Perrigo's Q3 revenues up 13 percent

Perrigo's Q3 revenues up 13 percent

Nutritionals segment net sales decreased by $6 million compared to fiscal 2011 due to lower existing product sales in the infant formula and vitamins, minerals and supplements categories.

Perrigo's chairman and CEO Joseph C. Papa commented, "We are very pleased with our record fiscal third quarter revenue and earnings performance. These strong results were made possible by the continued operational excellence of the team. Headlining this execution were the $64 million in new product launches, mostly in OTC, which keep us on track to exceed our $190 million new product sales goal for fiscal 2012. Global Consumer Healthcare sales grew 6 percent in the quarter, driven mainly by U.S. OTC sales growth of 8 percent despite a historically mild cough/cold and flu season. In Nutritionals, we were able to improve adjusted margins from last quarter as measures put in place partially offset the volatility in raw materials pricing. Our Rx segment continues to exceed our expectations in both our existing and newly acquired business. We are continuing to make quality healthcare more affordable to consumers around the globe."

Third quarter results
Net sales for the third quarter of fiscal 2012 were $778 million, an increase of 13 percent over fiscal 2011. The increase was driven primarily by $70 million of net sales attributable to the Paddock Laboratories, Inc. (Paddock) and CanAm Care, LLC acquisitions and new product sales of $64 million, partially offset by decreases in sales of certain existing products, primarily in the Consumer Healthcare and Nutritionals segments. Reported income from continuing operations was approximately $116 million, or $1.23 per diluted share, an increase over $92 million, or $0.98 per diluted share, a year ago. Excluding charges as outlined in Table I at the end of this release, third quarter fiscal 2012 adjusted income from continuing operations was $133 million, or $1.41 per diluted share, up 32 percent over fiscal 2011. In the quarter, there was a $0.20 per diluted share tax benefit as a result of the closing of various tax audits and statutory expirations. Reported gross margin increased 130 basis points to 35.9 percent, while adjusted gross margin increased 190 basis points to 37.6 percent. Reported operating margin increased 100 basis points to 18.8 percent, while adjusted operating margin increased by 250 basis points to 22.1 percent.

Nine months results
Net sales for the first nine months of fiscal 2012 were $2,341 million, an increase of 14 percent over fiscal 2011. The increase was driven primarily by $177 million of net sales attributable to the Paddock and CanAm Care acquisitions and new product sales of $160 million, partially offset by decreases in sales of certain existing products, primarily in the Consumer Healthcare and Nutritionals segments. Reported gross profit was $802 million, an increase of 14 percent over fiscal 2011, and reported gross margin was 34.2 percent, as compared to 34.3 percent last year. Adjusted gross profit was approximately $871 million, an increase of 20 percent over fiscal 2011, and adjusted gross margin increased 180 basis points to 37.2 percent. Reported operating income was $408 million, an increase of 11 percent over fiscal 2011, and reported operating margin was 17.4 percent, as compared to 17.9 percent last year. Adjusted operating income was $505 million, an increase of 25 percent over fiscal 2011, and adjusted operating margin increased 190 basis points to 21.6 percent.

Consumer Healthcare
Consumer Healthcare segment net sales for the third quarter rose to $449 million from $425 million in the third quarter last year, an increase of 6 percent, due to new product sales of $34 million (primarily in the cough/cold and dermatological categories), an increase in sales of existing products of $5 million (primarily in the smoking cessation category), and net sales attributable to the acquisition of CanAm Care of approximately $8 million. These increases were partially offset by a decline of approximately $25 million in existing product sales due primarily to a historically mild cough/cold and flu season. Reported operating income increased by $2 million to approximately $75 million, while adjusted operating income increased by $3 million to $77 million, driven by profit contribution on new product sales. Gross and operating margins were impacted year-over-year by increased competition on a key product in the gastrointestinal category and under absorption of fixed production costs relative to lower volume output caused by a historically mild cough/cold and flu season.

Year-to-date net sales increased 6 percent or $81 million compared to fiscal 2011 driven by new product sales of $76 million (mainly in the cough/cold, diabetes and dermatological care categories), along with an increase in sales of existing products of approximately $29 million in the cough/cold and smoking cessation categories. These increases were partially offset by a decline of $32 million in sales of existing products within the gastrointestinal and analgesics product categories.

On January 6, 2012, the Company signed a definitive agreement to acquire substantially all of the assets of CanAm Care, a privately-held, Alpharetta, Georgia-based distributor of diabetes care products, for approximately $36 million in cash.

On January 12, 2012, the Company announced that the United States District Court for the Western District of Michigan granted summary judgment in its favor in patent litigation involving Guaifenesin Extended-Release Tablets, 600 mg, a generic version of Mucinex® tablets.

On February 14, 2012, the Company announced that it began shipping Loratadine-D 12 hour extended release tablets, the store brand equivalent to Schering-Plough's Claritin-D® 12 hour extended release tablets.

On March 1, 2012, the Company announced that it initiated market launch and made its first shipments of Minoxidil 5 percent Foam, comparable to Rogaine® 5 percent Foam Hair Regrowth Treatment, to its retail and wholesale customers.

Nutritionals
Nutritionals segment net sales for the third quarter decreased $6 million to $118 million compared to fiscal 2011 due to lower existing product sales of $27 million in the Vitamins, Minerals and Supplements (VMS) and infant formula categories. These decreases were largely offset by new product sales of $20 million, primarily in the infant formula category. The decrease in sales of existing infant formula products was primarily due to the transition to next generation formulas within the portfolio. Infant formula sales were also impacted by the absence of increased demand of approximately $8 million in net sales that the Company experienced last year as a result of a competitor's product recall, along with a decline in U.S. birth rates year-over-year, while the decrease in the VMS category was driven by increased competition. Reported operating margin decreased 1,140 basis points to 3.1 percent, impacted by restructuring at the Company's Florida facility disclosed last quarter. Adjusted operating margin decreased 430 basis points to 14.8 percent due to under absorption of fixed production costs relative to lower volume output year-over-year, increased costs of raw materials for infant formula and change in product mix.

For the first nine months of fiscal 2012, net sales decreased approximately $15 million or 4 percent to $366 million, compared to fiscal 2011, due to a decline in existing product sales of $72 million partially offset by new product sales of $57 million, primarily in the infant formula category.

Other
Continuing operations for the Other category, consisting of the Israel Pharmaceutical and Diagnostic Products operating segment, reported third quarter net sales of $19 million, an increase of 12 percent compared to fiscal 2011. This increase was due to new product sales of $1 million, along with an increase in sales of existing products of $1 million. For the first nine months of fiscal year 2012, net sales were $56 million, an increase of 15 percent compared to fiscal 2011, driven by new product sales of $4 million and an increase in sales of existing products of approximately $4 million.

 

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