximates the fill date. Sales taxes are presented on a net basis (excluded from revenues and costs). Revenues generated from prescription drug sales were $1,175,169 and $941,533 for the three months ended September 30, 2016 and 2015, respectively, and $3,247,401 and $2,365,860 for the nine months ended September 30, 2016 and 2015, respectively. The Company accrues an estimate of fees, including direct and indirect remuneration (“DIR”) fees, which are assessed or expected to be assessed by payors at some point after adjudication of a claim. In the third quarter of 2016, the Company was assessed and recorded approximately $4,000 of retroactive DIR fees that increased its previous estimates by approximately $1,700 and $2,300 for the first and second quarters of 2016, respectively. The Company recognizes revenue from service, data, and consulting services when the services have been performed and the earnings process is therefore complete. Revenues generated from service, data and consulting services were $6,004 and $5,380 for the three months ended September 30, 2016 and 2015, respectively, and $18,148 and $13,947 for the nine months ended September 30, 2016 and 2015, respectively.
Accounting Standards Update (ASU) Adoption	Accounting Standards Update (“ASU”) Adoption — Debt Issuance Cost Presentation In April 2015, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2015-03 , Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”), and, in August 2015, the FASB issued ASU No. 2015-15 , Interest — Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements - Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting (“ASU 2015-15”). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-15 then clarified that the SEC staff would not object to debt issuance costs related to a line-of-credit arrangement being presented as an asset on the balance sheet, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. These ASUs were effective for annual periods beginning after December 15, 2015, and for interim periods within those annual periods. Upon adoption, these ASUs were to be applied on a retrospective basis and disclosed as a change in an accounting principle. Effective January 1, 2016, the Company adopted the accounting guidance contained within ASU 2015-03 and 2015-15. The following December 31, 2015 condensed consolidated balance sheet line items were adjusted due to this adoption: As Previously Reported Adjustment As Adjusted Other noncurrent assets $ $ ) $ Total assets ) Long-term debt, less current portion ) Total liabilities ) Total liabilities and shareholders’ equity ) Debt issuance costs of $719 related to the Company’s line of credit arrangement remained classified within “Other noncurrent assets” as of December 31, 2015. ASU Adoption — Employee Share-Based Payment Accounting In March 2016, the FASB issued ASU No. 2016-09 , Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). The intent of ASU 2016-09 is to simplify several aspects of the accounting for employee share-based payment award transactions, including: recognition of excess tax benefits irrespective of whether the benefit reduces taxes payable in the current period; recognition of excess tax benefits as a reduction to income taxes on the statement of operations; changes to the determination of award classification as being either an equity or liability award; and the cessation of classifying excess tax benefits as a decrease to operating cash flows and an increase to financing cash flows on the statement of cash flows. ASU 2016-09 is effective for annual periods beginning on or after December 15, 2016, including interim periods within those annual periods. Early adoption is permitted. Effective January 1, 2016, the Company adopted the accounting guidance contained within ASU 2016-09. As a result, the Company recorded a $16,903 current deferred tax asset and a $16,903 increase to retained earnings on January 1, 2016 to recognize the Company’s excess tax benefits that existed as of December 31, 2015 (modified retrospective application). Beginning January 1, 2016, the Company recognizes all newly arising excess tax benefits as a reduction to income taxes in its condensed consolidated statements of operations, which resulted in the Company’s recognition of $3,076 and $4,454 in benefits to income taxes during the three and nine months ended September 30, 2016, respectively. Also beginning January 1, 2016, the Company elected the prospective transition method such that excess tax benefits will no longer be reflected as a decrease to cash flows from operating activities and as an increase to cash flows from financing activities on the condensed consolidated statement of cash flows. Finally, effective January 1, 2016, the Company elected to account for share-based compensation forfeitures when they occur. There was no impact of this election because prior to the adoption the Company did not have adequate historical information to estimate forfeitures. No prior period amounts have been adjusted as a result of the adoption of ASU 2016-09. ASU Adoption — Transition to the Equity Method of Accounting In March 2016, the FASB issued ASU No. 2016-07 , Investments — Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting (“ASU 2016-07”), eliminating the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. Instead, ASU 2016-07 requires that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment qualifies for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. ASU 2016-07 is effective for annual periods beginning on or after December 15, 2016, including interim periods within those annual periods. Early adoption is permitted. Effective January 1, 2016, the Company adopted the accounting guidance contained within ASU 2016-07. There was no current impact to the Company as a result of this adoption.
New Accounting Pronouncements	New Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09 , Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which will supersede the existing revenue recognition guidance under U.S. GAAP. ASU 2014-09 focuses on creating a single source of revenue guidance for revenue arising from contracts with customers for all industries. The objective of the new standard is for companies to recognize revenue when it transfers the promised goods or services to its customers at an amount that represents what the company expects to be entitled to in exchange for those goods or services. In July 2015, the FASB issued ASU No. 2015-14 , Revenue from Contracts with Customers (Topic 606) Deferral of the Effective Date, which deferred the effective date of ASU 2014-09 by one year to annual reporting periods beginning after December 15, 2017 for public entities. ASU 2014-09 may be applied either retrospectively or as a cumulative effect adjustment as of the date of adoption. Early adoption is not permitted. The Company is currently assessing the method under which it will adopt and the potential impact of adopting ASU 2014-09 on its financial position, results of operations, cash flows and/or disclosures, although the Company does not expect the impact to be significant. In July 2015, the FASB issued ASU No. 2015-11 , Inventory (Topic 330): Simplifying the Measurement of Inventory , requiring that inventory be measured at the lower of cost and net realizable value. Net realizable value is defined as estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This ASU is effective for annual periods beginning on or after December 15, 2016, including interim periods within those annual periods. The Company is currently evaluating the impact, if any, that the adoption of this guidance will have on its financial position, results of operations, cash flows, and/or disclosures. In November 2015, the FASB issued ASU No. 2015-17 , Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes , eliminating the current requirement for companies to present deferred tax assets and liabilities as current and noncurrent. Instead, companies will be required to classify all deferred tax assets and liabilities as noncurrent. This ASU is effective for annual periods beginning on or after December 15, 2016, including interim periods within those annual periods. The adoption of this guidance will result in a balance sheet reclassification and require related disclosure revisions in the Company’s financial statements and notes thereto. In February 2016, the FASB issued ASU No. 2016-02 , Leases (Topic 842) , requiring lessees to recognize a right-of-use asset and a lease liability for all leases (with the exception of short-term leases) at the lease commencement date. This ASU is effective for annual periods beginning on or after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted. The Company is currently evaluating whether to early adopt and the impact that the adoption of this guidance will have on its financial position, results of operations, cash flows, and/or disclosures.

SUMMARY OF SIGNIFICANT ACCOUN19

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	9 Months Ended
	Sep. 30, 2016
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Schedule condensed consolidated balance sheet line items adjusted due to this adoption	The following December 31, 2015 condensed consolidated balance sheet line items were adjusted due to this adoption: As Previously Reported Adjustment As Adjusted Other noncurrent assets $ $ ) $ Total assets ) Long-term debt, less current portion ) Total liabilities ) Total liabilities and shareholders’ equity )

BUSINESS ACQUISITION (Tables)

BUSINESS ACQUISITION (Tables)	9 Months Ended
	Sep. 30, 2016
Business acquisition
Schedule of unaudited pro forma results of operations	Three Months Ended Nine Months Ended 2016 2015 2016 2015 Net sales $ $ $ $ Net income attributable to Diplomat Pharmacy, Inc. $ $ $ $ Net income per common share — basic $ $ $ $ Net income per common share — diluted $ $ $ $
Valley Campus Pharmacy, Inc
Business acquisition
Schedule of consideration transferred	Cash $ 324,244 restricted common shares Post-close adjustment receivable ) $
Summary of the fair values of identifiable acquired assets and assumed liabilities	Cash $ Accounts receivable Inventories Prepaid expenses and other current assets Property and equipment Capitalized software for internal use Definite-lived intangible assets Other noncurrent assets Accounts payable ) Accrued expenses — compensation and benefits ) Accrued expenses — other ) Total identifiable net assets Goodwill $
Schedule of definite-lived intangible assets that were acquired and their respective useful lives	Useful Amount Physician relationships 10 years $ Noncompete employment agreements 5 years Trade names and trademarks 1 year $
Burman's Apothecary, LLC
Business acquisition
Schedule of consideration transferred	Cash $ 253,036 restricted common shares $
Summary of the fair values of identifiable acquired assets and assumed liabilities	Accounts receivable $ Inventories Prepaid expenses and other current assets Property and equipment Capitalized software for internal use Definite-lived intangible assets Accounts payable ) Accrued expenses — compensation and benefits ) Accrued expenses — other ) Total identifiable net assets Goodwill $
Schedule of definite-lived intangible assets that were acquired and their respective useful lives	Useful Life Amount Physician relationships 10 years $ Noncompete employment agreements 5 years Favorable supply agreement 1 year $
BioRx, LLC
Business acquisition
Schedule of consideration transferred	Cash $ 4,038,853 restricted common shares Contingent consideration at fair value $
Summary of the fair values of identifiable acquired assets and assumed liabilities	Cash and cash equivalents $ Accounts receivable Inventories Deferred income taxes Prepaid expenses and other current assets Property and equipment Definite-lived intangible assets Other noncurrent assets Accounts payable ) Accrued expenses — compensation and benefits ) Accrued expenses — other ) Deferred income taxes ) Total identifiable net assets Goodwill $
Schedule of definite-lived intangible assets that were acquired and their respective useful lives	Useful Amount Patient relationships 10 years $ Noncompete employment agreements 5 years Trade names and trademarks 8 years $

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	9 Months Ended
	Sep. 30, 2016
FAIR VALUE MEASUREMENTS
Schedule of assets and liabilities re-measured and disclosed at fair value on a recurring basis	The following table presents the placement in the fair value hierarchy of assets and liabilities that were measured and disclosed at fair value on a recurring basis at December 31, 2015: Asset / Valuation (Liability) Level 3 Technique Contingent consideration $ ) $ ) C
Schedule of a roll forward of the Level 3 measurements	Contingent Balance at January 1, 2016 $ ) Change in fair value Payments Balance at September 30, 2016 $ —

GOODWILL AND DEFINITE-LIVED I22

GOODWILL AND DEFINITE-LIVED INTANGIBLE ASSETS (Tables)	9 Months Ended
	Sep. 30, 2016
GOODWILL AND DEFINITE-LIVED INTANGIBLE ASSETS
Schedule of changes in the carrying amount of goodwill	Balance at January 1, 2016 $ TNH acquisition Miscellaneous Balance at September 30, 2016 $
Schedule of definite-lived intangible assets	September 30, 2016 December 31, 2015 Gross Accumulated Net Gross Net Carrying Amortization Carrying Carrying Accumulated Carrying Amount /Impairment Amount Amount Amortization Amount Patient relationships $ $ ) $ $ $ ) $ Noncompete employment agreements ) ) Physician relationships ) ) Trade names and trademarks ) ) Software licensing agreement ) — — Intellectual property ) — — Favorable supply agreement ) — ) $ $ ) $ $ $ ) $

SHARE-BASED COMPENSATION (Table

SHARE-BASED COMPENSATION (Tables)	9 Months Ended
	Sep. 30, 2016
SHARE-BASED COMPENSATION.
Summary of entity's stock option activity	Weighted Weighted Average Average Remaining Aggregate Number Exercise Contractual Intrinsic of Options Price Life Value (Years) Outstanding at January 1, 2016 $ $ Granted Exercised ) Expired/cancelled ) Outstanding at September 30, 2016 $ $ Exercisable at September 30, 2016 $ $
Schedule of assumptions used to determine the valuation of granted options	Exercise price $25.92 - $36.60 Expected volatility 23.90% - 24.76% Expected dividend yield Risk-free rate over the estimated expected life 1.23% - 1.64% Expected life (in years)

INCOME PER COMMON SHARE (Tables

INCOME PER COMMON SHARE (Tables)	9 Months Ended
	Sep. 30, 2016
INCOME PER COMMON SHARE
Schedule of the calculation for basic and diluted income per common share	Three Months Ended Nine Months Ended 2016 2015 2016 2015 Numerator: Net income attributable to Diplomat Pharmacy, Inc. $ $ $ $ Denominator: Weighted average common shares outstanding, basic Weighted average dilutive effect of stock options and restricted stock awards Weighted average dilutive effect of contingent consideration — — — Weighted average common shares outstanding, diluted Net income per common share: Basic $ $ $ $ Diluted $ $ $ $

DESCRIPTION OF BUSINESS - Opera

DESCRIPTION OF BUSINESS - Operations (Details)	9 Months Ended
	Sep. 30, 2016statesegment
DESCRIPTION OF BUSINESS
Number of pharmacy locations (in locations)	19
Number of states with call center locations (in states) | state	50
Number of reportable segments | segment	1

DESCRIPTION OF BUSINESS - Follo

DESCRIPTION OF BUSINESS - Follow-On Public Offering (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	9 Months Ended
	Mar. 31, 2015	Sep. 30, 2015
Initial Public Offering
Proceeds from follow-on public offering, net of transaction costs		$ 187,238
Follow-On Public Offering
Initial Public Offering
Number of shares of common stock sold (in shares)	9,821,125
Initial public offering price (in dollars per share)	$ 29
Number of shares sold by the Company (in shares)	6,821,125
Number of shares of stock sold by the existing shareholders (in shares)	3,000,000
Proceeds from follow-on public offering, net of transaction costs	$ 187,238
Net proceeds used to repurchase stock options	$ 36,298

SUMMARY OF SIGNIFICANT ACCOUN27

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Principles of Consolidation thru Inventories (Details)	Sep. 30, 2016
Principles of Consolidation
Percentage of ownership interest in subsidiary that the entity has the ability to control	51.00%

SUMMARY OF SIGNIFICANT ACCOUN28

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition thru New Accounting Pronouncements (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Revenue recognition
Retroactive DIR fees	$ 4,000		$ 4,000
Revenues from service, data and consulting services	6,004	$ 5,380	18,148	$ 13,947
Change in Accounting Principle
Other noncurrent assets	783		783		$ 900
Total assets	1,130,354		1,130,354		1,001,579
Long-term debt, less current portion	102,179		102,179		106,706
Total liabilities	516,940		516,940		486,033
Total liabilities and shareholders' equity	1,130,354		1,130,354		1,001,579
Debt issuance costs			3,571		4,294
Prescription Drugs
Revenue recognition
Revenues	1,175,169	$ 941,533	3,247,401	$ 2,365,860
Increase in estimate of first quarter
Revenue recognition
Retroactive DIR fees	1,700		1,700
Increase in estimate of second quarter
Revenue recognition
Retroactive DIR fees	$ 2,300		$ 2,300
As Previously Reported
Change in Accounting Principle
Other noncurrent assets					5,194
Total assets					1,005,873
Long-term debt, less current portion					111,000
Total liabilities					490,327
Total liabilities and shareholders' equity					1,005,873
Adjustment
Change in Accounting Principle
Other noncurrent assets					(4,294)
Total assets					(4,294)
Long-term debt, less current portion					(4,294)
Total liabilities					(4,294)
Total liabilities and shareholders' equity					(4,294)
Other Noncurrent Assets | Line of credit
Change in Accounting Principle
Debt issuance costs					$ 719

SUMMARY OF SIGNIFICANT ACCOUN29

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Employee Share Based Payment Accounting - ASU Adoption (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Jan. 01, 2016	Dec. 31, 2015
New Accounting Pronouncements or Change in Accounting Principle
Retained earnings	$ 77,404		$ 77,404			$ 31,130
Income tax benefit	3,236	$ (9,768)	(9,443)	$ (13,973)
Accounting Standards Update 2016-09 Compensation - Stock Compensation | Adjustments for New Accounting Principle, Early Adoption
New Accounting Pronouncements or Change in Accounting Principle
Current deferred tax asset					$ 16,903
Retained earnings					$ 16,903
Income tax benefit	$ 3,076		$ 4,454

BUSINESS ACQUISITIONS - Valley

BUSINESS ACQUISITIONS - Valley Campus Pharmacy, Inc (Details) - USD ($) $ / shares in Units, $ in Thousands	Jun. 01, 2016	May 31, 2016	Jun. 30, 2016	Sep. 30, 2016	Dec. 31, 2015
Summary of the preliminary fair value determination of the acquired assets and liabilities
Goodwill				$ 315,373	$ 256,318
Valley Campus Pharmacy, Inc
Business acquisition
Cash	$ 70,931
Restricted common shares	9,507
Post-close adjustment receivable	(2,016)
Total	$ 78,422
Restricted common shares (in shares)	324,244
Market price (in dollars per share)		$ 32.58
Market price multiplier to factor in restricted nature of the shares (as a percent)		90.00%
Purchase consideration deposited into an escrow account	$ 3,800
Deposit term into an escrow account	2 years
Acquisition-related costs charged to Selling, general, and administrative expenses			$ 40	$ 399
Summary of the preliminary fair value determination of the acquired assets and liabilities
Cash	$ 2,114
Accounts receivable	17,426
Inventories	4,740
Prepaid expenses and other current assets	46
Property and equipment	200
Capitalized software for internal use	14,000
Definite-lived intangible assets	13,890
Other noncurrent assets	21
Accounts payable	(29,773)
Accrued expenses - compensation and benefits	(400)
Accrued expenses - other	(1,962)
Total identifiable net assets	20,302
Goodwill	58,120
Total acquisition price	$ 78,422
Physician relationships | Valley Campus Pharmacy, Inc
Definite-lived intangible assets
Useful Life	10 years
Amount	$ 7,700
Noncompete employment agreements | Valley Campus Pharmacy, Inc
Definite-lived intangible assets
Useful Life	5 years
Amount	$ 4,490
Trade names and trademarks | Valley Campus Pharmacy, Inc
Definite-lived intangible assets
Useful Life	1 year
Amount	$ 1,700

BUSINESS ACQUISITIONS - Burman'

BUSINESS ACQUISITIONS - Burman's Apothecary, LLC (Details) - USD ($) $ / shares in Units, $ in Thousands	Jun. 19, 2015	Jun. 18, 2015	Jun. 30, 2015	Sep. 30, 2015	Sep. 30, 2016	Dec. 31, 2015
Summary of the preliminary fair value determination of the acquired assets and liabilities
Goodwill					$ 315,373	$ 256,318
Burman's Apothecary, LLC
Business acquisition
Cash	$ 77,416
Restricted common shares	9,578
Total	$ 86,994
Restricted common shares (in shares)	253,036
Market price (in dollars per share)		$ 42.06
Market price multiplier to factor in restricted nature of the shares (as a percent)		90.00%
Purchase consideration deposited into an escrow account	$ 5,000
Deposit term into an escrow account	2 years
Acquisition-related costs charged to Selling, general, and administrative expenses			$ 532	$ 735
Summary of the preliminary fair value determination of the acquired assets and liabilities
Accounts receivable	$ 17,109
Inventories	8,064
Prepaid expenses and other current assets	7,513
Property and equipment	88
Capitalized software for internal use	17,000
Definite-lived intangible assets	22,200
Accounts payable	(25,761)
Accrued expenses - compensation and benefits	(169)
Accrued expenses - other	(6)
Total identifiable net assets	46,038
Goodwill	40,956
Total acquisition price	$ 86,994
Physician relationships | Burman's Apothecary, LLC
Definite-lived intangible assets
Useful Life	10 years
Amount	$ 14,000
Noncompete employment agreements | Burman's Apothecary, LLC
Definite-lived intangible assets
Useful Life	5 years
Amount	$ 5,500
Favorable supply agreement | Burman's Apothecary, LLC
Definite-lived intangible assets
Useful Life	1 year
Amount	$ 2,700

BUSINESS ACQUISITIONS - BioRx,

BUSINESS ACQUISITIONS - BioRx, LLC (Details) $ / shares in Units, $ in Thousands	Apr. 01, 2015USD ($)shares	Apr. 30, 2016USD ($)shares	Sep. 30, 2015USD ($)	Mar. 31, 2015$ / shares	Sep. 30, 2016USD ($)segment	Sep. 30, 2015USD ($)	Dec. 31, 2015USD ($)
Business acquisition
Number of acquisitions not treated as asset purchase for tax purposes | segment					1
Summary of the preliminary fair value determination of the acquired assets and liabilities
Goodwill					$ 315,373		$ 256,318
BioRx, LLC
Business acquisition
Number of acquisitions not treated as asset purchase for tax purposes | segment					1
Cash	$ 217,024	$ 105
Restricted common shares	125,697
Contingent consideration at fair value	41,000	$ 36,888					$ 46,208
Total	$ 383,721
Restricted common shares (in shares) | shares	4,038,853
Market price (in dollars per share) | $ / shares				$ 34.58
Market price multiplier to factor in restricted nature of the shares (as a percent)				90.00%
Number of additional restricted Company shares to be issued upon achievement of EBITDA-based metric (in shares) | shares	1,350,309
Number of shares issued | shares		1,346,282
Purchase consideration deposited into an escrow account					$ 10,000
Deposit term into an escrow account					2 years
Acquisition-related costs charged to Selling, general, and administrative expenses			$ 40			$ 1,394
Summary of the preliminary fair value determination of the acquired assets and liabilities
Cash and cash equivalents	$ 1,786
Accounts receivable	37,716
Inventories	5,546
Deferred income taxes	715
Prepaid expenses and other current assets	287
Property and equipment	494
Definite-lived intangible assets	181,700
Other noncurrent assets	163
Accounts payable	(25,088)
Accrued expenses - compensation and benefits	(1,653)
Accrued expenses - other	(852)
Deferred income taxes	(8,495)
Total identifiable net assets	192,319
Goodwill	191,402
Total acquisition price	383,721
Definite-lived intangible assets
Amount	181,700
Patient relationships | BioRx, LLC
Summary of the preliminary fair value determination of the acquired assets and liabilities
Definite-lived intangible assets	$ 130,000
Definite-lived intangible assets
Useful Life	10 years
Amount	$ 130,000
Noncompete employment agreements | BioRx, LLC
Summary of the preliminary fair value determination of the acquired assets and liabilities
Definite-lived intangible assets	$ 39,700
Definite-lived intangible assets
Useful Life	5 years
Amount	$ 39,700
Trade names and trademarks | BioRx, LLC
Summary of the preliminary fair value determination of the acquired assets and liabilities
Definite-lived intangible assets	$ 12,000
Definite-lived intangible assets
Useful Life	8 years
Amount	$ 12,000

BUSINESS ACQUISITIONS - Pro For

BUSINESS ACQUISITIONS - Pro Forma Data (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Pro Forma Operating Results
Net sales	$ 1,181,173	$ 1,050,498	$ 3,468,342	$ 2,945,803
Net income attributable to Diplomat Pharmacy, Inc.	$ 5,395	$ 15,081	$ 29,576	$ 28,618
Net income per common share - basic (in dollars per share)	$ 0.08	$ 0.23	$ 0.45	$ 0.46
Net income per common share - diluted (in dollars per share)	$ 0.08	$ 0.23	$ 0.43	$ 0.44

FAIR VALUE MEASUREMENTS - Recur

FAIR VALUE MEASUREMENTS - Recurring Basis (Details) - Recurring - Contingent consideration $ in Thousands	Dec. 31, 2015USD ($)
Fair value measurements
Asset (Liability)	$ (52,665)
Level 3
Fair value measurements
Asset (Liability)	$ (52,665)

FAIR VALUE MEASUREMENTS - Rollf

FAIR VALUE MEASUREMENTS - Rollforward of Level 3 Measurements (Details) - Level 3 - Contingent consideration $ in Thousands	9 Months Ended
	Sep. 30, 2016USD ($)
Level 3 measurements
Balance at beginning of the period	$ (52,665)
Changes in fair value	8,922
Payments	$ 43,743

GOODWILL AND DEFINITE-LIVED I36

GOODWILL AND DEFINITE-LIVED INTANGIBLE ASSETS (Details) $ in Thousands	Aug. 28, 2014USD ($)item	Sep. 30, 2016USD ($)	Sep. 30, 2016USD ($)	Dec. 31, 2015USD ($)	Dec. 31, 2014USD ($)
Changes in the carrying amount of goodwill
Balance as of beginning of period			$ 256,318
Miscellaneous			935
Balance as of end of period		$ 315,373	315,373	$ 256,318
Gross Carrying Amount		266,793	266,793	252,903
Accumulated Amortization/Impairment		(58,071)	(58,071)	(28,259)
Net Carrying Amount		208,722	208,722	224,644
Selling, General and Administrative Expenses
Changes in the carrying amount of goodwill
Impairment		4,804	4,804
Primrose
Changes in the carrying amount of goodwill
Number of unrelated third party entities (in entities) | item	2
Committed contribution	$ 5,000
Ownership percentage (as a percent)	51.00%
Amount contributed				2,000	$ 3,000
Patient relationships
Changes in the carrying amount of goodwill
Gross Carrying Amount		159,100	159,100	159,100
Accumulated Amortization/Impairment		(27,276)	(27,276)	(15,217)
Net Carrying Amount		131,824	131,824	143,883
Noncompete employment agreements
Changes in the carrying amount of goodwill
Gross Carrying Amount		54,689	54,689	50,199
Accumulated Amortization/Impairment		(15,940)	(15,940)	(8,111)
Net Carrying Amount		38,749	38,749	42,088
Physician relationships
Changes in the carrying amount of goodwill
Gross Carrying Amount		21,700	21,700	14,000
Accumulated Amortization/Impairment		(2,192)	(2,192)	(758)
Net Carrying Amount		19,508	19,508	13,242
Trade names and trademarks
Changes in the carrying amount of goodwill
Gross Carrying Amount		23,800	23,800	22,100
Accumulated Amortization/Impairment		(5,159)	(5,159)	(2,710)
Net Carrying Amount		18,641	18,641	19,390
Software licensing agreement
Changes in the carrying amount of goodwill
Gross Carrying Amount		2,647	2,647	2,647
Accumulated Amortization/Impairment		(2,647)	(2,647)
Net Carrying Amount				2,647
Software licensing agreement | Primrose
Changes in the carrying amount of goodwill
Amount contributed by unrelated third party entities	$ 2,647
Intellectual property
Changes in the carrying amount of goodwill
Gross Carrying Amount		2,157	2,157	2,157
Accumulated Amortization/Impairment		(2,157)	(2,157)
Net Carrying Amount				2,157
Intellectual property | Primrose
Changes in the carrying amount of goodwill
Amount contributed by unrelated third party entities	$ 2,157
Favorable supply agreement
Changes in the carrying amount of goodwill
Gross Carrying Amount		2,700	2,700	2,700
Accumulated Amortization/Impairment		$ (2,700)	(2,700)	(1,463)
Net Carrying Amount				$ 1,237
Valley Campus Pharmacy, Inc
Changes in the carrying amount of goodwill
Acquired during the period			$ 58,120

INVESTMENT IN NON-CONSOLIDATE37

INVESTMENT IN NON-CONSOLIDATED ENTITY (Details) - USD ($) $ in Thousands	1 Months Ended
	Oct. 31, 2015	Dec. 31, 2014	Sep. 30, 2016
Ageology
Schedule of Equity Method Investments
Ownership percentage (as a percent)			25.00%
Ageology | Affiliated entity | Chief Executive Officer
Schedule of Equity Method Investments
Amount loaned			$ 14,351
Physician Resource Management, Inc.
Schedule of Equity Method Investments
Ownership percentage (as a percent)	19.90%	15.00%
Cash paid for investment	$ 1,459	$ 3,500
Physician Resource Management, Inc. | Affiliated entity | Chief Executive Officer
Schedule of Equity Method Investments
Amount loaned			$ 250

DEBT (Details)

DEBT (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015	Apr. 01, 2015
Debt
Debt issuance costs	$ 3,571	$ 4,294
Line of credit | GE
Debt
Interest rate (as a percent)	4.50%
Amount of borrowings outstanding	$ 45,519	0
Maximum borrowing capacity	175,000		$ 175,000
Amount of borrowings available under the credit agreement	129,481	$ 166,691
Letters of credit | GE
Debt
Maximum borrowing capacity			10,000
Deferred draw term loan | GE
Debt
Maximum borrowing capacity	$ 25,000		25,000
Term Loan A | GE
Debt
Interest rate (as a percent)	3.02%	2.74%
Amount of borrowings outstanding	$ 112,500	$ 117,000
Maximum borrowing capacity			120,000
Swing loans | GE
Debt
Maximum borrowing capacity			$ 15,000
Minimum | Line of credit | GE
Debt
Monthly unused commitment fee (as a percent)	0.25%
Minimum | Deferred draw term loan | GE
Debt
Monthly unused commitment fee (as a percent)	0.50%
Maximum | Line of credit | GE
Debt
Monthly unused commitment fee (as a percent)	0.50%
Maximum | Deferred draw term loan | GE
Debt
Monthly unused commitment fee (as a percent)	0.75%
Other Noncurrent Assets | Line of credit
Debt
Debt issuance costs		$ 719
Base Rate | Term Loan A | GE
Debt
Variable rate basis	Base Rate
Interest rate margin (as a percent)	1.50%
Base Rate | Line Of Credit And Swingline Loan | GE
Debt
Variable rate basis	Base Rate
Interest rate margin (as a percent)	1.00%
LIBOR | Term Loan A | GE
Debt
Variable rate basis	LIBOR
Interest rate margin (as a percent)	2.50%
LIBOR | Line Of Credit And Swingline Loan | GE
Debt
Variable rate basis	LIBOR
Interest rate margin (as a percent)	2.00%

SHARE-BASED COMPENSATION - Stoc

SHARE-BASED COMPENSATION - Stock Option Activity (Details) - Stock options - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Number of Options
Outstanding at beginning of period (in shares)	4,114,685
Granted (in shares)	846,532
Exercised (in shares)	(511,719)
Expired/cancelled (in shares)	(65,334)
Outstanding at end of period (in shares)	4,384,164	4,114,685
Exercisable at end of period (in shares)	1,614,796
Weighted Average Exercise Price
Outstanding at beginning of period (in dollars per share)	$ 17.53
Granted (in dollars per share)	28.64
Exercised (in dollars per share)	7.34
Expired/cancelled (in dollars per share)	22.95
Outstanding at end of period (in dollars per share)	20.78	$ 17.53
Exercisable at end of period (in dollars per share)	$ 11.09
Weighted Average Remaining Contractual Life
Outstanding at beginning of period	7 years 7 months 6 days	7 years 8 months 12 days
Outstanding at end of period	7 years 7 months 6 days	7 years 8 months 12 days
Exercisable at end of period	5 years 10 months 24 days
Aggregate Intrinsic Value
Outstanding at beginning of period	$ 76,567
Outstanding at end of period	46,822	$ 76,567
Exercisable at end of period	$ 30,692

SHARE-BASED COMPENSATION - Info

SHARE-BASED COMPENSATION - Information and Valuation Assumptions (Details) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended			9 Months Ended
	Mar. 31, 2015USD ($)shares	Sep. 30, 2016USD ($)$ / shares	Mar. 31, 2016shares	Sep. 30, 2015USD ($)	Sep. 30, 2016USD ($)item$ / sharesshares	Sep. 30, 2015USD ($)
Additional disclosures
Excess tax benefits related to share-based awards reported as decrease to operating activities						$ (14,348)
Excess tax benefits related to share-based awards reported as increase to financing activities						14,348
2014 Plan
Assumptions used to determine the valuation of granted options
Expected dividend yield (as a percent)					0.00%
Expected life					6 years 3 months
Maximum | 2014 Plan
Assumptions used to determine the valuation of granted options
Exercise price of options | $ / shares		$ 36.60			$ 36.60
Expected volatility (as a percent)					24.76%
Risk-free interest rate for the estimated expected term (as a percent)					1.64%
Minimum | 2014 Plan
Assumptions used to determine the valuation of granted options
Exercise price of options | $ / shares		$ 25.92			$ 25.92
Expected volatility (as a percent)					23.90%
Risk-free interest rate for the estimated expected term (as a percent)					1.23%
Stock options
Share-based compensation
Granted (in shares) | shares					846,532
Weighted average grant-date fair value of options granted (in dollars per share) | $ / shares					$ 7.91
Additional disclosures
Total compensation expense		$ 1,236		$ 1,232	$ 4,230	2,389
Stock options | 2007 Stock Option Plan
Additional disclosures
Stock options repurchased to buy shares from certain current and former employees (in shares) | shares	1,641,387
Cash consideration for redeemed stock options	$ 36,298
Incremental compensation expense	$ 0
Restricted Stock Awards
Additional disclosures
Total compensation expense		$ 120		$ 38	$ 278	$ 113
Service-based stock options | 2014 Plan
Share-based compensation
Granted (in shares) | shares					465,000
Percentage of options exercisable in installments beginning on the first anniversary of the grant date and each of the three anniversaries thereafter					25.00%
Maximum term of stock option plan					10 years
Number of anniversary dates upon which options become exercisable					3
Performance-based stock options | 2014 Plan
Share-based compensation
Granted (in shares) | shares			381,532
Percentage of options exercisable in installments beginning on the first anniversary of the grant date and each of the three anniversaries thereafter					25.00%
Maximum term of stock option plan					10 years
Number of installments for vesting (in installments) | item					4

INCOME PER COMMON SHARE (Detail

INCOME PER COMMON SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Numerator:
Net income attributable to Diplomat Pharmacy, Inc.	$ 5,408	$ 15,961	$ 29,371	$ 22,210
Denominator:
Weighted average common shares outstanding, basic (in shares)	66,511,118	63,890,060	65,714,727	59,507,347
Weighted average dilutive effect of stock options and restricted stock awards (in shares)	1,848,493	1,622,995	1,919,076	2,251,632
Weighted average dilutive effect of contingent consideration (in shares)			448,761
Weighted average common shares outstanding, diluted (in shares)	68,359,611	65,513,055	68,082,564	61,758,979
Net income per common share:
Basic (in dollars per share)	$ 0.08	$ 0.25	$ 0.45	$ 0.37
Diluted (in dollars per share)	$ 0.08	$ 0.24	$ 0.43	$ 0.36
Contingent consideration
Net income per common share:
Anti-dilutive securities excluded (in shares)		1,350,309		1,350,309
Performance-based stock options
Net income per common share:
Anti-dilutive securities excluded (in shares)	381,532	678,234	269,728	550,512
Service-based stock options
Net income per common share:
Anti-dilutive securities excluded (in shares)	1,603,375	615,504	1,504,739	270,421