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The Medicines Company (MDCO) Reports Second Quarter and First Half 2012 Financial Results



7/25/2012 9:13:22 AM

PARSIPPANY, NJ--(Marketwire - July 25, 2012) - The Medicines Company (NASDAQ: MDCO), a global pharmaceutical company focused on advancing the treatment of critical care patients through the delivery of innovative, cost-effective medicines, today announced second quarter and first half financial results for 2012.

Financial highlights for the second quarter of 2012:

  • Net revenue increased by 13.5% to $135.7 million for the second quarter of 2012 from $119.6 million in the second quarter of 2011.
    • Angiomax U.S. sales increased by 8.2% to $121.2 million in the second quarter of 2012 compared to $112.0 million in the second quarter of 2011.
    • Angiomax/Angiox international net revenue in the second quarter of 2012 increased by 63.6% to $11.9 million compared with $7.3 million in the second quarter of 2011.
  • Net income for the second quarter of 2012 was $13.8 million, or $0.25 per share, compared with net income of $11.4 million, or $0.21 per share, for the second quarter of 2011.
  • Non-GAAP net income for the second quarter of 2012 was $25.7 million, or $0.46 per share, compared to non-GAAP net income of $13.2 million, or $0.24 per share for the second quarter 2011. Non-GAAP net income excludes stock-based compensation expense, non-cash interest expense and non-cash income taxes.

Financial highlights for the first half of 2012:

  • Net revenue increased by 13.2% to $262.3 million for the first half of 2012 from $231.7 million in the first half of 2011.
    • Angiomax U.S. sales increased by 9.1% to $236.7 million in the first half of 2012 compared with $217.0 million in the first half of 2011.
    • Angiomax/Angiox international net revenue in the first half of 2012 increased by 56.2% to $22.6 million compared with $14.4 million in the first half of 2011.
  • Net income for the first half of 2012 was $21.3 million, or $0.38 per share, compared with net income of $35.7 million, or $0.66 per share, for the first half of 2011.
  • Non-GAAP net income for the first half of 2012 was $40.9 million, or $0.74 per share, compared with non-GAAP net income of $47.7 million, or $0.88 per share for the first half of 2011. Non-GAAP net income excludes stock-based compensation expense, non-cash interest expense and non-cash income taxes.

Glenn Sblendorio, President and Chief Financial Officer, stated, "For the first half of 2012, revenue growth has been robust with Europe a particular bright spot -- while we have kept worldwide SG&A costs stable. Since 2010, we have been realizing the operating leverage we anticipated. Our R&D projects are moving forward aggressively to drive toward answers on our critical Phase 3 trials of oritavancin and cangrelor."

The following table provides reconciliations between GAAP and non-GAAP net income for the second quarter (Q2) and first half (1H) of 2012 and 2011. Non-GAAP net income excludes the transaction charges related to stock-based compensation expense, non-cash interest expense and non-cash income taxes:

                                                    Non-cash                
                                                    Provision               
             Reported    Stock-Based   Non-cash     (Benefit)               
             GAAP Net   Compensation   Interest    for Income   Non-GAAP Net
(millions)    Income       Expense      Expense       Taxes      Income (1) 
           ------------ ------------ ------------ ------------  ------------
                                                                            
Q2 2012    $       13.8 $        4.2 $        0.6 $        7.2  $       25.7
                                                                            
Q2 2011    $       11.4 $        3.2 $          - $       (1.4) $       13.2
                                                                            
1H 2012    $       21.3 $        7.3 $        0.6 $       11.7  $       40.9
                                                                            
1H 2011    $       35.7 $        5.4 $          - $        6.6  $       47.7
                                                                            
Note: Amounts may not sum due to                                            
 rounding.                                                                  
(1)Excluding stock-based                                                    
 compensation expense, non-cash                                             
 interest expense and the non-cash                                          
 provision (benefit) for income                                             
 taxes                                                                      

Reconciliations between GAAP and non-GAAP fully diluted earnings per share (EPS) for Q2 and 1H of 2012 and 2011 are provided in the following table:

                                                    Non-cash                
                                                    Provision               
                         Stock-Based   Non-cash     (Benefit)               
(per         Reported   Compensation   Interest    for Income   Non-GAAP EPS
 share)      GAAP EPS      Expense      Expense       Taxes          (1)    
           ------------ ------------ ------------ ------------  ------------
                                                                            
Q2 2012    $       0.25 $       0.08 $       0.01 $       0.13  $       0.46
                                                                            
Q2 2011    $       0.21 $       0.06 $          - $      (0.03) $       0.24
                                                                            
1H 2012    $       0.38 $       0.13 $       0.01 $       0.21  $       0.74
                                                                            
1H 2011    $       0.66 $       0.10 $          - $       0.12  $       0.88
                                                                            
Note: Amounts may not sum due to                                            
 rounding.                                                                  
(1)Excluding stock-based                                                    
 compensation expense, non-cash                                             
 interest expense and the non-cash                                          
 provision (benefit) for income                                             
 taxes                                                                      

The Company believes that presenting the non-GAAP information contained in the financial tables and in this press release assists investors and others in gaining a better understanding of the Company's core operating results and future prospects, expected growth rates or forecasted guidance, particularly as related to stock-based compensation expense and non-cash income taxes. Management uses this non-GAAP information, in addition to the GAAP information, as the basis for measuring the Company's core operating performance and comparing such performance to that of prior periods and to the performance of its competitors. Such measures are also used by management in its financial and operating decision-making. Non-GAAP information is not meant to be considered superior to or a substitute for the Company's results of operations prepared in accordance with GAAP. A reconciliation of GAAP results with non-GAAP results may also be found in the attached financial tables.

There will be a conference call with management today at 8:30 a.m. Eastern Time to discuss second quarter 2012 financial results and operational developments. The conference call will be available via phone and webcast. The webcast can be accessed at The Medicines Company website at www.themedicinescompany.com.

The dial in information is listed below:
Domestic Dial In: 800-659-2032
International Dial In: 617-614-2712
Passcode for both dial in numbers: 69019146

Replay is available from 10:30 a.m. Eastern Time following the conference call through August 8, 2012. To hear a replay of the call dial 888-286-8010 (domestic) and 617-801-6888 (international). Passcode for both dial in numbers is 72155180.

About The Medicines Company
The Medicines Company (NASDAQ: MDCO) provides medical solutions to improve health outcomes for patients in acute and intensive care hospitals worldwide. These solutions comprise medicines and knowledge that directly impact the survival and well being of critically ill patients. The Medicines Company's website is www.themedicinescompany.com.

Statements contained in this press release about The Medicines Company that are not purely historical, and all other statements that are not purely historical, may be deemed to be forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Without limiting the foregoing, the words "believes," "anticipates" and "expects" and similar expressions, including the Company's preliminary revenue results, are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by these forward-looking statements. Important factors that may cause or contribute to such differences include the extent of the commercial success of Angiomax, the Company's ability to develop its global operations and penetrate foreign markets, whether the Company's products will advance in the clinical trials process on a timely basis or at all, whether the Company will make regulatory submissions for product candidates on a timely basis, whether its regulatory submissions will receive approvals from regulatory agencies on a timely basis or at all, whether physicians, patients and other key decision makers will accept clinical trial results, risks associated with the establishment of international operations, whether the Company is able to obtain or maintain patent protection for the intellectual property relating to the Company's products; and such other factors as are set forth in the risk factors detailed from time to time in the Company's periodic reports and registration statements filed with the Securities and Exchange Commission including, without limitation, the risk factors detailed in the Company's Quarterly Report on Form 10-Q filed on May 10, 2012, which are incorporated herein by reference. The Company specifically disclaims any obligation to update these forward-looking statements.

                           The Medicines Company                            
              Condensed Consolidated Statements of Operations               
                                (unaudited)                                 
(in thousands, except per share data)           Three months ended June 30, 
                                               ---------------------------- 
                                                    2012           2011     
                                               -------------  ------------- 
                                                                            
Net revenue                                    $     135,702  $     119,591 
Operating expenses:                                                         
  Cost of revenue                                     42,681         37,830 
  Research and development                            32,962         26,536 
  Selling, general and administrative                 40,467         41,420 
                                               -------------  ------------- 
    Total operating expenses                         116,110        105,786 
                                               -------------  ------------- 
Income from operations                                19,592         13,805 
  Co-promotion income                                  2,500              - 
  Interest expense                                      (784)             - 
  Other income                                           697             61 
                                               -------------  ------------- 
Income before income taxes                            22,005         13,866 
Provision for income taxes                            (8,251)        (2,426)
                                               -------------  ------------- 
                                                                            
Net income                                            13,754         11,440 
Net loss attributable to non-controlling                                    
 interest                                                  1              - 
                                               -------------  ------------- 
Net income attributable to The Medicines                                    
 Company                                       $      13,755  $      11,440 
                                               =============  ============= 
                                                                            
Basic earnings per common share attributable                                
 to The Medicines Company                      $        0.25  $        0.21 
                                               =============  ============= 
Shares used in computing basic earnings per                                 
 common share                                         54,035         53,441 
                                               =============  ============= 
                                                                            
Diluted earnings per common share attributable                              
 to The Medicines Company                      $        0.25  $        0.21 
                                               =============  ============= 
Shares used in computing diluted earnings per                               
 common share                                         55,556         54,314 
                                               =============  ============= 
                                                                            
                                                                            
                                                                            
                                                                            
                           The Medicines Company                            
              Condensed Consolidated Statements of Operations               
                                (unaudited)                                 
                                                                            
(in thousands, except per share data)                Year to Date June 30,  
                                                   ------------------------ 
                                                       2012         2011    
                                                   -----------  ----------- 
Net revenue                                        $   262,312  $   231,728 
Operating expenses:                                                         
  Cost of revenue                                       81,344       73,400 
  Research and development                              65,740       50,328 
  Selling, general and administrative                   83,653       79,348 
                                                   -----------  ----------- 
    Total operating expenses                           230,737      203,076 
                                                   -----------  ----------- 
Income from operations                                  31,575       28,652 
  Legal settlement                                           -       17,984 
  Co-promotion income                                    2,500            - 
  Interest expense                                        (784)           - 
  Other income                                             759          872 
                                                   -----------  ----------- 
Income before income taxes                              34,050       47,508 
Provision for income taxes                             (12,725)     (11,827)
                                                   -----------  ----------- 
Net income                                              21,325       35,681 
Net loss attributable to non-controlling interest            1            - 
                                                   -----------  ----------- 
Net income attributable to The Medicines Company   $    21,326  $    35,681 
                                                   ===========  =========== 
                                                                            
Basic earnings per common share attributable to                             
 The Medicines Company                             $      0.39  $      0.67 
                                                   ===========  =========== 
Shares used in computing basic earnings per common                          
 share                                                  54,036       53,343 
                                                   ===========  =========== 
                                                                            
Diluted earnings per common share attributable to                           
 The Medicines Company                             $      0.38  $      0.66 
                                                   ===========  =========== 
Shares used in computing diluted earnings per                               
 common share                                           55,614       54,223 
                                                   ===========  =========== 
                                                                            
                                                                            
                                                                            
                                                                             
                             The Medicines Company                           
                     Condensed Consolidated Balance Sheets                   
                                                                             
                                                                             
                                                     June 30,    December 31,
 (in thousands)                                        2012          2011    
                                                  ------------- -------------
                                                   (unaudited)               
                      ASSETS                                                 
 Cash, cash equivalents and available for sales                              
  securities                                      $     517,485 $     340,512
 Accrued interest receivable                                300           374
 Accounts receivable, net                                65,664        74,559
 Inventory                                               47,202        45,145
 Deferred tax assets                                      9,395         9,395
 Prepaid expenses and other current assets               12,406        11,738
                                                  ------------- -------------
   Total current assets                                 652,452       481,723
                                                                             
 Fixed assets, net                                       16,916        17,979
 Intangible assets, net                                 121,835        87,329
 Restricted cash                                          2,697         4,714
 Deferred tax assets                                     74,547        78,441
 Goodwill                                                14,671        14,671
 Other assets                                             7,766         7,790
                                                  ------------- -------------
   Total assets                                   $     890,884 $     692,647
                                                  ============= =============
                                                                             
       LIABILITIES AND STOCKHOLDERS' EQUITY                                  
 Current liabilities                              $     116,365 $     154,635
 Contingent purchase price                               21,568        20,431
 Convertible senior notes (due 2017)                    221,322             -
 Other Long Term Liabilities                              6,028         5,939
 Stockholders' equity                                   525,601       511,642
                                                  ------------- -------------
   Total liabilities and stockholders' equity     $     890,884 $     692,647
                                                  ============= =============
                                                                             
                                                                             
                                                                             
                                                                            
The Medicines Company                                                       
Reconciliation of GAAP to non-GAAP Measures                                 
(All amounts in thousands, except per share amounts)                        
(Unaudited)                                                                 
                                                                            
                                  Three Months Ended June 30                
                  --------------------------------------------------------- 
                                             2012                           
                  --------------------------------------------------------- 
                                                                     Non-   
                                            Non-cash   Non-cash    GAAP(5)  
                             Stock-Based    Interest      Tax         As    
                   GAAP(1)  Compensation     Expense   Provision   Adjusted 
                  --------  ------------    --------   ---------   -------- 
Net revenue       $135,702  $          -    $      -   $       -   $135,702 
                                                                            
Operating                                                                   
 expenses:                                                                  
  Cost of revenue   42,681           (38)(2)       -           -     42,643 
  Research and                                                              
   development      32,962          (480)(2)       -           -     32,482 
  Selling,                                                                  
   general and                                                              
   administrative   40,467        (3,663)(2)       -           -     36,804 
                  --------  ------------    --------   ---------   -------- 
    Total                                                                   
     operating                                                              
     expenses      116,110        (4,181)          -           -    111,929 
                  --------  ------------    --------   ---------   -------- 
                                                                            
Income loss from                                                            
 operations         19,592         4,181           -           -     23,773 
  Co-promotion                                                              
   income            2,500             -           -           -      2,500 
  Interest                                                                  
   expense            (784)            -         577(3)        -       (207)
  Other income         697             -           -           -        697 
                  --------  ------------    --------   ---------   -------- 
Income before                                                               
 income taxes       22,005         4,181         577           -     26,763 
  (Provision)                                                               
   benefit for                                                              
   income taxes     (8,251)            -           -       7,232(4)  (1,019)
                  --------  ------------    --------   ---------   -------- 
Net income          13,754         4,181         577       7,232     25,744 
Net loss                                                                    
 attributable to                                                            
 non-controlling                                                            
 interest                1             -           -           -          1 
                  --------  ------------    --------   ---------   -------- 
Net income                                                                  
 attributable to                                                            
 The Medicines                                                              
 Company          $ 13,755  $      4,181    $    577   $   7,232   $ 25,745 
                  ========  ============    ========   =========   ======== 
                                                                            
Basic earnings                                                              
 per common share                                                           
 attributable to                                                            
 The Medicines                                                              
 Company          $   0.25  $       0.08    $   0.01   $    0.13   $   0.48 
                  ========  ============    ========   =========   ======== 
                                                                            
Shares used in                                                              
 computing basic                                                            
 earnings per                                                               
 common share       54,035        54,035      54,035      54,035     54,035 
                  ========  ============    ========   =========   ======== 
                                                                            
Diluted earnings                                                            
 per common share                                                           
 attributable to                                                            
 The Medicines                                                              
 Company          $   0.25  $       0.08    $   0.01   $    0.13   $   0.46 
                  ========  ============    ========   =========   ======== 
                                                                            
Shares used in                                                              
 computing                                                                  
 diluted earnings                                                           
 per common share   55,556        55,556      55,556      55,556     55,556 
                  ========  ============    ========   =========   ======== 
                                                                            
Note: Amounts may not sum                                                   
 due to rounding.                                                           
(1) GAAP Results                                                            
(2) Non-cash stock compensation expense                                     
(3) Non-cash interest expense                                               
(4) Non-cash income taxes                                                   
(5) Non-GAAP Results                                                        
                                                                            
                                                                            
                                                                            
The Medicines Company                                                       
Reconciliation of GAAP to non-GAAP Measures                                 
(All amounts in thousands, except per share amounts)                        
(Unaudited)                                                                 
                                                                            
                                   Six Months Ended June 30                 
                  --------------------------------------------------------- 
                                             2012                           
                  --------------------------------------------------------- 
                                                                     Non-   
                                            Non-cash   Non-cash    GAAP(5)  
                             Stock-Based    Interest      Tax         As    
                   GAAP(1)  Compensation     Expense   Provision   Adjusted 
                  --------  ------------    --------   ---------   -------- 
Net revenue       $262,312  $          -    $      -   $       -   $262,312 
                                                                            
Operating                                                                   
 expenses:                                                                  
  Cost of revenue   81,344           (73)(2)       -           -     81,271 
  Research and                                                              
   development      65,740        (1,026)(2)       -           -     64,714 
  Selling,                                                                  
   general and                                                              
   administrative   83,653        (6,196)(2)       -           -     77,457 
                  --------  ------------    --------   ---------   -------- 
    Total                                                                   
     operating                                                              
     expenses      230,737        (7,295)          -           -    223,442 
                  --------  ------------    --------   ---------   -------- 
                                                                            
Income from                                                                 
 operations         31,575         7,295           -           -     38,870 
  Co-promotion                                                              
   income            2,500             -           -           -      2,500 
  Interest                                                                  
   expense            (784)            -         577(3)        -       (207)
  Other income         759             -           -           -        759 
                  --------  ------------    --------   ---------   -------- 
Income before                                                               
 income taxes       34,050         7,295         577           -     41,922 
  (Provision)                                                               
   benefit for                                                              
   income taxes    (12,725)            -           -      11,706(4)  (1,019)
      

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