Hospira, Inc. (NYSE: HSP), a leading global specialty pharmaceutical and medication delivery company, today reported results for the first quarter ended March 31, 2010. Net sales for the quarter were $1.0 billion, and adjusted diluted earnings per share were $0.94. (Adjusted measures exclude certain specified items as described later in this press release and the attached schedules.)
"Hospira started out the year with very strong sales and profitability. Our positive performance was driven by continued momentum in our Specialty Injectable Pharmaceuticals business, as well as by additional progress on our Project Fuel optimization initiatives," said Christopher B. Begley, chairman and chief executive officer. "Based on our first-quarter performance and the expected benefit to sales from acquiring Orchid Chemicals & Pharmaceuticals' generic injectable business, we have increased our full-year guidance. We remain dedicated to delivering on our commitments to our customers and patients through focused execution and improving shareholder value through sustainable top- and bottom-line growth."
First-Quarter 2010 Results
The following table highlights selected financial results for the first quarter of 2010 compared to the same period in 2009:
In $ millions, GAAP Adjusted except per Three Months Ended Three Months Ended share amounts March 31, March 31, ------------------ % ------------------ % 2010 2009 Change 2010 2009 Change -------- ------ ------ -------- ------- ------ Net Sales $1,007.6 $859.7 17.2% n/a n/a n/a Gross Profit (Net Sales less Cost of Products Sold) $430.3 $319.6 34.6% $454.7 $339.6 33.9% Income from Operations $207.6 $114.7 81.0% $239.9 $149.9 60.0% Diluted EPS $0.84 $1.03 (18.4%) $0.94 $0.60 56.7% Statistics (as a % of Net Sales) -------------------------------- Gross Profit (Net Sales less Cost of Products Sold) 42.7% 37.2% 45.1% 39.5% Operating Income 20.6% 13.3% 23.8% 17.4%
Results under U.S. Generally Accepted Accounting Principles (GAAP) include items as detailed in the schedules attached to this press release, including a $0.57 benefit to first-quarter 2009 GAAP diluted earnings per share from the settlement of a U.S. Internal Revenue Service audit.
Net sales increased 17.2 percent to $1.0 billion in the first quarter of 2010, compared to $860 million in the first quarter of 2009. Specialty Injectable Pharmaceuticals drove the majority of the growth, primarily a result of continued strong U.S. sales of the generic oncolytic oxaliplatin and Precedex™, Hospira's proprietary sedation agent, as well as several products launched in the last year.
Adjusted income from operations increased 60.0 percent to $240 million in the first quarter of 2010, compared to $150 million in the first quarter of 2009. Driving the majority of the increase were higher net sales, more favorable product mix and improved manufacturing efficiency from the company's Project Fuel optimization initiatives.
The effective tax rate on an adjusted basis in the quarter was 27.0 percent, up from the first-quarter 2009 rate of 21.5 percent. The increase is primarily related to the expiration of certain U.S. tax provisions in the first quarter of 2010. A shift of earnings to higher tax jurisdictions relative to the first-quarter 2009 earnings mix also contributed to the increase.
Cash flow from operations for the first quarter of 2010 resulted in an outflow of $6 million compared to an inflow of $89 million in the same period in 2009. The decrease primarily reflects the timing of chargeback payments associated with U.S. sales of oxaliplatin.
Capital expenditures were $41 million for the first quarter of 2010, compared to $34 million in the first quarter of 2009, mainly a result of Project Fuel-related spending.
Hospira now expects net sales to increase approximately 3 to 5 percent on a constant-currency basis. Including the impact of foreign exchange, the company expects net sales growth to be 4 to 6 percent.
Hospira is also increasing its adjusted diluted earnings per share projection for full-year 2010, which now is expected to range between $3.35 and $3.45 per share.
The reconciliation between the projected 2010 adjusted diluted earnings per share and GAAP diluted earnings per share follows:
Diluted earnings per share -- adjusted $3.35 - $3.45 ------------- Estimated charges related to Project Fuel initiatives (mid-point of an estimated range of $0.24 to $0.28 per diluted share) ($0.26) Estimated charges related to facilities optimization initiatives (mid-point of an estimated range of $0.04 to $0.06 per diluted share) ($0.05) Estimated $67 million for the amortization of intangibles related to the Mayne Pharma and Orchid Pharma acquisitions ($0.27) Estimated acquisition and integration-related charges associated with the Orchid Pharma acquisition (mid-point of an estimated range of $0.05 to $0.07 per share) ($0.06) ------------- Diluted earnings per share -- GAAP $2.71 - $2.81>The estimated charges are shown net of tax of $53 million, which is calculated for the specified components stated above based on the statutory tax rate in the various tax jurisdictions in which the items are expected to occur.
The company is increasing its projection for cash flow from operations, which is now expected to range between $625 million and $675 million. Depreciation and amortization are now projected to be in a range of $250 million to $260 million, reflecting the impact of the Orchid Pharma acquisition. The projected range for capital expenditures remains unchanged at $195 million to $215 million.
SOURCE Hospira, Inc.