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HiTech Pharmacal Co. Inc. Reports Operating Results (10-Q)

December 08, 2011 | About:
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10qk

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HiTech Pharmacal Co. Inc. (HITK) filed Quarterly Report for the period ended 2011-10-31.

Hitech Pharmacal Co. Inc. has a market cap of $501.4 million; its shares were traded at around $39.28 with a P/E ratio of 10.7 and P/S ratio of 2.6.

Highlight of Business Operations:

Net sales of ECR Pharmaceuticals, which sells branded prescription products, declined due to the discontinuation of Lodrane® extended release antihistamines. On March 2, 2011, the FDA indicated in its MedWatch publication that the FDA removed approximately 500 currently marketed cough/cold and allergy related products. Three of these were marketed by ECR Pharmaceuticals under the brand name Lodrane®. ECR Pharmaceuticals stopped shipping these products as of August 31, 2011. Sales of Lodrane® products amounted to approximately $400,000 and $4,100,000 for the three months ended October 31, 2011 and October 31, 2010, respectively. Increased sales of Bupap® and Dexpak® and sales from newly acquired Cephadyn®, Orbivan®, Tussicaps® and Zolvit® partially offset the decrease in sales for the quarter.

Net sales of Hi-Tech generic pharmaceutical products, which include some private label contract manufacturing, increased due to an increase in sales of Fluticasone Propionate nasal spray. Sales of these products increased to $49,200,000 from $29,000,000 in the comparable period as the Company sold more units. Sales of Dorzolamide with Timolol ophthalmic solution and Dorzolamide ophthalmic solution dropped to $11,000,000 in the period versus $16,000,000 in the comparable period due to lower pricing for the products and slightly lower unit volume. The Company temporarily halted sales of several unapproved products in late June 2010, so the six months ended October 31, 2011 did not include any sales of these products. The Company also benefited from the recent launch of Gabapentin oral solution, launched in February 2011, Ranitidine oral solution, launched in May 2011, Levofloxacin oral solution, launched in June 2011 and Lidocaine sterile jelly, launched in September 2011. Increased sales of the Companys Clobetasol line of topical products and Buprenorphine also contributed to the results.

Net Sales of ECR Pharmaceuticals, which sells branded prescription products, declined due to the discontinuation of Lodrane® extended release antihistamines. On March 2, 2011, the FDA indicated in its MedWatch publication that the FDA removed approximately 500 currently marketed cough/cold and allergy related products. Three of these were marketed by ECR Pharmaceuticals under the brand name Lodrane®. ECR Pharmaceuticals stopped shipping these products as of August 31, 2011. Sales of Lodrane® products amounted to approximately $2,800,000 and $6,800,000 for the six months ended October 31, 2011 and October 31, 2010, respectively. Increased sales of Bupap® and Dexpak® and sales from newly acquired Cephadyn®, Orbivan®, Tussicaps® and Zolvit® partially offset the decrease in sales for the quarter.

The Company believes that its financial resources consisting of current working capital and anticipated future operating revenue will be sufficient to enable it to meet its working capital requirements for at least the next 12 months. Additionally, the Company has a $10,000,000 revolving line of credit with JPMorgan Chase which remains undrawn, and an additional $3,224,000 of the equipment financing line from JPMorgan Chase. The revolving line of credit agreement expires May 27, 2013, while borrowings under the equipment line mature October 6, 2016.

Historically, the months of September through March account for a greater portion of the Companys sales than the other months of the fiscal year. However, this sales pattern is unlikely to continue as the Company sells fewer cough and cold products, more allergy products and more products without seasonal fluctuations. Even with these changes in product mix, period-to-period comparisons within the same fiscal year are not necessarily meaningful and should not be relied on as indicative of future results.

Read the The complete Report

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