MORRISTOWN, N.J., Nov. 4, 2010 /PRNewswire-FirstCall/ -- Watson Pharmaceuticals, Inc. (NYSE: WPI) today reported net revenue grew 33 percent for the third quarter ended September 30, 2010 to $882.4 million, compared to $662.1 million in the third quarter 2009. On an adjusted cash basis, net income increased 18 percent to $105.9 million or $0.85 per share, compared to $90.0 million or $0.78 per share in the third quarter 2009. GAAP earnings for the third quarter 2010 were $0.21 per share, compared to $0.55 per share in the prior year period, and include an $89.9 million charge associated with a potential legal settlement for certain pending drug pricing litigation. Please refer to the attached reconciliation tables for additional adjustments to GAAP earnings.
Adjusted EBITDA increased 18 percent to $211.1 million for the third quarter 2010, versus $178.4 million for the third quarter 2009. Cash and marketable securities were $265.9 million as of September 30, 2010.
"Watson delivered another quarter of strong financial results and continued progress against our strategic objectives," said Paul Bisaro, president and CEO. "Our Global Generics revenue increased by 45 percent as a result of continued growth of our extended release and our oral contraceptive franchises, and the addition of international sales. In our Global Brands business, we made significant progress on the expansion of our pipeline and expanding Watson's position in Women's health through the addition of Crinone® for infertility, which we began promoting during the quarter. Also, the U.S. Food and Drug Administration approved ella®, a novel emergency contraceptive we intend to launch in the current quarter under our exclusive distribution agreement with HRA Pharma. Additionally, our Anda distribution business continued to perform well with revenues up 35 percent."
"We continued to invest in our future, increasing our investment in R&D in both our Global Generics and Global Brands segments. In addition, our long-term strategic alliance with Moksha8 to market a select number of products in Brazil and Mexico demonstrates our continued commitment to global expansion."
"During the third quarter we also paid the remaining $50 million balance on our revolving credit facility and our leverage ratio was 1.5x adjusted EBITDA at quarter end," Bisaro added. "2010 continues to be an extremely successful year for Watson and I'm very pleased with our excellent results."
Business Segment Results
Global Generics Segment Information
Three Months Ended
Nine Months Ended
(Unaudited; $ in millions)
Cost of sales
Research and development
Selling and marketing
Adjusted gross profit (1)
Adjusted gross margin
(1) Adjusted gross profit represents net revenue less adjusted cost of sales and excludes amortization of acquired intangibles. Pro forma adjustments for the respective periods include the following:
Global Supply Chain Initiative
Purchase accounting adjustments
Acquisition and licensing adjustments
Global Generics net revenue for the third quarter 2010 increased 45 percent to $577.6 million compared to the third quarter 2009, reflecting the addition of product sales from our new international markets, the addition of the 100mg and 200mg strengths of Metoprolol ER, Potassium Chloride and higher sales of oral contraceptives. Third quarter international net revenue was $102.2 million, slightly lower than the second quarter 2010 as a result of seasonality and lower pricing in certain key markets.
Global Generics adjusted gross margin was relatively unchanged at 50.3 percent in the third quarter 2010 versus the prior year period.
Global Generics R&D investment increased $17.1 million to $54.1 million in the third quarter 2010 compared to the third quarter 2009, primarily due to the addition of international R&D expense.