Diplomat q317 ir presentation

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Copyright © 2017 by Diplomat Pharmacy Inc. Diplomat is a registered trademark of Diplomat Pharmacy Inc. All rights reserved.
Capturing the Opportunity
NOVEMBER 2017 BETHANY
DIPLOMAT PATIENT

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NON-GAAP INFORMATION
Adjusted EPS adds back, net of income taxes, the impact of all merger and acquisition related expenses, including amortization of intangible assets, the change in fair value of contingent consideration, as well as transaction-related costs.
We exclude merger and acquisition-related expenses from Adjusted EPS because we believe the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and such
expenses can vary significantly between periods as a result of new acquisitions, full amortization of previously acquired intangible assets, or ultimate realization of contingent consideration. Investors should note that acquisitions, once
consummated, contribute to revenue in the periods presented as well as future periods and should also note that amortization and contingent consideration expenses may recur in future periods. A reconciliation of Adjusted EPS, a
non-GAAP measure, to EPS as prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) can be found below.
We define Adjusted EBITDA as net income (loss) attributable to Diplomat before interest expense, income taxes, depreciation and amortization, share-based compensation, change in fair value of contingent consideration and other merger
and acquisition-related expenses, restructuring and impairment charges, and certain other items that we do not consider indicative of our ongoing operating performance (which are itemized below in the reconciliation to net income (loss)
attributable to Diplomat). Adjusted EBITDA is not in accordance with, or an alternative to, GAAP. In addition, this non‑GAAP measure is not based on any comprehensive set of accounting rules or principles. You should be aware that in
the future we may incur expenses that are the same as or similar to some of the adjustments in the presentation, and we do not infer that our future results will be unaffected by unusual or non-recurring items.
We consider Adjusted EBITDA and Adjusted EPS to be supplemental measures of our operating performance. We present Adjusted EBITDA and Adjusted EPS because they are used by our Board of Directors and management to
evaluate our operating performance. Adjusted EBITDA is also used as a factor in determining incentive compensation, for budgetary planning and forecasting overall financial and operational expectations, for identifying underlying trends,
and for evaluating the effectiveness of our business strategies. Further, we believe they assist us, as well as investors, in comparing performance from period-to-period on a consistent basis. Other companies in our industry may calculate
Adjusted EBITDA and Adjusted EPS differently than we do and these calculations may not be comparable to our Adjusted EBITDA and Adjusted EPS metrics. A reconciliation of Adjusted EBITDA, a non-GAAP measure, to net income
(loss) attributable to Diplomat can be found below
FORWARD-LOOKING STATEMENTS
This presentation contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give current expectations or forecasts of future events
or our future financial or operating performance. The forward-looking statements in this presentation are based on management’s good-faith belief and reasonable judgment based on current information. These statements are qualified by
important risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from those forecasted or indicated by such forward-looking statements. For a discussion of such risks and
uncertainties, review Diplomat's filings with the Securities and Exchange Commission, including “Risk Factors” in Diplomat’s Annual Report on Form 10-K for the year ended Dec. 31, 2016, and in subsequent reports filed with or furnished to
the Securities and Exchange Commission. Except as may be required by any applicable laws, Diplomat assumes no obligation to publicly update such forward-looking statements, which are made as of the date hereof or the earlier date
specified herein, whether as a result of new information, future developments, or otherwise.
INDUSTRY AND MARKET DATA
Certain information in this presentation concerning our industry and the markets in which we operate is derived from publicly available information released by third-party sources, including independent industry and research organizations,
and management estimates. Management estimates are derived from publicly available information released by independent industry and research analysts and other third-party sources, as well as data from our internal research, and are
based on assumptions made by us upon reviewing such data and our knowledge of such industry and markets, which we believe to be reasonable. We believe the data from these third-party sources is reliable. In addition, projections,
assumptions, and estimates of the future performance of the industry in which we operate and our future performance are necessarily subject to uncertainty and risk due to a variety of factors, as discussed in Diplomat’s reports filed with the
Securities and Exchange Commission. These and other factors could cause results to differ materially from those expressed in the estimates made by these third-party sources.
MEDICAL DISCLAIMER
The information herein is for educational purposes only and may not be construed as medical advice. Diplomat Pharmacy Inc. takes no responsibility for the accuracy or validity of the information herein, nor the claims or statements of any
manufacturer.
Proprietary and Confidential of Diplomat Pharmacy Inc.
DISCLAIMERS

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INVESTMENT HIGHLIGHTS
Diplomat is continuing its
planned transition to a
broader health care company
● Acquisition of PBM dramatically
expands our services to address unmet
market needs across the specialty
industry
● Continuing strength in the growing
oncology and infusion markets
● Diversified growth focusing on EBITDA
and cash flow
Specialty drug growth is far
outpacing traditional drugs
Extensive access to limited-distribution
drugs creates a competitive advantage
Diplomat is unique in the
specialty pharmacy industry
Expanded manufacturer services and
payor capabilities
Diplomat has an enhanced
leadership team with deep
industry expertise

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DELIVERING SUPERIOR CLIENT SOLUTIONS TO
PATIENTS, MEMBERS, AND PARTNERS
CUSTOM-FOCUSEDPATIENT-CENTRIC GROWTH-ORIENTED
Customized, client-centric
solutions for payors and pharma
Management of pharmacy costs
through skill and scale
High-touch caregiving
In-house clinicians providing
disease state–specific
knowledge
Seamless work with providers,
payors, and pharmaceutical
manufacturers to ease the
patient journey
Leader in high-growth
specialty pharmacy
Deep access to
limited-distribution drugs
Disciplined, strategic M&A
Customized, fee-for-service
offerings to add value for each
client type
Proprietary of Diplomat Pharmacy Inc.

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POSITIONED TO CAPITALIZE
ON MARKET TRENDS
Market Trend Diplomat Position
Growth of specialty pharmacy
Decades of experience drive increasing market share in the
highest-growth categories
Limited-distribution drugs driving market growth
Growing portfolio of more than 100 limited-distribution drugs,
including more than 35 orphan drugs
Increasing national healthcare costs
Creating efficiencies through technology solutions,
home infusion services, and site-of-care management
Rapid expansion of biopharma and increasing
demand for hub services
EnvoyHealth provides mission-critical hub solutions while
deepening relationships with Pharma
Unmet payor drug-management needs
Acquisitions and experience allow us to deliver
customized solutions

Founding
Traditional pharmacy
Growth & Expansion
Health care services
Paradigm shift
Transition to specialty

7Proprietary and Confidential of Diplomat Pharmacy Inc.
Payor ServicesPharmacy Services
▪ Customized industry solutions
▪ Fee-for-service
▪ Technology
▪ Specialty
▪ Infusion
▪ Home delivery
▪ Pharmacy benefit management
▪ Site-of-care transition
▪ Medical benefit management
DIPLOMAT’S CONTINUED EVOLUTION
Three Complementary Focus Areas Providing a Broader Spectrum of Care
Industry Services

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DIPLOMAT GUIDES THE PATIENT JOURNEY
PROVIDERS
Collaborate to
gather patient
information
PAYORS
Collaborate on
all member
services
MANUFACTURERS
Monitor adherence
and gather data
PATIENTS
Answer their questions
and assist with funding
and onboarding
PATIENTS &
PROVIDERS
Educate on
therapy
RX INTAKE
ADJUDICATION
MEMBER
MANAGEMENT
BENEFIT
INVESTIGATION
PRIOR
AUTHORIZATION
RE-ADJUDICATION
CLINICAL
VERIFICATION &
INTERVENTIONS
PATIENT
ASSISTANCE
QUALIFICATION
PATIENT
ONBOARDING
FIRST SHIPMENT
SETUP
CLINICAL
EDUCATION &
TRAINING
REPORTING
PORTALS
BUSINESS
INTELLIGENCE
FULFILLMENT
DATA
CAPTURE
CLINICAL
MANAGEMENT
WHOWESERVEWHATWEDO

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LEADING NPS REFLECTS PATIENT FOCUS
1. Diplomat Patient Surveys, 2017. Approximate. Data from survey of approximately 4,500 respondents.
2. Satmetrix 2016 U.S. Consumer Study.
Net Promoter Score (NPS) measures the net number of customers who recommend a
company’s products or services on a scale from -100 to 100.
84
80 78
70
69 66

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SPECIALTY DRUGS DRIVE PHARMACY
INDUSTRY GROWTH
1. The 2017 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers, Adam Fein, February 2017.
Historical and Projected Growth, 2011–20211
Specialty drugs as % of
pharmacy industry revenues 17% 28% 42%
2011 2016 2021
SPECIALTY DRUGS
TRADITIONAL DRUGS
$300
$412
$572
$250
$297
$332
$240
$115
$50
(BILLIONS)

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LIMITED DISTRIBUTION DRUG ACCESS
PROVIDES A PATH TO GROWTH
2012
DPLO EXCLUSIVE
2013
DPLO LARGEST OF 4
2016
DPLO 1 of 7
2015
DPLO 1 of 6
2017
DPLO LARGEST OF 2
2017
DPLO LARGEST OF 3
80%
OF FUTURE DRUG
LAUNCHES ARE
EXPECTED TO BE
LIMITED
DISTRIBUTION1
100+
DIPLOMAT LDD
PORTFOLIO
60%+
2017E REVENUE
FROM LD DRUGS
Specialty Spend Under
Pharmacy Benefit to Grow ~5x1
2011A 2021E
$240 BILLION$50 BILLION
DIPLOMAT 2%
1. The 2017 Economic Report on Retail, Mail, and Specialty Pharmacies. February 2017.
Property of Diplomat Pharmacy Inc.
$115 BILLION
DIPLOMAT 5%
2016A
2017
DPLO 1 OF 8
2017
DPLO 1 OF 6
2017
DPLO LARGEST OF 4

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DEEP ONCOLOGY PIPELINE
FUELS FURTHER GROWTH
Rapid Growth in the Oncology Market1
2016A 2021E
$86 BILLION
$46 BILLION
DIPLOMAT 5%
1. Barclays Research, EvaluatePharma. January 2017
2. 2015 Profile Biopharmaceutical Research Industry – April 2015 & 2016 Profile Biopharmaceutical Research Industry 2016 – April 2016
Drugs in Pipeline by Therapeutic Class 2
According to BioWorld, biotech funding has increased 25% year-over-year to
$15.8 billion in the third quarter 2017.

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INFUSION CONTINUES TO
OUTPERFORM THE MARKET
Alpha-1
$550M
Hemophilia
$4B
Hereditary Angioedema
$1.5B
IVIG & SCIG
$4B
Nutrition &
Digestive Disorders
$2.9B

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MANAGED MARKETS STRATEGY
Benefits to DiplomatStrategy Benefits to Clients
Increases our ability to contract
directly with health plans
Expands our existing capabilities
dramatically to deliver improved
financial performance through a
differentiated, patient-centric
platform
Accelerating our existing push
into PBM-like services based on
industry dynamics
Targeting small to midsize
payors, self-funded employers,
and unions
Acquisition expands existing
capabilities into highly
customized payor services
Builds high-quality,
patient-centric services that
directly address unmet market
needs for drug management

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NPS TRANSACTION SUMMARY
•Pharmaceutical Technologies, Inc., dba National Pharmaceutical Services (NPS)
•Full-service pharmacy benefit manager (PBM) with access to 475,000 member lives
•Based in Omaha, Nebraska
•Revenue: $32 million (2017E) and Adjusted EBITDA: $5.4 million (2017E)
Target
•$47 million purchase price
•Transaction includes real estate valued at ~$10 millionPurchase Price
•$31 million in cash using cash on hand and existing credit facility
•$16 million in common stock
•No contingent earn-out consideration
•Expected to be accretive to adjusted EPS in 2018
Consideration
•Diversified mix of PBM lives
•Robust technology platform: In-house proprietary claims-processing system
•Captive mail-order pharmacy (Integrated HMO Pharmacy)
•Near-term synergy opportunities for specialty Rx volume
•Senior management team will remain in place
Business Overview
•Transaction expected to close in 30 days
•Subject to customary closing conditionsAnticipated Closing

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INDUSTRY SERVICES
GENERATE NEW PROFITS
1. $1 billion market size is a management estimate based on total 2016 specialty pharmacy market size.
Hub services are a $1B
and growing market.1
We compete in this
emerging, high-margin area.
● Affordability and copay support
● Noncommercial pharmacy—PAP and
wholesale support
● Market insight and remote monitoring
● Benefit coverage and access support
● Adherence program management
● Nursing/health support
● Customized technology solutions

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M&A: BECOMING BETTER, NOT JUST BIGGER
Acquisition Date
Accelerated Current
Capabilities
New Therapy
Expanded
Geography
Access to Additional
Payors
Manufacturer
Relationships
New Technology
Expanded Service
Offering
Q4 2013
Q2 2014
Q2 2015
Q2 2015
Q2 2016
Q1 2017
Q1 2017
Q2 2017
Q3 2017
Q3 2017
Q4 2017
Q4 2017

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THIRD QUARTER 2017 RESULTS
Revenue
$1,181
$1,125
(MILLIONS)
1. Based on dispensed scripts only.
2. Gross profit / net sales (i.e., based on dispensed and serviced scripts).
Adjusted EBITDA
$22.6
$23.2
(MILLIONS)
3Q16A 3Q17A
3Q16A 3Q17A
Gross Profit/Script1
$289
$360
3Q16A 3Q17A
Net Income
$5.4
$1.0
(MILLIONS)
3Q16A 3Q17A
Adjusted EBITDA
margin: 1.9% (3Q16A)
to 2.1% (3Q17A)
Gross margin2
:
6.6% (3Q16A) to
7.6% (3Q17A)

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LONG-TERM FINANCIAL PERFORMANCE
Total Revenue
$578
(MILLIONS)
2010A 2011A 2012A 2013A 2014A 2015A 2016A
% Growth 53% 34% 46% 34% 46% 52% 31%
$772
$1,127
$1,515
$2,215
$3,367
$4,410
Note: Historical financials are not pro forma for any acquisitions.
3Q16A 3Q17A
$1,181
$1,125

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LONG-TERM FINANCIAL PERFORMANCE
Adjusted EBITDA
$8
(MILLIONS)
2010A 2011A 2012A 2013A 2014A 2015A 2016A
% Growth 27% 88% (28%) 75% 85% 170% 13%
% Margin 1.3% 2.0% 1.0% 1.3% 1.6% 2.8% 2.4%
$15
$11
$19
$35
$95
$107
3Q16A 3Q17A
1.9% 2.1%
$22.6
$23.2
Note: Historical financials are not pro forma for any acquisitions.
Pre-IPO
infrastructure
investments

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GROWTH IN PROFITABILITY
Gross Profit/Script
(MILLIONS)
$71
2010A 2011A 2012A 2013A 2014A 2015A 2016A
% Growth 12% 31% 4% 20% 44% 68% 16%
% Margin 7.1% 7.3% 6.2% 5.9% 6.3% 7.8% 7.4%
$93
$97
$116
$167
$280
$325
3Q16A 3Q17A
6.6% 7.6%
$289
$360
Financials are not pro forma for acquisitions.
Gross profit per script is based on dispensed
scripts only.
Percent margin equals gross profit / net sales
(i.e., based on dispensed and serviced scripts).

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BALANCE SHEET/CASH FLOW SNAPSHOT
Sept. 2017 Dec. 2016
Cash $27 $8
Total Debt $1601
$1502
Shareholders’ equity $647 $614
Net Debt/ProForma TTM EBITDA ~1.3x3
~1.0x4
Cash Flow From Operations (period ended) $94 $31
1. Includes $11mm in cash-based contingent consideration
2. Includes $4mm in cash-based contingent consideration
3. ProForma includes 12 months of Accurate, Affinity, Comfort Infusion, FocusRx, and WRB Communications
4. ProForma includes 12 months of Affinity, Comfort Infusion, and TNH

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MOVING FORWARD,
STRONG PATHS FOR GROWTH
Specialty Infusion
Payor Services
EnvoyHealth
M
& A
Opportunity/Revenue/Value
Time
Traditional Specialty Pharmacy
Scalability through efficiencies—
more new benefits than added costs
High-margin fee-for-service
opportunities for pharma/payors
High-growth market with unmet
drug-management needs
Strategic national coverage and
site-of-care cost reduction
Continued high revenue with growing
LDD opportunities

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Therapeutic Class 2016 % of Total 2015 2014 2013
Oncology $2,102,130 48% $1,432,091 $1,068,751 $736,987
Immunology $644,173 15% $510,708 $438,145 $378,685
Hepatitis $583,751 13% $520,771 <10% <10%
Specialty Infusion $505,240 11% $374,884 <10% <10%
Multiple Sclerosis <10% N/A <10% $226,805 $169,470
Other (none greater
than 10% in period)
$575,094 13% $528,177 $481,255 $229,997
$4,410,388 $3,366,631 $2,214,956 $1,515,139
Limited-distribution
drug % of total
53% 45% 44% 40%
REVENUE BY THERAPEUTIC CLASS
($ IN THOUSANDS)

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RECONCILIATION OF NET INCOME (LOSS) &
ADJUSTED EBITDA
For the three months ended September 30, Calendar year ending December 31,
($ in millions) 2017 2016 2016A 2015A 2014A 2013A 2012A 2011A 2010A
Net income (loss) attributable to Diplomat $1.0 $5.4 $28.3 $25.8 $4.8 ($26.1) ($2.6) $9.2 ($7.8)
Depreciation & Amortization $16.9 $13.7 $50.0 $30.8 $8.1 $3.9 $3.8 $3.1 $2.2
Interest Expense $2.1 $1.8 $6.6 $5.2 $2.5 $2.0 $1.1 $0.6 $0.5
Income tax expense ($0.7) ($3.2) $11.2 $16.2 $4.7 - - - -
EBITDA $19.3 $17.7 $96.1 $78.1 $20.1 ($20.2) $2.3 $12.8 ($5.2)
Contingent consideration and other M&A expense $3.0 $0.4 - - - - - - -
Share-based compensations expense $1.7 $1.4 $5.4 $4.0 $2.9 $0.9 $0.9 $1.4 $0.8
Change in fair value of redeemable common shares - - - - ($9.1) $34.3 $6.6 - $10.7
Termination of existing stock redemption agreement - - $0.2 - $4.8 - - - -
Employer payroll taxes - option repurchases $0.0 $0.1 - $1.6 - - - - -
Restructuring and impairment charges - $2.5 $7.1 $0.2 - $1.0 $0.4 $0.4 $1.5
Equity loss of non-consolidated entity - - - - $6.2 $1.1 $0.3 $0.1 -
Severance and related fees $0.1 $0.1 $1.1 $0.5 $0.4 $0.2 $0.4 $0.7 -
Merger and acquisition related expenses - - ($6.6) $9.2 $7.2 $0.7 - - -
Private company expenses - - - - $0.2 $0.2 - - -
Tax credits and other - - - - $1.0 - ($0.1) ($0.6) -
Other items ($0.9) $0.4 $4.0 $1.5 $1.4 $0.7 $0.1 $0.2 ($0.0)
Adjusted EBITDA $23.2 $22.6 $107.4 $95.0 $35.2 $19.0 $10.9 $15.1 $7.7

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RECONCILIATION OF NET INCOME (LOSS) &
ADJUSTED EBITDA
(1) Share-based compensation expense relates to director and employee share-based awards.
(2) Restructuring and impairment charges reflect decreases in the fair market value of non-core property and assets, or actual losses on disposal of such assets. The full year 2016
includes both the Q4 2016 impairment to write down our cost method investment in Physician Resource Management, LLC (“PRM”) and the Q3 2016 full impairment of the
definite-lived intangible assets associated with Primrose Healthcare LLC. 2013 charges primarily relate to the $932 write-down of our former Swartz Creek, Michigan headquarters
facility to its fair value, after we vacated it in favor of our present Flint, Michigan facility. 2012 charges primarily relate to our write-down of an externally purchased software
package we no longer utilize, as well as sales of Company-owned vehicles. 2011 charges include expense associated with the closure of our former Cleveland, Ohio facility, the
move of our Chicago, Illinois area facility, and sales of Company-owned vehicles.
(3) During the fourth quarter of 2014, we reassessed the recoverability of our investment in our non-consolidated entity, Ageology. Based upon this assessment, we determined
that a full impairment of $4,869 was warranted, primarily due to updated projections of continuing losses into the foreseeable future. The remaining amounts in 2014, 2013 and
2012 represents our share of losses recognized by Ageology, using the equity method of accounting. We first invested in Ageology, an anti-aging physician network dedicated to
nutrition, fitness and hormones, in October 2011, in connection with its formation.
(4) Employee severance and related fees primarily relates to severance for former management.
(5) Fees and expenses directly related to merger and acquisition activities, and the impact of changes in the fair value of related contingent consideration liabilities.
(6) Primarily includes philanthropic activities performed at the direction of our majority shareholder.
(7) Represents (a) various tax credits received from the state of Michigan for facility improvement and employee hiring initiatives, (b) the one-time costs associated with converting
from an S-Corporation to a C-Corporation, and (c) a 2014 charge of $1,825 related to non-income tax obligations.
(8) Q3 2017 excludes $1.0 million of insurance proceeds associated with the 2016 inventory loss due to a cooler failure. 2016 includes a $2.4 million inventory loss due to a cooler
failure. Other expense is predominantly IT operating leases. Operating leases were initiated, in lieu of purchases or capital leases for a subset of our IT spend, for a short period of
time in 2013 and 2014 for liquidity purposes. We have since discontinued the practice of leasing IT equipment. The cost of purchased IT equipment is reflected in depreciation and
amortization.

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