MEDICIS REPORTS FIRST QUARTER 2011 RESULTS
SCOTTSDALE, Ariz.May 5, 2011Medicis (NYSE:MRX) today announced revenues of approximately $164.9 million for the three months ended March 31, 2011, compared to revenues of approximately $165.5 million for the three months ended March 31, 2010, which represents a decrease of approximately $0.6 million, or approximately 0.4%. In April 2011, the Company received notice from its contract manufacturer that one lot of ZIANA® Gel went out of specifications. As a result, the Company booked a $3.9 million reserve against sales in the three months ended March 31, 2011, related to a targeted recall of product from this lot.
Non-generally accepted accounting principles (non-GAAP, defined below) diluted earnings per share (EPS, defined below) for the three months ended March 31, 2011, was $0.50, compared to non-GAAP diluted EPS of $0.61 for the three months ended March 31, 2010, which represents a decrease of $0.11 per diluted share, or approximately 18.8% (see Unaudited Reconciliation of Non-GAAP Adjustments in the financial tables of this press release). GAAP diluted EPS for the three months ended March 31, 2011, was $0.30, compared to GAAP diluted EPS of $0.54 for the three months ended March 31, 2010, which represents a decrease of $0.24 per diluted share, or approximately 45.2%.
The Companys achievement of approximately $164.9 million in revenues and non-GAAP diluted EPS of $0.50 is consistent with the Companys published guidance of $160-$170 million in revenues and $0.45-$0.50 in non-GAAP diluted EPS for the three months ended March 31, 2011.
We are pleased to announce a solid first quarter, said Jonah Shacknai, Chairman and Chief Executive Officer. With the announcement of our recent settlement with Teva, issuance of the 7,919,483 patent and approximately 95% of new prescriptions for SOLODYN® being written in the latest five strengths, we remain confident in the SOLODYN franchise for the foreseeable future. Additionally, we eagerly await FDAs decision on an expanded label for RESTYLANE®, following the recent FDA advisory panel recommendation to approve an indication for lip augmentation. We entered the second quarter with a significant focus on business development opportunities within our core heritage of medical dermatology and facial aesthetics, and look forward to the potential value these opportunities may yield.
Non-GAAP net income for the three months ended March 31, 2011, was approximately $32.9 million, compared to non-GAAP net income of approximately $40.0 million for the three months ended March 31, 2010, which represents a decrease of approximately $7.1 million, or approximately 17.8%. Non-GAAP net income for the three months ended March 31, 2011, excludes charges totaling approximately $20.5 million (pre-tax), consisting of a $7.0 million research and development (R&D) milestone payment to a Medicis partner, a loss from discontinued operations of approximately $11.4 million associated with the
LipoSonix business and $2.1 million related to additional expenses from fluctuations in the Companys stock price and the resulting effect on the Companys Stock Appreciation Rights (SARs). Non-GAAP net income for the three months ended March 31, 2010, excluded a loss from discontinued operations of approximately $7.3 million (pre-tax) associated with the LipoSonix business.
GAAP net income for the three months ended March 31, 2011, was approximately $19.4 million, compared to GAAP net income of approximately $35.4 million for the three months ended March 31, 2010, which represents a decrease of approximately $16.0 million, or approximately 45.3%.
Medicis recorded revenues of approximately $103.5 million from sales of its acne products for the three months ended March 31, 2011, compared to revenues of approximately $120.2 million for the three months ended March 31, 2010, which represents a decrease of approximately $16.7 million, or approximately 13.9%. This decrease is due primarily to returns reserves associated with the 45 mg, 90 mg and 135 mg strengths of SOLODYN, reserves related to ZIANA and the impact from the early 2011 discontinuation of TRIAZ® and the Companys decision to no longer promote PLEXION®. The Medicis Acne Products category includes primarily SOLODYN and ZIANA.
Medicis recorded revenues of approximately $52.2 million associated with its non-acne products for the three months ended March 31, 2011, compared to revenues of approximately $34.3 million for the three months ended March 31, 2010, which represents an increase of approximately $17.9 million, or approximately 52.5%. This increase is due primarily to increased sales of DYSPORT®, the RESTYLANE franchise and VANOS®, offset by decreased sales of LOPROX® due to generic competition. The Medicis Non-Acne Products category includes primarily DYSPORT, PERLANE®, RESTYLANE and VANOS.
Other Non-Dermatological Products
Medicis recorded revenues of approximately $9.2 million associated with its other non-dermatological products for the three months ended March 31, 2011, compared to revenues of approximately $11.1 million for the three months ended March 31, 2010, which represents a decrease of approximately $1.9 million, or approximately 16.7%. The Medicis Other Non-Dermatological Products category includes primarily AMMONUL®, BUPHENYL® and contract revenue.
Other Income Statement Items
Gross profit margin for the three months ended March 31, 2011, was approximately 91.3%.
Selling, general and administrative (SG&A) expense for the three months ended March 31, 2011, was approximately $84.6 million, or approximately 51.3% of revenues, compared to approximately $72.3 million, or approximately 43.7% of revenues, for the three months ended March 31, 2010. SG&A expense for the three months ended March 31, 2011, includes a $1.9 million charge related to additional expenses from fluctuations in the Companys stock price and the resulting effect on the Companys SARs.
R&D expense for the three months ended March 31, 2011, was approximately $14.3 million, compared to approximately $6.6 million for the three months ended March 31, 2010. R&D expense for the three months ended March 31, 2011, includes a $7.0 million purchased R&D charge associated with a milestone payment to a Medicis partner and a $0.2 million charge related to additional expenses from fluctuations in the Companys stock price and the resulting effect on the Companys SARs. The Company recorded no special R&D charges for the three months ended March 31, 2010.
The Companys cash flow from operations for the three months ended March 31, 2011, was approximately $91.2 million, consisting of approximately $96.7 million from continued operations, partially offset by cash used of approximately $5.5 million from discontinued operations.
Based upon information available currently to the Companys management, the Companys financial guidance for the remainder of 2011 is anticipated as follows:
(in millions, except per share amounts)
Additional 2011 Guidance Considerations
The above guidance does not take into account the following:
At the time of this disclosure, Medicis believes these objectives are attainable based upon information currently available to the Companys management.
Diluted Earnings Per Share
Diluted earnings per share amounts are calculated using the if-converted method of accounting regardless of whether the Companys outstanding convertible bonds meet the criteria for conversion and regardless of whether the bondholders actually convert their bonds into shares.
Use of Non-GAAP Financial Information
The Company has disclosed non-GAAP financial information in this press release to provide meaningful supplemental information regarding its operational performance and to enhance its investors overall
understanding of its core financial performance. Management measures the Companys performance using non-GAAP financial measures, such as those that are disclosed in this press release. This information facilitates managements internal comparisons to the Companys historical core operating results and competitors core operating results, and is a basis for financial decision making. Management believes that Medicis investors benefit from seeing the Companys results on the same basis as management, in addition to the GAAP presentation. In our view, the non-GAAP financial measures are informative to investors, allowing them to focus on the ongoing operations and core results of Medicis business. Historically, Medicis has reported similar non-GAAP information to its investors and believes that the inclusion of comparative numbers provides consistency in the Companys financial disclosures. This information is not in accordance with, or an alternative for, information prepared using GAAP. Non-GAAP net income excludes certain items, such as R&D charges which result from payments made to Medicis partners, transaction costs, the impairment of long-lived assets, gains resulting from the sale of subsidiaries, charges related to the accounting for our investment in Revance or Hyperion and litigation reserves. These items may have a material effect on the Companys net income and diluted earnings per common share calculated in accordance with GAAP. The Company excludes such charges and the related tax benefits when analyzing its financial results as the items are distinguishable events. Management believes that, by viewing the Companys results of operations excluding these charges, investors are given an indication of the ongoing results of the Companys operations.
Medicis is the leading independent specialty pharmaceutical company in the United States focusing primarily on the treatment of dermatological and aesthetic conditions. The Company is dedicated to helping patients attain a healthy and youthful appearance and self-image. Medicis has leading branded prescription products in a number of therapeutic and aesthetic categories. The Companys products have earned wide acceptance by both physicians and patients due to their clinical effectiveness, high quality and cosmetic elegance.
The Companys products include the brands DYSPORT® (abobotulinumtoxinA) 300 Units for Injection, PERLANE® Injectable Gel, PERLANE-L® Injectable Gel with 0.3% Lidocaine, RESTYLANE® Injectable Gel, RESTYLANE-L® Injectable Gel with 0.3% Lidocaine, DYNACIN® (minocycline HCl Tablets, USP), LOPROX® (ciclopirox) Gel 0.77% and Shampoo 1%, SOLODYN® (minocycline HCl, USP) Extended Release Tablets, VANOS® (fluocinonide) Cream 0.1%, ZIANA® (clindamycin phosphate 1.2% and tretinoin 0.025%) Gel, AMMONUL® (sodium phenylacetate and sodium benzoate) Injection 10%/10%, BUPHENYL® (sodium phenylbutyrate) Tablets and Powder and the over-the-counter brand ESOTERICA®.
For more information about Medicis, please visit the Companys website at www.Medicis.com. Printed copies of the Companys complete audited financial statements are available free of charge upon request.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act. All statements included in this press release that address activities, events or developments that Medicis expects, believes or anticipates will or may occur in the future are forward-looking statements, including:
These statements are based on certain assumptions made by the Company based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. No assurances can be given, however, that these activities, events or developments will occur or that such results will be achieved. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company. The Companys business is subject to all risk factors outlined in the Companys most recent annual report on Form 10-K for the year ended December 31, 2010, and other documents we file with the Securities and Exchange Commission (SEC). At the time of this press release, the Company cannot, among other things, assess the likelihood, timing or forthcoming results of R&D projects, the risks associated with the FDA approval process and risks associated with significant competition within the Companys industry, nor can the Company validate its assumptions of the full impact on its business of the approval of competitive generic versions of the Companys primary brands, and any future competitive product approvals that may affect the Companys brands.
Additionally, Medicis may acquire and/or license products or technologies from third parties to enter into new strategic markets. The Company periodically makes up-front, non-refundable payments to third parties for R&D work that has been completed and periodically makes additional non-refundable payments for the achievement of various milestones. There can be no certainty about the periods in which these potential payments could be made, nor if any payments such as these will be made at all. Any estimated future guidance does not include, among other things, the potential payments associated with any such transactions.
There are a number of additional important factors that could cause actual results to differ materially from those projected, including:
Forward-looking statements represent the judgment of the Companys management as of the date of this release and the Company disclaims any intent or obligation to update any forward-looking statements contained herein, which speak as of the date hereof.
NOTE: Full prescribing information for any of the Companys prescription products is available by contacting the Company. All trademarks are the property of their respective owners.
Medicis Pharmaceutical Corporation
Summary Statements of Operations (Unaudited)
(in thousands, except per share data)
Medicis Pharmaceutical Corporation
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands, except per share data)
Medicis Pharmaceutical Corporation
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