First Horizon Pharmaceutical (NASDAQ:FHRX)
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First Horizon Pharmaceutical Corporation (NASDAQ:FHRX):
Fourth Quarter 2005 Results Include:
-- Net revenues of $66.9 million, an increase of 58% over fourth
quarter 2004
-- Net income of $13.0 million, an increase of 52% over fourth
quarter 2004
-- Diluted earnings per share of $0.32 versus diluted earnings
per share of $0.21 cents in the fourth quarter 2004, an
increase of 52%
-- Earnings before interest, taxes, depreciation and amortization
(EBITDA, a non-GAAP measure) of $25.9 million, an increase of
90% over fourth quarter 2004
Year-end 2005 results include:
-- Net revenues of $216.4 million, an increase of 42% over full
year 2004
-- Net income of $39.2 million, an increase of 48% over full year
2004
-- Diluted earnings per share of $0.97 versus diluted earnings
per share of $0.66 for the full year 2004, an increase of 47%
-- Earnings before interest, taxes, depreciation and amortization
(EBITDA, a non-GAAP measure) of $81.6 million, an increase of
49% over full year 2004
-- Completed stock repurchases of 0.4 million shares at a cost of
$6.5 million
Guidance for Full Year 2006 (based solely on existing product
portfolio):
-- Net revenues of between $265 million and $275 million
-- Diluted earnings per share of between $1.15 and $1.20,
excluding the effect of stock-based compensation expense (a
non-GAAP measure)
First Horizon Pharmaceutical Corporation (NASDAQ:FHRX), a
specialty pharmaceutical company, today announced results for the
fourth quarter and year ended December 31, 2005. Net revenues for the
fourth quarter of 2005 increased 58% to $66.9 million compared with
$42.4 million for the quarter ended December 31, 2004. Net income for
the quarter ended December 31, 2005 increased 52% to $13.0 million, or
$0.32 per diluted share, compared with net income of $8.6 million, or
$0.21 per diluted share for the fourth quarter of 2004. Cost of
revenues was $10.0 million for the fourth quarter of 2005, producing
gross margins of 85%, compared with gross margins of 82% for the
fourth quarter of 2004. Selling, general and administrative expenses
were $29.1 million for the fourth quarter of 2005 compared with $20.5
million for the quarter ended December 31, 2004. The increase in
selling, general and administrative expenses resulted primarily from
the costs associated with adding more than 100 sales representatives
during 2005, the launch costs for Triglide, and an increase in royalty
and commission expenses related to the higher revenues.
For the year ended December 31, 2005, net revenues increased 42%
to $216.4 million from $152.0 million for the full year 2004. Net
income for the year ended December 31, 2005, increased 48% to $39.2
million, or $0.97 per diluted share, compared with net income of $26.6
million, or $0.66 per diluted share for the full year 2004. Cost of
revenues was $33.3 million for the year ended December 31, 2005,
producing a gross margin of 85%, compared with $29.1 million with a
gross margin of 81% for the full year 2004. Selling, general and
administrative expenses were $97.4 million for the year ended December
31, 2005, compared with $66.8 million for the full year 2004. This
increase was primarily related to the increase in our sales force, the
associated costs for the launch of the Company's new products and an
increase in royalty and commission expenses related to the higher net
revenues.
First Horizon's CEO and President, Patrick Fourteau, commented,
"We are pleased with our fourth quarter 2005 results. The fourth
quarter was favorably impacted by the performance of Triglide,
OptiNate and Ponstel. We believe the fourth quarter revenues are a
base-line from which to grow our business. We have completed the
preparatory work for the realignment of our sales force to include the
Women's Health specialty division, which was implemented in early
January 2006."
Cardiology Products
Net revenues of the Company's Cardiology products were $46.5
million for the fourth quarter of 2005, representing 70% of total
sales. For the full year of 2005, net revenues of the Company's
Cardiology products were $144.5 million, or 67% of net revenues,
compared with $75.3 million, or 50% of net revenues, for the full year
2004. This increase was primarily a result of the addition of the
Company's new products, Altoprev and Fortamet, commencing in April
2005, the launch of Triglide in July 2005, price increases on the
Company's products, and total prescription growth of Sular.
New prescriptions of Sular increased 16.9% and total prescriptions
increased 16.1% for the full year 2005 compared with full year 2004.
(Source: IMS Health's National Prescription Audit Plus(TM) data).
Fortamet captured a 1.2% market share of new prescriptions and a
1.1% market share of total prescriptions of the metformin market for
the month of December 2005. Altoprev captured a 0.3% market share of
new prescriptions and a 0.4% market share of total prescriptions of
the statin market for the month of December 2005 (Source: IMS Health's
National Prescription Audit Plus(TM) data).
The Company launched Triglide in July 2005. Triglide captured a
1.6% market share of the fenofibrate market new prescriptions and 0.9%
market share of its total prescriptions for the month of December 2005
(Source: IMS Health's National Prescription Audit Plus(TM) data).
Women's Health Products
Net revenues of the Company's Women's Health products, which
currently include the Prenate line and Ponstel, were $14.6 million for
the fourth quarter of 2005, representing 22% of total sales. Net
revenues of the Company's Women's Health products, which currently
include the Prenate line and Ponstel were approximately $46.6 million,
for the year ended December 31, 2005, compared with $22.2 million, for
the year ended December 31, 2004. The increase for the full year 2005
versus the full year 2004 was due primarily to 2005 containing a full
year of Prenate Elite which was launched in March 2004, the successful
launch of OptiNate in March 2005, price increases on our products, and
the growth of total prescriptions of Ponstel. Prenate Elite, the only
prescription prenatal vitamin with Metafolin(R), captured a 12.8%
market share of prenatal multi-vitamins new prescriptions and 13.4%
market share of prenatal multi-vitamins total prescriptions for the
month of December 2005. In addition, OptiNate captured an 7.2% market
share of the EFA prenatal vitamin market for new prescriptions and
7.2% market share of its total prescriptions for the month of December
2005 (Source: IMS Health's National Prescription Audit Plus(TM) data).
Development
The Company continued to increase its research and development
efforts in 2005, spending $4.1 million for the full year, an increase
of $2.6 million from the $1.5 million spent in the prior year. The
increase was due primarily to greater activity in the development
program for lifecycle management initiatives for the Company's
products.
Outlook
Full Year 2006 - First Horizon expects full year 2006 net revenues
to be in the range of $265 million to $275 million and diluted
earnings per share to be in the range of $1.15 to $1.20, excluding the
effect of stock-based compensation. This approximates a 24% increase
in revenues and earnings per share on a year-over-year basis.
Projections for 2006, which are based solely on sales of the
products in the Company's current portfolio, anticipate investments of
5% of net revenues into research and development, and a sales team of
approximately 525 sales representatives. The 2006 earnings projections
do not include the requirement to incur stock compensation expense in
2006, which is estimated to be $0.13 per share.
Conference Call
First Horizon will host a conference call on Thursday, February
23, 2006, beginning at 5:00 p.m. Eastern Time to discuss the financial
results. Analysts, investors and other interested parties are invited
to participate by visiting the Company's website, www.fhrx.com, and
entering the Investor Relations page. You may also dial in to the
conference call. The dial-in numbers are (800) 289-0496 for domestic
callers and (913) 981-5519 for international callers. All callers
should use passcode 3492629 to gain access to the conference call.
Please plan to dial-in or log on at least ten minutes prior to the
designated start time so management can begin promptly.
First Horizon Background
First Horizon Pharmaceutical Corporation is a specialty
pharmaceutical company that markets, sells and develops prescription
products with a primary focus on cardiology and women's health. First
Horizon has a portfolio that includes 15 branded prescription products
of which eight are actively promoted to high-prescribing physicians
through its recently expanded nationwide sales force of approximately
525 representatives. First Horizon's web site address is:
www.fhrx.com. Please visit First Horizon's website for full
prescribing information on First Horizon's products.
Safe Harbor Statement
This press release contains forward-looking statements (in
addition to historical facts) that are subject to risks and
uncertainties that could cause actual results to materially differ
from those described. Although we believe that the expectations
expressed in these forward-looking statements are reasonable, we
cannot promise that our expectations will turn out to be correct. Our
actual results could be materially different from and worse than our
expectations. With respect to such forward-looking statements, we seek
the protections afforded by the Private Securities Litigation Reform
Act of 1995. These risks include, without limitation:
-- We may not attain expected revenues and earnings;
-- If we are unsuccessful in obtaining third party payor
contracts for our products, we may experience reductions in
sales levels and may fail to reach anticipated sales levels;
-- If demand for our products exceeds our initial expectations or
the ability of our suppliers to provide demand-meeting
quantities of product and samples, our future ability to sell
these products could be adversely impacted;
-- The potential growth rate for our promoted products may be
limited by slower growth for the class of drugs to which our
promoted products belong and unfavorable clinical studies
about such class of drugs;
-- We may encounter problems in the manufacture or supply of our
products, for which we depend entirely on third parties;
-- Strong competition exists in the sale of our promoted
products, which could adversely affect expected growth of our
promoted products' sales or increase our costs to sell our
promoted products;
-- We may not be able to protect our competitive position for our
promoted products from patent infringers;
-- Altoprev has experienced manufacturing issues. If the issues
recur and cannot be resolved, our ability to acquire the
product for sale and sampling will be adversely affected;
-- Sales of our Tanafed and Robinul products have been adversely
affected by the introduction of knock-off and generic
products, respectively;
-- An issued FDA notice may cause us to incur increased expenses
and adversely affect our revenue from our Tanafed products;
-- We may incur unexpected costs in integrating new products into
our operations;
-- We may be unable to develop or market line extensions for our
products including Sular, Triglide, Fortamet, and our Prenate
Line or, even if developed, obtain patent protection for our
line extensions. Further, introductions by us of line
extensions of our existing products may require that we make
unexpected changes in our estimates for future product returns
and reserves for obsolete inventory. If these risks occur, our
operating results would be adversely affected;
-- Our licensor/supplier can terminate our rights to
commercialize Nitrolingual and the 60 dose size of this
product has not yet met our expectation;
-- We depend on a small senior management group, the departure of
any member of which would likely adversely affect our
business;
-- An adverse interpretation or ruling by one of the taxing
jurisdictions in which we operate could adversely impact our
operating results;
-- A small number of customers account for a large portion of our
sales and the loss of one of them, or changes in their
purchasing patterns, could result in substantially reduced
sales and adversely impact our financial results;
-- If third-party payors do not adequately reimburse patients for
our products, doctors may not prescribe them;
-- Side effects or marketing or manufacturing problems with our
products could result in product liability claims which could
be costly to defend and could result in the withdrawal or
recall of products from the market;
-- We rely on operational data obtained from IMS, an industry
accepted data source. IMS data may not accurately reflect
actual prescriptions (for instance, we believe IMS data does
not capture all product prescriptions from some non-retail
channels);
-- An adverse judgment in the securities class action litigation
in which we and certain current and former directors and
executive officers are defendants could have a material
adverse effect on our results of operations and liquidity;
-- If we fail to obtain, or encounter difficulties in obtaining,
regulatory approval for new products or new uses of existing
products, or if our development agreements are terminated, we
will have expended significant resources for no return;
-- Our business and products are highly regulated. The regulatory
status of some of our products makes these products subject to
increased competition and other risks, and we run the risk
that we, or third parties on whom we rely, could violate the
governing regulations;
-- If generic competitors that compete with any of our products
are introduced, our revenues may be adversely affected; and
-- Some unforeseen difficulties may occur.
This list is intended to identify some of the principal factors
that could cause actual results to differ materially from those
described in the forward-looking statements included herein. These
factors are not intended to represent a complete list of all risks and
uncertainties inherent in our business, and should be read in
conjunction with the more detailed cautionary statements and risk
factors included in our other filings with the Securities and Exchange
Commission.
The Company's product names are trademarks, in some cases
registered, of the Company.
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FIRST HORIZON PHARMACEUTICAL CORPORATION
Condensed Consolidated Statement of Operations
(Unaudited, in thousands, except per share amounts)
For the For the
Quarter Ended Year Ended
December 31, December 31,
---------------- ------------------
2005 2004 2005 2004
------- ------- -------- --------
Net revenues $66,867 $42,400 $216,358 $151,967
Operating costs and expenses:
Cost of revenues 10,041 7,787 33,331 29,082
Selling, general and
administrative 29,146 20,486 97,386 66,773
Depreciation and amortization 6,344 4,307 22,666 16,907
Research and development 1,790 523 4,075 1,546
------- ------- -------- --------
Total operating costs and
expenses 47,321 33,103 157,458 114,308
------- ------- -------- --------
Operating income 19,546 9,297 58,900 37,659
Other income (expense), net 21 541 (514) 1,310
------- ------- -------- --------
Income before provision for
income taxes 19,567 9,838 58,386 38,969
Provision for income taxes 6,584 1,275 19,177 12,415
------- ------- -------- --------
Net income $12,983 $ 8,563 $ 39,209 $ 26,554
======= ======= ======== ========
Net income per common share:
Basic $ 0.37 $ 0.24 $ 1.12 $ 0.74
======= ======= ======== ========
Diluted $ 0.32 $ 0.21 $ 0.97 $ 0.66
======= ======= ======== ========
Weighted average common shares
outstanding:
Basic 35,000 35,438 35,102 35,761
======= ======= ======== ========
Diluted 42,356 43,657 42,514 42,429
======= ======= ======== ========
FIRST HORIZON PHARMACEUTICAL CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
December 31, December 31,
2005 2004
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 17,043 $ 36,586
Marketable securities 82,757 160,636
Accounts receivable, net 48,353 23,833
Inventories 28,924 15,824
Other 27,311 16,438
----------- -----------
Total current assets 204,388 253,317
----------- -----------
Property and equipment, net 5,148 5,110
Other assets:
Intangibles, net 315,798 229,953
Other 4,371 10,104
----------- -----------
Total other assets 320,169 240,057
----------- -----------
Total assets $ 529,705 $ 498,484
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 12,093 $ 14,569
Accrued expenses 18,482 20,508
----------- -----------
Total current liabilities 30,575 35,077
----------- -----------
Long-term liabilities:
Convertible debt 150,000 150,000
Other 8,994 4,998
----------- -----------
Total liabilities 189,569 190,075
----------- -----------
Stockholders' equity:
Common stock 36 36
Additional paid-in capital 292,639 288,335
Retained earnings 82,524 43,315
Deferred compensation (7,489) --
Accumulated other comprehensive loss (4,384) (87)
Treasury stock (23,190) (23,190)
----------- -----------
Total stockholders' equity 340,136 308,409
----------- -----------
Total liabilities and stockholders'
equity $ 529,705 $ 498,484
=========== ===========
FIRST HORIZON PHARMACEUTICAL CORPORATION
Reconciliation of EBITDA (1)
(Unaudited, in thousands)
For the For the
Quarter Year
Ended Ended
December 31, December 31,
2005 2005
----------- -----------
Net income as reported (GAAP) $ 12,983 $ 39,209
Add: Other expense, net (21) 514
Add: Provision for income taxes 6,584 19,177
Add: Depreciation and amortization 6,344 22,666
----------- -----------
Earnings before interest, taxes,
depreciation and amortization $ 25,890 $ 81,566
=========== ===========
(1) The Company believes that EBITDA is a meaningful non-GAAP
financial measure as an earnings-derived indicator that may
approximate cash flow. EBITDA, as defined and presented by the
Company, may not be comparable to similar measures reported by
other companies.
Reconciliation of Projected Diluted Earnings per Share (2)
(Unaudited)
For the
Year
Ended
December 31,
2006
------------
2006 Projected diluted earnings per share, as presented $ 1.15-1.20
Less: Stock-based compensation expense (0.13)
------------
2006 Projected diluted earnings per share (GAAP) $ 1.02-1.07
(2) The Company believes that projected diluted earnings per share
before stock-based compensation expense is a meaningful non-GAAP
financial measure for providing comparability to 2005 reported
diluted earnings per share. Diluted earnings per share before
stock-based compensation expense, as defined and presented by the
Company, may not be comparable to similar measures reported by
other companies.
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