Thursday, November 1, 2012

Watson Pharmaceuticals (WPI) Q3 Earnings release

Watson Pharmaceuticals released its third quarter earnings this morning. This will be their last stand alone quarter before their Actavis acquisition will begin to shape their financial statements.

Net Revenue increased to $1.29 Billion based on several new Generic and Branded product debuts resulting in an increase of 19% versus prior year $1.08 Billion. By segment, Global Generics grew by 14% to $920.9 M, an increase of 118.4 M but $300 M shy of street estimates. Global Brands increased to ~10% to $121.3 M and Global Distribution increased significantly by 44% to $243 M versus last year’s $168.8 M. This increase was attributable to new third-party product launches during the third quarter

Total Operating expenses increased 27% to $1,196 B due to Increased marketing expenses from growing international sales, third-party costs in biosimilars, and other costs related to the Actavis Acquisition

Adjusted EBITDA saw a significant increase of 18% to $304.6 M versus 3Q 2011’s $258.2 M

Adjusted Net income showed a significant increase of 24.2% to $172.3 M. This resulted in $1.35 per diluted share on a non-gaap basis versus last year’s $1.09. This landed within the mid to upper end of analyst expectations.

Looking ahead, WPI estimates total net revenue for 2012 to be $5.9 Billion with adjusted non-gaap earnings between $5.85 and $5.95 per diluted share. Adjusted EBITDA should fall between $1.36 and $1.39 Billion

2013 non-GAAP EPS is expected to grow between 30% and 40% over the high end of the combined range of 2012. This is inclusive of an additional 5.5 Million shares outstanding at the close of the Actavis acquisition

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