Hi-Tech Pharmacal Co., Inc. (NASDAQ: HITK) today reported results for the Company's fiscal second quarter ended October 31, 2011.
Net sales for the three months ended October 31, 2011 were $56,875,000, an increase of $12,219,000 or 27% compared to the net sales of $44,656,000, for the three months ended October 31, 2010.
Net sales for generic pharmaceuticals for the three months ended October 31, 2011 were $48,667,000, an increase of $12,106,000 or 33%, compared to sales of $36,561,000 for the respective prior fiscal period. The increase was primarily due to stronger sales of Fluticasone Propionate nasal spray. Sales of Fluticasone Propionate increased to $23,000,000 from $17,300,000 in the comparable quarter as the Company sold more units at a lower average price. The Company also benefited from sales of Gabapentin oral solution, launched in February 2011, Ranitidine oral solution, launched in May 2011, Levofloxacin oral solution, launched in June 2011 and Lidocaine sterile jelly, launched in September 2011. Increased sales of the Company's Clobetasol line of topical products and Buprenorphine also contributed to the results.
ECR Pharmaceuticals contributed $3,511,000 to sales in the current period, a decrease of $1,234,000 or 26%, compared to sales of $4,745,000 for the respective fiscal 2011 period. The decrease was primarily due to the discontinuation of the extended release versions in the Lodrane® line of antihistamines. Increased sales of recently acquired products, including Tussicaps®, partially offset the decrease in sales for the quarter.
Net sales for the Health Care Products division, which markets the Company's OTC branded products, were $4,697,000, an increase of $1,347,000, or 40%, compared to $3,350,000 reported for the same period last year. The increase was primarily due to stronger sales of Zostrix® and Diabetiderm®.
Cost of goods sold increased to $23,479,000 or 41% of net sales, for the three months ended October 31, 2011 from $19,525,000, or 44% of net sales, for the three months ended October 31, 2010. The decrease in cost of goods sold as a percentage of net sales is primarily due to increased sales of Fluticasone Propionate nasal spray, and the impact of newly launched products such as Gabapentin oral solution, Levofloxacin oral solution and Lidocaine sterile jelly, which all have higher than average margins.
Research and product development costs for the three months ended October 31, 2011 increased slightly to $2,468,000, compared to $2,402,000 for the same period ended October 31, 2010.
Selling, general and administrative expense increased to $11,859,000 from $8,628,000 for the three months ended October 31, 2011 and 2010, respectively. This increase is primarily due to increased amortization associated with product acquisitions in the ECR Pharmaceuticals subsidiary and increased advertising in the Health Care Products division.
For the three months ended October 31, 2011, the Company recorded net income from continuing operations of $13,783,000, a 32% increase over income from continuing operations of $10,423,000, for the same period in the prior year. On a fully diluted share basis, EPS increased to $1.04 from $0.79 in the prior year.
David Seltzer, President and CEO, commented on the results: "We are very pleased with our continued strong performance this quarter. Our generic drug business continues to excel, led by strong sales of our Fluticasone Propionate nasal spray, as well as other products. Additionally, we reported a significant increase in HCP revenues for the period. This increase was the result of additional distribution of several products and positive response to advertising."
Hi-Tech Pharmacal Co., Inc.