Medicis Reports Second Quarter Fiscal 2002 Financial Results
SCOTTSDALE, Ariz.--Jan. 23, 2002--Medicis Pharmaceutical Corporation (NYSE:MRX) today reported second quarter fiscal 2002 net revenue growth of 28% to $53.0 million with net income (absent special charges) of $14.8 million, or $0.47 per diluted share, representing 17% growth in net income and EPS as compared to the same quarter in the previous fiscal year. Including special charges of $6.2 million for purchased in-process research and development associated with the Ascent Pediatrics transaction, Medicis reported net income of $8.6 million, or $0.27 per diluted share. In the second quarter of fiscal 2001, Medicis reported net revenues of $41.4 million with net income of $12.7 million, or $0.40 per diluted share.
In November 2001, Medicis completed the Ascent Pediatrics merger. This transaction provided Medicis with critical mass to enter the pediatric market. In conjunction with this transaction, the Company recorded a charge to operations of $6.2 million, based upon an independent valuation, relating to purchased in-process research and development for projects that are in early stages of development.
Second quarter net revenue increased primarily as a result of net overall growth in sales of the Company's eight core brands. The Company's core brands represented approximately 88% of total product sales on a collective basis and increased approximately 48% in total reported prescription volume. The Company's core brands include DYNACIN(R), LOPROX(R), LUSTRA(R), OMNICEF(R), ORAPRED(R), OVIDE(R), PLEXION(R) and TRIAZ(R). Cash flow from operations for the second quarter of fiscal 2002 was $19.7 million, an increase of 22.3%, compared to $16.2 million for the second quarter of fiscal 2001. The Company's gross profit margin for the second quarter of fiscal 2002 was 83.0%, a 1.8 percentage point increase, compared to 81.2% for the second quarter of fiscal 2001.
For the first six months of fiscal 2002, Medicis reported net revenue growth of 21% to $98.6 million with net income (absent special charges) of $28.6 million, or $0.91 per diluted share, representing 16% growth in net income and 17% growth in EPS, as compared to the same period in the previous fiscal year. Including special charges reported in the first half of fiscal 2002 for purchased in-process research and development totaling $6.2 million associated with the Ascent Pediatrics merger, the Company reported net income of $22.4 million, or $0.71 per diluted share. Comparatively, in the first half of fiscal 2001, Medicis reported net revenues of $81.6 million with net income of $24.7 million, or $0.78 per diluted share. Reported fiscal 2001 first six months' results exclude the tax-effected special charge of $11.5 million associated with a research project collaboration.
For the first six months of fiscal 2002, net revenue increased primarily as a result of net overall growth in sales of the Company's eight core brands. In the first half of fiscal 2002, the Company's core brands represented approximately 87% of total product sales and increased approximately 33% in total reported prescription volume. Cash flow from operations for the first half of fiscal 2002 was $38.6 million, an increase of 51.7%, compared to $25.4 million for the second half of fiscal 2001. The Company's gross profit margin for the first half of fiscal 2002 was 83.1%, a 1.8 percentage point increase, compared to 81.3% for the first half of fiscal 2001.
"We are pleased to announce another strong quarter driven by the growth of our core dermatological and pediatric brands," said Jonah Shacknai, Chairman and Chief Executive Officer of Medicis. "In our second quarter, we announced, closed and integrated the merger with Ascent Pediatrics. As we enter the pediatric market, we remain focused on expanding sales of our core brands, pursuing business development opportunities, cultivating new relationships in pediatrics and supplementing our robust dermatological pipeline with additional therapies for pediatric patients. Our newly expanded sales force embraces the opportunity to demonstrate our strong commitment and dedication to the physicians and patients we serve."
Medicis previously released fiscal year 2002 revenue guidance of $210.5 million and earnings per share guidance of $1.93. The impact of the second quarter's results improve the fiscal year 2002 guidance to $212 million in revenue and $1.94 in earnings per share, excluding special charges. Third quarter fiscal year 2002 (for the quarter ending March 31, 2002) revenue guidance of $56.0 million and earnings per share guidance of $0.49 remain unchanged. Fourth quarter fiscal year 2002 (for the quarter ending June 30, 2002) revenue guidance of $57.5 million and earnings per share guidance of $0.54 remain unchanged. The Company expects to provide quarterly guidance for the fiscal year 2003 before the end of the current fiscal year. At the time of this disclosure, Medicis believes the objectives are attainable based upon information currently available to the Company. The Company's business is subject to all risk factors outlined in the Company's Form 10-K and other publicly filed documents including significant competition within the Company's industry. At the time of this release, the Company cannot, among other things, assess the forthcoming results of the Company's research and development projects and the risks associated with the FDA approval process, nor can the Company validate its assumptions of the full impact on its business of the approval of competitive generic versions of the Company's core brands, or any future competitive product approvals that may affect the Company's brands.
Medicis is a specialty pharmaceutical company and the leading independent pharmaceutical company in the United States focusing primarily on the treatment of dermatological and pediatric conditions. Medicis develops and markets leading products for major segments within dermatology, including acne, fungal infections, rosacea, hyperpigmentation, photoaging, psoriasis, eczema, skin and skin-structure infections, seborrheic dermatitis, head lice and cosmesis (improvement in the texture and appearance of skin). Ascent Pediatrics, Inc., the Company's wholly owned pediatric subsidiary, markets leading pediatric products for the treatment of asthma and other respiratory inflammatory conditions; acute otitis media, or middle ear infections; and an over-the-counter saline nasal mist.
The Company's brands include the prescription brands DYNACIN(R) (minocycline HCl), LOPROX(R) (ciclopirox), LUSTRA(R) (hydroquinone), LUSTRA-AF(R) (hydroquinone) with sunscreen, ALUSTRA(TM) (hydroquinone) with retinol, PLEXION(R) (sodium sulfacetamide/sulfur), PLEXION TS(TM) (sodium sulfacetamide/sulfur), TRIAZ(R) (benzoyl peroxide), OMNICEF(R) (cefdinir), ORAPRED(R) (prednisolone sodium phosphate), OVIDE(R) (malathion), LIDEX(R) (fluocinonide), SYNALAR(R) (fluocinolone acetonide) and TOPICORT(R) (desoximetasone); the over-the-counter brands ESOTERICA(R); and BUPHENYL(R) (sodium phenylbutyrate), a prescription product indicated in the treatment of Urea Cycle Disorder.
Except for historical information, this press release includes "forward-looking statements" within the meaning of the Securities Litigation Reform Act. All statements included in this press release that address activities, events or developments that Medicis expects, believes or anticipates will or may occur in the future are forward-looking statements. This includes earnings estimates, future financial performance and other matters. These statements are based on certain assumptions made by Medicis based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. The Company cannot validate its assumptions of the full impact on its business of the approval of competitive generic versions of the Company's core brands, or any future competitive product approvals that may affect the Company's brands. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Medicis. Any such projections or statements include the current views of Medicis with respect to future events and financial performance. No assurances can be given, however, that these events will occur or that such results will be achieved and there are a number of important factors that could cause actual results to differ materially from those projected, including the ability of Medicis to successfully integrate Ascent's operations, the ability to realize anticipated synergies and benefits of the transaction, the risks and uncertainties normally incident to the pharmaceutical industry, dependence on sales of key products, the uncertainty of future financial results and fluctuations in operating results, dependence on Medicis' strategy including the uncertainty of license payments and/or other payments due from third parties, the timing and success of new product introductions and other risks described from time to time in Medicis' SEC filings including its Annual Report on Form 10-K for the year ended June 30, 2001. Forward-looking statements represent the judgment of Medicis' management as of the date of this release, and Medicis disclaims any intent or obligation to update any forward-looking statements.
NOTE: Full prescribing information for any Medicis prescription product is available by contacting the Company. OMNICEF(R)is a registered trademark of Abbott Laboratories, Inc. under a license from Fujisawa Pharmaceutical Co., Ltd. All other marks (or brands) and names are the property of Medicis Pharmaceutical Corporation or its affiliates.
Medicis Pharmaceutical Corporation
(in thousands, except per share data)
Summary Statements of Operations
--------------------------------
(unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
--------------------- -------------------
2001 2000 2001 2000
--------------------- -------------------
Revenues $ 53,042 $ 41,367 $ 98,556 $ 81,621
Cost of sales 9,027 7,791 16,668 15,271
-------- -------- -------- --------
Gross profit 44,015 33,576 81,888 66,350
Operating expenses:
Selling, general
and administrative 19,669 14,332 35,944 29,495
Research and development 1,841 1,441 3,285 20,667(a)
Depreciation and
amortization 2,008 2,054 3,924 3,994
-------- -------- -------- --------
Total operating
expenses 23,518 17,827 43,153 54,156
Purchased in-process
research & development 6,217 -- 6,217 --
-------- -------- -------- --------
Operating income 14,280 15,749 32,518 12,194
Interest income, net 2,346 3,998 4,894 8,355
Income tax expense (7,995) (7,010) (15,000) (7,295)
-------- -------- -------- --------
Net income $ 8,631 $ 12,737 $ 22,412 $ 13,254
======== ======== ======== ========
Basic net income per
common share $0.28 $0.42 $0.74 $0.44
===== ===== ===== =====
Diluted net income per
common share $0.27 $0.40 $0.71 $0.42
===== ===== ===== =====
Shares used in basic net
income per common share 30,374 30,274 30,314 29,959
Shares used in diluted
net income per common
share 31,744 32,083 31,555 31,856
Cash flow from operations 19,784 16,177 38,585 25,442
----------------------------------------------------------------------
Absent special charge for
in-process R&D of $6,217 in
fiscal 2002 and tax-effected
adjustment for special R&D
charge of $11,473 in fiscal
2001:
Net income $ 14,848 $ 12,737 $ 28,629 $ 24,727
======== ======== ======== ========
Basic net income per
common share $0.49 $0.42 $0.94 $0.83
===== ===== ===== =====
Diluted net income
per common share $0.47 $0.40 $0.91 $0.78
===== ===== ===== =====
----------------------------------------------------------------------
(a) Reported R&D expenses include special charge of $17,788 relating to
research collaboration
Balance Sheets
--------------
At December 31, 2001 At June 30, 2001
-------------------- ----------------
(unaudited)
Assets
Cash, cash equivalents & short-term
investments $299,576 $334,157
Accounts receivable, net 40,131 36,526
Inventory, net 10,339 8,750
Other current assets 25,615 19,446
-------- --------
Total current assets 375,661 398,879
Property and equipment, net 2,144 1,964
Deferred tax asset 23,852 --
Intangible assets, net 179,342 147,277
Other assets 60 576
-------- --------
Total assets $581,059 $548,696
======== ========
Liabilities and stockholders' equity
Current liabilities $ 37,575 $ 40,410
Deferred tax liabilities 5,616 4,832
Stockholders' equity 537,868 503,454
-------- --------
Total liabilities and
stockholders' equity $581,059 $548,696
======== ========
Working capital $338,086 $358,469
======== ========
Contacts: Medicis Pharmaceutical Corporation, Scottsdale Libby Ivy, 602/808-3854 www.medicis.com