OSI Pharma Reports Lower Q3 Profit On Higher Tax Provision; Revenue Up 18%

10/21/2009 6:47 PM ET

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(RTTNews) - Wednesday, OSI Pharmaceuticals, Inc. (OSIP: News ) reported lower profit for the third quarter despite an 18% increase in revenue, primarily due to an increase in tax provision from 3% to 39%.

The Melville, New York-based company's net income for the quarter decreased to $17.57 million or $0.30 per share from $51.64 million or $0.87 per share last year. Net income from continuing operations declined to $17.9 million or $0.30 per share from $31.4 million or $0.53 per share a year ago.

On a non-GAAP basis, net income from continuing operations increased to $51 million or $0.81 per share from $40 million or $0.64 per share last year.

On average, 14 analysts polled by Thomson Reuters estimated earnings of $0.32 per share for the quarter. Analysts' estimates typically exclude special items.

This is the first year of financial reporting in which OSI has shown a full tax provision on its earnings, estimated at 39%. Non-GAAP results exclude adjusting for non-cash tax expense to reflect OSI's actual cash tax rate of 3%, restructuring and other charges related to consolidation of the U.S. operations, expense related to equity-based compensation, non-cash interest expense on convertible notes, and certain other items.

Total revenues from continuing operations for the quarter increased 18% to $111 million from $95 million in the prior-year period.

Revenue related to Tarceva, OSI's non-small cell lung cancer drug, increased to $88.74 million from $80.71 million in the prior-year quarter. Other revenues declined to $22.71 million from $13.86 million a year ago.

Income tax provision for the quarter was raised to $17.28 million, compared to $987 thousand in the previous year quarter.

For the nine-month period, OSI's income from continuing operations declined to $50.88 million or $0.88 per share from $94.12 million or $1.65 per share a year ago. Revenue for the period increased to $304.19 million from $280.96 million in the prior-year.

OSIP closed Wednesday's regular trading at $31.56, down $0.10 or 0.32%, on a volume of 1.09 million shares on the Nasdaq.