Forest Labs takes 3Q loss on payments, lower sales

Forest Labs posts 3rd-quarter loss and lowers guidance, says rebates hurt sales of some drugs

Associated Press

NEW YORK (AP) -- Forest Laboratories Inc. said Tuesday it took a loss in the fiscal third quarter on greater payments to partners and a continued decline in its sales.

The company said it now expects to reach the low end of its fiscal-year profit guidance and cut its sales estimate. Forest's sales have dropped since its anxiety and depression drug Lexapro lost patent protection in early 2012, and it said sales of other products were hurt by higher rebates. Those increased payments hurt its current top revenue source, the Alzheimer's disease drug Namenda, as well as Daliresp, a new lung disease drug.

Forest said it lost $153.6 million, or 58 cents per share, over the three months ended Dec. 31. A year earlier the company reported a profit of $278.4 million, or $1.04 per share. Excluding upfront payments to Forest's drug development and marketing partners, the company said it lost 21 cents per share, compared with year-earlier earnings per share of $1.08.

Its revenue fell 40 percent, to $722.7 million from $1.21 billion.

Analysts expected Forest to take a loss of 11 cents per share and $761.9 million in revenue, according to FactSet.

Sales of Namenda rose 1.6 percent to $345.8 million. Lexapro sales plunged to $20.3 million from $593 million. The company said sales of the name-brand version of the drug and Forest's authorized generic decreased compared to the last two quarters.

Forest has cut its income and revenue estimates several times this year because sales of the original version of Lexapro have been lower than it expected, and prices for the company-backed generic version have been lower than anticipated. Forest last said it would earn between 45 and 60 cents per share in fiscal 2013, and the company now expects to reach the low end of that guidance. It expects revenue of $3.1 billion to $3.2 billion, down from its previous estimate of $3.2 billion to $3.4 billion.

Analysts expect income of 46 cents per share and $3.14 billion in revenue on average.

Shares of Forest Laboratories lost 14 cents to $37.45 in morning trading.

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