) first quarter 2013 adjusted earnings of 52 cents per share beat
the Zacks Consensus Estimate of 44 cents. Higher-than-expected
revenues led to the earnings beat. Moreover, earnings were above
the year-ago figure by 10.6%. Including one-time items, the
company suffered a loss of 46 cents per share as opposed to
earnings of 24 cents a year-ago.
First quarter revenues increased 2.3% to $988.3 million, narrowly
beating the Zacks Consensus Estimate of $988 million.
Quarter in Detail
The Specialty Injectable Pharmaceuticals (SIP) business, the
biggest contributor to Hospira's revenues, performed well in the
quarter with sales from the segment climbing 11.1% (up 11.4% at
constant currency) to $651.5 million.
Drugs such as Precedex performed well during the quarter.
Segmental results were also aided by the improved pricing of SIP
drugs. The SIP segment includes generic injectables as well as
proprietary specialty injectables.
The segment includes offerings such as the generic version of
) cancer drug, Eloxatin. Under the segment, Hospira also markets
biosimilars such as Nivestim, a biosimilar of
) Neupogen, in Europe and Australia.
The Medication Management segment performed disappointingly
during the first quarter of 2013. Sales in the segment declined
10.7% (down 10.6% at constant currency) to $228.8 million. The
segment has been going through a rough patch. In Feb 2013, the US
Food and Drug Administration (FDA) expanded the import ban on
certain Hospira products issued last year.
In Nov 2012, the FDA had issued a directive prohibiting
Hospira from importing Symbiq medication infusion pumps,
manufactured at its Costa Rica facility, into the US. The US
regulatory body issued a fresh directive in Feb 2013, preventing
Hospira from importing Plum, GemStar and LifeCare PCA infusion
pumps, manufactured in Costa Rica, into the US. Sales in the
Other Pharma division declined 12.4% (down 12.2% at constant
currency) to $108.0 million.
Geographically, the Americas, Europe, Middle East and Africa and
the Asia-Pacific markets contributed $786.8 million (up 2.4% at
constant currency), $130.3 million (up 1.2% at constant currency)
and $71.2 million (up 6.5% at constant currency), respectively,
to total revenue in the first quarter of 2013.
Apart from releasing its financial results, the company issued a
fresh guidance for 2013. We remind investors that Hospira
withdrew its guidance for 2013 (issued while releasing the fourth
quarter 2012 results) following the FDA decision in Feb 2013 to
expand the import ban on some of Hospira's products.
Hospira now expects top-line growth in the range of negative 1%
to positive 1%. The company expects 2013 adjusted earnings in the
range of $2.05 to $2.10 per share, representing flat to 5%
growth. The Zacks Consensus Estimate currently stands at $2.04
per share, just below the company's guidance range.
The company expects cash flow from operations for 2013 in the
range of $200 million - $250 million. Depreciation and
amortization is projected in the range of $255 million- $275
million. Hospira forecasts 2013 capital expenditures in the range
of $425 million - $475 million.
Global Device Scheme Unfurled
In a separate development, Hospira unveiled a strategy to
modernize and streamline its device portfolio in order to drive
growth and serve customers in a better manner. Under the program
the company intends to remove its relatively old pump technology
from the market and bring in customer replacement programs over
the next few years.
Moreover, Hospira intends to focus on developing
next-generation pump technology. The company will focus on
strengthening its global device quality system to facilitate
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Hospira carries a Zacks Rank #4 (Sell). Not all stocks in the
medical sector are performing as poorly as Hospira.
) is an example of an attractive stock in the sector and carries
a Zacks Rank #2 (Buy).