Reports Adjusted EPS of $0.26
WOODCLIFF LAKE, N.J., Nov. 6 /PRNewswire-FirstCall/ -- Par Pharmaceutical Companies, Inc. (NYSE: PRX) today announced results for the third quarter ended Sept 27, 2008.
Third Quarter and Nine Month Results
For the third quarter ended September 27, 2008, Par reported total revenues of $149.0 million and net income of $1.7 million, or $0.05 per diluted share. This is compared with reported revenues of $212.7 million and net income of $1.3 million, or $0.04 per diluted share, for the same period in 2007. For the nine months ended September 27, 2008, Par reported total revenues of $416.8 million and a net loss of $15.8 million, or $0.47 per diluted share. This is compared with reported revenues of $614.5 million and net income of $45.6 million, or $1.30 per diluted share, for 2007.
Third quarter 2008 reported net income included the write-off of an intangible asset and certain inventories related to the trimming of its current generic product portfolio of $5.4 million, a charge relating to a government pricing contingency of $4.6 million, a $2.5 million impairment charge on an investment due to the downturn in the financial markets, a $1.25 million development milestone payment to MonoSol Rx, and a $2.2 million gain from the sale of non-core ANDAs. Adjusting for these one-time items, net income for the third quarter 2008 was $8.8 million, or $0.26 per diluted share. By comparison, net income in the third quarter 2007 included $16.2 million of costs related to business development activities in support of Strativa Pharmaceuticals. Adjusting for this one-time item, net income for the third quarter 2007 was $11.1 million, or $0.32 per diluted share.
Third Quarter Financial Review
For the third quarter ended September 27, 2008, total revenues decreased 30.0% compared with the same period a year earlier as a result of increased competition on the Company's generic products and decreased net sales of Megace(R) ES.
Revenues for the generic products division during the three month period decreased 31.2% to $129.4 million compared with the same period in 2007. Lower generic revenues in 2008 were primarily due to pricing pressure, including for metoprolol, fluticasone, propranolol, ranitidine HCl syrup, various amoxicillin products, cabergoline, and many of the Company's other products. The July 2008 launches of meclizine and dronabinol partially offsetting these declines. Revenues from Strativa decreased 20.3% to $19.6 million compared with the same period in 2007 due to decreased net sales of Megace(R) ES. Net sales growth tempered in 2008 principally due to a more challenging reimbursement environment for Megace(R) ES and included a change in reimbursement status.
Par's third quarter gross margin was 34.5% of sales, compared with 31.2% in 2007. This increase is primarily attributed to increased sales of higher margin meclizine and dronabinol and lower sales of low margin product such as metoprolol, partially offset by lower royalties of ondansetron tablets and lower sales of higher margin products such as propranolol. The gross margin percentage for Strativa was 79.3% in the third quarter of 2008 compared with 78.4% in the same period in 2007, due mainly to a mid-year price increase tempered by increased rebates.
Research and development (R&D) expense decreased 58.0% to $13.8 million in the third quarter of 2008 compared with the same period in 2007, driven primarily by a net reduction in one-time milestone payments.
Third quarter selling, general and administrative (SG&A) expenses decreased by 9.6% to $30.7 million compared with the third quarter of 2007, driven by lower bonus and share-based compensation, and lower sales and marketing expenses of Megace(R) ES, tempered by an increase in legal fees.
Recent Events
On October 14, 2008, Par announced a resizing of its generic unit as part of an ongoing strategic assessment of its businesses. The Company will significantly reduce its research and development (R&D) expenses by decreasing its internal R&D effort to focus on completing products currently in development and will continue to look for opportunities with external partners. In addition, the Company is trimming its current generic product portfolio and retaining only those marketed products that deliver acceptable profit to the Company. These actions will result in a workforce reduction of approximately 190 employees.
