) third quarter fiscal 2013 (ended Mar 30, 2013) earnings of
$1.42 per share fell short of the Zacks Consensus Estimate by 2
cents. Lower-than-expected revenues led to the earnings miss. The
company earned $1.41 per share (including the tax benefit of 20
cents but excluding other special items) in the year-ago quarter.
Net sales in the quarter climbed 18% to $920 million. Revenues
were boosted by $40 million due to the inclusion of results of
Sergeant's Pet Care Products, Inc (assets acquired by Perrigo in
Oct 2012) and Rosemont Pharma (acquired by Perrigo in Feb 2013).
Newly launched products aided revenues by $41 million. Revenues
missed the Zacks Consensus Estimate of $932 million.
Quarter in Detail
Perrigo reports revenue primarily from the following segments:
Consumer HealthCare (CHC), Nutritionals, Rx Pharmaceuticals and
Active Pharmaceutical Ingredients (API).
Perrigo reported CHC revenue of $537 million in the quarter, up
20% from the prior year. Net sales growth was driven by improved
sales of existing products primarily in the cough/cold, contract
and analgesics units, along with strong new product sales, mainly
in the gastrointestinal, cough/cold and smoking cessation
Sales in the segment were also aided by results from
Sergeant's Pet Care Products. Adjusted gross profit for the
segment climbed 27.3% to $180.1 million.
Perrigo reported revenue of $133.3 million, up 13.3% year over
year. All the sub-groups of the segment witnessed growth during
the reported quarter. Adjusted gross profit for the segment
improved 2% to $34 million in the third quarter of fiscal 2013.
The Rx Pharmaceuticals segment performed encouragingly during the
quarter with net sales improving 21.7% to $189.4 million. Sales
of new products boosted segmental revenues by $18 million.
Inclusion of results of Rosemont Pharma boosted sales by $8
million. Adjusted gross profit for the segment increased 19.3% to
Active Pharmaceutical Ingredients:
The company reported API sales of $41.1 million, up 11.3% from
the prior-year quarter. Results were aided by increased sales of
Fiscal 2013 View Backed
Perrigo continues to expect adjusted earnings per share for
fiscal 2013 in the range of $5.53 - $5.73 per share, up 11%-15%
year over year. The Zacks Consensus Estimate for fiscal 2013
currently stands at $5.64 per share, well within the company's
Perrigo has lately been quite active on the acquisition front. On
Apr 1, 2013, Perrigo announced the completion of the acquisition
of companion animal health company, Velcera, Inc.
The deal, which has strengthened Perrigo's position in the
over-the-counter (OTC) retail pet healthcare market, is
encouraging. In Feb 2013, Perrigo acquired UK-based privately
held pharmaceutical company, Rosemont Pharmaceuticals Ltd. By
acquiring Rosemont Pharma, Perrigo has strengthened its position
in the UK oral liquid formulations space. We are impressed by
Perrigo's growth-by-acquisition strategy.
In Mar 2013, Perrigo commenced the shipping of its generic
version of Adams Respiratory Therapeutics' expectorant Mucinex
(600 mg extended-release tablets). Adams Respiratory Therapeutics
is a subsidiary of Reckitt Benckiser Group.
The launch of the store brand version of Mucinex further
strengthens its dominant position in the store brand OTC drug
market. We note that Perrigo competes with players like
Dr. Reddy's Laboratories, Ltd.
) in the store brand space.
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Perrigo carries a Zacks Rank #3 (Hold) in the short-run.
) appears to be more attractive with a Zacks Rank #1 (Strong