Perrigo first quarter revenue increases 21% to record $641 million

  • Fiscal first quarter revenue from continuing operations increased $113 million, or 21 percent, to a record $641 million
  • Fiscal first quarter adjusted income from continuing operations increased 22 percent to a record $81 million, or $0.87 per share
  • Fiscal first quarter GAAP income from continuing operations increased 44 percent to $74 million, or $0.79 per share
  • Rx segment revenue grew 47 percent with reported operating income of $18 million and adjusted operating income of $20 million
  • Management raises expected full-year fiscal 2011 adjusted diluted earnings from continuing operations to be in a range of $3.60 to $3.75 per share, an increase of 19 percent to 24 percent compared to fiscal 2010 adjusted diluted EPS

Perrigo Company (Nasdaq: PRGO; TASE) today announced results for its first quarter ended September 25, 2010.

Perrigo's Chairman and CEO Joseph C. Papa commented, "We have started fiscal 2011 well, delivering record earnings for the quarter. The market for store brands continues to grow, now representing approximately 29% of over-the-counter (OTC) and nutritional sales dollars at retail and up 400 basis points in the past two years. Our Rx segment continued its strong performance, which was driven by new product sales and growth in over-the-counter Rx (ORx) combined with our continued focus on quality and R&D. Our value proposition continues to resonate well with consumers in all economic conditions."

Following the acquisition of PBM Holdings, Inc. (PBM), the Company has realigned its reportable segments to include a new reportable segment, Nutritionals. The financial information in this press release, including the attached tables, reflects the realignment of the Company's reportable segments, as well as the elimination of the prior one-month reporting lag in international subsidiaries.

First Quarter Results

Net sales from continuing operations for the first quarter of fiscal 2011 were $641 million, an increase of 21%. Reported income from continuing operations was $74 million, or $0.79 per share, up 44% from $51 million, or $0.55 per share, a year ago. Excluding charges as outlined in Table II at the end of this release, first quarter fiscal 2011 adjusted income from continuing operations was $81 million, or $0.87 per share.

Consumer Healthcare

Consumer Healthcare segment net sales in the first quarter were $396 million compared with $381 million in the first quarter last year, an increase of $15 million or 4%. The increase resulted from approximately $18 million of sales in existing products, primarily in cough/cold and analgesics plus $17 million of new product sales. These increases were partially offset by the impact of competition in the smoking cessation category, as well as a decrease in contract manufacturing. Reported operating income was $71 million, compared to $74 million a year ago, largely as a result of decreased sales in smoking cessation. On an adjusted basis, operating income was $73 million compared to $76 million in fiscal 2010. Adjusted operating margin decreased 140 basis points year-over-year for the quarter due primarily to additional spending in quality and increased sales promotional spending.

On July 26, 2010, the Company announced that it received final approval from the U.S. Food and Drug Administration (FDA) to manufacture and market OTC Cetirizine Cherry Syrup, 1mg/ml. Shipments began in the first quarter of fiscal 2011. Cherry joins grape flavor cetirizine syrup in the Company's product portfolio, giving patients a choice of store brand flavors.

Nutritionals

The Nutritionals segment, which consists of infant formulas, infant and toddler foods, vitamins, minerals and supplements, as well as oral electrolyte solutions, reported first quarter net sales of $123 million, compared with $56 million a year ago. The increase in sales was primarily the result of the acquisition of PBM. Adjusted operating income was $24 million compared to a loss of $2 million last year due to the addition of higher margin PBM sales and improved productivity in the Company's operations.

On August 25, 2010, the Company announced that it received FDA clearance to manufacture infant formula liquid concentrate and ready-to-use products through its partner Kerry Proteins and Nutritionals located in Sainte Claire, Quebec.

Rx Pharmaceuticals

The Rx Pharmaceuticals segment first quarter net sales were $69 million compared with $47 million a year ago, an increase of 47%. The increase in sales was driven by new product sales, primarily as a result of the Company obtaining the generic distribution rights to Aldara®, as well as by higher volumes on existing products. Adjusted operating income was $20 million, an increase of $3 million from last year.

On September 8, 2010 the Company announced that it received FDA approval to manufacture and market Imiquimod Cream, 5%. The product is the generic equivalent of Aldara® Cream, 5%, a topical treatment for actinic keratoses on the face or scalp, superficial basal cell carcinoma, and external genital and perianal warts in patients 12 years old or older. The Company will manufacture and supply the active ingredient. Aldara® had sales of approximately $382 million prior to generic market formation, as measured by Wolters Kluwer Health.

API

The API segment reported first quarter net sales of $37 million compared with $33 million a year ago. The increase was due primarily to sales of temozolomide in Europe, partially offset by a decline in existing products and $2 million in unfavorable changes in foreign currency exchange rates. Adjusted operating income increased $6 million or 141% due to strong gross margins.

Other

Continuing operations for the Other category, consisting of the Israel Pharmaceutical and Diagnostic Products operating segment, reported first quarter net sales of $16 million, compared with $12 million a year ago. The increase was due to increased sales of new and existing products, slightly offset by unfavorable changes in foreign currency exchange rates. Adjusted operating income was $1 million, up 42% from last year.

Guidance

Chairman and CEO Joseph C. Papa concluded, "Particularly in these challenging economic times, Perrigo is uniquely positioned to continue to save consumers billions of dollars annually on their healthcare spend while also adding value for our customers and shareholders. As a result of our first quarter performance, continued strong demand for our products in the Consumer Healthcare and Nutritionals businesses, and great execution and new product growth in the Rx and API businesses, we are raising our full year EPS guidance. We expect fiscal 2011 reported diluted earnings from continuing operations to be between $3.28 and $3.43 per share as compared to $2.42 in fiscal 2010. Excluding the charges outlined in Table III at the end of this release, we expect fiscal 2011 adjusted diluted earnings from continuing operations to be between $3.60 and $3.75 per share, which implies a growth rate of 19% to 24% over last year. Perrigo is the right company, in the right place, at the right time."

SOURCE Perrigo Company

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