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Perrigo Profit Tops Estimate, To Buy Velcera For $160 Mln.; Stock Up

Generic drug maker Perrigo Co. (PRGO), Friday reported a better-than-expected increase in second-quarter profit, helped mostly by growth in Consumer Healthcare segment sales and lower income tax expense, partly offset by reduced margins.

The company raised its net earnings per share guidance for the full year 2013, while reaffirming adjusted earnings expectations.

Separately, Perrigo has agreed to acquire Velcera Inc. (VLCR.OB), a pet health products company, for $160 million in cash. Assuming a full year of sales in 2014, Perrigo expects Velcera to be $0.11 accretive to adjusted earnings, and neutral to marginally dilutive to GAAP earnings.

Shares of the company are up six percent in morning trade on the Nasdaq.

Allegan, Michigan-based Perrigo reported second-quarter net income of $106 million or $1.12 per share, compared with $99.7 million or $1.06 per share last year.

Excluding items, adjusted earnings for the quarter were $1.36 per share, compared with $1.20 per share in the prior year.

On average, 15 analysts polled by Thomson Reuters expected earnings of $1.31 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter totaled $883 million, up 5 percent from $838 million last year. Analysts on consensus estimated revenues of $881.8 million for the quarter.

Growth was supported by the Sergeant's and CanAm Care LLC acquisitions and new product sales, partly offset by decreases in sales of certain existing products in the Rx segment.

Consumer Healthcare segment sales jumped 14.4 percent from last year, while Nutritional fell 4.8 percent. RX segment sales declined 8.3 percent, and API segment slid 4.4 percent.

Gross margin for the quarter dropped to 34.8 percent from 35.2 percent a year ago, and operating margin slid to 18.6 percent from 19.2 percent.

For the fiscal year 2013, Perrigo now expects net earnings of $4.73 and $4.93 per share, compared with prior guidance of $4.71 to $4.91 per share . The company continues to expect adjusted earnings of $5.45 to $5.65 per share. Analysts currently estimate earnings of $5.54 per share for 2013.

Perrigo has launched clobetasol emulsion propionate foam, 0.05%, the generic equivalent of Olux -E Foam, 0.05%, indicated for the treatment of moderate to severe dermatosis of the scalp. Perrigo, which has 180 days of generic exclusivity, will commence shipment of the product immediately.

Perrigo is trading at $106.66, up 6.12%, on the Nasdaq.

by RTTNews Staff Writer

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