UPDATE: Hospira 3Q Profit Jumps 42%; EPS View Raised
October 27 2009 - 9:58AM
Dow Jones News
Hospira Inc.'s (HSP) third-quarter profit jumped 42% as results
surged ahead of analysts' expectations with help from a generic
version of a Sanofi-Aventis SA (SNY, SAN.FR) colon-cancer drug and
a cost-cutting plan.
The maker of injectable drugs and medical devices boosted its
already twice-increased 2009 earnings outlook thanks to a tax
benefit, and it affirmed its full-year sales-growth outlook.
Shares of the Lake Forest, Ill., company moved higher in
premarket trading Tuesday and were recently up 4.5% to $48.38.
Through Monday, Hospira shares had risen about 73% so far this
year.
The company reported earnings of $116.2 million, or 71 cents a
share, up from $81.8 million, or 51 cents a share, a year earlier.
Excluding one-time items, including mostly charges linked to the
restructuring plan in the recent quarter, earnings rose to 90 cents
from 63 cents.
Analysts surveyed by Thomson Reuters had forecast, on average,
earnings of 69 cents in the recent quarter.
Gross margin rose to 39.3% from 36.1%.
Quarterly sales for Hospira, which spun off from Abbott
Laboratories (ABT) in 2004, topped the 1 billion mark for the first
time by reaching $1.01 billion, far ahead of Wall Street's $936.2
million projection.
Sales were up 8.9% from a year ago, or 10.8% excluding the
impact of foreign currency.
The driver was Hospira's business for specialty injectable
drugs, where sales surged about 24% to $575.7 million. Due in part
to unfavorable currency rates, other major product categories saw
year-over-year declines in the third quarter.
Christopher B. Begley, Hospira's chairman and chief executive,
said results were helped by the restructuring program launched in
March and the launch of a generic version of the Sanofi drug, which
is known as Eloxatin.
There is an ongoing patent fight concerning the drug, and a
federal appeals court ruled in Sanofi's favor in September while
throwing out an earlier trial-court ruling in favor of generic
competitors including Hospira. Hospira kept shipping the drug, and
noted in a regulatory filing Tuesday that a trial is expected in
2010.
The restructuring plan announced in March, called "Project
Fuel," includes a 10% work force reduction and the slimming down of
Hospira's product offerings alongside the potential sale of
non-core businesses.
Despite the strong third quarter, Hospira backed the forecast
for 5% to 7% sales growth this year excluding the impact of foreign
currency. Based on a tax benefit, the company hiked its adjusted
earnings guidance by 5 cents to a range of $2.85 to $2.90 per
share. Including items, full-year earnings are seen at $2.25 to
$2.30 a share.
-By Jon Kamp, Dow Jones Newswires; 617-654-6728;
jon.kamp@dowjones.com