Drug maker King Pharmaceuticals Inc. (KG) 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.
Net sales of SKELAXIN totaled $102 million for the latest quarter, compared to $110 million in the previous year. Net sales of THROMBIN-JMI product were $43 million, a decline from the prior-year's sales of $67 million.
Quarterly net sales of AVINZA decreased to$31 million from $36 million last year, while net sales of FLECTOR PATCH, which was obtained by the company as a result of its acquisition of Alpharma on December 29, 2008, totaled $40 million during the third quarter of 2009. Net sales of EMBEDA totaled $11 million for the 2009 third quarter. King Pharma announced the launch and commercial availability of EMBEDA on September 21, 2009.
Revenues from the company's Animal Health business, which was added as a result of its acquisition of Alpharma, totaled $96 million for the recent quarter.
King Pharma's Meridian Auto-Injector business contributed quarterly revenue of $72 million, an increase from the previous year's revenue of $68 million. During the quarter, the next generation EpiPen Auto-Injector was shipped to Dey L. P. in preparation for a fourth quarter 2009 launch.
Royalty revenues, derived primarily from ADENOSCAN, decreased to $12 million from $18 million reported in the third quarter of fiscal 2008.
Year-To-Date Synopsis
For the nine-month period, the company reported net income of $69.7 million or $0.28 per share, compared to $208.8 million or $0.85 per share in the year-ago period.
Non-GAAP net income fell to $215.2 million or $0.87 per share from $305.9 million or $1.25 per share in the nine months ended September 30, 2008.
Total revenues increased to $1.34 billion from $1.22 billion reported in the comparable period of the previous year.
Peer Review
Among King's rivals, Cephalon Inc. (CEPH) posted third-quarter net income of $102.72 million or $1.31 per share, down from $105.59 million or $1.34 per share in the year-ago period. Revenues for the quarter grew 9% to $549.41 million from $498.48 million in the previous year.
Another peer, Elan Corp. Plc (ELN) swung to a third-quarter net income of $52.3 million or $0.11 per share, from a loss of $83.5 million or $0.18 per share incurred a year earlier, reflecting a net gain related to Johnson & Johnson transaction as well as an improvement in operating performance. Revenues advanced 6% to $287.0 million from $270.1 million in the previous year.
Stock Quotes
King Pharma shares, which have been trading between $5.86 and $11.36 in the past 52 weeks, closed Wednesday's trading session at $10.19.
For comments and feedback: editorial@rttnews.com