LAKE FOREST, Ill., July 27, 2011 /PRNewswire/ -- Hospira, Inc. (NYSE: HSP), a leading global specialty pharmaceutical and medication delivery company, today reported results for the second quarter ended June 30, 2011. Net sales for the quarter were $1.1 billion, and adjusted* diluted earnings per share were $0.94. (Adjusted* measures exclude certain specified items as described later in this press release and the attached schedules.)
"Hospira delivered strong second-quarter performance, driven primarily by positive results for the oncolytic docetaxel in the United States," said F. Michael Ball, chief executive officer. "We continued to advance the business and make progress on our quality and product supply improvement initiatives. In part due to the quarter's results, we are increasing our sales projections for the year, and remain focused on driving value for our customers, patients and shareholders."
Second-Quarter 2011 Results
The following table highlights selected financial results for the second quarter of 2011 compared to the same period in 2010:
In $ millions, except per share amounts | GAAP Three Months Ended June 30, | Adjusted* Three Months Ended June 30, | |||||
2011 | 2010 | % Change | 2011 | 2010 | % Change | ||
Net Sales | $1,064.1 | $968.2 | 9.9% | n/a | n/a | n/a | |
Gross Profit (Net Sales less Cost of Products Sold) | $413.4 | $369.2 | 12.0% | $433.4 | $416.8 | 4.0% | |
Income from Operations | $190.5 | $116.3 | 63.8% | $212.0 | $213.1 | (0.5)% | |
Diluted EPS | $0.85 | $0.49 | 73.5% | $0.94 | $0.86 | 9.3% | |
Statistics (as a % of Net Sales) | |||||||
Gross Profit (Net Sales less Cost of Products Sold) | 38.8% | 38.1% | 40.7% | 43.0% | |||
Income from Operations | 17.9% | 12.0% | 19.9% | 22.0% | |||
Results under U.S. Generally Accepted Accounting Principles (GAAP) include items as detailed in the schedules attached to this press release.
Net sales increased 9.9 percent to $1.1 billion in the second quarter of 2011, compared to $968 million in the second quarter of 2010. Driving the quarter's performance was strong sales in Specialty Injectable Pharmaceuticals, primarily driven by U.S. sales of the oncolytic docetaxel, as well as by contribution from several other newer compounds.
Adjusted* income from operations decreased 0.5 percent to $212 million in the second quarter of 2011, compared to $213 million in the second quarter of 2010. The decrease is primarily due to a difficult year-over-year comparison driven by strong margin contribution from U.S. sales of oncolytic oxaliplatin in the second quarter of 2010, as well as the 2011 impact of the joint-venture arrangement related to the production of docetaxel, which tempered the margin contribution of U.S. docetaxel sales.
The effective tax rate on an adjusted basis* in the quarter was 23.0 percent, a slight decrease from the second-quarter 2010 rate of 23.8 percent.
Cash Flow
Cash flow from operations for the first six months of 2011 was $253 million, compared to the $144 million generated for the same period in 2010. The increase primarily reflects the timing of rebate and chargeback payments, partially offset by higher inventory levels.
Capital expenditures were $139 million for the first six months of 2011, compared to $79 million for the first six months of 2010. The increase is related to the company's capacity expansion and information technology (IT) initiatives.
During the second quarter, Hospira entered into accelerated share repurchase (ASR) agreements under its $1 billion share repurchase authorization. Under the agreements, which the company completed in July 2011, the company repurchased 3.7 million shares of common stock for a total of $200 million.
2011 Projections
Hospira is now projecting full-year net sales growth of approximately 7 to 9 percent on a constant-currency basis, with foreign exchange now expected to contribute an additional 2 percent.
The company anticipates that the projected higher sales growth will be offset by lower than originally anticipated gross margin performance. As a result, Hospira is maintaining its adjusted* diluted earnings per share projection for full-year 2011, which is expected to range between $3.90 and $4.00 per share, representing year-over-year growth of 18 to 21 percent.
