Diplomat Pharmacy (DPLO) 10-Q 10 May 19 2019 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 03, 2019
Document and Entity Information
Entity Registrant Name	Diplomat Pharmacy, Inc.
Entity Central Index Key	0001610092
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
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		74,713,696
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Current assets:
Cash and equivalents	$ 2,739	$ 9,485
Receivables, net	329,881	326,602
Inventories	174,507	210,573
Prepaid expenses and other current assets	10,544	9,596
Total current assets	517,671	556,256
Property and equipment, net	31,244	34,525
Capitalized software for internal use, net	29,844	30,506
Operating lease right-of-use assets	27,325
Goodwill	609,592	609,592
Definite-lived intangible assets, net	227,005	240,810
Other noncurrent assets	4,387	4,670
Total assets	1,447,068	1,476,359
Current liabilities:
Accounts payable	283,893	308,084
Rebates payable to PBM customers	21,573	23,264
Borrowings on revolving line of credit	156,500	176,300
Current portion of long-term debt	11,500	11,500
Current portion of operating lease liabilities	4,239
Accrued expenses:
Compensation and benefits	12,228	13,348
Contingent consideration	5,225	5,075
Other	22,361	21,014
Total current liabilities	517,519	558,585
Long-term debt, less current portion	436,187	438,369
Noncurrent operating lease liabilities	23,950
Deferred income taxes	3,233	2,781
Contingent consideration	1,880	1,820
Derivative liability	6,419	4,292
Deferred gain		5,175
Other		253
Total liabilities	989,188	1,011,275
Shareholders' equity:
Preferred stock (10,000,000 shares authorized; none issued and outstanding)
Common stock (no par value; 590,000,000 shares authorized; 74,713,696 and 74,474,677 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively)	634,214	629,411
Additional paid-in capital	49,313	50,544
Accumulated deficit	(219,228)	(210,579)
Accumulated other comprehensive loss	(6,419)	(4,292)
Total shareholders' equity	457,880	465,084
Total liabilities and shareholders' equity	$ 1,447,068	$ 1,476,359

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2019	Dec. 31, 2018
Condensed Consolidated Balance Sheets
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	74,713,696	74,474,677
Common shares, outstanding shares	74,713,696	74,474,677

Condensed Consolidated Statemen

Condensed Consolidated Statements of Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Condensed Consolidated Statements of Comprehensive Loss
Net sales	$ 1,256,808	$ 1,342,484
Cost of sales	(1,177,588)	(1,252,106)
Gross profit	79,220	90,378
Selling, general and administrative expenses	(82,868)	(81,687)
(Loss) income from operations	(3,648)	8,691
Other (expense) income:
Interest expense	(10,215)	(10,427)
Other	181	418
Total other expense	(10,034)	(10,009)
Loss before income taxes	(13,682)	(1,318)
Income tax (expense) benefit	(619)	868
Net loss	(14,301)	(450)
Other comprehensive loss, net of tax	(2,127)
Total comprehensive loss	$ (16,428)	$ (450)
Loss per common share, basic and diluted (in dollars per share)	$ (0.19)	$ (0.01)
Weighted average common shares outstanding, basic and diluted (in shares)	74,460,990	73,996,313

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash flows from operating activities:
Net loss	$ (14,301)	$ (450)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	21,395	23,951
Share-based compensation expense	3,572	3,161
Net provision for doubtful accounts	2,447	2,322
Amortization of debt issuance costs	961	1,132
Change in fair value of contingent consideration	210
Contingent consideration payment		(470)
Deferred income tax expense (benefit)	452	(547)
Other	633	(3)
Changes in operating assets and liabilities:
Accounts receivable	(5,726)	21
Inventories	36,779	11,903
Accounts payable	(24,191)	8,465
Rebates payable	(1,691)	3,288
Other assets and liabilities	3,112	(4,201)
Net cash provided by operating activities	23,652	48,572
Cash flows from investing activities:
Expenditures for property and equipment	(6,840)	(567)
Expenditures for capitalized software for internal use	(897)	(2,302)
Other	14	3
Net cash used in investing activities	(7,723)	(2,866)
Cash flows from financing activities:
Net payments on revolving line of credit	(19,800)	(48,250)
Payments on long-term debt	(2,875)	(76,875)
Payments of debt issuance costs		(171)
Proceeds from issuance of stock upon stock option exercises		1,909
Contingent consideration payment		(530)
Net cash used in financing activities	(22,675)	(123,917)
Net decrease in cash and equivalents	(6,746)	(78,211)
Cash and equivalents at beginning of period	9,485
Cash and equivalents at end of period	2,739	6,040
Supplemental disclosures of cash flow information:
Cash paid for interest	(9,254)	(10,160)
Cash paid for income taxes	$ (67)	$ (48)

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands	Common Stock	Additional Paid-In Capital	Retained Earnings (Accumulated Deficit)	Accumulated Other Comprehensive Loss	Total
Balance at Dec. 31, 2017	$ 619,235	$ 38,450	$ 91,816		$ 749,501
Balance (in shares) at Dec. 31, 2017	73,871,424
Changes in Shareholders' Equity
Net loss			(450)		(450)
Stock issued upon exercises of stock options	$ 2,461	(552)			1,909
Stock issued upon exercises of stock options (in shares)	200,677
Stock issued upon vesting of restricted stock units	$ 157	(157)
Stock issued upon vesting of restricted stock units (in shares)	10,705
Share-based compensation		3,161			3,161
Balance at Mar. 31, 2018	$ 621,853	40,902	91,240		753,995
Balance (in shares) at Mar. 31, 2018	74,082,806
Changes in Shareholders' Equity
Cumulative effect adjustment | ASU 2014-09			(126)		(126)
Balance at Dec. 31, 2018	$ 629,411	50,544	(210,579)	$ (4,292)	$ 465,084
Balance (in shares) at Dec. 31, 2018	74,474,677				74,474,677
Changes in Shareholders' Equity
Net loss			(14,301)		$ (14,301)
Stock issued upon vesting of restricted stock units	$ 4,766	(4,766)
Stock issued upon vesting of restricted stock units (in shares)	244,948
Share-based compensation		3,572			3,572
Restricted stock award activity	$ 37	(37)
Restricted stock award activity (in shares)	(5,929)
Other comprehensive loss, net of tax				(2,127)	(2,127)
Balance at Mar. 31, 2019	$ 634,214	$ 49,313	(219,228)	$ (6,419)	$ 457,880
Balance (in shares) at Mar. 31, 2019	74,713,696				74,713,696
Changes in Shareholders' Equity
Cumulative effect adjustment | ASU 2016-02			$ 5,652		$ 5,652

DESCRIPTION OF BUSINESS AND BAS

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION	3 Months Ended
	Mar. 31, 2019
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION	1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Description of Business Diplomat Pharmacy, Inc. and its consolidated subsidiaries (the “Company”) is the largest independent provider of specialty pharmacy and infusion services in the United States of America (“U.S.”). The Company is focused on improving the lives of patients with complex chronic diseases while also delivering unique solutions for manufacturers, hospitals, payers and providers. The Company’s patient-centric approach positions it at the center of the healthcare continuum for treatment of complex chronic disease states, including oncology, specialty infusion therapy, immunology, hepatitis, multiple sclerosis and many other serious or long-term conditions. The Company operates in two reportable segments - Specialty and Pharmacy Benefit Management (“PBM”). The Specialty segment offers a broad range of innovative solutions to address the dispensing, delivery, dosing and reimbursement of clinically intensive, high-cost specialty drugs and a wide range of applications. The PBM segment provides services designed to help customers reduce the cost and manage the complexity of their prescription drug programs. The Company dispenses to patients in all U.S. states and territories through its advanced distribution centers and manages centralized clinical call centers to deliver localized services on a national scale. Basis of Presentation Unaudited Condensed Consolidated Financial Statements The condensed consolidated balance sheet as of March 31, 2019, and the condensed consolidated statements of comprehensive loss, changes in shareholders’ equity and cash flows for the three months ended March 31, 2019 and 2018 are unaudited. The 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 unaudited condensed consolidated 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 for the periods presented. The results of operations for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 or for any future annual or interim period. The consolidated balance sheet at December 31, 2018 included herein was derived from the audited financial statements as of that date. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Reclassifications During the second quarter of 2018, the Company changed its accounting policy to classify shipping and handling costs incurred at its dispensing pharmacies in “Cost of sales” which were previously reported in “Selling, general and administrative expenses” (“SG&A”) in its consolidated statements of comprehensive loss. The amount of the reclassifications from SG&A to Cost of sales was $15,139 for the three months ended March 31, 2018. The Company has historically classified the cost of its nursing support services within SG&A as these amounts were not considered significant in relation to total cost of sales. During the second quarter of 2018, the Company reclassified these nursing support service costs from SG&A to Cost of sales in its consolidated statements of comprehensive loss. The amount reclassified was $5,095 for the three months ended March 31, 2018. In addition, certain prior year amounts have been reclassified to conform with the current year presentation. These reclassifications, discussed above, had no impact on “(Loss) income from operations,” “Net loss,” or “Loss per common share, basic and diluted,” for the three months ended March 31, 2018.

NEW ACCOUNTING STANDARDS

NEW ACCOUNTING STANDARDS	3 Months Ended
	Mar. 31, 2019
NEW ACCOUNTING STANDARDS
NEW ACCOUNTING STANDARDS	2. NEW ACCOUNTING STANDARDS Adoption of New Accounting Standard Leases The Company has adopted Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842) and all subsequent amendments as of January 1, 2019. Topic 842 requires a lessee to recognize the following for all leases, except short-term leases, at the commencement date: (1) a lease liability which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Topic 842 also requires expanded disclosures. Topic 842 permits entities to use a modified retrospective transition approach to apply the guidance as of the beginning of the earliest period presented in the financial statements in the period adopted or the optional transition method which allows entities to apply the new guidance at the adoption date and record a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, and not to restate the comparative periods presented. The Company adopted Topic 842 as of January 1, 2019 using the optional transition method. Therefore, the comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods. The adoption of the standard resulted in the recognition of net operating lease right-of-use assets of $28.4 million and operating lease liabilities of $29.3 million on the condensed consolidated balance sheet as of January 1, 2019 primarily related to its real estate operating leases. The operating lease right-of-use assets includes the impact of deferred rent. The Company does not have any finance leases. Also, upon adoption, the Company recorded a cumulative-effect adjustment, after tax, of $5,652 (a valuation allowance was established against the full amount of the net deferred taxes of $1,387) to increase retained earnings for the amount of a previously deferred gain on a sale-leaseback transaction that closed in 2018. Such gain recorded on the sale-leaseback transaction would have been fully recognized under Topic 842. The Company elected to apply the package of practical expedients upon transition, which includes no reassessment of whether existing contracts are or contain leases and allowed for the lease classification for existing leases to be retained. The Company did not elect the practical expedient to use hindsight, and accordingly the initial lease term did not differ under the new standard versus prior accounting practice. After transition, in certain instances, the cost of renewal options will be recognized earlier in the term of the lease than under the previous lease accounting rules. The operating lease agreements include lease and non-lease components for which the Company elected the practical expedient to not separate non-lease components from the lease components but instead to combine them and account for them as a single lease component and will continue to do so for its real estate operating leases. The Company has selected as its accounting policy to keep leases with a term of twelve months or less off the balance sheet and recognize these lease payments on a straight-line basis over the lease term. The Company has recorded operating lease right-of-use assets and operating lease liabilities in its condensed consolidated balance sheet at March 31, 2019. The lessors’ rate implicit in the operating leases was not available to the Company and was not determinable from the terms of the lease. Therefore, the Company used its incremental borrowing rate to determine the present value of the future lease payments. The incremental borrowing rates were not observable and therefore, the rates were estimated primarily using a methodology dependent on the Company’s financial condition, creditworthiness, and availability of certain observable data. In particular, the Company considered its actual cost of borrowing for collateralized loans and its credit rating, along with the corporate bond yield curve in estimating its incremental borrowing rates. These estimated incremental borrowing rates were applied to future lease payments to determine the present value of the operating lease liability for each lease. The new standard did not have a significant impact on the timing or measurement of lease expense in the condensed consolidated statement of comprehensive loss and had no impact on the condensed consolidated statement of cash flows for the three months ended March 31, 2019. As noted above, the comparative prior period information for the three months ended March 31, 2018 has not been adjusted and continues to be reported under the Company’s historical lease recognition policies under ASC Topic 840, Leases. The disclosure requirements of Topic 842 are included within Note 13, Leases. Accounting Standards Issued But Not Yet Adopted Credit Losses In June 2016, the Financial Accounting Standards Board issued ASU No. 2016-13, Financial Instruments— Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which is intended to improve financial reporting by requiring the recording of credit losses on financial assets, including receivables, on a more timely basis. The guidance will replace the current incurred loss accounting model with an expected loss approach. The new methodology requires an entity to estimate the credit losses expected over the life of an exposure based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses. ASU No. 2016-13 is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2019. The effect of adoption of the standard is required as an adjustment to the opening balance of retained earnings as of the beginning of the first reporting period in which ASU No. 2016-13 is effective. The Company has not yet determined the magnitude of any such one-time adjustment or the overall impact of ASU No. 2016-13 on its consolidated financial statements.

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	3 Months Ended
	Mar. 31, 2019
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., and its wholly owned subsidiaries. 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. Receivables, net Receivables, net consisted of the following: March 31, December 31, 2019 2018 Trade receivables, net of allowances of $(27,191) and $(25,342), respectively $ 312,371 $ 299,407 Rebate receivables 12,129 22,375 Other receivables 5,381 4,820 $ 329,881 $ 326,602 Trade receivables are stated at the invoiced amount. Trade receivables primarily include amounts due from clients, third-party pharmacy benefit managers and insurance providers and are based on contracted prices. Trade receivables are unsecured and require no collateral. Trade receivable terms vary by payer, but generally are due within 30 days after the sale of the product or performance of the service. Rebate receivables are amounts due from pharmaceutical manufacturers related to drug purchases by participants of the various pharmacy benefit plans that the Company manages, a portion of which, depending on contract terms, are paid back to the Company’s customers. The Company estimates these rebates at period-end based on its contractual arrangements with its manufacturers and such rebates are recorded as a reduction of cost of sales. Inventories Inventories consist of prescription and over-the-counter medications and are stated at the lower of cost or net realizable value. 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.

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	3 Months Ended
	Mar. 31, 2019
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS	4. 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’s 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 should 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 liabilities that are measured and disclosed at fair value on a recurring basis: Asset / Valuation Valuation (Liability) Level 2 Level 3 Technique March 31, 2019: Contingent consideration $ (7,105) $ — $ (7,105) C Interest rate swaps (Note 7) (6,419) (6,419) — A December 31, 2018: Contingent consideration $ (6,895) $ — $ (6,895) C Interest rate swaps (Note 7) (4,292) (4,292) — A The following table sets forth the change in contingent consideration (Level 3 measurements) for the three months ended March 31, 2019: Contingent Consideration Balance at January 1, 2019 $ (6,895) Change in fair value (210) Payments — Balance at March 31, 2019 $ (7,105) 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.

DEFINITE-LIVED INTANGIBLE ASSET

DEFINITE-LIVED INTANGIBLE ASSETS	3 Months Ended
	Mar. 31, 2019
DEFINITE-LIVED INTANGIBLE ASSETS
DEFINITE-LIVED INTANGIBLE ASSETS	5. DEFINITE-LIVED INTANGIBLE ASSETS Definite-lived intangible assets consisted of the following: March 31, 2019 Weighted Average Gross Amortization Carrying Accumulated Carrying Period Amount Amortization Amount Customer relationships 9.6 $ 100,200 $ (4,637) $ 95,563 Patient relationships 5.7 170,100 (72,474) 97,626 Trade names and trademarks 1.7 30,650 (22,307) 8,343 Non-compete employment agreements 1.5 61,389 (47,136) 14,253 Physician relationships 4.6 21,700 (10,480) 11,220 $ 384,039 $ (157,034) $ 227,005 December 31, 2018 Weighted Average Gross Amortization Carrying Accumulated Carrying Period Amount Amortization Amount Customer relationships 9.8 $ 100,200 $ (1,238) $ 98,962 Patient relationships 5.9 170,100 (67,964) 102,136 Trade names and trademarks 1.8 30,650 (20,270) 10,380 Non-compete employment agreements 1.6 61,389 (44,100) 17,289 Physician relationships 4.8 21,700 (9,657) 12,043 $ 384,039 $ (143,229) $ 240,810 Amortization expense for the three months ended March 31, 2019 and 2018 was $13,805 and $17,010, respectively.

DEBT

DEBT	3 Months Ended
	Mar. 31, 2019
DEBT
DEBT	6. DEBT Total outstanding debt consisted of the following: March 31, December 31, 2019 2018 Short-term debt, borrowings on revolving line of credit $ 156,500 $ 176,300 Long-term debt: Term loan A $ 140,625 $ 142,500 Term loan B 321,000 322,000 Total 461,625 464,500 Unamortized debt issuance costs (13,938) (14,631) Total long-term debt 447,687 449,869 Less: current portion 11,500 11,500 Long-term debt, less current portion $ 436,187 $ 438,369 The Company has a credit agreement with JP Morgan Chase Bank, N.A., and Capital One, National Association, that provides for a $250,000 revolving line of credit and a $150,000 Term Loan A and $400,000 Term Loan B (“credit facility”). The credit agreement also provides for issuances of letters of credit of up to $10 million and swingline loans up to $20 million. The revolving line of credit and Term Loan A mature on December 20, 2022 and Term Loan B matures on December 20, 2024. Interest on the revolving line of credit and Term Loan A is accrued at a rate equal to (i) the monthly LIBOR plus an applicable margin or (ii) a base rate that is the highest of the U.S. prime rate, federal funds rate (plus ½ of 1 percent) and LIBOR (plus 1 percent), at the Company’s option. The applicable margin is adjusted quarterly based on the Company’s leverage ratio. At March 31, 2019, the applicable margin was 2.25 percent for LIBOR loans and 1.25 percent for base rate loans. Interest on the Term Loan B is accrued similarly to Term Loan A, except the applicable margin is fixed at 4.50 percent for LIBOR loans and 3.50 percent for base rate loans. The Company’s Term Loan A and Term Loan B interest rates were 4.75 percent and 7.0 percent, respectively, at March 31, 2019 and 4.78 percent and 7.03 percent, respectively, at December 31, 2018. The interest rate on the revolving line of credit was 5.0 percent and 5.19 percent at March 31, 2019 and December 31, 2018, respectively. The Company is charged a monthly unused commitment fee ranging from 0.3 percent to 0.4 percent on the average unused daily balance on its $250,000 revolving line of credit. The Company had weighted average borrowings on its revolving line of credit of $165,064 and $163,992 and maximum borrowings on its revolving line of credit of $196,300 and $188,250 during the three months ended March 31, 2019 and 2018, respectively. The Company had $93,500 and $73,700 available to borrow on its revolving line of credit at March 31, 2019 and December 31, 2018, respectively. Revolving line of credit-related unamortized debt issuance costs of $3,978 and $4,246 as of March 31, 2019 and December 31, 2018, respectively, are classified within “Other noncurrent assets” in the condensed consolidated balance sheets. The Term Loan A and Term Loan B requires quarterly principal payments of $1,875 and $1,000, plus accrued interest, respectively. During the three months ended March 31, 2018, the Company made a voluntary prepayment of $74,000 on the Term Loan B. The credit facility is collateralized by substantially all of the Company’s assets. The credit facility contains covenants that requires the Company, among other things, to provide financial and other information reporting, and to provide notice upon certain events. These covenants also place restrictions on the Company’s ability to incur additional indebtedness, pay dividends or make other distributions, redeem or repurchase capital stock, make investments and loans, and enter into certain transactions, including selling assets, engaging in mergers or acquisitions, or engaging in transactions with affiliates. The Company was in compliance with all such covenants as of March 31, 2019.

INTEREST RATE SWAPS

INTEREST RATE SWAPS	3 Months Ended
	Mar. 31, 2019
INTEREST RATE SWAPS
INTEREST RATE SWAPS	7. INTEREST RATE SWAPS The Company enters into interest rate swap contracts to hedge variable interest rate risk related to certain variable rate borrowings. These interest rate swap contracts are designated as cash flow hedges for the purposes of hedge accounting treatment and any unrealized gains or losses that result from changes in the fair value of the interest rate swap contracts are reported in “Accumulated other comprehensive loss” as a component of shareholders’ equity. The Company measures hedge effectiveness on a quarterly basis. The Company does not use derivative financial instruments for speculative purposes. In 2018, the Company became a party to two pay-fixed and receive-floating interest rate swaps, which are effective on March 29, 2019 and terminate on March 31, 2022. The combined notional amount of the interest rate swaps was $290.6 million at March 31, 2019 and December 31, 2018, respectively. At March 31, 2019 and December 31, 2018, the fair value of the interest rate swaps (derivative liability) was $6,419 and $4,292, respectively (a valuation allowance was established against the full amount of the net deferred tax benefit of $1,643 and $1,099, respectively). The Company recognized other comprehensive loss of $2,127 during the three months ending March 31, 2019.

REVENUE

REVENUE	3 Months Ended
	Mar. 31, 2019
REVENUE
REVENUE	8. REVENUE The following table disaggregates net sales by therapeutic categories for the Specialty segment and by product and service distribution channels for the PBM segment: Three Months Ended March 31, 2019 2018 Specialty Segment: Oncology $ 686,634 $ 686,897 Specialty infusion 178,448 165,717 Immunology 135,692 135,599 Other 167,591 164,766 Total Specialty segment 1,168,365 1,152,979 PBM Segment: Retail networks 67,412 145,161 Specialty pharmacy 16,097 22,313 Mail order 10,965 16,993 Other 3,443 7,001 Total PBM segment 97,917 191,468 Inter-segment eliminations (9,474) (1,963) Total net sales $ 1,256,808 $ 1,342,484 Rebates retained, which represents the difference between the manufacturers’ rebates earned and rebates incurred to customers, approximated 11.6% of total gross profit for each of the three months ended March 31, 2019 and 2018.

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION	3 Months Ended
	Mar. 31, 2019
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION	9. SHARE-BASED COMPENSATION Stock Options A summary of the Company’s stock option activity as of and for the three months ended March 31, 2019 is as follows: Weighted Weighted Average Average Remaining Aggregate Number Exercise Contractual Intrinsic of Options Price Life Value (Years) Outstanding at January 1, 2019 5,186,025 $ 18.42 8.0 $ 2,910 Granted — — Exercised — — Expired/cancelled 380,147 18.77 Outstanding at March 31, 2019 4,805,878 $ 18.40 7.9 $ 171 Exercisable at March 31, 2019 2,140,475 $ 18.48 7.2 $ 171 The Company recorded share-based compensation expense associated with stock options of $1,793 and $2,155 for the three months ended March 31, 2019 and 2018, respectively.At March 31, 2019, the total compensation cost related to nonvested options not yet recognized was $13,623 which will be recognized over a weighted average period of 2.2 years, assuming all employees complete their respective service periods for vesting of the options. Restricted Stock Units (“RSU” or “RSUs”) A summary of the Company’s RSU activity as of and for the three months ended March 31, 2019 is as follows: Weighted Average Number Grant Date of RSUs Fair Value Nonvested at January 1, 2019 1,869,029 $ 21.67 Granted 1,498,500 13.78 Vested and issued (244,948) 19.46 Cancelled / expired (767,247) 23.54 Nonvested at March 31, 2019 2,355,334 $ 16.18 The Company granted a performance-based award of 1,498,500 RSUs as a sign-on inducement award to an executive during the second quarter of 2018. The award will be earned or forfeited based upon the Company’s performance relative to specified cumulative Adjusted EBITDA and revenue goals for the years ending December 31, 2018 and 2019 and the executive’s completion of the service condition. In January 2019, the performance goals were measurable and determinable, therefore, a grant date for accounting purposes was established. The Company is accounting for these performance-based RSUs under the current presumption that the award will be forfeited. The Company recorded share-based compensation expense associated with RSUs of $1,653 and $868 for the three months ended March 31, 2019 and 2018, respectively. At March 31, 2019, the total compensation cost related to nonvested RSUs not yet recognized was $14,985, which will be recognized over the next 1.78 years, assuming all employees complete their respective service periods for vesting of the RSUs. Restricted Stock Awards (“RSA” or RSAs”) A summary of the Company’s RSA activity as of and for the three months ended March 31, 2019 is as follows: Number Weighted of Shares Average Subject to Grant Date Restriction Fair Value Nonvested at January 1, 2019 43,355 $ 20.91 Vested (2,559) 14.65 Forfeited (5,929) 21.63 Nonvested at March 31, 2019 34,867 21.24 The Company recorded share-based compensation expense associated with RSAs of $126 and $138 for the three months ended March 31, 2019 and 2018, respectively. At March 31, 2019, the total compensation cost related to nonvested RSAs not yet recognized was $231 which will be recognized during 2019, assuming the non-employee directors complete their service period for vesting of the RSAs.

LOSS PER COMMON SHARE

LOSS PER COMMON SHARE	3 Months Ended
	Mar. 31, 2019
LOSS PER COMMON SHARE
LOSS PER COMMON SHARE	10. LOSS PER COMMON SHARE Basic (loss) income per common share is computed by dividing net (loss) income by the weighted average number of common shares outstanding during the period. Diluted income per common share further includes any common shares available to be issued upon exercise of outstanding service-based stock options; exercise of outstanding performance-based stock options for which all performance conditions were satisfied; and satisfaction of all contingent consideration performance conditions; and RSAs and RSUs, if such inclusions would be dilutive. The potentially dilutive common shares are determined for inclusion in diluted income per common share using the treasury stock method. For periods of net loss, basic and diluted per common share information are the same. The following table sets forth the computation of basic and diluted loss per common share: Three Months Ended March 31, 2019 2018 Numerator: Net loss $ (14,301) $ (450) Denominator: Weighted average common shares outstanding, basic 74,460,990 73,996,313 Weighted average dilutive effect of stock options, RSAs and RSUs — — Weighted average common shares outstanding, diluted 74,460,990 73,996,313 Loss per common share: Basic $ (0.19) $ (0.01) Diluted $ (0.19) $ (0.01) The Company had a net loss for the three months ended March 31, 2019 and 2018. As a result, basic and diluted loss per common share were the same as any potentially dilutive securities would be anti-dilutive. In the absence of a net loss, the weighted average dilutive effect of stock options, RSUs and RSAs would have been 205,058 for the three months ended March 31, 2019. The weighted average effect of certain common stock equivalents including stock options, RSUs and RSAs were excluded from the computation of weighted average diluted shares outstanding as inclusion of such items would be anti-dilutive, are summarized as follows: Three Months Ended March 31, 2019 2018 Service-based and earned performance-based stock options 3,946,288 4,011,211 Unearned performance-based stock options 574,138 574,138 Weighted average service-based RSUs 1,010,148 51,553 Weighted average performance based RSUs 1,523,451 7,751 Weighted average RSAs 17,911 — Total 7,071,936 4,644,653

INCOME TAXES

INCOME TAXES	3 Months Ended
	Mar. 31, 2019
INCOME TAXES
INCOME TAXES	11. INCOME TAXES The reconciliation of income taxes computed at the U.S. federal statutory tax rate to income tax (expense) benefit is as follows: Three Months Ended March 31, 2019 2018 Income tax benefit at U.S. statutory rate $ 2,873 $ 277 Tax effect from: State income taxes, net of federal benefit (323) 279 State income taxes, valuation allowance (296) — Share-based compensation (709) 218 Valuation allowance (1,994) — Disallowed compensation (64) 42 Other (106) 52 Income tax (expense) benefit $ (619) $ 868 In determining the requirement for a valuation allowance against its deferred tax assets, the Company considers its historical and projected financial results of the legal entity or consolidated group recording the net deferred tax asset, along with other available positive and negative evidence. Due primarily to the parent company, along with several of its subsidiaries, being in a three-year cumulative loss from continuing operations position at March 31, 2019, the Company has determined it more likely than not its consolidated deferred tax asset and a substantial portion of separate entities’ deferred tax assets established for state loss carryforwards, will not be realized as a benefit in the future. Accordingly, the Company has increased its valuation allowance against these net deferred tax assets by $2,290 at March 31, 2019.

RELATED PARTY TRANSACTION

RELATED PARTY TRANSACTION	3 Months Ended
	Mar. 31, 2019
RELATED PARTY TRANSACTION
RELATED PARTY TRANSACTION	12. RELATED PARTY TRANSACTION In December 2018, the Company signed a definitive agreement with ReactiveCore, Inc. (“ReactiveCore”) to provide information technology services to the Company over a period of three years, commencing on January 1, 2019. Kenneth Klepper, a member of the Board of Directors, is the co-founder, chairman and chief executive officer of ReactiveCore. Prior to the signing of this agreement, the Board of Directors reviewed and approved this transaction in accordance with the Company’s related persons transaction policy. The Company will pay base fees to ReactiveCore of approximately $2,400 over the term of the agreement, with the potential of paying additional fees for the provision of additional services. During the three months ended March 31, 2019, the Company incurred a three-year licensing fee of $1,946 for the term of the agreement, which has been recorded in capitalized software for internal use, net in the condensed consolidated balance sheet.

LEASES

LEASES	3 Months Ended
	Mar. 31, 2019
LEASES
LEASES	13. LEASES The Company leases many of its pharmacy locations, office facilities, distribution centers, and certain office equipment through noncancelable operating lease contracts. Such noncancelable operating lease contracts convey the right to control such property for a period of time in exchange for consideration. The operating leases have initial terms ranging from three to 12 years and generally have options to extend for one or two five -year periods. Additionally, most frequently, the lease contracts include a provision for early termination after a specified time period along with payment of a termination fee. Beginning in 2019, the lease term, for accounting purposes, will include renewal option periods when it is reasonably certain that the option to extend the lease will be exercised based on the facts and circumstances at lease commencement. The lease agreements, most often, provide for rental payments that increase over the lease term based on a fixed percentage or specified amount. Additionally, the Company, in most cases, is required to pay real estate taxes, insurance costs and other occupancy costs such as common area maintenance that vary over the lease term. Rent expense was $1,886 for the three months ended March 31, 2018. The components of lease expense in the condensed consolidated statements of comprehensive loss for the three months ended March 31, 2019, were as follows: Operating lease cost $ 2,059 Variable lease cost 377 Short-term lease cost 108 Total $ 2,544 Maturities of lease liabilities for each of the next five years and thereafter, including reconciliation to the lease liabilities, were as follows: 2019 (excluding the three months ended March 31, 2019) $ 4,567 2020 5,473 2021 4,832 2022 4,195 2023 3,311 Thereafter 14,386 Total future lease payments 36,764 Less: imputed interest costs (a) (8,575) Lease liabilities $ 28,189 (a) Computed using the estimated incremental borrowing rate for each lease Other Information related to the Company's lease liabilities as of and for the three months ended March 31, 2019 was as follows: Cash paid for amounts included in the measurement of lease liabilities Operating cash flows for operating leases $ 1,585 Weighted average remaining lease term (in years) 7.76 Weighted average discount rate 6.77 %

CONTINGENCIES

CONTINGENCIES	3 Months Ended
	Mar. 31, 2019
CONTINGENCIES
CONTINGENCIES	14. CONTINGENCIES On November 10, 2016, a putative class action complaint was filed in the U.S. District Court for the Eastern District of Michigan against Diplomat Pharmacy, Inc. and certain former officers of the Company. Following the appointment of lead plaintiffs and lead counsel, an amended complaint was filed on April 11, 2017. The amended complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 in connection with public filings made between February 29, 2016 and November 2, 2016 (the “potential class period”). The plaintiffs seek to represent a class of shareholders who purchased stock in the potential class period. The complaint seeks unspecified monetary damages and other relief. The Company filed a motion to dismiss the amended complaint on May 24, 2017. The court issued orders denying the Company’s motion to dismiss on January 19, 2018 and the Company’s motion for reconsideration of its motion to dismiss on August 9, 2018. The parties reached an agreement-in-principle on April 22, 2019 to resolve the litigation. The court preliminarily approved the settlement on May 7, 2019, and a final settlement approval hearing is scheduled for August 20,2019. If approved by the court, the settlement would not have a material impact on the Company’s results of operations, financial condition or cash flows. On February 10, 2017, the Company’s Board of Directors received a demand letter from a purported shareholder containing allegations similar to those contained in the putative class action complaint described above. The letter demanded that the Board of Directors take action to remedy the alleged violations. In response, the Board of Directors established a Special Independent Committee of its disinterested and independent members to investigate the claims. Subsequently, on June 2, 2017, the shareholder filed a putative shareholder’s derivative lawsuit in the Michigan Circuit Court for the County of Genesee regarding the same matters alleged in the demand letter. The complaint names the Company as a nominal defendant and names a number of the Company’s current and former officers and directors as defendants. The complaint seeks unspecified monetary damages and other relief. On February 6, 2019, the parties reached an agreement-in-principle to settle the action. The court preliminarily approved the settlement on April 8, 2019, and a final settlement approval hearing is scheduled for June 17, 2019. If approved by the court, the settlement would not have a material impact on the Company’s results of operations, financial condition or cash flows. On February 24, 2019 and March 6, 2019, in the U.S. District Court for the Central District of California and on March 12, 2019 in the U.S. District Court for the Northern District of Illinois, putative class actions complaints were filed against Diplomat Pharmacy, Inc. and certain current and former officers of the Company. The complaints allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 in connection with our public filings made between February 26, 2018 and February 21, 2019 (the “potential class period”). The plaintiffs each seek to represent a class of shareholders who purchased stock in the potential class period. The complaints seek unspecified monetary damages and other relief. The Company has filed unopposed motions to transfer the two complaints pending in the Central District of California to the Northern District of Illinois. The Company believes the complaints and allegations to be without merit and intends to vigorously defend itself against the actions. The Company is unable at this time to determine whether the outcome of the litigation would have a material impact on its results of operations, financial condition or cash flows. The Company’s business of providing specialized pharmacy services and other related services may subject it to litigation and liability for damages in the ordinary course of business. Nevertheless, the Company believes there are no other legal proceedings, the outcome of which, if determined adversely to the Company, would individually or in the aggregate be reasonably expected to have a material adverse effect on its business, financial position, cash flows, or results of operations.

SEGMENT REPORTING

SEGMENT REPORTING	3 Months Ended
	Mar. 31, 2019
SEGMENT REPORTING
SEGMENT REPORTING	15. SEGMENT REPORTING The Company reports in two reportable segments: Specialty and PBM. The Specialty segment offers a broad range of innovative solutions to address the dispensing, delivery, dosing and reimbursement of clinically intensive, high-cost specialty drugs and a wide range of applications and the PBM segment provides services designed to help the Company’s customers reduce the cost and manage the complexity of their prescription drug programs. The chief operating decision maker evaluates segment performance principally upon net sales and gross profit. Net sales, cost of sales and gross profit information by segment are as follows: Three Months Ended March 31, Net Sales Cost of Sales Gross Profit 2019 2018 2019 2018 2019 2018 Specialty $ 1,168,365 $ 1,152,979 $ (1,100,841) $ (1,080,159) $ 67,524 $ 72,820 PBM 97,917 191,468 (86,221) (173,910) 11,696 17,558 Inter-segment eliminations (9,474) (1,963) 9,474 1,963 — — $ 1,256,808 $ 1,342,484 $ (1,177,588) $ (1,252,106) $ 79,220 $ 90,378 Total assets by segment are as follows: March 31, December 31, 2019 2018 Specialty $ 1,032,201 $ 1,045,174 PBM 414,867 431,185 $ 1,447,068 $ 1,476,359

SUMMARY OF SIGNIFICANT ACCOUN_2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
	Mar. 31, 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation	Principles of Consolidation The condensed consolidated financial statements include the accounts of Diplomat Pharmacy, Inc., and its wholly owned subsidiaries. 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.
Receivables, net	Receivables, net Receivables, net consisted of the following: March 31, December 31, 2019 2018 Trade receivables, net of allowances of $(27,191) and $(25,342), respectively $ 312,371 $ 299,407 Rebate receivables 12,129 22,375 Other receivables 5,381 4,820 $ 329,881 $ 326,602 Trade receivables are stated at the invoiced amount. Trade receivables primarily include amounts due from clients, third-party pharmacy benefit managers and insurance providers and are based on contracted prices. Trade receivables are unsecured and require no collateral. Trade receivable terms vary by payer, but generally are due within 30 days after the sale of the product or performance of the service. Rebate receivables are amounts due from pharmaceutical manufacturers related to drug purchases by participants of the various pharmacy benefit plans that the Company manages, a portion of which, depending on contract terms, are paid back to the Company’s customers. The Company estimates these rebates at period-end based on its contractual arrangements with its manufacturers and such rebates are recorded as a reduction of cost of sales.
Inventories	Inventories Inventories consist of prescription and over-the-counter medications and are stated at the lower of cost or net realizable value. 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.

SUMMARY OF SIGNIFICANT ACCOUN_3

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	3 Months Ended
	Mar. 31, 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Schedule of receivables, net	March 31, December 31, 2019 2018 Trade receivables, net of allowances of $(27,191) and $(25,342), respectively $ 312,371 $ 299,407 Rebate receivables 12,129 22,375 Other receivables 5,381 4,820 $ 329,881 $ 326,602

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	3 Months Ended
	Mar. 31, 2019
FAIR VALUE MEASUREMENTS
Schedule of liabilities measured and disclosed at fair value on a recurring basis	Asset / Valuation Valuation (Liability) Level 2 Level 3 Technique March 31, 2019: Contingent consideration $ (7,105) $ — $ (7,105) C Interest rate swaps (Note 7) (6,419) (6,419) — A December 31, 2018: Contingent consideration $ (6,895) $ — $ (6,895) C Interest rate swaps (Note 7) (4,292) (4,292) — A
Schedule of change in contingent consideration Level 3 measurements	Contingent Consideration Balance at January 1, 2019 $ (6,895) Change in fair value (210) Payments — Balance at March 31, 2019 $ (7,105)

DEFINITE-LIVED INTANGIBLE ASS_2

DEFINITE-LIVED INTANGIBLE ASSETS (Tables)	3 Months Ended
	Mar. 31, 2019
DEFINITE-LIVED INTANGIBLE ASSETS
Schedule of definite-lived intangible assets	March 31, 2019 Weighted Average Gross Amortization Carrying Accumulated Carrying Period Amount Amortization Amount Customer relationships 9.6 $ 100,200 $ (4,637) $ 95,563 Patient relationships 5.7 170,100 (72,474) 97,626 Trade names and trademarks 1.7 30,650 (22,307) 8,343 Non-compete employment agreements 1.5 61,389 (47,136) 14,253 Physician relationships 4.6 21,700 (10,480) 11,220 $ 384,039 $ (157,034) $ 227,005 December 31, 2018 Weighted Average Gross Amortization Carrying Accumulated Carrying Period Amount Amortization Amount Customer relationships 9.8 $ 100,200 $ (1,238) $ 98,962 Patient relationships 5.9 170,100 (67,964) 102,136 Trade names and trademarks 1.8 30,650 (20,270) 10,380 Non-compete employment agreements 1.6 61,389 (44,100) 17,289 Physician relationships 4.8 21,700 (9,657) 12,043 $ 384,039 $ (143,229) $ 240,810

DEBT (Tables)

DEBT (Tables)	3 Months Ended
	Mar. 31, 2019
DEBT
Schedule of outstanding debt	March 31, December 31, 2019 2018 Short-term debt, borrowings on revolving line of credit $ 156,500 $ 176,300 Long-term debt: Term loan A $ 140,625 $ 142,500 Term loan B 321,000 322,000 Total 461,625 464,500 Unamortized debt issuance costs (13,938) (14,631) Total long-term debt 447,687 449,869 Less: current portion 11,500 11,500 Long-term debt, less current portion $ 436,187 $ 438,369

REVENUE (Tables)

REVENUE (Tables)	3 Months Ended
	Mar. 31, 2019
REVENUE
Schedule of disaggregation of net sales by therapeutic categories for the Specialty segment and by product and service distribution channels for the PBM segment	Three Months Ended March 31, 2019 2018 Specialty Segment: Oncology $ 686,634 $ 686,897 Specialty infusion 178,448 165,717 Immunology 135,692 135,599 Other 167,591 164,766 Total Specialty segment 1,168,365 1,152,979 PBM Segment: Retail networks 67,412 145,161 Specialty pharmacy 16,097 22,313 Mail order 10,965 16,993 Other 3,443 7,001 Total PBM segment 97,917 191,468 Inter-segment eliminations (9,474) (1,963) Total net sales $ 1,256,808 $ 1,342,484

SHARE-BASED COMPENSATION (Table

SHARE-BASED COMPENSATION (Tables)	3 Months Ended
	Mar. 31, 2019
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, 2019 5,186,025 $ 18.42 8.0 $ 2,910 Granted — — Exercised — — Expired/cancelled 380,147 18.77 Outstanding at March 31, 2019 4,805,878 $ 18.40 7.9 $ 171 Exercisable at March 31, 2019 2,140,475 $ 18.48 7.2 $ 171
Summary of restricted stock units activity	Weighted Average Number Grant Date of RSUs Fair Value Nonvested at January 1, 2019 1,869,029 $ 21.67 Granted 1,498,500 13.78 Vested and issued (244,948) 19.46 Cancelled / expired (767,247) 23.54 Nonvested at March 31, 2019 2,355,334 $ 16.18
Summary of restricted stock awards activity	Number Weighted of Shares Average Subject to Grant Date Restriction Fair Value Nonvested at January 1, 2019 43,355 $ 20.91 Vested (2,559) 14.65 Forfeited (5,929) 21.63 Nonvested at March 31, 2019 34,867 21.24

LOSS PER COMMON SHARE (Tables)

LOSS PER COMMON SHARE (Tables)	3 Months Ended
	Mar. 31, 2019
LOSS PER COMMON SHARE
Schedule of the calculation for basic and diluted income per common share	Three Months Ended March 31, 2019 2018 Numerator: Net loss $ (14,301) $ (450) Denominator: Weighted average common shares outstanding, basic 74,460,990 73,996,313 Weighted average dilutive effect of stock options, RSAs and RSUs — — Weighted average common shares outstanding, diluted 74,460,990 73,996,313 Loss per common share: Basic $ (0.19) $ (0.01) Diluted $ (0.19) $ (0.01)
Schedule of weighted average effect of shares were excluded from the computation of weighted average diluted shares outstanding	Three Months Ended March 31, 2019 2018 Service-based and earned performance-based stock options 3,946,288 4,011,211 Unearned performance-based stock options 574,138 574,138 Weighted average service-based RSUs 1,010,148 51,553 Weighted average performance based RSUs 1,523,451 7,751 Weighted average RSAs 17,911 — Total 7,071,936 4,644,653

INCOME TAXES (Tables)

INCOME TAXES (Tables)	3 Months Ended
	Mar. 31, 2019
INCOME TAXES
Schedule of reconciliation of income taxes computed at the U.S. federal statutory tax rate to income tax benefit (expense)	Three Months Ended March 31, 2019 2018 Income tax benefit at U.S. statutory rate $ 2,873 $ 277 Tax effect from: State income taxes, net of federal benefit (323) 279 State income taxes, valuation allowance (296) — Share-based compensation (709) 218 Valuation allowance (1,994) — Disallowed compensation (64) 42 Other (106) 52 Income tax (expense) benefit $ (619) $ 868

LEASES (Tables)

LEASES (Tables)	3 Months Ended
	Mar. 31, 2019
LEASES
Operating lease expense information	The components of lease expense in the condensed consolidated statements of comprehensive loss for the three months ended March 31, 2019, were as follows: Operating lease cost $ 2,059 Variable lease cost 377 Short-term lease cost 108 Total $ 2,544
Maturity of lease liabilities	2019 (excluding the three months ended March 31, 2019) $ 4,567 2020 5,473 2021 4,832 2022 4,195 2023 3,311 Thereafter 14,386 Total future lease payments 36,764 Less: imputed interest costs (a) (8,575) Lease liabilities $ 28,189 (a) Computed using the estimated incremental borrowing rate for each lease
Schedule of Other information	Cash paid for amounts included in the measurement of lease liabilities Operating cash flows for operating leases $ 1,585 Weighted average remaining lease term (in years) 7.76 Weighted average discount rate 6.77 %

SEGMENT REPORTING (Tables)

SEGMENT REPORTING (Tables)	3 Months Ended
	Mar. 31, 2019
SEGMENT REPORTING
Schedule of information by segment	Three Months Ended March 31, Net Sales Cost of Sales Gross Profit 2019 2018 2019 2018 2019 2018 Specialty $ 1,168,365 $ 1,152,979 $ (1,100,841) $ (1,080,159) $ 67,524 $ 72,820 PBM 97,917 191,468 (86,221) (173,910) 11,696 17,558 Inter-segment eliminations (9,474) (1,963) 9,474 1,963 — — $ 1,256,808 $ 1,342,484 $ (1,177,588) $ (1,252,106) $ 79,220 $ 90,378 Total assets by segment are as follows: March 31, December 31, 2019 2018 Specialty $ 1,032,201 $ 1,045,174 PBM 414,867 431,185 $ 1,447,068 $ 1,476,359

DESCRIPTION OF BUSINESS AND B_2

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019segment	Mar. 31, 2018USD ($)
Number of reportable segments | segment	2
Cost of sales
Reclassifications
Shipping and handling costs, reclassified from SG&A to Cost of sales		$ 15,139
Cost of nursing support services, reclassified from SG&A to cost of sales		$ 5,095

NEW ACCOUNTING STANDARDS - Adop

NEW ACCOUNTING STANDARDS - Adoption of New Accounting Standards (Details) - USD ($) $ in Thousands	Jan. 01, 2019	Mar. 31, 2019
Adoption of New Accounting Standards
Operating lease right-of-use assets		$ 27,325
Net lease liabilities		$ 28,189
Lease, Practical Expedients, Package [true/false]		true
Lease, Practical Expedient, Use of Hindsight [true/false]		false
ASU 2016-02
Adoption of New Accounting Standards
Operating lease right-of-use assets	$ 28,400
Net lease liabilities	29,300
Cumulative-effect adjustment, after tax	5,652
Net deferred taxes	$ 1,387

SUMMARY OF SIGNIFICANT ACCOUN_4

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Receivables
Receivables, net	$ 329,881	$ 326,602
Trade receivables terms after sale of product or performance of service	30 days
Inventories
Maximum period before expiration within which Inventory is returnable and fully refundable	6 months
Trade receivables
Receivables
Receivables, net	$ 312,371	299,407
Allowance for trade receivables	(27,191)	(25,342)
Rebate receivables
Receivables
Receivables, net	12,129	22,375
Other receivables
Receivables
Receivables, net	$ 5,381	$ 4,820

FAIR VALUE MEASUREMENTS - Recur

FAIR VALUE MEASUREMENTS - Recurring Basis (Details) - Recurring - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Contingent consideration
FAIR VALUE MEASUREMENTS
Asset (Liability)	$ (7,105)	$ (6,895)
Interest rate swaps
FAIR VALUE MEASUREMENTS
Asset (Liability)	(6,419)	(4,292)
Level 2 | Interest rate swaps
FAIR VALUE MEASUREMENTS
Asset (Liability)	(6,419)	(4,292)
Level 3 | Contingent consideration
FAIR VALUE MEASUREMENTS
Asset (Liability)	$ (7,105)	$ (6,895)

FAIR VALUE MEASUREMENTS - Roll

FAIR VALUE MEASUREMENTS - Roll forward of Level 3 Measurements (Details) - Contingent consideration $ in Thousands	3 Months Ended
	Mar. 31, 2019USD ($)
Level 3 measurements
Balance at beginning of the period	$ 6,895
Change in fair value	(210)
Balance at end of the period	$ (7,105)

DEFINITE-LIVED INTANGIBLE ASS_3

DEFINITE-LIVED INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
DEFINITE-LIVED INTANGIBLE ASSETS
Gross Carrying Amount	$ 384,039		$ 384,039
Accumulated Amortization	(157,034)		(143,229)
Carrying Amount	227,005		$ 240,810
Amortization expense	$ 13,805	$ 17,010
Customer relationships
DEFINITE-LIVED INTANGIBLE ASSETS
Weighted Average Amortization Period (in years)	9 years 7 months 6 days		9 years 9 months 18 days
Gross Carrying Amount	$ 100,200		$ 100,200
Accumulated Amortization	(4,637)		(1,238)
Carrying Amount	$ 95,563		$ 98,962
Patient relationships
DEFINITE-LIVED INTANGIBLE ASSETS
Weighted Average Amortization Period (in years)	5 years 8 months 12 days		5 years 10 months 24 days
Gross Carrying Amount	$ 170,100		$ 170,100
Accumulated Amortization	(72,474)		(67,964)
Carrying Amount	$ 97,626		$ 102,136
Trade names and trademarks
DEFINITE-LIVED INTANGIBLE ASSETS
Weighted Average Amortization Period (in years)	1 year 8 months 12 days		1 year 9 months 18 days
Gross Carrying Amount	$ 30,650		$ 30,650
Accumulated Amortization	(22,307)		(20,270)
Carrying Amount	$ 8,343		$ 10,380
Non-compete employment agreements
DEFINITE-LIVED INTANGIBLE ASSETS
Weighted Average Amortization Period (in years)	1 year 6 months		1 year 7 months 6 days
Gross Carrying Amount	$ 61,389		$ 61,389
Accumulated Amortization	(47,136)		(44,100)
Carrying Amount	$ 14,253		$ 17,289
Physician relationships
DEFINITE-LIVED INTANGIBLE ASSETS
Weighted Average Amortization Period (in years)	4 years 7 months 6 days		4 years 9 months 18 days
Gross Carrying Amount	$ 21,700		$ 21,700
Accumulated Amortization	(10,480)		(9,657)
Carrying Amount	$ 11,220		$ 12,043

DEBT - Outstanding debt (Detail

DEBT - Outstanding debt (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Debt
Short-term debt, borrowings on revolving line of credit	$ 156,500	$ 176,300
Long-term debt	461,625	464,500
Unamortized debt issuance costs	(13,938)	(14,631)
Total long-term debt	447,687	449,869
Less: current portion	11,500	11,500
Long-term debt, less current portion	436,187	438,369
Term Loan A
Debt
Long-term debt	140,625	142,500
Term Loan B
Debt
Long-term debt	321,000	322,000
Revolving line of credit
Debt
Short-term debt, borrowings on revolving line of credit	$ 156,500	$ 176,300

DEBT - Summary (Details)

DEBT - Summary (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Dec. 20, 2017
Debt
Unamortized debt issuance costs	$ 13,938		$ 14,631
Amortization of debt issuance costs	961	$ 1,132
Letters of credit
Debt
Maximum borrowing capacity	10,000
Swingline loans
Debt
Maximum borrowing capacity	$ 20,000
JPMorgan Chase Bank N.A. And Capital One National Association | Minimum
Debt
Monthly unused commitment fee (as a percent)	0.30%
JPMorgan Chase Bank N.A. And Capital One National Association | Maximum
Debt
Monthly unused commitment fee (as a percent)	0.40%
JPMorgan Chase Bank N.A. And Capital One National Association | Revolving line of credit
Debt
Amount of borrowing	$ 250,000			$ 250,000
Interest rate (as a percent)	5.00%		5.19%
Weighted average borrowings	$ 165,064	163,992
Maximum borrowings	196,300	188,250
Amount of borrowings available under the credit agreement	93,500		$ 73,700
JPMorgan Chase Bank N.A. And Capital One National Association | Revolving line of credit | Other noncurrent assets
Debt
Unamortized debt issuance costs	3,978		$ 4,246
JPMorgan Chase Bank N.A. And Capital One National Association | Term Loan A
Debt
Amount of borrowing	$ 150,000
Interest rate (as a percent)	4.75%		4.78%
Quarterly principal payments	$ 1,875
JPMorgan Chase Bank N.A. And Capital One National Association | Term Loan B
Debt
Amount of borrowing	$ 400,000
Interest rate (as a percent)	7.00%		7.03%
Quarterly principal payments	$ 1,000
Voluntary prepayment of debt		$ 74,000
JPMorgan Chase Bank N.A. And Capital One National Association | Term Loan B | LIBOR
Debt
Interest rate margin (as a percent)	4.50%
JPMorgan Chase Bank N.A. And Capital One National Association | Term Loan B | Base Rate
Debt
Interest rate margin (as a percent)	3.50%
JPMorgan Chase Bank N.A. And Capital One National Association | Revolving line of credit and Term loan A | LIBOR
Debt
Interest rate margin (as a percent)	2.25%
JPMorgan Chase Bank N.A. And Capital One National Association | Revolving line of credit and Term loan A | Base Rate
Debt
Interest rate margin (as a percent)	1.25%

INTEREST RATE SWAPS (Details)

INTEREST RATE SWAPS (Details) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2019USD ($)	Mar. 31, 2018USD ($)	Dec. 31, 2018USD ($)item
Deferred tax benefit	$ 452	$ (547)
Other comprehensive loss, net of tax	2,127
Interest rate swaps
Number of interest rate swap agreements | item			2
Notional amount	290,600		$ 290,600
Derivative liability	6,419		4,292
Deferred tax benefit	$ (1,643)		$ 1,099

REVENUE (Details)

REVENUE (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenue
Revenue	$ 1,256,808	$ 1,342,484
Manufacturer's rebates earned on total gross profit (in percent)	11.60%	11.60%
Inter-segment eliminations
Revenue
Revenue	$ (9,474)	$ (1,963)
Specialty
Revenue
Revenue	1,168,365	1,152,979
PBM
Revenue
Revenue	97,917	191,468
Oncology | Specialty
Revenue
Revenue	686,634	686,897
Specialty infusion | Specialty
Revenue
Revenue	178,448	165,717
Immunology | Specialty
Revenue
Revenue	135,692	135,599
Other | Specialty
Revenue
Revenue	167,591	164,766
Retail networks | PBM
Revenue
Revenue	67,412	145,161
Specialty pharmacy | PBM
Revenue
Revenue	16,097	22,313
Mail order | PBM
Revenue
Revenue	10,965	16,993
Other | PBM
Revenue
Revenue	$ 3,443	$ 7,001

SHARE-BASED COMPENSATION - Stoc

SHARE-BASED COMPENSATION - Stock Options (Details) - Stock Options - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Number of Options
Outstanding at beginning of period (in shares)	5,186,025
Cancelled/expired (in shares)	380,147
Outstanding at end of period (in shares)	4,805,878		5,186,025
Exercisable at end of period (in shares)	2,140,475
Weighted Average Exercise Price
Outstanding at beginning of period (in dollars per share)	$ 18.42
Cancelled/expired (in dollars per share)	18.77
Outstanding at end of period (in dollars per share)	18.40		$ 18.42
Exercisable at end of period (in dollars per share)	$ 18.48
Weighted Average Remaining Contractual Life
Outstanding (in years)	7 years 10 months 24 days		8 years
Exercisable (in years)	7 years 2 months 12 days
Aggregate Intrinsic Value
Outstanding at end of period	$ 171		$ 2,910
Exercisable at end of period	171
Additional disclosures
Allocated Share-based Compensation Expense	1,793	$ 2,155
Total compensation cost related to non-vested options not yet recognized	$ 13,623
Weighted average period to recognize compensation cost related to non-vested options not yet recognized	2 years 2 months 12 days

SHARE-BASED COMPENSATION - Rest

SHARE-BASED COMPENSATION - Restricted Stock Units and Restricted Stock Awards (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018
Restricted Stock Units
Number of Shares Subject to Restriction
Outstanding at the beginning of the period (in shares)	1,869,029
Granted (in shares)	1,498,500
Vested and issued (in shares)	(244,948)
Expired/cancelled (in shares)	(767,247)
Outstanding at the end of the period (in shares)	2,355,334
Weighted Average Grant Date Fair Value
Outstanding at the beginning of the period (in dollars per share)	$ 21.67
Granted (in dollars per share)	13.78
Vested and issued (in dollars per share)	19.46
Forfeited (in dollars per share)	23.54
Outstanding at the end of the period (in dollars per share)	$ 16.18
Additional disclosures
Share-based compensation expense	$ 1,653		$ 868
Total compensation cost not yet recognized	$ 14,985
Weighted average period to recognize compensation cost related to non-vested options not yet recognized	1 year 9 months 11 days
Sign-on inducement award, performance-based RSUs | Executive
Number of Shares Subject to Restriction
Granted (in shares)		1,498,500
Restricted Stock Awards
Number of Shares Subject to Restriction
Outstanding at the beginning of the period (in shares)	43,355
Vested and issued (in shares)	(2,559)
Expired/cancelled (in shares)	(5,929)
Outstanding at the end of the period (in shares)	34,867
Weighted Average Grant Date Fair Value
Outstanding at the beginning of the period (in dollars per share)	$ 20.91
Vested and issued (in dollars per share)	14.65
Forfeited (in dollars per share)	21.63
Outstanding at the end of the period (in dollars per share)	$ 21.24
Additional disclosures
Share-based compensation expense	$ 126		$ 138
Total compensation cost not yet recognized	$ 231

LOSS PER COMMON SHARE (Details)

LOSS PER COMMON SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Numerator:
Net loss	$ (14,301)	$ (450)
Denominator:
Weighted average common shares outstanding, basic (in shares)	74,460,990	73,996,313
Weighted average common shares outstanding, diluted (in shares)	74,460,990	73,996,313
Weighted average dilutive effect of stock options, RSUs and RSAs, absence of net loss (in shares)	205,058
Loss per common share:
Basic (in dollars per share)	$ (0.19)	$ (0.01)
Diluted (in dollars per share)	$ (0.19)	$ (0.01)

LOSS PER COMMON SHARE - Shares

LOSS PER COMMON SHARE - Shares excluded from the computation of weighted average diluted shares outstanding (Details) - shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Anti-dilutive securities excluded
Anti-dilutive securities excluded (in shares)	7,071,936	4,644,653
Service-based and Performance-based stock options
Anti-dilutive securities excluded
Anti-dilutive securities excluded (in shares)	3,946,288	4,011,211
Unearned performance-based stock options
Anti-dilutive securities excluded
Anti-dilutive securities excluded (in shares)	574,138	574,138
Service-based RSUs
Anti-dilutive securities excluded
Anti-dilutive securities excluded (in shares)	1,010,148	51,553
Performance-based RSUs
Anti-dilutive securities excluded
Anti-dilutive securities excluded (in shares)	1,523,451	7,751
RSAs
Anti-dilutive securities excluded
Anti-dilutive securities excluded (in shares)	17,911

INCOME TAXES - Reconciliation o

INCOME TAXES - Reconciliation of income taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Reconciliation of income taxes computed at the United States federal statutory tax rate to income tax benefit (expense)
Income tax benefit at U.S. statutory rate	$ 2,873	$ 277
State income taxes, net of federal benefit	(323)	279
State income taxes, valuation allowance	(296)
Share-based compensation	(709)	218
Valuation allowance	(1,994)
Disallowed compensation	(64)	42
Other	(106)	52
Income tax (expense) benefit	(619)	$ 868
Valuation allowance	$ 2,290

RELATED PARTY TRANSACTION (Deta

RELATED PARTY TRANSACTION (Details) - ReactiveCore - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Dec. 31, 2018	Mar. 31, 2019	Jan. 01, 2019
RELATED PARTY TRANSACTION
Definitive agreement term	3 years
Base fee payable			$ 2,400
License fee		$ 1,946

LEASES (Details)

LEASES (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Operating Leases
Rent expense		$ 1,886
Components of lease expense
Operating lease cost	$ 2,059
Variable lease cost	377
Short-term lease cost	108
Total	$ 2,544
Minimum
Operating Leases
Initial term (in years)	3 years
Renewal term (in years)	5 years
Maximum
Operating Leases
Initial term (in years)	12 years
Renewal term (in years)	10 years

LEASES - Maturity of lease liab

LEASES - Maturity of lease liabilities (Details) $ in Thousands	Mar. 31, 2019USD ($)
Maturities of lease liabilities
2019 (excluding the three months ended March 31, 2019)	$ 4,567
2020	5,473
2021	4,832
2022	4,195
2023	3,311
Thereafter	14,386
Total future lease payments	36,764
Less: imputed interest costs	(8,575)
Lease liabilities	$ 28,189

LEASES - Other Information (Det

LEASES - Other Information (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019USD ($)
LEASES
Operating cash flows from operating leases	$ 1,585
Weighted average remaining lease term (in years)	7 years 9 months 4 days
Weighted average discount rate	6.77%

CONTINGENCIES (Details)

CONTINGENCIES (Details)	Feb. 24, 2019complaint
CONTINGENCIES
Number of complaints pending	2

SEGMENT REPORTING (Details)

SEGMENT REPORTING (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019USD ($)segment	Mar. 31, 2018USD ($)
Segment reporting information
Number of reportable segments | segment	2
Net Sales	$ 1,256,808	$ 1,342,484
Cost of Sales	(1,177,588)	(1,252,106)
Gross Profit	79,220	90,378
Inter-segment eliminations
Segment reporting information
Net Sales	(9,474)	(1,963)
Cost of Sales	9,474	1,963
Specialty | Operating Segments
Segment reporting information
Net Sales	1,168,365	1,152,979
Cost of Sales	(1,100,841)	(1,080,159)
Gross Profit	67,524	72,820
PBM | Operating Segments
Segment reporting information
Net Sales	97,917	191,468
Cost of Sales	(86,221)	(173,910)
Gross Profit	$ 11,696	$ 17,558

SEGMENT REPORTING - Total Asset

SEGMENT REPORTING - Total Assets by Segment (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Segment reporting information
Total assets	$ 1,447,068	$ 1,476,359
Specialty
Segment reporting information
Total assets	1,032,201	1,045,174
PBM
Segment reporting information
Total assets	$ 414,867	$ 431,185