To Our Shareholders, Customers and Employees:

2015 was a great year for PharMerica; a year where we exceeded financial and operational expectations and executed on important strategic initiatives. We are confident our strategies will further enhance a solid financial and operational foundation built over the last several years, and we remain optimistic on the Company’s long-term prospects.


Highlights of PharMerica’s financial results for the full year are as follows:

These results were achieved despite several significant 2015 planned headwinds. First, in 2015, in an effort to improve the Company’s client quality mix in the institutional pharmacy business, we withdrew from providing service to certain clients. Second, we changed drug wholesalers early in the year as a result of poor performance which resulted in higher drug acquisition costs than planned for the year. And, third, the Company’s revenues increased 7.1% despite a very strong year for branded drugs that went to lower priced generics. The Company’s specialty pharmacy business was primarily responsible for the growth in revenues.

We also completed five acquisitions which added approximately $100 million in annualized revenues. We have an annual goal of acquiring $100 million or more of annualized revenues. So, we are happy to report that we once again achieved this goal. Revenues associated with the acquisitions completed in 2015 were approximately evenly split between the institutional pharmacy and specialty markets.

PharMerica’s strategy is twofold: Drive market share in the institutional pharmacy market and diversify into high-growth specialty pharmacy markets. We seek to grow both organically and through acquisitions. From an organic growth perspective, growth is being fueled by a strong pipeline of new drugs in the specialty pharmacy market, a favorable pricing environment with respect to brand drugs and increased patient utilization.

We will continue to diversify into the specialty markets. Amerita, the specialty home infusion pharmacy, and Onco360, the specialty oncology pharmacy, represent two solid operating platforms to build upon over the next several years. Both of these specialty markets are experiencing double-digit growth and we expect growth to continue for the foreseeable future. We are confident the Company’s organic growth and acquisition strategy will drive continued shareholder value.

Driving Growth Through Market Differentiation
In 2015, we continued to realize returns on investments that we made over the past several years in the Company’s operating platform. These investments have created a competitive advantage and meaningful market differentiation, particularly against significantly smaller competitors. This competitive advantage has driven increased sales productivity and improved client retention. PharMerica’s business model is simple in concept but difficult in execution. To be a market leader we must provide consistent, high quality pharmacy services and at the same time, save our clients money. To that end, we rely extensively on automated data driven solutions that drive operating scale, high quality pharmacy services and low cost. PharMerica has emerged as the leader in cost containment solutions and we are steadfast in driving the Company’s value proposition of superior customer service, operational excellence, and leading cost containment programs.

Furthermore, in early 2015, PharMerica entered into a new and exciting partnership with Cardinal Health. This new partnership provides operating certainty with regards to drug sourcing and distribution. Cardinal’s scale and expertise in sourcing and distribution will drive additional supply chain efficiencies.

Driving Growth Through Diversification

Diversification into high-growth specialty pharmacy markets is integral to the Company’s long-term success. PharMerica’s investments in Onco360 and Amerita represent important steps forward in capturing share in the higher-growth specialty pharmacy markets. In 2015, we saw double-digit growth in these specialty pharmacy businesses and we anticipate growth will continue. We set a goal in 2014 of approximately $400 million in diversified revenues by the end of 2016, and achieved this goal in 2015, a full year earlier. In addition, we completed an acquisition in 2015 to expand the important hospital pharmacy management business. At the close of 2015, the yearly run rate associated with these businesses is over $550 million, and we anticipate revenue growth in the range of 25% to 30%.


As we look to the future, we are confident that we will continue to build operating and financial momentum as we leverage the accomplishments of the past year and continue to pursue the Company’s strategic objectives. We are confident that PharMerica will continue to deliver strong financial performance while successfully capitalizing on opportunities that drive scale, profitability and margins. We will continue to differentiate the Company through creative programs that save clients money and pursue acquisitions with discipline and thoughtfulness.

We benefit from the dedication and contributions of outstanding leaders and talented employees, and their efforts to deliver strong results to both shareholders and customers. We remain loyal to the Company’s mission to lead the industry in performance, provide outstanding value and be a trusted pharmacy services partner.

Thank you for your investment in PharMerica, and your ongoing confidence and support.


Gregory S. Weishar
Chief Executive Officer