Sagent Pharma Reports Second Quarter 2015 Financial Results

Company to evaluate strategic alternatives for Sagent (China) Pharmaceuticals

Company modifies earnings guidance for 2015

SCHAUMBURG, Ill., Aug. 4, 2015 (GLOBE NEWSWIRE) -- Sagent Pharmaceuticals, Inc. (NASDAQ:SGNT), a leader of specialty pharmaceutical products with a specific emphasis on the injectable market, today announced financial results for the quarter ended June 30, 2015.

Second Quarter 2015 Highlights

• Revenue increased 12% to $77.3 million driven primarily by the October 1, 2014 acquisition of Omega Laboratories Limited ("Omega");
• Reported gross profit declined 18% to $18.4 million, or 23.8% of net revenue;
• Adjusted Gross Profit¹ declined 22% to $18.7 million, or 24.2% of net revenue;
• Adjusted EBITDA¹ declined 15% to $6.2 million;
• Net loss of $0.3 million, or diluted loss per share of $0.01; and
• Initiated evaluation of strategic alternatives for Sagent (China) Pharmaceuticals ("SCP").

"Sagent is committed to building upon its solid business platform and maximizing the profitability of the company. We are taking the necessary actions to drive long-term profitable growth and value for our shareholders," said Michael Logerfo, President of Sagent. "To support these objectives, we have conducted a comprehensive review of SCP and are actively evaluating strategic alternatives to optimize the value of this facility, including its potential sale. We will continue to invest in vertical integration where it supports our profitable growth. The company remains focused on organic investments and business development activities that both strengthen our global product portfolio and pipeline through existing and new partners and facilitate long-term growth opportunities for our business."

¹ Adjusted Gross Profit and Adjusted EBITDA are non-GAAP measures. Please see discussion of Non-GAAP Financial Measures at the end of this press release.

Financial Results for the quarter ended June 30, 2015

Net revenue for the second quarter of 2015 was $77.3 million, an increase of $8.2 million, or 12%, compared to $69.2 million in the second quarter of 2014.  The increase was driven primarily by the $8.1 million from the addition of Omega on October 1, 2014. Gross profit for the second quarter of 2015 was $18.4 million, or 23.8% of net revenue, compared to $22.6 million, or 32.7% of net revenue, in the second quarter of 2014. Adjusted Gross Profit for the second quarter of 2015 was $18.7 million, or 24.2% of net revenue, compared to $24.1 million, or 34.8% of net revenue in the second quarter of 2014.  

Total operating expenses for the second quarter of 2015 were $17.3 million, a decline of $2.0 million compared to $19.3 million for the same period in 2014. Included in the second quarter of 2015 were $2.0 million of operating expenses for Omega. Product development expense for the second quarter of 2015 totaled $5.4 million, inclusive of $0.8 million for Omega, a decline of $4.6 million, or 46% compared to $10.0 million for the second quarter of 2014. Selling, general and administration expenses for the second quarter of 2015 totaled $11.4 million, inclusive of $1.2 million for Omega, compared to $10.7 million in the second quarter of 2014. During the second quarter of 2015 Sagent incurred $0.6 million of non-recurring operating expenses primarily related to recent management transitions. The equity in net income of joint ventures for the second quarter of 2015 totaled $0.3 million compared to $1.5 million in the second quarter of 2014.

Adjusted EBITDA for the second quarter of 2015 was $6.2 million, a decline of $1.1 million, or 15% compared to $7.4 million in the second quarter of 2014.

Net loss for the three months ended June 30, 2015 was $0.3 million, compared to net income of $3.1 million in the second quarter of 2014.

Liquidity

Our cash and cash equivalents and short term investments at June 30, 2015 were $71.1 million, and our working capital totaled $120.2 million.   

Fiscal 2015 Guidance

Jonathon Singer, Executive Vice President and Chief Financial Officer of Sagent, stated, "Although we believe the long term fundamental trends in our business remain positive, competitive pricing and an approval backlog at the FDA have impacted our financial performance to date in 2015. With a lower than anticipated impact from new business development activities and GPO contract renewals, we have revised our outlook for 2015. Although not anticipated to impact near term results, we continue to have strong contractual relationships with the group purchasing organizations, and remain focused on business development activities and strategic investments to support our future growth potential."

Sagent's business plan for fiscal 2015 currently anticipates:

• Net revenue for the year to be in the range of $305 to $330 million, a reduction from our previous guidance of $325 to $375 million;
• Adjusted Gross Profit as a percentage of net revenue in the range of 25% to 28%, a decline from our initial estimate of 27% to 31%;
• Operating expenses in the range of $80 to $90 million.

Based on the above assumptions, the Company anticipates Adjusted EBITDA in the range of $20 - $30 million.

Conference Call Information     

Sagent will host its second quarter conference call this morning beginning at 9:00 a.m. Eastern Daylight Time.   Please call 877-293-5456 from the United States or +1-707-287-9357 internationally.  In addition, the live conference call is being webcast and can be accessed on the "Events and Presentations" page of the "Investor Relations" section of the Company's website, www.sagentpharma.com.  A replay also will be available for 14 days following the live call, and may be accessed via the Company's website or by calling 855-859-2056, passcode 97589286.

About Sagent Pharmaceuticals