Perrigo sees 2015 profit approaching $1 billion

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The generic drug company’s fourth quarter results beat analysts’ estimates.

Perrigo Company (NYSE:PRGO; TASE:PRGO) released its fourth quarter and full year results today. The company’s fiscal year ends in June. It reported annual revenue growth of 14.7% to $4.06 billion. Perrigo made a GAAP-based net profit of $205 million, 54% lower than in the previous year, but on an adjusted basis the net profit was up 40%, at $740 million.

Perrigo chairman, president and CEO Joseph C. Papa said, “I am pleased to report that Perrigo has delivered year-over-year record sales and adjusted earnings for the ninth straight fiscal year. While the year was not without its challenges, including an historically weak cough/cold season among other headwinds, this team was able to deliver record results. I am proud of our top line organic growth of 7%, driven by $231 million in new product sales and great execution in our business segments. We transformed Perrigo into a truly global organization with the acquisition of Elan and are uniquely positioned to continue our growth, while making quality healthcare products more affordable for the world.”

Perrigo had a good fourth quarter, after the third quarter disappointed. Revenue totaled $1.1 billion, representing growth of 18.3% in comparison with the corresponding quarter, and was higher than the analysts’ consensus estimate. Adjusted earnings also beat the estimates, at $234 million, or $1.74 per share, $0.19 above the analysts’ consensus.

The company forecasts adjusted earnings growth of 12.7-17.4% in its 2015 fiscal year to $7.2-7.5 per share, or between $969 million and just over $1 billion in total. This guidance is lower than the consensus analysts’ estimate of earnings per share of $7.53 in 2015.

Of the company’s plans for 2015, Papa said, ” We expect to launch greater than $235 million in new products, including multiple products that have recently switched from prescription to OTC status, and are enthusiastic about the number of categories currently being considered to switch. We have the deepest Rx pipeline in our history and are excited about the global prospects for Tysabri.”

Generic drugs company Perrigo is traded in New York and Tel Aviv at a market cap of $18.6 billion.

Perrigo’s Consumer Healthcare segment net sales were $607 million, reflecting an increase in sales of existing products of $52 million (primarily in the antacids and smoking cessation categories), new product sales of $15 million and $6 million attributable to the recent acquisition of OTC products from Aspen. These combined increases were offset by a decline of $29 million in sales of existing products (primarily in the contract manufacturing and animal health categories) due primarily to relatively lower sales in third party contract manufacturing and a delayed start to the flea and tick season in the US due to weather. The adjusted gross margin contracted 210 basis points due to an under absorption of fixed production costs and lower sales of higher margin animal health products versus last year. The adjusted operating margin included increased R&D investments as more products move from prescription to over-the-counter status.

The Nutritionals segment reported fourth quarter net sales of $145 million as new product sales of $6 million were more than offset by $4 million in discontinued products and lower year-over-year sales in the infant/toddler food and VMS categories.

The acquisition of Irish company Elan has improved Perrigo’s tax structure and made it an attractive takeover target itself. “Globes” reported a month ago that Perrigo was for sale, and had hired an investment bank to examine the possibility of a sale to a large drug company.

Perrigo shares closed 5.35% up on the Tel Aviv Stock Exchange today.

Published by Globes [online], Israel business news – www.globes-online.com