Medicis Reports First Quarter Fiscal 2003 Financial Results
SCOTTSDALE, Ariz.--Oct. 17, 2002--Medicis (NYSE:MRX) today announced first quarter fiscal 2003 net revenue growth of 29% to $58.7 million with net income of $15.3 million, or $0.54 per diluted share, absent a $3.4 million tax-effected special charge reported in the first quarter associated with a research and development collaboration. Net income including the special charge associated with the research collaboration was $11.9 million, or $0.42 per diluted share. In the first quarter of fiscal 2002, Medicis reported net revenues of $45.5 million with net income of $13.8 million, or $0.44 per diluted share.
In the first quarter of fiscal 2003, revenues increased primarily due to growth in several of the Company's eight core brands, including LOPROX(R) (ciclopirox), PLEXION(R) (sodium sulfacetamide/sulfur) and TRIAZ(R) (benzoyl peroxide). The Company's eight core brands include: DYNACIN(R) (minocycline HCl), LOPROX(R) (ciclopirox), LUSTRA(R) (hydroquinone), OMNICEF(R) (cefdinir), ORAPRED(R) (prednisolone sodium phosphate), OVIDE(R) (malathion), PLEXION(R) (sodium sulfacetamide/sulfur) and TRIAZ(R) (benzoyl peroxide). Prescription volume growth for the Company's eight core brands increased 49% in total prescriptions and 69% in new prescriptions first quarter 2003 over first quarter 2002. Additionally, the Company's gross profit margins increased 1.2 percentage points, primarily due to changes in the Company's product mix.
"We are pleased to announce another strong quarter's growth in revenues and earnings," said Jonah Shacknai, Chairman and Chief Executive Officer of Medicis. "Impressive prescription trends for several of the Company's core dermatologic products have resulted from intensive efforts of our sales and marketing organization. We have also received encouraging clinical data on several key development projects that continue to progress toward commercialization. We are also pleased by the new collaborative relationships formed with several highly regarded organizations whose development expertise we expect to complement the strength of our pipeline."
The Company is raising its fiscal year 2003 earnings per share guidance by $0.02. 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 Estimated Estimated Estimated Estimated
--------- --------- --------- --------- ---------
Current revenue
objectives $58.7 $59.0 $62.0 $65.0 $244.7
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 $0.54 $0.56 $0.62 $2.26
Current EPS objectives
including special
charge of $5.4 million
in 1Q '03 $0.42 $0.54 $0.56 $0.62 $2.13
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.
On October 16, 2002, Joseph P. Cooper, Executive Vice President, Business Development, tendered his resignation to the Company. Mr. Cooper expects to remain with the Company through the end of the month before departing to assume the role of Chief Executive Officer and Director of a privately held, Arizona-based biotechnology company. During this transition period, Jonah Shacknai, Chairman and Chief Executive Officer of Medicis and Mark A. Prygocki, Sr., Executive Vice President, Chief Financial Officer of Medicis, will assume business development responsibilities previously managed by Mr. Cooper. In addition, the Company's Executive Committee has always been, and will continue to maintain an active role in the assessment, pursuit and execution of the numerous business development opportunities available to the Company.
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, head lice, 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), OVIDE(R) (malathion), 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), SYNALAR(R) (fluocinolone acetonide) and TOPICORT(R) (desoximetasone); the over-the-counter brand 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 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 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
September 30,
----------------------
2002 2001
----------------------
Revenues $58,745 $45,514
Cost of sales 9,158 7,641
-------- --------
Gross profit 49,587 37,873
Operating expenses:
Selling, general and administrative 21,605 16,275
Research and development 7,876(a) 1,444
Depreciation and amortization 2,006 1,916
-------- --------
Total operating expenses 31,487 19,635
-------- --------
Operating income 18,100 18,238
Interest income, net 176 2,548
Income tax expense (6,397) (7,005)
-------- --------
Net income $11,879 $13,781
======== ========
Basic net income per common share $0.43 $0.46
===== =====
Diluted net income per common share $0.42 $0.44
===== =====
Shares used in basic net income per
common share 27,483 30,253
Shares used in diluted net income
per common share 28,336 31,442
Cash flow from operations $34,691 $18,801
----------------------------------------------------------------------
Net income (GAAP) $11,879 $13,781
Special charge for R&D (tax-effected) 3,402 - - -
-------- --------
Net income after special charge $15,281 $13,781
======== ========
Basic net income per common share $0.56 $0.46
===== =====
Diluted net income per common share $0.54 $0.44
===== =====
----------------------------------------------------------------------
(a) Reported R&D expenses include a special charge of $5.4 million
relating to a research & development collaboration
Balance Sheets
--------------
At September 30, 2002 At June 30, 2002
--------------------- ----------------
(unaudited)
Assets
Cash, cash equivalents &
short-term investments $589,373 $577,576
Accounts receivable, net 39,784 45,054
Inventory, net 11,244 11,955
Other current assets 25,727 23,888
-------- --------
Total current assets 666,128 658,473
Property and equipment, net 2,558 2,605
Deferred tax asset 16,557 17,570
Intangible assets, net 193,445 185,193
Other assets 11,874 12,432
-------- --------
Total assets $890,562 $876,273
======== ========
Liabilities and stockholders'
equity
Current liabilities $ 59,671 $ 47,214
Contingent convertible
senior notes 400,000 400,000
Stockholders' equity 430,891 429,059
-------- --------
Total liabilities and
stockholders' equity $890,562 $876,273
======== ========
Working capital $606,457 $611,259
======== ========
Contacts: Medicis, Scottsdale Libby Ivy, 602/808-3854 www.medicis.com