Diplomat Pharmacy (DPLO, Financial), the nation’s biggest independent speciality pharmacy plans to raise up to $200 million through an IPO on the NYSE with a market capitalization of $756 million, at a price range midpoint of $15 for Friday, October 10, 2014. The shares are traded under the DPLO ticker on the NYSE. The initial details of the IPO were filed by the company on July 3, 2014. The lead underwriters are Credit Suisse and Morgan Stanley, and under their guidance, Diplomat Pharmacy is hoping to see success in the stock market. Let’s take a brief look at the position of the company in the pharmacy industry vis-à -vis the rivals, and what is happening in the initial hours of trading on the exchange on the red-lettered day.
Looking into the past
The company is the largest independent speciality pharmacy in the U.S. that focuses on individuals with chronic disorders. The company has taken a unique patient-centric approach that positions the company as the center of the healthcare life cycle for the treatment of diseases. The company was founded in 1975 by its CEO, Philip Hagerman, and his father, Dale, both trained pharmacists who transformed its business from a traditional pharmacy into a leading specialty pharmacy.
In 2005, the pharmacy started its expansion into specialty pharmacy from a small regional operation, into a large national enterprise, allowing the company to grow from $20 billion in sales in 2005 to $63 billion in sales in 2013. As a result, Diplomat has grown its revenue organically to more than $1.5 billion in 2013, achieving a compounded annual growth rate of 65% since 2005. Currently, the company has grown phenomenally to become the fourth largest overall specialty pharmacy in the U.S.
Comparison with immediate rivals
The company holds a 2% market share in the specialty pharmacy segment, and is consistently strengthening its hold in key therapeutic categories such as oncology and immunology. It is broadening the scope of its services to retailers, and building strong relationships with patients, pharmaceutical manufacturers and physicians.
Nevertheless, it faces intense competition from a number of companies that distribute specialty medicines and supply-related services. As it currently holds the fourth position in specialty pharmacy, the top three drug stores being CVS Caremark (CVS, Financial), Express Scripts (ESRX, Financial) and Walgreens (WAG, Financial) are threatened by its whopping growth within such a short timeline.
First hours of trading
The company finally set the pricing on October 9 towards the lower range of $13 per share, but reports have confirmed that the share price was about $16 a share during the first hour of trading. This means that Diplomat Pharmacy has had a strong start on its debut day of trading. The shares are up $3.39 or 26.1% from the original pricing of $13. The stock is surging ahead and analysts are hoping that the stock will set a record high as well in a few months time.
Final word
All eyes of specialty pharmaceutical majors are on the IPO of Diplomat Pharmacy, and interested investors want to find out if the company will be able to create a mark in the stock market, as it has done within the past 39 years by adding newer ventures. Let’s stay tuned and find out how the IPO fares for a few days after the debut, which might give further insight into the near future of the DPLO stock.
