TNH Acquisition: Integration Into a Statewide Network

California-based Valley Campus Pharmacy, Inc. d/b/a TNH Advanced Specialty Pharmacy, entered into a definitive $75 million-worth acquisition agreement this April with Diplomat Pharmacy, Inc. (NYSE:DPLO), the nation’s largest independent specialty pharmacy. The payment consideration consisted of $65 million in cash and $10 million in Diplomat common stock. The cash component is planned to be funded with a combination of available cash and Diplomat’s credit facility.

The 2015 revenue of the target TNH, a leading specialty pharmacy, is estimated at around $400 million. The acquisition deal was closed at TNH’s revenue multiple of 0.19 and EBITDA multiple of 8.41. TNH acquisition is expected to be accretive to Diplomat’s earnings per share in 2016.

Founded in 2008 and based in Van Nuys, Calif., TNH provides medications for a broad spectrum of complex chronic diseases, such as oncology, Crohn’s disease, cystic fibrosis, multiple sclerosis, rheumatoid arthritis, hepatitis and HIV/AIDS. The company also provides infusion therapy and pharmacy services for transplant patients. TNH products and services are available to patients and doctors in 34 U.S. states and territories. In addition, the company has developed TNH Live Portal, which is a platform that combines patient management, education and live communication.

Diplomat is a family business started in 1975. It has expanded into a family of companies that serve patients and physicians coast to coast, in all the states. They are committed to delivering high-touch patient management programs that enhance patients’ care experience. They have recently established a physical presence in Texas, which will enable them to serve almost 4 million Medicaid patients in the state. TNH acquisition means that Diplomat will be able to leverage TNH’s strong physician referral network established in Texas, as well as in California. TNH’s proprietary portal, TNH Live, will provide Diplomat valuable data for partners to act on.

Both companies are dedicated to enhancing the continuity of patient care through programs that advance therapy management. According to Phil Hagerman, CEO and chairman of Diplomat, TNH acquisition is expected to “open new sales synergies” and make their services “stronger in the evolving specialty pharmacy market”.

TNH acquisition is the third such move by Diplomat recently. In 2015, Diplomat acquired Burman’s Specialty Pharmacy and BioRx, based in Philadelphia and Cincinnati respectively.

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