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PharMerica Corporation (PMC)
February 25, 2013 2:15 pm ET
Michael J. Culotta - Chief Financial Officer and Executive Vice President
George Hill - Citigroup Inc, Research Division
Michael J. Culotta
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Okay. Who we are, just -- again, I'm going to go through this quickly, some of you may know who we are, some of you may not know who we are, we are PharMerica Corporation. We are a leading institutional pharmacy specialty infusion and hospital pharmacy management services company. We were a spin out of 2 different companies, AmerisourceBergen and Kindred Healthcare in 2007. We have pharmacies in 45 states and can fill over 40 million prescriptions a year. A little bit we'll get into very quickly, in a second, what institutional pharmacy business means. So here are our locations. As you can see across the United States including Hawaii, we are located there, and you can see we have a very strong footprint throughout the United States.
Again, only 1 of 2 companies in the institutional pharmacy space that has a U.S.-wide platform. Again, what is institutional pharmacy business? It's very -- it's not like what you're used to from the standpoint -- like if you went to fill your prescription at CVS or Walgreens. Basically, what we do is we usually get -- the prescription comes in usually via fax or usually via e-mail that comes into our pharmacies, it's called a closed-door pharmacy. You would not see our sign anywhere out there. Customers do not come walking in the front door, but that prescription comes in. From there, it is loaded into our system, it is checked by a pharmacist. At that point, once the pharmacist approves it, it then gets adjudicated. Also, it gets sent to the backroom, where the drugs will be filled and dispensed. Back there, the label will be printed, a check will pick that label up, they will pick up the bingo cards, as you see there, or a blister pack affectionately known, as you see on the screen there, which is anywhere from 14- to 30-day packs with the prescription that's in there. On the backside of that card, you'll see numbers 1 through 30, 1 through 31. So when it's being given to the patient, they'll pop it out and they'll know what day of the month it is for that prescription. Purpose of this is for safety measures for the nurses in the nursing home, at the skilled nursing facilities. We dispense predominantly to skilled nursing facilities, assisted living facilities and group mental homes is predominantly where it goes. So getting back to the prescription, that label would be put on one of the blister packs. From there it would be going into a tote, it would be checked by a pharmacist to make sure the drug ties directly to the label. From there, it would be delivered to the nursing home. And from there, the nurses would dispense that drug. So the difference is you don't have customers walking in, you have the prescriptions being e-mailed in, but we deliver. We deliver to the skilled nursing facilities. We are 24/7. A number of our -- majority of our pharmacies are open 24 hours. However, those that are not, they're constantly on call, 7 days a week, 24 hours of the day. The whole concept here is to get the drugs to the patient as soon as possible. Usually, we can get the drug to the patient within 2 to 3 hours of once the patient prescription has changed or a patient has been admitted to the nursing home. So again, that's all the requirements of the institutional pharmacy business in the setting we're in. Remember, we're in a long-term care setting. So the types of drugs that we're dispensing are not what you would normally see. If you looked at the top 50, top 100 drugs that are being dispensed throughout the United States, we may have 1 or 2 or 3 of those that we dispense. Remember, we have a large population base, dementia, Alzheimer's, et cetera, et cetera, elderly population types. So the types of drugs that they're taking are different than the general population as a whole. Our specialty infusion business, which we just got into at the end of 2012, in December of 2012, we acquired Amerita, which is a home infusion specialty business and they have 12 specialty pharmacies or specialty infusion centers in the -- across the United States. They administer the drug, the patient training by the registered nurses there and a very locally based model. People are asking, "Okay, you're in the institutional pharmacy business, why infusion business?" Well, part of it is the first the prescription dispensed is usually by Amerita because it's local. Their pharmacies normally ship. So they're shipping via FedEx, UPS, usually dry ice, they're shipping those IVs. However, the first prescription or first couple of prescriptions usually come from a local pharmacy. And because as you saw the map, we have pharmacies all over the United States, the majority of our pharmacies, guess what, they also have the capability of doing infusion business, albeit that infusion business are for the patients that's in the skilled nursing facilities, we still can fill those prescriptions and get those couriered out to the homes from our first fill perspective. So there is a little bit of synergies there, purchasing synergies also. Not any other synergies like the sales force anything of that nature. Again, this is another market, it's another opportunity for us to grow our business and get into multi-markets and also be able to use our current vendor agreement and to acquire drugs at a cheaper way.