Hospira, Inc. (NYSE: HSP), a leading global specialty pharmaceutical and medication delivery company, today reported results for the second quarter ended June 30, 2010. Net sales for the quarter were $968 million, and adjusted diluted earnings per share were $0.86. (Adjusted measures exclude certain specified items as described later in this press release and the attached schedules.)
"Hospira delivered another solid quarter, driven by strong performance in our Specialty Injectable Pharmaceuticals business and by continued momentum of our Project Fuel optimization initiatives," said Christopher B. Begley, chairman and chief executive officer. "We made significant progress in advancing our business during the quarter, launching our first product from Hospira India, commercializing our second biosimilar product in Europe and strengthening our position in acute-care proprietary pharmaceuticals. We are highly focused on executing our strategy of investing for growth and improving margins and cash flow, as well as on driving quality improvements across our global manufacturing organization. We remain on track to achieve our full-year earnings projections."
Second-Quarter 2010 Results
Net sales increased 1.2 percent to $968 million in the second quarter of 2010, compared to $957 million in the second quarter of 2009. Strong sales in Specialty Injectable Pharmaceuticals, resulting from the U.S. sales of the generic oncolytic oxaliplatin and Precedex™, Hospira's proprietary sedation agent, were primarily offset by a decline in Medication Management Systems as a result of the company's voluntary hold on shipments of its Symbiq™ Infusion System to new customers.
Adjusted income from operations increased 20.6 percent to $213 million in the second quarter of 2010, compared to $177 million in the second quarter of 2009. Driving the majority of the increase were more favorable product mix and improved manufacturing efficiency from the company's Project Fuel optimization initiatives, offset by charges associated with certain quality and product-related matters.
The effective tax rate on an adjusted basis in the quarter was 23.8 percent, up from the second-quarter 2009 rate of 21.5 percent. The increase is primarily related to the expiration of certain U.S. tax credits in 2010 as well as a shift in earnings mix to higher tax jurisdictions relative to the second quarter of 2009.
Cash flow from operations for the first six months of 2010 was $144 million, compared to the $236 million generated for the same period in 2009. The decrease primarily reflects the timing of chargeback payments associated with the U.S. sales of oxaliplatin, increased inventory levels and higher U.S. income tax payments.
Capital expenditures were $79 million for the first six months of 2010, compared to $78 million for the first six months of 2009.
Hospira is maintaining guidance for net sales growth of approximately 3 to 5 percent on a constant-currency basis. Including the impact of foreign exchange, the company currently expects net sales growth to also be 3 to 5 percent.
Hospira is maintaining its adjusted diluted earnings per share projection for full-year 2010, which 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 $0.06 to $0.08 per diluted share) ($0.07) 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 acquisitions of Mayne Pharma, the specialty injectable business of Orchid Chemicals & Pharmaceuticals and Javelin Pharmaceuticals ($0.25) Estimated acquisition and integration-related charges associated with the Orchid and Javelin acquisitions (mid-point of an estimated range of $0.06 to $0.08 per diluted share) ($0.07) Certain quality and product-related charges (mid-point of an estimated range of $0.18 to $0.24 per diluted share) ($0.21) Litigation settlement and related charges ($0.05) Initial research and development milestone charge associated with a partnered proprietary pharmaceutical product ($0.10). Diluted earnings per share -- GAAP $2.55 - $2.65>The adjusting items are shown net of tax in aggregate of $83 million, which is calculated for the specified adjustments stated above, based on the statutory tax rate in the various tax jurisdictions in which the items are expected to occur.
The company now expects cash flow from operations to range between $525 million and $575 million. The projected range for depreciation and amortization remains unchanged at $250 million to $260 million, as does the projected range for capital expenditures, at $195 million to $215 million.
SOURCE Hospira, Inc.