(RTTNews) - Drug maker King Pharmaceuticals Inc. (KG: News ) posted third-quarter profit that nearly halved from last year, reflecting higher costs and expenses. However, quarterly revenues advanced 19% on branded pharmaceutical and Animal Health sales, as well as an increase in sales of Auto-Injectors in the Meridian business.

Q3 Results

The Bristol, Tennessee-based company's third-quarter net income was $42.5 million or $0.17 per share, compared to $82.5 million or $0.34 per share in the prior-year quarter.

On a non-GAAP basis, net income, excluding certain special items and recurring non-GAAP adjustments, dropped to $71.3 million or $0.29 per share from $95.4 million or $0.39 per share last year.

On average, 15 analysts polled by Thomson Reuters expected the company to post earnings of $0.27 per share. Analysts' estimates typically exclude special items.

Total revenues for the quarter were $463.3 million, up 19% from the previous year's revenue of $388.4 million. Fourteen Wall Street analysts had a consensus revenue estimate of $444.98 million for the quarter.

Quarterly revenue growth of 19% was attributed primarily to branded pharmaceutical and Animal Health sales recorded as a result of the Alpharma acquisition and an increase in sales of Auto-Injectors in the Meridian business.

Brian Markison, Chairman, President and Chief Executive Officer of King Pharma, said, "The transformation of King to a fully integrated specialty pharmaceutical company was further supported by strong third quarter performances reported by each of our business segments."
The company added that the third-quarter results reflect strong cash flow from operations as well as a significant repayment of debt associated with the Alpharma acquisition, including complete repayment of the $200 million term loan in October.

Corporate Items

During the quarter, total cost of revenues grew to $162.8 million from $101.5 million last year, and total selling, general, and administrative expense amounted to $135.7 million, up from the prior-year's $99.3 million. Total operating costs and expenses rose to $376.2 million from $265.6 million in the year-earlier quarter.

Operating income for the recent quarter declined to $87.2 million from $122.8 million reported a year ago. Non-GAAP operating income was $129.4 million for the third-quarter of 2009, compared to $138.1 million earned in the prior-year period.

Business Segments

The company's branded pharmaceuticals generated third-quarter net revenues of $283 million, down from $302 million in the third quarter of 2008, primarily due to the sales declines of its THROMBIN-JMI product and the market entry of generic substitutes for ALTACE beginning in December 2007, offset by the addition of revenues from sales of FLECTOR PATCH and EMBEDA.

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