Perrigo Company’s (PRGO) fiscal second quarter 2013 (ended Dec 29, 2012) earnings of $1.36 per share beat the Zacks Consensus Estimate by 5 cents. Earnings increased 13.3% from the year-ago period driven by higher revenues.
Net sales in the quarter climbed 5% to $883 million. Revenues were boosted by $34 million due to the inclusion of results of Sergeant's Pet Care Products, Inc (assets acquired by Perrigo in Oct 2012) and CanAm Care (assets were acquired by Perrigo in Jan 2012). Newly launched products boosted revenues by $25 million. Revenues were just shy of the Zacks Consensus Estimate of $884 million.
We note that the second quarter of fiscal 2013 had one less week of operations compared to the year ago quarter. This impacted second quarter fiscal 2013 results.
Quarter in Detail
Perrigo reports revenue from the following five segments: Consumer HealthCare (CHC), Nutritionals, Rx Pharmaceuticals, Active Pharmaceutical Ingredients (API) and other.
Consumer Healthcare: Perrigo reported CHC revenue of $539 million in the quarter, up 14% from the prior year. Net sales growth was driven by improved sales of existing products primarily in the cough/cold, contract and smoking cessation units, along with strong new product sales, mainly in the gastrointestinal, cough/cold and dermatological care units. Sales in the segment were also aided by results from CanAm Care and Sergeant's Pet Care Products. Adjusted gross profit for the segment climbed 15.6% to $173.2 million.
Nutritional: Perrigo reported revenue of $122 million, down 4.8% year over year. Results were hurt by reduced sales of existing products. Adjusted gross profit for the segment improved 6.2% to $33.2 million in the second quarter of fiscal 2013. The improvement in adjusted gross profit was attributable to a rise in price and a favorable product mix.
Rx Pharmaceuticals: The Rx Pharmaceuticals segment performed disappointingly with net sales declining 8.3% to $162.5 million. The decrease was attributable to weak sales of existing products. Increased competition impacted sales of existing products. Adjusted gross profit for the segment decreased 4.9% to $94.5 million.
Active Pharmaceutical Ingredients: The company reported API sales of $41 million, down 4% from the prior year quarter. Results were hurt by reduced sales of existing products.
Other: Segmental sales declined 5.3% to $18 million. Foreign currency movements negatively impacted results.
Fiscal 2013 View Backed
Perrigo continues to expect adjusted earnings per share for fiscal 2013 between $5.45 and $5.65, up 9%-13% year over year. The Zacks Consensus Estimate of $5.54 per share is within the company’s guidance range.
Perrigo to Buy Velcera
In a bid to strengthen its position in the over-the-counter (:OTC) retail pet healthcare market, Perrigo inked a deal to buy animal health company Velcera, Inc. for $160 million in cash. The deal is expected to close in calendar year 2013.
We note that Perrigo has been quite active on the acquisition front lately. In Dec 2012, Perrigo acquired privately-held Cobrek Pharmaceuticals, Inc. for approximately $45 million in cash. In Oct 2012, Perrigo acquired the entire assets of privately-held Sergeant's Pet Care Products, Inc.
Perrigo, which develops, manufactures and distributes OTC and generic prescription pharmaceuticals among others, carries a Zacks Rank #3 (Hold). Other players in the generic market, such as Mylan Inc (MYL) and Pernix Therapeutic Holdings, Inc. (PTX) carry a Zacks Rank #2 (Buy). Meanwhile, biopharma stock, Medivation, Inc. (MDVN) has a Zacks Rank #1 (Strong Buy).
More From Zacks.com