Par Pharmaceutical Companies Reports First Quarter 2012 Results Reports Q1 2012 Adjusted Cash EPS of $0.80; GAAP Loss of $0.79 per Share

WOODCLIFF LAKE, N.J., May 8, 2012 /PRNewswire/ -- Par Pharmaceutical Companies, Inc. (NYSE: PRX) today reported results for the first quarter ended March 31, 2012.

For the first quarter ended March 31, 2012, the Company reported total revenues of $271.5 million and a loss from continuing operations of $28.7 million, or $0.79 per diluted share, which includes a $45 million charge related to the Company's best estimate of loss related to the potential settlement of the on-going Department of Justice investigation of Strativa's marketing of Megace® ES. On an adjusted cash basis (non-GAAP measure), which excludes the $45 million charge, a milestone payment, amortization expenses, other transaction-related costs and the impairment of an IPR&D asset, income from continuing operations was $29.8 million, or $0.80 per diluted share for the first quarter 2012.  (Refer to attached reconciliation table between GAAP and adjusted non-GAAP amounts.)

First Quarter Highlights 

Key Product Sales (Net sales comparisons at the product level are to fourth quarter 2011.)

  • Metoprolol:  For the quarter ended March 31, 2012, net sales of metoprolol succinate were $61.8 million compared to $56.4 million in the fourth quarter 2011.  The increase was driven by customer buying patterns.  Par Pharmaceutical, the Company's generic drug division, is the authorized generic for all strengths of AstraZeneca's Toprol XL®.
  • Budesonide EC:  Net sales for budesonide EC in the first quarter 2012 were $38.0 million compared to $33.1 million in the fourth quarter 2011.  The increase was driven by customer buying patterns.  Par Pharmaceutical is the authorized generic for AstraZeneca's Entocort® EC.
  • Propafenone Hydrochloride ER: Net sales for propafenone hydrochloride ER in the first quarter were $19.1 million compared to $16.4 million in the fourth quarter 2011.  Par Pharmaceutical remained the exclusive supplier of generic Rythmol SR® throughout the first quarter.
  • Sumatriptan: Net sales of sumatriptan succinate were $16.7 million in the first quarter compared to $15.3 million in the prior quarter.  The increase was driven by customer buying patterns in advance of our expected second half 2012 exit from this product.
  • Bupropion Hydrochloride ER: Net sales of bupropion were $11.4 million in the first quarter 2012.  Par recorded $6.1 million of net sales in the last six weeks of the fourth quarter following the closing of its acquisition of Anchen Pharmaceuticals.  
  • Zolpidem Tartrate: Net sales of zolpidem tartrate of $6.9 million in the first quarter 2012.  Par recorded $5.3 million of net sales in the last six weeks of the fourth quarter following the completion of the Anchen acquisition.
  • Fentanyl Citrate Lozenges: Net sales for fentanyl for the first quarter were $2.0 million compared to $2.6 million in the fourth quarter.  The decrease is due to customer buying patterns.
  • Other Generic Products:  For the first quarter 2012, net sales from all other generic products were $95.3 million. This compares to fourth quarter 2011 net sales of $91.8 million.  The increase is due to product mix and a full quarter of Anchen products.
  • Megace® ES:  Net sales were $12.2 million for the first quarter compared to $15.8 million in the fourth quarter.  The decrease was due to customer buying patterns.  
  • Nascobal® B12 Nasal Spray:  Net sales were $5.9 million for the first quarter compared to $6.6 million in the fourth quarter 2011.  The decrease was due to lower prescription volume.

Revenues and adjusted gross margin for the first quarter 2012 were $271.5 million and $110.7 million, respectively, compared to $253.6 million in net sales and $103.8 million in adjusted gross margin during the prior quarter (Q4 2011). The adjusted gross margin rate on the Company's consolidated product portfolio remained essentially flat at 40.8% versus 40.9% in the fourth quarter 2011.  (Par is now presenting non-GAAP gross margin on an adjusted basis. See detailed reconciliation table at the end of this press release.)




1Q 2012


4Q 2011






$

%


$

%




Key Par (Generic)

Products (1)


$   46.4

29.8%


$   35.4

26.2%














All Other (Generic)


47.8

50.1%


46.4

50.5%














Total Par Generics


$   94.2

37.5%


$   81.8

36.0%














Strativa (Branded) Products(2)


$   16.5

81.5%


$   22.0

82.4%














Total (All Products)


$ 110.7

40.8%


$ 103.8

40.9%













(1) Q1 2012 Key Par Products include metoprolol, sumatriptan, budesonide, propafenone, bupropion,
zolpidem, fentanyl lozenges.  (2) Strativa products consist primarily of Megace ES and Nascobal.

 

Operating Expenses
On a GAAP basis, total operating expenses increased during the first quarter of 2012 as compared to the prior quarter as follows:

  • Research and development expenses were $29.9 million in the first quarter 2012 compared to $18.1 million in the fourth quarter 2011.  The increase was due primarily to a one-time upfront development payment, as well as a full quarter of Anchen research and development expenses and a partial quarter of Edict Pharmaceuticals research and development expenses following Par's acquisition of Edict.
  • Selling, general and administrative expenses for the first quarter 2012 decreased to $42.2 million compared to $44.5 million in the fourth quarter of 2011.  The decrease reflects significantly lower transaction-related costs tempered by a full quarter of Anchen expenses.

Cash and cash equivalents and marketable securities aggregate balance as of March 31, 2012 was $186.5 million, which included a payment of $25.0 million in conjunction with the Edict acquisition and a one-time upfront development payment.

Product and Pipeline Update

In February 2012, Par Pharmaceutical, Inc. completed its acquisition of privately-held Edict Pharmaceuticals Private Limited, an India-based developer and manufacturer of generic pharmaceuticals.  Edict has been renamed Par Formulations Private Limited.

In April 2012, Par Pharmaceutical, Inc. announced that it had entered into an exclusive acquisition and license agreement with Handa Pharmaceuticals LLC to acquire Handa's ANDA for dexlansoprazole capsules, the generic version of Takeda's Dexilant®.  Under the terms of the agreement, Par has the exclusive rights to market, sell and distribute dexlansoprazole capsules in the U.S. under the ANDA, subject to final FDA approval.  Par will receive a percentage of profits from the sales of the product.  Handa believes it is the first to file an ANDA containing a paragraph IV certification for the 60 mg strength of the product, which would potentially provide 180 days of marketing exclusivity.  According to IMS Health data, annual sales in the U.S. for the 60 mg strength of Dexilant are approximately $517 million.

Par Pharmaceutical, along with third-party partners, currently has approximately 71 ANDAs pending with the FDA, 21 of which it believes to be first-to-file opportunities.

Conference Call

Par Pharmaceutical Companies, Inc. will host a conference call and live webcast on Tuesday, May 8, 2012 at 9:00 AM EDT to review results for the first quarter 2012. 

Access to the live webcast can be made via the Company's website at www.parpharm.com.

Dial-in Information

Domestic:   

800-510-0146

International:  

617-614-3449

Passcode: 

72245227

A replay of the conference call will be available for two weeks approximately one hour after the call. 

Replay Information

Domestic:       

888-286-8010

International:    

617-801-6888

Passcode:   

42736584

Non-GAAP Measures

Par Pharmaceutical Companies, Inc. ("the Company") believes it prepared its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) and pursuant to accounting requirements of the Securities and Exchange Commission.  In an effort to provide investors with additional information regarding the Company's results and to provide a meaningful period-over-period comparison of the Company's financial performance, the Company sometimes uses non-GAAP financial measures as defined by the Securities and Exchange Commission.  The differences between the U.S. GAAP and non-GAAP financial measures are reconciled in attached schedules.  In presenting comparable results, the Company discloses non-GAAP financial measures when it believes such measures will be useful to investors in evaluating the Company's underlying business performance.  Management uses the non-GAAP financial measures to evaluate the Company's financial performance against internal budgets and targets.  In addition, management internally reviews the Company's results excluding the impact of certain items, as it believes that these non-GAAP financial measures are useful for evaluating the Company's core operating results and facilitating comparison across reporting periods.  Importantly, the Company believes non-GAAP financial measures should be considered in addition to, and not in lieu of, U.S. GAAP financial measures.  The Company's non-GAAP financial measures may be different from non-GAAP financial measures used by other companies.

About Par Pharmaceutical Companies, Inc.

Par Pharmaceutical Companies, Inc. is a US-based specialty pharmaceutical company.  Through its wholly-owned subsidiary's two operating divisions, Par Pharmaceutical and Strativa Pharmaceuticals, it develops, acquires, manufactures and markets higher-barrier-to-entry generic drugs and niche, innovative proprietary pharmaceuticals. For press release and other company information, visit www.parpharm.com.

Safe Harbor Statement

Certain statements in this news release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  To the extent any statements made in this news release contain information that is not historical, these statements are essentially forward-looking and, as such, are subject to known and unknown risks, uncertainties and contingencies, many of which are beyond the control of the Company, which could cause actual results and outcomes to differ materially from those expressed herein.  Risk factors that might affect such forward-looking statements include those set forth in Item 1A of the Company's most recent Annual Report on Form 10-K, in other of the Company's filings with the SEC from time to time, including Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and on general industry and economic conditions.  Any forward-looking statements included in this news release are made as of the date hereof only, based on information available to the Company as of the date hereof, and, subject to any applicable law to the contrary, the Company assumes no obligation to update any forward-looking statements.

 

PAR PHARMACEUTICAL COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share and Per Share Data)

(Unaudited)








March 31,


December 31,



2012


2011

      ASSETS





Current assets:





    Cash and cash equivalents


$156,876


$162,516

    Available for sale marketable debt securities


29,630


25,709

    Accounts receivable, net 


135,200


125,940

    Inventories


92,796


106,250

    Prepaid expenses and other current assets


26,208


20,475

    Deferred income tax assets


50,445


55,966

    Income taxes receivable


31,146


27,049

    Total current assets


522,301


523,905






Property, plant and equipment, net


102,039


97,790

Intangible assets, net


302,317


311,669

Goodwill


313,337


283,432

Other assets


14,286


14,657

Total assets


$1,254,280


$1,231,453






      LIABILITIES AND STOCKHOLDERS' EQUITY





Current liabilities:





    Current portion of long-term debt


$26,250


$21,875

    Accounts payable


31,536


33,000

    Payables due to distribution agreement partners


73,203


69,359

    Accrued salaries and employee benefits


13,270


16,174

    Accrued government pricing liabilities


27,989


39,614

    Accrued legal fees


6,645


4,150

    Accrued legal settlements


82,800


37,800

    Payable to former Anchen securityholders


20,598


20,620

    Accrued expenses and other current liabilities


18,806


9,604

    Total current liabilities


301,097


252,196






Long-term liabilities


23,481


19,952

Non-current deferred tax liabilities


26,939


25,974

Long-term debt, less current portion


315,000


323,750

Commitments and contingencies


-


-






Stockholders' equity:





    Common stock, par value $0.01 per share, authorized 90,000,000 shares; issued





         39,919,972 and 39,677,291 shares


399


397

    Additional paid-in capital


398,085


389,166

    Retained earnings


274,261


302,984

    Accumulated other comprehensive income


48


13

    Treasury stock, at cost 3,247,206 and 3,201,858 shares


(85,030)


(82,979)

    Total stockholders' equity


587,763


609,581

Total liabilities and stockholders' equity


$1,254,280


$1,231,453

 

 

PAR PHARMACEUTICAL COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Per Share Data)

(Unaudited)




Three months ended


March 31,


March 31,


2012


2011





Revenues:




    Net product sales

$264,123


$220,789

    Other product related revenues

7,349


12,163

Total revenues

271,472


232,952

Cost of goods sold, excluding amortization expense

164,804


120,539

Amortization expense

8,822


2,761

Total cost of goods sold

173,626


123,300

    Gross margin

97,846


109,652

Operating expenses:




    Research and development

29,900


10,710

    Selling, general and administrative

42,159


46,945

    Intangible assets impairment

2,000


-

    Settlements and loss contingencies, net

45,000


190,560

Total operating expenses

119,059


248,215

Operating loss

(21,213)


(138,563)

Interest income

136


423

Interest expense

(3,094)


(150)

Loss from continuing operations before
     provision (benefit) for income taxes

(24,171)


(138,290)

Provision (benefit) for income taxes

4,525


(29,446)

Loss from continuing operations

(28,696)


(108,844)

Discontinued operations:




Provision for income taxes

27


127

Loss from discontinued operations

(27)


(127)

Net loss

($28,723)


($108,971)





Basic loss per share of common stock:




Loss from continuing operations

($0.79)


($3.07)

Loss from discontinued operations

(0.00)


(0.00)

Net loss

($0.79)


($3.07)





Diluted loss per share of common stock:




Loss from continuing operations

($0.79)


($3.07)

Loss from discontinued operations

(0.00)


(0.00)

Net loss

($0.79)


($3.07)





Weighted average number of common shares
     outstanding:




  Basic

36,305


35,500

  Diluted

36,305


35,500

 

Reconciliation Between Reported (GAAP); Adjusted Income (Loss) from Continuing Operations and "Cash EPS"

(In Thousands, Except Per Share Data)

(Unaudited)









Three Months Ended

March 31, 2012




GAAP 10-Q P&L
CONSOLIDATED


ADJUSTMENTS


NON-GAAP


Revenues:







    Net product sales

$264,123




$264,123


    Other product related revenues

7,349




7,349


Total revenues

271,472




271,472


Cost of goods sold, excluding amortization expense

164,804


(4,048)

a

160,756


Amortization expense

8,822


(8,822)

b

-


Total cost of goods sold

173,626


(12,870)


160,756


    Gross margin

97,846


12,870


110,716


    Gross margin %

36%




41%









Operating expenses:







    Research and development

29,900


(10,000)

c

19,900


    Selling, general and administrative

42,159


(2,302)

d

39,857


    Intangible assets impairment

2,000


(2,000)

e

-


    Settlements and loss contingencies, net

45,000


(45,000)

f

-


Total operating expenses

119,059


(59,302)


59,757


Operating (loss) income

(21,213)


72,172


50,959


Interest income

136




136


Interest expense

(3,094)




(3,094)


(Loss) income from continuing operations before
     provision for income taxes

(24,171)


72,172


48,001


Provision for income taxes

4,525


13,697

g

18,222


(Loss) income from continuing operations


(28,696)


58,475


29,779

Discontinued operations:







Provision (benefit) for income taxes


27


(27)


-

(Loss) income from discontinued operations


(27)


27


-

Net (loss) income


($28,723)


$58,502


$29,779








Basic earnings per share of common stock:







(Loss) income from continuing operations


($0.79)




$0.82

(Loss) income from discontinued operations


(0.00)




0.00

Net (loss) income


($0.79)




$0.82








Diluted earnings per share of common stock:







(Loss) income from continuing operations


($0.79)




$0.80

(Loss) income from discontinued operations


(0.00)




0.00

Net (loss) income


($0.79)




$0.80








Weighted average number of common shares
     outstanding:







  Basic


36,305




36,305

  Diluted


36,305




37,051









 

a - Amortization of inventory step up established with Anchen purchase accounting ($4,048)


b - Amortization expense ($8,822)



c - Upfront and development milestone payments



d - Transaction costs on Anchen ($772)/Edict ($676), amortization expense for Megace ($380), and Anchen-related severance costs ($474)

e - Impairment of Anchen IPR&D intangible assets



f -  Contingent loss



g -  Estimated tax on adjustments ($13,697)



 

SOURCE Par Pharmaceutical Companies, Inc.



RELATED LINKS
http://www.parpharm.com

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