LAKE FOREST, Ill., Oct. 18, 2011 /PRNewswire/ -- Hospira, Inc. (NYSE: HSP), the world’s leading provider of injectable drugs and infusion technologies, today announced that its preliminary third-quarter 2011 net sales, adjusted* income from operations and adjusted* earnings per share are lower than anticipated primarily due to certain quality actions taken in response to a U.S. Food and Drug Administration (FDA) 2010 warning letter and subsequent observations related to the company’s manufacturing facility in Rocky Mount, North Carolina, and device quality and supply-related issues.
“While recently launched product sales continue to drive top-line growth, we were extremely disappointed in the third quarter by developments related to our quality-improvement initiatives that resulted in a significant slowdown of production and an associated impact on our operating performance,” said F. Michael Ball, chief executive officer. “As I indicated at our Investor Day in early September, addressing these issues is Hospira’s top priority, and our organization is committed to full resolution. I remain confident that Hospira will emerge from this process a stronger, more competitive global company that is optimally positioned to serve the needs of our customers and patients, and deliver strong value to our shareholders.”
Preliminary net sales for the quarter were $977 million, an increase of 2.9 percent compared to $949 million in the third quarter of 2010, with the increase primarily driven by continued strong U.S. net sales of the oncolytic docetaxel. On a constant-currency basis, third-quarter net sales increased slightly compared to the third quarter of 2010.
Preliminary adjusted* income from operations for the third quarter of 2011 was $142 million compared to $189 million in the third quarter of 2010. The decline is primarily due to charges and costs associated with the quality actions and related inventory losses. Preliminary adjusted* diluted earnings per share were $0.66 for the third quarter of 2011.
On a U.S. Generally Accepted Accounting Principles (GAAP) basis, the company had a preliminary loss from operations of $85 million in the third quarter of 2011 compared to income from operations of $142 million in the third quarter of 2010. The third quarter of 2011 includes a preliminary goodwill impairment charge related to Hospira’s European operating unit identified during Hospira’s annual impairment test. On a GAAP basis, the company had a preliminary diluted loss per share of $0.54 compared to diluted earnings per share of $0.42 in the prior-year third quarter. Results under GAAP include items as detailed in the schedule attached to this press release.
Preliminary cash flow from operations for the first nine months of 2011 was $277 million, compared to the $235 million generated for the same period in 2010. The increase primarily reflects the timing of chargeback and rebate payments.
These results are preliminary and remain subject to change as the company completes its quarterly close and reporting processes. Hospira intends to issue a full press release containing the third-quarter 2011 results on our originally scheduled conference call date of October 26, 2011.
2011 Projections
Given the preliminary third-quarter results, Hospira currently estimates that its adjusted* diluted earnings per share for full-year 2011 will range between $2.95 and $3.05 per share, or $1.40 to $1.50 on a GAAP basis. These estimates are preliminary. Hospira will discuss its full-year 2011 projections in further detail when it reports its final third-quarter 2011 results on October 26, 2011.
*Use of Non-GAAP Financial Measures
Adjusted measures used in this press release are reconciled to the most comparable measures calculated in accordance with GAAP in the schedules attached to this release. For more information regarding these non-GAAP financial measures, please see Hospira’s Current Report on Form 8-K furnished to the Securities and Exchange Commission on the date of this press release.
Webcast
Hospira will hold a conference call for investors and media at 9 a.m. Central time today, October 18, 2011. A simultaneous webcast of the conference call will be available on Hospira’s website at www.hospirainvestor.com. Listeners should log on approximately 10 minutes in advance to ensure proper setup for receiving the webcast.
About Hospira
Hospira, Inc. is the world’s leading provider of injectable drugs and infusion technologies. Through its broad, integrated portfolio, Hospira is uniquely positioned to Advance Wellness by improving patient and caregiver safety while reducing healthcare costs. The company is headquartered in Lake Forest, Ill., and has approximately 14,000 employees. Learn more at www.hospira.com.
Private Securities Litigation Reform Act of 1995 --
A Caution Concerning Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including projections of certain measures of Hospira’s results of operations, projections of certain charges and expenses, and statements regarding Hospira’s goals and strategy. Hospira cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, regulatory, legal, technological, manufacturing supply, quality and other factors that may affect Hospira’s operations and may cause actual results to be materially different from expectations include the risks, uncertainties and factors discussed under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Hospira’s latest Annual Report on Form 10-K and subsequent Forms 10-Q, filed with the Securities and Exchange Commission, which are incorporated by reference. Hospira undertakes no obligation to release publicly any revisions to forward-looking statements as the result of subsequent events or developments.