Medicis Reports Second Quarter Fiscal 2003 Financial Results
SCOTTSDALE, Ariz.--Jan. 22, 2003--Medicis (NYSE:MRX) today announced second quarter fiscal 2003 net revenues of $59.5 million with net income of $15.3 million, or $0.55 per diluted share, compared to second quarter fiscal 2002 net revenues of $53.0 million with net income of $14.8 million, or $0.47 per diluted share, absent a special charge of $6.2 million for purchased in-process research and development associated with the Ascent Pediatrics transaction reported in the second quarter of fiscal 2002. Including the special charge 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.
Second quarter fiscal 2003 net revenue increased primarily as a result of net overall growth in sales of the Company's core brands. The Company's core brands represented approximately 86% of total product sales on a collective basis and increased approximately 30% in total reported prescription volume. At the end of the second quarter, the Company's core brands included DYNACIN(R), LOPROX(R), LUSTRA(R), OMNICEF(R), ORAPRED(R), PLEXION(R), TRIAZ(R) and OVIDE(R). The Company's gross profit margin for the second quarter of fiscal 2003 was 84.4% compared to 83.0% for the second quarter of fiscal 2002.
For the first six months of fiscal 2003, Medicis reported net revenues of $118.3 million with net income of $30.6 million, or $1.09 per diluted share, absent a $3.4 million tax-effected special charge reported in the first quarter of fiscal 2003 associated with a research and development collaboration. Including the special charge of $3.4 million, Medicis reported net income of $27.2 million, or $0.97 per diluted share for the first six months of fiscal 2003. Comparatively, in the first half of fiscal 2002, Medicis reported net revenues of $98.6 million with net income of $28.6 million, or $0.91 per diluted share, absent a special charge of $6.2 million for purchased in-process research and development associated with the Ascent Pediatrics transaction reported in the second quarter of fiscal 2002. Including the special charge of $6.2 million for purchased in-process research and development associated with the Ascent Pediatrics transaction, Medicis reported net income of $22.4 million, or $0.71 per diluted share in the first six months of fiscal 2002.
For the first six months of fiscal 2003, net revenue increased primarily as a result of net overall growth in sales of the Company's core brands. In the first half of fiscal 2003, the Company's core brands represented approximately 86% of total product sales and increased approximately 31% in total reported prescription volume. Cash flow from operations for the first half of fiscal 2003 was $41.8 million, compared to $38.6 million for the second half of fiscal 2002. The Company's gross profit margin for the first half of fiscal 2003 was 84.4% compared to 83.1% for the first half of fiscal 2002.
Cash flow from operations for the second quarter of fiscal 2003 and for the six months ended December 31, 2002 were $7 million and $42 million, respectively, or an average quarterly cash flow from operations of approximately $21 million, as projected by the Company in the first quarter of fiscal 2003. The Company's first quarter fiscal 2003 cash flows from operations were atypically high primarily due to a significant accounts receivable prepayment and other favorable working capital fluctuations. The Company continues to anticipate cash flows from operations for fiscal 2003 to average on a quarterly basis between $20 million and $22 million.
"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. "As we continue to enjoy success in the dermatologic, pediatric and podiatric markets, we remain focused on expanding sales of our core brands, pursuing interesting business development opportunities and supplementing our research and development pipeline with additional therapies of benefit to our universe of physicians. Evidenced by increasing prescription volume in many of the Company's core brands, our sales and marketing organization remains steadfast in their focus by promoting brands which have the potential to provide meaningful contributions to the future growth of Medicis."
Medicis previously released fiscal 2003 revenue guidance of approximately $244 million and earnings guidance of $2.26. The impact of the second quarter's results improve the fiscal 2003 guidance to approximately $245 million in revenues and $2.27 in diluted earnings per share, excluding special charges. Based upon information available currently to the Company, its guidance is as follows:
Fiscal Year 2003
ending June 30, 2003
(in millions, except per share amounts)
First Second Third Fourth Fiscal
Quarter Quarter Quarter Quarter Year
(9/30/02)(12/31/02)(3/31/03) (6/30/03) 2003
Actual Actual Estimated Estimated Estimated
-------- -------- --------- --------- ---------
EPS guidance
prior to beginning
of fiscal year $0.53 $0.53 $0.56 $0.62 $2.24
Current EPS objectives
excluding special
charge of $5.4
million in 1Q '03 $0.54 $0.55 $0.56 $0.62 $2.27
Current EPS objectives
including special
charge of $5.4
million in 1Q '03 $0.42 $0.55 $0.56 $0.62 $2.15
At the time of this disclosure, Medicis believes these 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 most recent annual report on Form 10-K, its Form S-3 registration statement and other filed documents with the Securities and Exchange Commission. 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, risks associated with significant competition within the Company's industry, 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. Additionally, Medicis may acquire and/or license products or technologies from third parties to enter into new strategic markets. The Company periodically makes up-front, non-refundable payments to third parties for research and development work which has been completed and periodically makes additional non-refundable payments for the achievement of various milestones. There can be no certainty which periods these potential payments could be made, nor if any payments such as these will be made at all. The above estimated future guidance does not include the potential payments associated with any such transactions, except for the first payment of the Dow transaction previously announced. Due to the uncertainty of the timing of the completion of the specified Dow development milestones and their associated payments, the Company has not adjusted its fiscal 2003 quarterly guidance for the inclusion of the possible payment of $8.8 million, which could occur as early as the second half of fiscal 2003.
Medicis is the leading independent specialty pharmaceutical company in the United States focusing primarily on the treatment of dermatological, pediatric and podiatric conditions. Medicis has leading prescription products in a number of therapeutic categories, including acne, asthma, eczema, fungal infections, hyperpigmentation, photoaging, psoriasis, rosacea, seborrheic dermatitis and skin and skin-structure infections. The Company's products have earned wide acceptance by both physicians and patients due to their clinical effectiveness, high quality and cosmetic elegance.
The Company's products include the prescription brands DYNACIN(R) (minocycline HCl), LOPROX(R) (ciclopirox), LUSTRA(R) (hydroquinone), LUSTRA-AF(R) (hydroquinone) with sunscreen, ALUSTRA(R) (hydroquinone) with retinol, OMNICEF(R) (cefdinir), ORAPRED(R) (prednisolone sodium phosphate), PLEXION(R) Cleanser (sodium sulfacetamide/sulfur), PLEXION TS(R) (sodium sulfacetamide/sulfur), PLEXION SCT(R) (sodium sulfacetamide/sulfur), TRIAZ(R) (benzoyl peroxide), LIDEX(R) (fluocinonide), and SYNALAR(R) (fluocinolone acetonide); the over-the-counter brand ESOTERICA(R); and BUPHENYL(R) (sodium phenylbutyrate), a prescription product indicated in the treatment of Urea Cycle Disorder. For more information about Medicis, please visit the Company's website at www.medicis.com.
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 to realize anticipated synergies and benefits of the Ascent 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 development by Medicis or third parties, 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, 2002. In addition, Medicis recently sold $400 million of 2.5% Contingent Convertible Notes Due 2032. There can be no assurance as to when or if any of the Notes will be converted, and what impact the increase in the number of shares outstanding will have on our results of operations. 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 or its Affiliates.
Medicis
(in thousands, except per share data)
Summary Statements of Operations
--------------------------------
(unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
-------------------- ------------------
2002 2001 2002 2001
-------------------- ------------------
Revenues $59,514 $53,042 $118,259 $98,556
Cost of sales 9,307 9,027 18,465 16,668
------- ------- -------- -------
Gross profit 50,207 44,015 99,794 81,888
Operating expenses:
Selling, general and
administrative 22,325 19,669 43,931 35,944
Research and development 2,288 1,841 10,163(a) 3,285
Depreciation and
amortization 2,168 2,008 4,174 3,924
------- ------- -------- -------
Total operating
expenses 26,781 23,518 58,268 43,153
Purchased in-process
research & development ---- 6,217 ---- 6,217
------- ------- -------- -------
Operating income 23,426 14,280 41,526 32,518
Interest income, net 114 2,346 291 4,894
Income tax expense (8,239) (7,995) (14,636) (15,000)
------- ------- -------- -------
Net income $ 15,301 $ 8,631 $ 27,181 $ 22,412
========= ======= ======== ========
Basic net income per common
share $0.57 $0.28 $1.00 $0.74
===== ===== ===== =====
Diluted net income per common
share $0.55 $0.27 $0.97 $0.71
===== ===== ===== =====
Shares used in basic net
income per common share 27,012 30,374 27,248 30,314
Shares used in diluted net
income per common share 27,946 31,744 28,135 31,555
------------------------------------------------------------ --------
Net income (GAAP) $ 15,301 $ 8,631 $ 27,181 $ 22,412
Special charge for research
& development (tax-
effected) ---- ---- 3,402 ----
Special charge for in-
process research &
development ---- 6,217 ---- 6,217
------- ------- ------- -------
Net income absent special
charge $ 15,301 $ 14,848 $ 30,583 $ 28,629
======== ======== ======== ========
Basic net income per
common share $0.57 $0.49 $1.12 $0.94
===== ===== ===== =====
Diluted net income
per common share $0.55 $0.47 $1.09 $0.91
===== ===== ===== =====
----------------------------------------------------------------------
(a) Reported R&D expenses include a special charge of $5.4 million
relating to a research & development collaboration
Balance Sheets
--------------
At December 31, 2002 At June 30, 2002
-------------------- -----------------
(unaudited)
Assets
Cash, cash equivalents &
short-term investments $579,072 $577,576
Accounts receivable, net 47,975 45,054
Inventory, net 12,316 11,955
Other current assets 25,551 23,888
------- -------
Total current assets 664,914 658,473
Property and equipment, net 2,507 2,605
Other assets 213,036 215,195
------- -------
Total assets $880,457 $876,273
======== ========
Liabilities and stockholders'
equity
Current liabilities $49,612 $47,214
Contingent convertible
senior notes 400,000 400,000
Stockholders' equity 430,845 429,059
------- -------
Total liabilities and
stockholders' equity $880,457 $876,273
======== ========
Working capital $615,302 $611,259
======== ========
Contacts: Medicis, Scottsdale Libby Ivy, 602/808-3854