Forest Laboratories Inc. Reports Operating Results (10-Q)
Forest Laboratories, Inc. has a market cap of $8.91 billion; its shares were traded at around $33.34 with a P/E ratio of 11.4 and P/S ratio of 1.9. Forest Laboratories, Inc. had an annual average earning growth of 9.7% over the past 10 years. GuruFocus rated Forest Laboratories, Inc. the business predictability rank of 4-star.
Highlight of Business Operations:Total net revenues decreased to $821.1 million for the three months ended June 30, 2012 as compared to $1.15 billion for the same period last year primarily due to a decrease in Lexapro® sales resulting from the expiration of its market exclusivity in March, partially offset by increases in sales of our currently promoted products. Our next generation products, Bystolic®, Savella®, Teflaro®, Daliresp® and Viibryd®, totaled $200 million in sales for the current quarter, representing growth of 63% over the year ago period. Lexapro s market exclusivity expired in March 2012 and Lexapro now faces generic competition which, as expected, has resulted in a significant reduction in sales as compared with the same period last year. Net income decreased 78.6% in the current quarter as compared to the same period last year primarily due to the expiration of Lexapro s market exclusivity as well as the impact in the current quarter of post-launch promotional spending for Daliresp and Viibryd and pre-approval commercial costs associated with aclidinium (Tudorza™ Pressair™) and linaclotide.
Net sales for the three-month period ended June 30, 2012 decreased $352.4 million or 31.9% as compared with the same period last year primarily due to a decrease in Lexapro sales of $475.7 million resulting from the expiration of its market exclusivity in March, partially offset by increases in our promoted products Namenda®, Bystolic, Teflaro, Viibryd and Daliresp.
Bystolic (nebivolol), a beta-blocker indicated for the treatment of hypertension, grew 38.2%, achieving sales of $107.8 million in the current quarter, an increase of $29.8 million as compared to $78.0 million for the quarter ended June 30, 2011 of which $18.7 million was due to increased sales volume and $11.1 million was due to price increases.
Contract revenue for the current quarter was $65.8 million compared to $40.6 million in the same period last year. Benicar® (olmesartan medoxomil) co-promotion income totaled $35.4 million, a decrease of $1.3 million compared to $36.7 million in last year s first quarter. Contract revenue in the current quarter also included $29.4 million of income from a distribution agreement with Mylan, Inc. (Mylan) pursuant to which Mylan is authorized to sell a generic version of Lexapro and we retain a portion of the profits from those sales.
Provisions for Medicaid and contract rebates during a period are recorded based upon the actual historical experience ratio of rebates paid and actual prescriptions written. The experience ratio is applied to the period s sales to determine the rebate accrual and related expense. This experience ratio is evaluated regularly to ensure that the historical trends are as current as practicable. As appropriate, we will adjust the ratio to more closely match the current experience or expected future experience. In assessing this ratio, we consider current contract terms, such as the effect of changes in formulary status, discount rate and utilization trends. Periodically, the accrual is adjusted based upon actual payments made for rebates. If the ratio is not indicative of future experience, results could be affected. Rebate accruals for Medicaid were $46.9 million at June 30, 2012 and $70.3 million at March 31, 2012. Commercial discounts and other rebate accruals were $159.5 million at June 30, 2012 and $147.2 million at March 31, 2012. Accruals for chargebacks, discounts and returns were $50.7 million and $53.0 million at June 30, 2012 and March 31, 2012, respectively. These and other rebate accruals are established in the period the related revenue was recognized, resulting in a reduction to sales and the establishment of a liability, which is included in accrued expenses.
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