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Obagi Medical Products Inc. (OMPI) filed Quarterly Report for the period ended 2011-09-30.
Obagi Medical Products Inc. has a market cap of $180.8 million; its shares were traded at around $9.72 with a P/E ratio of 13.3 and P/S ratio of 1.6.
This is the annual revenues and earnings per share of OMPI over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of OMPI.
Highlight of Business Operations:
Physician-dispensed sales increased $0.5 million, to $27.2 million during the three months ended September 30, 2011, as compared to $26.7 million during the three months ended September 30, 2010. This increase was primarily due to an increase of $0.5 million in the Elasticity product category. The growth in our Elasticity sales was primarily due to the launch of ELASTILash in October 2010, which contributed $0.2 million, and the increase in units sold related to our annual fall purchase with purchase promotion. In addition, we saw growth in the Vitamin C and Other product categories, which accounted for $0.2 million and $0.1 million, respectively, in sales growth during the three months ended September 30, 2011. These increases were partially offset by a decrease in the Therapeutic category of $0.3 million, primarily due to a decline in sales of our CLENZIderm product line. Licensing fees decreased by $0.3 million due primarily to lower sales from our Japanese partner, Rohto, during the three months ended September 30, 2011 as compared to the same period last year. We currently cannot assess the ongoing impact the March 2011 Japanese earthquake and tsunami may have on our future licensing revenues.Selling, general and administrative. Selling, general and administrative expenses consist primarily of salaries and other personnel-related costs, professional fees, insurance costs, stock-based compensation, depreciation and amortization not attributable to products sold, warehousing costs, advertising, travel expenses and other selling expenses. Selling, general and administrative expenses decreased $3.0 million to $15.1 million during the three months ended September 30, 2011, as compared to $18.1 million for the three months ended September 30, 2010. This decrease was primarily due to the following: (i) a $2.3 million decrease in litigation and termination costs related to Dr. Obagi; (ii) a $0.4 million decrease in marketing expenses; (iii) a $0.2 million decrease in promotions and training expenses; (iv) a $0.2 million decrease in expenses related to the secondary offering completed in November 2010; (v) a $0.1 million decrease in rent expense due to the termination of the Agreement with Dr. Obagi in September 2010; (vi) a $0.1 million decrease in bad debt expense; (vii) a $0.1 million decrease in costs related to the transferring of manufacturing methods to vendors; and (viii) a $0.1 million decrease in depreciation and amortization. These decreases were partially offset by: (i) a $0.2 million increase in professional fees, primarily related to consultants for our operations group; (ii) $0.1 million in expenses related to the Texas regulatory matter; and (iii) a $0.2 million increase in other expenses. As a percentage of net sales, selling, general and administrative expenses in the three months ended September 30, 2011 were 54%, as compared to 65% for the three months ended September 30, 2010.
Physician-dispensed sales increased $1.2 million, to $80.4 million during the nine months ended September 30, 2011, as compared to $79.2 million during the nine months ended September 30, 2010. We experienced net increases in the following product categories: (i) an increase in the Other category of $1.1 million; (ii) a $0.9 million increase in Nu-Derm sales; and (iii) an increase in Elasticity sales of $0.7 million, which was primarily attributable to the launch of our ELASTILash product in October 2010. The growth in the Other category was principally attributable to the launch of Blue Peel RADIANCE in January 2011, which contributed $1.3 million, partially offset by $0.2 million in sales returns related to Texas. The growth in our Nu-Derm sales was primarily due to the launch of Nu-Derm Sun Shield SPF 50 in January 2011, which contributed $2.2 million; partially offset by $1.1 million in sales returns related to Texas.
Selling, general and administrative. Selling, general and administrative expenses increased $5.9 million to $56.7 million during the nine months ended September 30, 2011, as compared to $50.8 million for the nine months ended September 30, 2010. This increase was primarily due to the following: (i) a $3.7 million increase in costs associated with the litigation and settlement of matters related to Dr. Obagi (see Note 8 to our Unaudited Condensed Consolidated Financial Statements); (ii) $0.9 million in expenses related to the Texas regulatory matter, which includes costs for coordinating the return of product from our customers residing in Texas, as well as legal and other related costs; (iii) a $0.9 million increase in professional fees primarily related to consultants for our operations group; (iv) a $0.7 million increase in other marketing principally due to increased efforts in market research and consumer engagement initiatives; (v) $0.5 million in impairment charges (see “Impairment of License” discussion under “Overview and Recent Developments”); (vi) a $0.5 million increase in promotions and training expenses; and (vii) a $0.4 million increase in headcount-related expenses due to an increase in marketing and administrative support headcount. These increases were partially offset by: (i) a $1.1 million decrease in bad debt expense, due to the reserve on a non-performing international distributor of $0.5 million during the nine months ended September 30, 2010, and due to an improvement in collections, reducing the number of accounts written-off; (ii) a $0.2 million decrease in expenses related to the secondary offering completed in November 2010; (iii) a $0.1 million decrease in quality and packaging related expenses; (iv) a $0.1 million decrease in advertising expenses; (v) a $0.1 million decrease in rent expense due to the termination of the Agreement with Dr. Obagi in September 2010; and (vi) a $0.1 million decrease in depreciation and amortization. As a percentage of net sales, selling, general and administrative expenses in the nine months ended September 30, 2011 were 68%, as compared to 62% for the nine months ended September 30, 2010.
Research and development. Research and development decreased $2.1 million to $1.3 million for the nine months ended September 30, 2011, as compared to $3.5 million for the nine months ended September 30, 2010. The decrease was primarily due to: (i) a $0.9 million decrease in expenses related to the development of line extensions and reformulations of existing products; (ii) a $0.7 million decrease in expenses related to the development of new products; and (iii) a $0.5 million decrease in accelerated advisory and related fees pursuant to the termination of the Agreement with Dr. Obagi in September 2010. The decline in our research and development costs is primarily due to the timing of our research and development activities and we have not reduced, nor do we intend to reduce, our long-term emphasis on research and development. As a percentage of net sales, research and development costs were 2% as compared to 4% for the nine months ended September 30, 2011 and 2010, respectively.
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