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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