Perrigo Reports Record Revenue; Acquisition Charges Ding Profits

ALLEGAN -- The generic drug and store brand health products maker Perrigo Co. (Nasdaq: PRGO) Wednesday reported record revenue of $919.8 million in the third fiscal quarer ended March 30, up from $778 million a year earlier.

Net income dipped to $111.9 million for the quarter or $1.18 a share, down from $115.7 million or $1.23 a share in the same quarter a year earlier.

The company said "adjusted" net income was $134.1 million, up from $132.7 million a year earlier. The adjusted figure backs out various costs related to acquisitions, severance costs and losses on sale of investments.

For the nine months, revenue was $2.57 billion, up from $2.34 billion a year earlier. Net income was $323.5 million or $3.42 a share, up from $285.9 million or $3.04 a share a year earlier.

"We are very pleased with our performance, as the team delivered all-time record quarterly revenue and adjusted diluted earnings per share," chairman and CEO Joseph C. Papa said in a statement. "It was a very busy quarter for the team. We signed and closed the acquisition of Rosemont Pharmaceuticals, a specialty and generic prescription pharmaceutical company focused on the manufacturing and marketing of oral liquid formulations. We shipped Guaifenesin 600mg Extended-Release tablets with $135 million in branded sales. It is the first product that is generically equivalent to Mucinex 600mg Extended-Release tablets. We launched the generic equivalents of Luxiq Foam and Nicorette mini lozenges and the authorized generic of Acetadote injection. Finally, we filed an ANDA for the generic equivalent of Androgel 1.62% and we believe we are the first to file. After the quarter ended, we closed our acquisition of Velcera, further expanding our recent entry into companion animal health and broadening our product offering. All of these great milestones were achieved while expanding margins in a record sales quarter." 

The third quarter sales increase was driven primarily by $61 million in base business growth, new product sales of $41 million and $40 million attributable to the Sergeant's and Rosemont acquisitions.

Consumer healthcare segment net sales increased 20 percent to $537 million, driven by an increase in sales of existing products of $54 million (contract, cough/cold and analgesics categories), $31 million attributable to the recent acquisition of Sergeant's and new product sales of approximately $17 million (cough/cold and smoking cessation categories). These combined increases were partially offset by a decline of $9 million in sales of existing products (other categories) and $4 million in discontinued products. Reported operating income was $95.9 million, up 20.8 percent from $79.4 million a year earlier.

The nutritionals segment reported third quarter net sales of $133 million, compared with $118 million a year ago. All product categories within the segment grew year-over-year and new product sales were $5 million. Reported operating income was $7 million, up from $1.8 million a year earlier.

The prescription pharmaceuticals segment third quarter net sales increased 22 percent to $189 million due primarily to new product sales of $18 million, $8 million in sales related to the Feb. 11 acquisition of Rosemont, and strong prescription volumes evidenced by an increase in existing product sales of $7 million. Reported operating income was $73.4 million, up 9.2 percent from $67.3 million a year earlier.

The active pharmaceutical ingredient segment net sales increased by 11 percent to $41 million due to an increase in existing product sales of $4 million primarily related to the continued successful launch of a customer's product. Operating margins expanded on favorable mix of existing product sales offset slightly by higher distribution selling, general and administrative expenses. Reported operating income was $11.7 million, up 12.1 percent from $10.5 million a year earlier.

The company is confirming the guidance which was provided on Feb. 11, the closing date of the Rosemont acquisition, and continues to expect fiscal 2013 reported earnings to be between $4.67 and $4.87 per diluted share as compared to $4.18 in fiscal 2012. Excluding the charges outlined in Table III at the end of this release, the Company continues to expect fiscal 2013 adjusted earnings to be between $5.53 and $5.73 per diluted share as compared to $4.99 in fiscal 2012.

To listen to a taped replay of the conference call discussing these results, call (855) 859-2056 in the United States or (404) 537-3406 elsewhere, using access code 31768198.

From its beginnings as a packager of generic home remedies in 1887, Allegan-based Perrigo has grown to become a global provider of quality, affordable healthcare products. Perrigo develops, manufactures and distributes over-the-counter and generic prescription pharmaceuticals, infant formulas, nutritional products, animal health, dietary supplements and active pharmaceutical ingredients The company is the world's largest manufacturer of OTC pharmaceutical products for the store brand market.

More at www.perrigo.com.