- Company provides Fiscal Year 2014
Revised Non-GAAP EPS Guidance in the Range of $0.95 - $1.15 Per
Share
- Sales of Next Generation Products
Reach $303.0 million in the Quarter, Representing 49.9% Growth vs
Prior Year Quarter
Forest Laboratories, Inc. (NYSE:FRX), an international
pharmaceutical manufacturer and marketer, today announced that
reported diluted earnings per share equaled $0.26 in the second
quarter of fiscal 2014. Reported diluted earnings per share in the
second quarter of fiscal 2013 were $0.08. Excluding acquisition
related amortization and specified items, non-GAAP EPS in the
second fiscal quarter of 2014 equaled $0.36 compared with $0.15 per
share in the second quarter of fiscal 2013.
Chief Executive Officer and
President
"There is rejuvenation underway at Forest as we return to
growth. We have a motivated and talented workforce, we are
launching new products and we are developing new drugs to drive
future growth. This quarter sales increased 17% and non-GAAP
earnings per share more than doubled," said Brent Saunders, CEO
& President. "To make Forest more relevant to all of our key
stakeholders - customers & patients; owners; partners and
colleagues - we are conducting a thorough review of our business
operations and evaluating changes to our strategy."
Product Sales
Performance
Net sales for the quarter increased 17.3% to $811.4 million,
from $692.0 million in the prior year quarter. The increase in
sales was driven by sales of the Company’s next generation products
which totaled $303.0 million, an increase of 49.9% compared with
the second quarter of fiscal 2013. Namenda franchise sales
increased $40.3 million or 11.0% compared with the second quarter
of fiscal 2013.
Central Nervous System
Franchise
- Namenda® (memantine HCl), an
NMDA receptor antagonist for the treatment of moderate to severe
Alzheimer’s disease, recorded sales of $396.3 million during the
quarter, an increase of 7.8% from last year’s second quarter.
Namenda XR™ (once-daily memantine HCl), recorded sales of
$11.5 million during the quarter. Namenda XR was launched in June
2013 and recorded sales of $14.0 million during the fiscal 2014
first quarter. Pursuant to the requirements of a Pediatric Written
Request from the FDA, the Company has conducted clinical studies to
evaluate the safety and effectiveness of memantine in the treatment
of autism.
- Viibryd® (vilazodone HCl), a
selective serotonin reuptake inhibitor (SSRI) and a partial agonist
at serotonergic 5-HT1A receptors for the treatment of adults with
major depressive disorder, recorded sales of $47.4 million during
the quarter, an increase of 18.9% from last year’s second
quarter.
Respiratory Franchise
- Daliresp® (roflumilast), a PDE4
enzyme inhibitor for the treatment to reduce the risk of
exacerbations in patients with chronic obstructive pulmonary
disease (COPD), recorded sales of $24.5 million for the quarter, an
increase of 25.4% from last year’s second quarter.
- Tudorza® (aclidinium bromide
inhalation powder), an anticholinergic indicated for the long-term
maintenance treatment of bronchospasm associated with COPD,
recorded sales of $16.7 million during the quarter. Tudorza was
launched in December 2012 and recorded sales of $15.9 million
during the fiscal 2014 first quarter.
Bystolic® (nebivolol), a
beta-blocker for the treatment of hypertension, recorded sales of
$130.0 million, an increase of 22.1% over the year-ago period.
Linzess®
(linaclotide), a guanylate cyclase agonist for the treatment of
both irritable bowel syndrome with constipation and chronic
idiopathic constipation in adults, recorded sales of $34.4 million
during the quarter. Linzess was launched in December 2012 and
recorded sales of $28.8 million during the fiscal 2014 first
quarter.
Savella® (milnacipran HCl),
a selective serotonin norepinephrine dual reuptake inhibitor for
the management of fibromyalgia, recorded sales of $23.5 million, a
decrease of 10.4% from last year’s second quarter.
Teflaro® (ceftaroline
fosamil), a broad-spectrum bactericidal cephalosporin antibiotic
for the treatment of adults with community-acquired bacterial
pneumonia and with acute bacterial skin and skin structure
infections, recorded sales of $14.9 million, an increase of 48.9%
over last year’s second quarter.
Contract Revenue was $36.0
million in the current quarter compared to $54.3 million in the
prior year second quarter. Benicar® (olmesartan medoxomil)
co-promotion income totaled $35.0 million, an increase of $4.8
million, compared to $30.2 million in last year’s second quarter.
Per the agreement with Daichi Sankyo, Forest’s active co-promotion
of Benicar ended in the first quarter of fiscal 2009 and the
Company receives a residual royalty until the end of March 2014.
Last year’s second quarter also included $22.7 million in royalties
from Mylan, Inc. on its sales of generic Lexapro.
Cost of Sales as a
percentage of sales was 20.2% compared with 21.6% in last year’s
second quarter.
Selling, General and
Administrative expense for the current quarter was
$408.6 million as compared to $374.9 million in the year-ago
quarter. The current level of spending reflects the resources and
activities required to support our currently marketed products,
particularly our newest products: Namenda XR, Linzess, Tudorza,
Viibryd, Daliresp and Teflaro.
Research and Development for
the current quarter was $191.4 million compared with $202.8 million
in last year’s second quarter. The current quarter included $10.0
million in development milestone expenses. There were no
development milestone payments in the prior year quarter.
Income Tax Expense for the
quarter was $21.6 million, reflecting a quarterly effective tax
rate of 23.6%.
Reported Net Income for the
quarter ended September 30, 2013 was $70.0 million or $0.26 per
diluted share compared to $20.8 million or $0.08 per diluted share
reported for last year’s second quarter.
Diluted Weighted Average Shares
Outstanding at September 30, 2013 were approximately
270,825,000.
Six Month Results
Revenues for the six months ended September 30, 2013 increased
6.7% to $1,688.2 million compared to $1,581.8 million in the prior
year.
Net income for the six months ended September 30, 2013 increased
22.6% to $93.3 million compared to $76.1 million in the prior year
six month period. Reported diluted GAAP earnings per share
increased 25.0% to $0.35 per share in the current year’s six months
as compared to diluted earnings per share of $0.28 per share in
last year’s six months.
Fiscal 2014 Guidance
The Company now expects that Non-GAAP earnings per share for the
fiscal year ending March 31, 2014 will be in the range of $0.95 to
$1.15. Research and development spend is now expected to be
approximately $800 million for the year.
Use of Non-GAAP Financial
Information
Forest provides non-GAAP financial measures as alternative views
of the Company’s performance. These measures exclude certain items
(including costs, expenses, gains/(losses) and other specified
items) due to their significant and/or unusual individual nature
and the impact they have on the analysis of underlying business
performance and trends. Management reviews these items individually
and believes excluding these items provides information that
enhances investors’ understanding of the Company’s financial
performance. Non-GAAP financial measures should be considered in
addition to, but not in lieu of, net income and EPS prepared in
accordance with accounting principles generally accepted in the
United States (GAAP). Non-GAAP financial measures have no
standardized meaning prescribed by GAAP and, therefore, have limits
in their usefulness to investors. Because of the non-standardized
definitions, Non-GAAP adjusted income and its components and EPS
(unlike GAAP net income and its components and EPS) may not be
comparable to the calculation of similar measures of other
companies. Non-GAAP adjusted income and its components and EPS are
presented solely to permit investors to more fully understand how
management assesses performance. A reconciliation between GAAP
financial measures and non-GAAP financial measures is as
follows:
FOREST LABORATORIES, INC. AND
SUBSIDIARIES
SUPPLEMENTAL FINANCIAL
INFORMATION
Forest Laboratories, Inc. Specified Items
For the Three and Six Months Ended September 30, 2013 and
2012
Three Months Ended
Six Months Ended September 30, September 30,
(In thousands)
2013 2012
2013 2012
Amortization arising from business
combinations and
acquisitions of product rights
$11,701 $8,926 $23,747 $17,784
Impact of specified items on Cost
of goods sold 11,701 8,926 23,747 17,784
Amortization arising from business
combinations and
acquisitions of product rights
14,913 10,966 28,937 21,905 Write-off of Nabriva note receivable --
-- 26,182 --
Impact of specified items on
Selling, general and
administrative
14,913 10,966 55,119 21,905
Increase to pre-tax
income 26,614 19,892 78,866 39,689 Income tax impact of
specified items -- -- -- --
Increase to net earnings
$26,614 $19,892 $78,866 $39,689
Forest
Laboratories, Inc. Reconciliation of Certain GAAP Line Items
to Non-GAAP Line Items For the Three and Six Months Ended
September 30, 2013 and 2012
Three Months Ended September
30, 2013 (In thousands)
GAAP Reported
Specified Items
Non-GAAP Adjusted
Gross profit $ 691,537 $ 11,701 $ 703,238 Selling,
general and administrative 408,564 14,913 393,651 Research and
development 191,358 – 191,358
Earnings before provision for
taxes 91,615 26,614 118,229 Provision for taxes 21,628 – 21,628
Earnings after provision for taxes $ 69,987 $ 26,614 $
96,601 Weighted average number of shares outstanding: 270,825 –
270,825
Three Months Ended
September 30, 2012 (In thousands)
GAAP Reported
Specified Items
Non-GAAP Adjusted
Gross profit $ 610,914 $ 8,926 $ 619,840 Selling,
general and administrative 374,889 10,966 363,923 Research and
development 202,839 – 202,839
Earnings before provision for
taxes 33,186 19,892 53,078 Provision for taxes 12,409 – 12,409
Earnings after provision for taxes $ 20,777 $ 19,892 $
40,669 Weighted average number of shares outstanding: 267,169 –
267,169
Six Months Ended
September 30, 2013 (In thousands)
GAAP Reported
Specified Items
Non-GAAP Adjusted
Gross profit $ 1,359,105 $ 23,747 $ 1,382,852
Selling, general and administrative 852,427 55,119 797,308 Research
and development 376,782 – 376,782
Earnings before provision for
taxes 129,896 78,866 208,762 Provision for taxes 36,631 –
36,631
Earnings after provision for taxes $ 93,265 $ 78,866
$ 172,131 Weighted average number of shares outstanding: 269,634 –
269,364
Six Months Ended September 30, 2012 (In thousands)
GAAP Reported
Specified Items
Non-GAAP Adjusted
Gross profit $ 1,263,818 $ 17,784 $ 1,281,602
Selling, general and administrative 757,198 21,905 735,293 Research
and development 398,005 – 398,005
Earnings before provision for
taxes 108,615 39,689 148,304 Provision for taxes 32,553 –
32,553
Earnings after provision for taxes $ 76,062 $ 39,689
$ 115,751 Weighted average number of shares outstanding: 268,092 –
268,092
Forest Laboratories, Inc.
Reconciliation of GAAP EPS to Non-GAAP EPS For the Three
and Six Months Ended September 30, 2013 and 2012
Three Months Ended
Six Months Ended September 30, September 30,
(In thousands, except per share amounts)
2013
2012 2013 2012
Reported Net income: $ 69,987 $ 20,777 $ 93,265 $
76,062 Specified items net of tax:
Amortization arising from business
combinations and acquisitions of product
rights
Recorded in Cost of sales 11,701 8,926 23,747 17,784 Recorded in
Selling, general and administrative 14,913 10,966 28,937 21,905
Write-off of Nabriva note receivable – – 26,182 –
Impact of specified items on provision
for
– – – –
income taxes
Adjusted
Non-GAAP earnings: $ 96,601 $ 40,669 $ 172,131 $ 115,751
Reported Diluted earnings per share: $ 0.26 $ 0.08 $ 0.35 $
0.28 Specified items net of tax:
Amortization arising from business
combinations
and acquisitions of product rights Recorded in Cost of sales 0.04
0.03 0.09 0.07 Recorded in Selling, general and administrative 0.06
0.04 0.11 0.08 Write-off of Nabriva note receivable – – 0.10
–
Impact of specified items on provision
for
– – – –
income taxes
Rounding – – (0.01) –
Adjusted Non-GAAP earnings per share $ 0.36 $ 0.15 $ 0.64 $
0.43
FOREST LABORATORIES, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Months Ended Six
Months Ended (In thousands, except per share amounts) September 30,
September 30, 2013 2012 2013
2012
Revenues: Net sales $ 811,429 $ 692,017 $
1,608,282 $ 1,443,783 Contract revenue 36,025 54,277 67,943 120,112
Interest and other income 7,801 14,343 11,965
17,869
Net revenues 855,255 760,637
1,688,190 1,581,764
Costs and
expenses: Cost of sales 163,718 149,723 329,085 317,946
Selling, general and administrative 408,564 374,889 852,427 757,198
Research and development 191,358 202,839
376,782 398,005 763,640 727,451
1,558,294 1,473,149
Income before income tax
expense 91,615 33,186 129,896 108,615 Income tax expense
21,628 12,409 36,631 32,553
Net income
$ 69,987 $ 20,777 $ 93,265 $ 76,062
Net income per common
share: Basic $ 0.26 $ 0.08 $ 0.35 $ 0.28 Diluted $ 0.26
$ 0.08 $ 0.35 $ 0.28
Weighted average number of
common shares outstanding: Basic 268,540 266,503
267,831 267,447 Diluted 270,825 267,169 269,634 268,092
Forest will host a conference call at 10:00 AM EST today to
discuss the results. The conference call will be webcast live
beginning at 10:00 AM EST on the Company’s website at www.frx.com.
Please log on to the website at least fifteen minutes prior to the
conference call as it may be necessary to download software to
access the call. A replay of the conference call will be available
until November 22, 2013 and also by dialing (800) 283-8183 (US or
Canada) or +1 (402) 220-0867 (international), Conference ID:
FRXQ214.
About Forest Laboratories and Its
Products
Forest Laboratories' (NYSE:FRX) longstanding global partnerships
and track record developing and marketing pharmaceutical products
in the United States have yielded its well-established central
nervous system and cardiovascular franchises and innovations in
anti-infective, respiratory, gastrointestinal and pain management
medicine. Forest’s pipeline, the most robust in its history,
includes product candidates in all stages of development across a
wide range of therapeutic areas. The Company is headquartered in
New York, NY. To learn more, visit www.FRX.com.
Except for the historical information contained herein, this
release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These
statements involve a number of risks and uncertainties, including
the difficulty of predicting FDA approvals, the acceptance and
demand for new pharmaceutical products, the impact of competitive
products and pricing, the timely development and launch of new
products, and the risk factors listed from time to time in Forest
Laboratories’ Annual Report on Form 10-K, Quarterly Reports on Form
10-Q and any subsequent SEC filings. Forest assumes no obligation
to update forward-looking statements contained in this release to
reflect new information or future events or developments.
Forest Laboratories, Inc.Frank J. Murdolo, 1-212-224-6714Vice
President - Investor Relationsmedia.relations@frx.com
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