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

December 07, 2012 | About:

HiTech Pharmacal Co. Inc. (HITK) filed Quarterly Report for the period ended 2012-10-31.

Hi-tech Pharmacal Co., Inc. has a market cap of $400.3 million; its shares were traded at around $35.55 with a P/E ratio of 10.1 and P/S ratio of 1.7.

Highlight of Business Operations:

Net sales of Hi-Tech generic pharmaceutical products decreased primarily due to lower sales of Fluticasone Propionate nasal spray which decreased to $43,500,000 from $49,200,000 in the comparable period as the Company sold more units at a lower average price. In January 2012, a fourth competitor entered the generic Fluticasone Propionate nasal spray market which may lead to additional price reductions for this product. The Company also experienced lower volumes and prices on Dorzolamide products during the six months

Net sales of ECR Pharmaceuticals, which sells branded prescription products, increased due to higher sales of Bupap® and Dexpak® and sales from Tussicaps® and Orbivan®, acquired in fiscal year 2012. Bupap® sales increased ahead of an announced price increase, as some customers purchased larger than typical quantities. The discontinuation of Lodrane® extended release antihistamines partially offset the increase in sales for the period. ECR Pharmaceuticals stopped shipping the Lodrane® products as of August 31, 2011. Sales of the discontinued Lodrane® products amounted to approximately $2,800,000 for the six months ended October 31, 2011.

The increase in selling, general and administrative expenses was partially due to 30 contract sales representatives hired in October 2011 in the ECR subsidiary to expand its sales force to new areas of the country. These 30 representatives were terminated at the end of July 2012. Advertising expense increased to $4,072,000 in the six months ended October 31, 2012 from $3,285,000 in the six months ended October 31, 2011 primarily in the HCP division to support the re-launch of Nasal Ease©. Increases in freight-out expense also contributed to the increase in SG&A.

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 $3,579,000 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.

Read the The complete Report

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