) fourth quarter 2013 adjusted earnings of $0.51 per share
surpassed the Zacks Consensus Estimate by a penny. Fourth quarter
2013 earnings were however below the year-ago figure by 7.3%.
Results were hurt by lower revenues and higher selling,
general and administrative (SG&A) costs and tax rate.
Including one-time items, the company posted earnings of 20 cents
per share in the final quarter of 2013 compared to the year-ago
figure of 3 cents.
Fourth quarter revenues slipped 1.3% year over year to $1
billion, in line with the Zacks Consensus Estimate. The
year-over-year decline was primary due to the weak performance of
the company's Medication Management division and the negative
foreign exchange impact.
The company's full-year earnings were $2.09 per share, ahead
of the Zacks Consensus Estimate by a penny and 4% above the
year-ago figure. Revenues in the final quarter of 2013 came in at
$4.1 billion, in line with the Zacks Consensus Estimate and
marginally above the year-ago figure.
The Fourth Quarter in Detail
The Specialty Injectable Pharmaceuticals (SIP) segment, the
biggest contributor to Hospira's revenues, performed well in the
final quarter of 2013 aided by improved pricing in the U.S.
Segmental sales climbed 5.2% (up 6.4% at constant currency) to
The Medication Management segment performed disappointingly
during the fourth quarter of 2013 due to low device sales. Sales
in the segment declined 17.5% (down 16.7% at constant currency)
to $221.7 million. The segment has been going through a rough
patch. In Feb 2013, the U.S. Food and Drug Administration (FDA)
expanded the import ban on certain Hospira products issued in
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 U.S. The U.S.
regulatory body issued a fresh directive in Feb 2013, preventing
Hospira from importing Plum, GemStar and LifeCare PCA infusion
pumps, manufactured in Costa Rica, to the U.S. Sales in the Other
Pharma division declined 3.1% (down 2.8% at constant
currency) to $130 million.
Geographically, the Americas, Europe, Middle East and Africa
and the Asia-Pacific markets contributed $856.9 million (down
0.6% at constant currency), $138.7 million (down 4.2% at constant
currency) and $88.8 million (up 7.8% at constant currency),
respectively, to total revenue in the final quarter of 2013.
Apart from releasing its earnings results, Hospira also
provided guidance for 2014. Hospira expects top-line growth in
the range of negative 2% to positive 3% (on a constant currency
basis). The company still expects 2014 adjusted earnings in the
range of $2.00 to $2.25 per share. The pre-earnings Zacks
Consensus Estimate of $2.14 per share is within the company's
The company expects cash flow from operations for 2014 in the
range of $100 million - $200 million ($317 million in 2013).
Depreciation and amortization is projected in the range of $225
million-$275 million. Hospira forecasts 2014 capital expenditures
in the range of $375 million-$425 million ($354 million in
We are not surprised by the modest results posted by Hospira
in the final quarter of 2013 with both revenues and earnings
declining on a year-over-year basis. We believe revenues will
remain under pressure until the manufacturing issues confronting
the company are resolved.
A positive development for Hospira in 2013 was the European
approval of the company's Inflectra (infliximab) for the
treatment of inflammatory conditions such as rheumatoid
arthritis, ankylosing spondylitis, Crohn's disease, ulcerative
colitis, psoriatic arthritis and psoriasis.
We note that Inflectra is the biosimilar version of
Johnson & Johnson
Merck & Co. Inc
) blockbuster drug Remicade. Biosimilars, which are generic
versions of biologic drugs, are expected to be a significant
growth driver in the generics industry in the coming years. The
biosimilars market represents huge commercial opportunity with a
significant amount of biologic sales slated to lose patent
protection in the coming years.
Hospira carries a Zacks Rank #4 (Sell).
) is a better-ranked stock in the sector carrying a Zacks Rank #1
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