Medicis Reports Fourth Quarter and Year-End Fiscal 2002 Financial Results
SCOTTSDALE, Ariz.--Aug. 27, 2002--Medicis (NYSE:MRX) today announced fiscal 2002 net revenue growth of 27% to $212.8 million with net income of $61.4 million, or $1.96 per diluted share, representing 18% growth in net income and 19% growth in earnings per share, or EPS, as compared to the prior year. These net income and EPS results are absent a $5.2 million tax-effected special charge reported in the fourth quarter associated with a research and development collaboration and a $6.2 million charge reported in the second quarter for purchased in-process research and development associated with the Company's merger with Ascent Pediatrics. Net income including the special charges associated with the research collaboration and purchased in-process research and development was $50.0 million, or $1.59 per diluted share. In fiscal 2001, Medicis reported net revenues of $167.8 million with net income of $51.9 million, or $1.64 per diluted share, absent a tax-effected special charge of $11.5 million associated with a research and development collaboration. Net income including the special charge associated with the 2001 research collaboration was $40.4 million, or $1.28 per diluted share.
Medicis also reported fourth quarter fiscal 2002 net revenue growth of 31% to $57.6 million with net income of $16.9 million, or $0.55 per diluted share, representing 22% growth in net income and 25% growth in EPS as compared to the same period in the prior year, absent a tax-effected special charge of $5.2 million in the fourth quarter associated with a research and development collaboration. Including the special charge for a research and development collaboration in the fourth quarter of fiscal 2002, net income was $11.7 million, or $0.38 per diluted share. Fiscal 2001 fourth quarter net revenues were $43.8 million with net income of $13.9 million, or $0.44 per diluted share.
In the 2002 fourth quarter and fiscal year, revenues increased due to growth in several of the Company's eight core brands, including LOPROX(R) (ciclopirox), OMNICEF(R) (cefdinir), ORAPRED(R) (prednisolone sodium phosphate) and PLEXION(R) (sodium sulfacetamide/sulfur). 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 63% year-over-year and the Company's gross profit margins increased 1.5 percentage points, primarily due to changes in the Company's product mix. Selling, general and administrative expenses increased 0.8 percentage points, primarily due to the 40% increase in the number of Company sales representatives and associated expenses, which related primarily to the Ascent Pediatrics transaction and the Company's expansion into the pediatric market. Research and development expense for the fourth quarter increased due to the special charge related to a dermatological research and development collaboration, which was reported in the fourth quarter of fiscal 2002.
"We are pleased to announce the completion of another strong quarter and fiscal year," said Jonah Shacknai, Chairman and Chief Executive Officer of Medicis. "Fiscal 2002 was another noteworthy year for Medicis with the achievement of numerous significant milestones. The successful entrance into the specialty of pediatrics provided a foundation of growth for our core dermatologic brands. Our research and development organization advanced eleven significant development projects through various stages in the development process and delivered three new products to market, PLEXION TS(TM), PLEXION SCT(TM) and ALUSTRA(TM). As we progress into Fiscal 2003, we remain focused on the growth of our core brands, the strength of our research and development pipeline and the continuous expansion of our universe of products, specialties and therapeutic categories."
The Company's previously released fiscal year 2003 revenue and earnings guidance remains unchanged and is as follows: fiscal year 2003 revenues of approximately $244 million and earnings per share guidance of approximately $2.24; first quarter fiscal year 2003 (for the quarter ending September 30, 2002) revenue guidance of approximately $58 million and earnings per share guidance of approximately $0.53; second quarter fiscal year 2003 (for the quarter ending December 31, 2002) revenue guidance of approximately $59 million and earnings per share guidance of approximately $0.53; third quarter fiscal 2003 (for the quarter ending March 31, 2003) revenue guidance of approximately $62 million and earnings per share guidance of approximately $0.56; and fourth quarter fiscal year 2003 (for the quarter ending June 30, 2003) revenue guidance of approximately $65 million and earnings per share guidance of approximately $0.62. 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, Form S-3 and other publicly filed documents. 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.
Medicis is a specialty pharmaceutical company and a leading independent pharmaceutical company in the United States focusing primarily on the treatment of dermatological, pediatric and podiatric 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 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) Cleanser (sodium sulfacetamide/sulfur), PLEXION TS(TM) (sodium sulfacetamide/sulfur), PLEXION SCT(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 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 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. 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
--------------------------------
Three Months Ended Year Ended
June 30, June 30,
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2002 2001 2002 2001
--------------------- ---------------------
Revenues $57,628 $43,834 $212,807 $167,802
Cost of sales 9,700 7,955 35,765 30,697
------- ------- ------- -------
Gross profit 47,928 35,879 177,042 137,105
Operating expenses:
Selling, general and
administrative 19,826 15,227 77,314 59,508
Research and development 9,912(b) 3,086 15,132(b) 25,515(a)
Depreciation and
amortization 2,036 2,228 7,928 8,261
------- ------- ------- -------
Total operating
expenses 31,774 20,541 100,374 93,284
Purchased in-process
research & development - - - - - - 6,217 - - -
------- ------- ------- -------
Operating income 16,154 15,338 70,451 43,821
Interest income, net 1,365 3,283 8,533 15,504
Income tax expense (5,782) (4,758) (28,960) (18,905)
------- ------- ------- -------
Net income $11,737 $13,863 $50,024 $40,420
======= ======= ======= =======
Basic net income per
common share $0.39 $0.46 $1.65 $1.34
===== ===== ===== =====
Diluted net income per
common share $0.38 $0.44 $1.59 $1.28
===== ===== ===== =====
Shares used in basic net
income per common share 29,798 30,209 30,268 30,134
Shares used in diluted
net income per common
share 30,734 31,492 31,405 31,694
Cash flow from operations $20,174 $23,914 $73,542 $71,120
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Net income (GAAP) $11,737 $13,863 $50,024 $40,420
Special charges for R&D
(tax-effected) 5,159 - - - 5,159 11,473
In-process research &
development - - - - - - 6,217 - - -
------- ------- ------- -------
Net income prior to
special charges $16,896 $13,863 $61,400 $51,893
======= ======= ======= =======
Basic net income per
common share $0.57 $0.46 $2.03 $1.72
===== ===== ===== =====
Diluted net income
per common share $0.55 $0.44 $1.96 $1.64
===== ===== ===== =====
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(a) Reported R&D expenses include special charge of $17,788 relating
to a research collaboration
(b) Reported R&D expenses include special charge of $7,700 relating to
a research collaboration
Balance Sheets
--------------
At June 30, 2002 At June 30, 2001
---------------- ----------------
Assets
Cash, cash equivalents & short-term
investments $577,576 $334,157
Accounts receivable, net 45,053 38,153
Inventory, net 11,955 8,750
Other current assets 23,889 19,131
-------- --------
Total current assets 658,473 400,191
Property and equipment, net 2,605 1,964
Deferred tax asset 17,570 - - -
Intangible assets, net 185,193 147,277
Other assets 12,432 576
-------- --------
Total assets $876,273 $550,008
======== ========
Liabilities and stockholders' equity
Current liabilities $ 47,214 $ 41,722
Contingent convertible senior notes 400,000 - - -
Deferred tax liabilities - - - 4,832
Stockholders' equity 429,059 503,454
-------- --------
Total liabilities and stockholders'
equity $876,273 $550,008
======== ========
Working capital $611,259 $358,469
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Contacts: Medicis, Scottsdale Libby Ivy, 602/808-3854 www.medicis.com