LAKE FOREST, Ill., July 29, 2015 /PRNewswire/ -- Hospira, Inc.
(NYSE: HSP), the world's leading provider of injectable drugs and
infusion technologies, and a global leader in biosimilars, today
reported results for the second quarter ended June 30, 2015. For the second quarter of 2015,
net sales were $1.2 billion, and
adjusted* diluted earnings per share were $0.85. (Adjusted* measures exclude certain
specified items as described later in this press release and the
attached schedules.) On a U.S. Generally Accepted Accounting
Principles (GAAP) basis, second-quarter 2015 diluted earnings per
share were $0.82.
"Hospira continues to see good momentum across our product
lines, resulting in strong sales and profitability in the first
half of the year," said F. Michael
Ball, chief executive officer. "Complementing our strong
financial performance is our continued progress on many fronts,
including new generic injectable product launches, advancements in
our on-market biosimilars and related pipeline, and execution of
our Device Strategy. We remain committed to advancing wellness and
meeting the needs of our customers and healthcare systems around
the world."
Hospira and Pfizer Inc. [NYSE: PFE] announced in the first
quarter of 2015 that the two companies had entered into a merger
agreement under which Pfizer will acquire Hospira for $90 a share in cash for a total enterprise value
of approximately $17 billion. During
the second quarter, Hospira's shareholders voted in favor of the
proposal to adopt the merger agreement with Pfizer Inc. at a
special meeting of stockholders held on May
13, 2015. The merger remains subject to customary closing
conditions, including regulatory approvals in several
jurisdictions, and is expected to close in the second half of
2015.
Second-quarter 2015 Results
The following table highlights selected financial results for
the second quarter of 2015 compared to the same period in 2014:
|
In $ millions, except
per share amounts
|
GAAP
Three Months
Ended
June 30,
|
% Change
|
Adjusted*
Three Months
Ended
June 30,
|
% Change
|
|
2015
|
2014
|
2015
|
2014
|
|
Net Sales
|
$1,183.6
|
$1,135.8
|
4.2%
|
$1,183.6
|
$1,135.8
|
4.2%
|
|
Gross Profit (Net
Sales less Cost of Products Sold)
|
$519.4
|
$400.0
|
29.9%
|
$527.8
|
$464.3
|
13.7%
|
|
Income from
Operations
|
$218.6
|
$99.5
|
119.7%
|
$226.9
|
$179.3
|
26.5%
|
|
Diluted Earnings per
Share
|
$0.82
|
$0.42
|
95.2%
|
$0.85
|
$0.72
|
18.1%
|
|
Statistics (as a %
of Net Sales, except for Income Tax Rate)
|
|
Gross Profit (Net
Sales less Cost of Products Sold)
|
43.9%
|
35.2%
|
|
44.6%
|
40.9%
|
|
|
Income from
Operations
|
18.5%
|
8.8%
|
|
19.2%
|
15.8%
|
|
|
Income Tax
Rate
|
30.2%
|
23.3%
|
|
30.6%
|
28.2%
|
|
Results under GAAP include items as detailed in the schedules
attached to this press release.
Net sales increased 4.2 percent to $1.2
billion in the second quarter of 2015. Excluding the impact
of foreign currency fluctuations, net sales increased 8.8 percent.
The majority of the increase was due to continued strong net sales
of Specialty Injectable Pharmaceuticals (SIP) in the United States. Also contributing to the
quarter's positive performance were sales of biosimilars in the
Europe, Middle East and Africa (EMEA) segment. The net sales growth
more than offset the expected decline of Precedex™, Hospira's
proprietary sedation drug, which lost market exclusivity in the
second half of 2014.
Adjusted* income from operations increased 26.5 percent to
$227 million in the second quarter of
2015, compared to $179 million in the
second quarter of 2014, and primarily reflects the impact of the
strong growth in net sales. Research and Development (R&D)
increased 18.6 percent to $90 million
due to higher spending on biosimilar trials and lower reimbursed
development funding. On a GAAP basis, income from operations was
$219 million compared to $100 million in the second quarter of 2014. In
addition to the strong net sales, the increase in second-quarter
2015 GAAP income from operations was primarily related to the
release of previously recorded accruals associated with the Device
Strategy, and lower quality and product-related charges, partially
offset by costs associated with the proposed merger with
Pfizer.
The effective tax rate on an adjusted* basis in the quarter was
30.6 percent compared to 28.2 percent in the second-quarter 2014.
The increase is mainly due to stronger earnings in the second
quarter of 2015 in higher tax-rate jurisdictions. On a GAAP basis,
the second-quarter 2015 effective tax rate was 30.2 percent,
compared to 23.3 percent in the second quarter of 2014. In addition
to the stronger second-quarter 2015 earnings, the tax rate on a
GAAP basis was also affected by lower one-time charges in higher
tax-rate jurisdictions compared to the same period last year.
Cash Flow
Cash flow from operations for the first six months of 2015 was
$186 million, compared to
$176 million in the first six months
of 2014. The increase reflects higher operating earnings in 2015,
partially offset by higher employee incentive payments.
Capital expenditures were $221
million for the first six months of 2015, compared to
$185 million for the same period in
2014. The increase primarily relates to capital spending associated
with capacity expansion and modernization initiatives at several of
the company's facilities.
2015 Projections
Given the announcement early in the first quarter that Hospira
and Pfizer had entered into a merger agreement, the company is not
providing annual projections for 2015.
*Use of Non-GAAP Financial Measures
Adjusted measures used in this press release are reconciled to
the most comparable measures calculated in accordance with GAAP in
the schedules attached to this release.
For more information regarding these non-GAAP financial
measures, please see Hospira's Current Report on Form 8-K furnished
to the Securities and Exchange Commission on the date of this press
release.
Webcast / Complementary Information
Given the proposed merger, Hospira will not hold a conference
call for its quarterly results, and therefore there will be no
webcast. Complementary information to this press release on the
second-quarter 2015 results is available on the Presentations page
of the Investor Relations website at www.hospirainvestor.com.
About Hospira
Hospira, Inc. is the world's leading provider of injectable
drugs and infusion technologies, and a global leader in
biosimilars. Through its broad, integrated portfolio, Hospira is
uniquely positioned to Advance Wellness™ by improving patient and
caregiver safety while reducing healthcare costs. The company is
headquartered in Lake Forest, Ill.
Learn more at www.hospira.com.
Private Securities Litigation Reform Act of
1995 --
A Caution Concerning Forward-Looking Statements
Information provided and statements contained in this release
that are not purely historical are forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, Section 21E of the Securities Exchange Act of 1934, as
amended, and the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements only speak as of the date of this
report and the company assumes no obligation to update the
information included in this report. Such forward-looking
statements include information concerning our possible or assumed
future results of operations, including descriptions of our
business strategy and statements regarding the proposed merger with
Pfizer Inc. These statements often include words such as "will,"
"believe," "expect," "anticipate," "intend," "plan," "estimate," or
similar expressions. These statements are not guarantees of
performance or results and they involve risks, uncertainties, and
assumptions. For a further description of these factors, see the
risk factors set forth in our filings with the Securities and
Exchange Commission, including our Annual Report on Form 10-K for
the fiscal year ended December 31,
2014 and subsequent Forms 10-Q. Additional factors may
include the effect of the announcement of the merger and related
transactions on Hospira's business relationships,
employee retention, operating results and the business generally;
the occurrence of any event, change or other circumstances that
could give rise to the termination of the merger agreement with
Pfizer Inc., and the risk that the merger agreement with Pfizer
Inc. may be terminated in circumstances that require Hospira to pay
a termination fee to Pfizer Inc.; the outcome of any legal
proceedings that may be instituted against Hospira related to the
merger agreement with Pfizer Inc.; and the failure to satisfy
conditions to completion of the merger with Pfizer Inc., including
the receipt of all required regulatory approvals related to the
merger with Pfizer Inc. Although we believe that these
forward-looking statements are based on reasonable assumptions,
there are many factors that could affect our actual financial
results or results of operations and could cause actual results to
differ materially from those in the forward-looking statements. All
future written and oral forward-looking statements by us or persons
acting on our behalf are expressly qualified in their entirety by
the cautionary statements contained or referred to above. Except
for our ongoing obligations to disclose material information as
required by the federal securities laws, we do not have any
obligations or intention to release publicly any revisions to any
forward-looking statements to reflect events or circumstances in
the future or to reflect the occurrence of unanticipated
events.
|
Hospira,
Inc.
|
|
Condensed
Consolidated Statements of Income
|
|
(Unaudited)
|
|
(dollars and
shares in millions, except for per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
%
Change
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
Net sales
|
$ 1,183.6
|
|
|
$ 1,135.8
|
|
|
4.2 %
|
|
|
|
|
|
|
|
|
|
Cost of products
sold
|
664.2
|
|
|
735.8
|
|
|
(9.7)%
|
|
Restructuring and
impairment
|
(0.3)
|
|
|
13.5
|
|
|
(102.2)%
|
|
Research and
development
|
89.8
|
|
|
75.7
|
|
|
18.6 %
|
|
Selling, general and
administrative
|
211.3
|
|
|
211.3
|
|
|
—%
|
|
Total operating costs
and expenses
|
965.0
|
|
|
1,036.3
|
|
|
(6.9)%
|
|
Income From
Operations
|
218.6
|
|
|
99.5
|
|
|
119.7 %
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
15.2
|
|
|
19.2
|
|
|
(20.8)%
|
|
Other income,
net
|
(2.6)
|
|
|
(0.8)
|
|
|
225.0 %
|
|
Income Before Income
Taxes
|
206.0
|
|
|
81.1
|
|
|
154.0 %
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
62.2
|
|
|
18.9
|
|
|
229.1 %
|
|
Equity income from
affiliates, net
|
(1.3)
|
|
|
(8.7)
|
|
|
(85.1)%
|
|
Net Income
|
$ 145.1
|
|
|
$ 70.9
|
|
|
104.7 %
|
|
|
|
|
|
|
|
|
|
Earnings Per Common
Share:
|
|
|
|
|
|
|
|
|
Basic
|
$ 0.84
|
|
|
$ 0.42
|
|
|
100.0 %
|
|
Diluted
|
$ 0.82
|
|
|
$ 0.42
|
|
|
95.2 %
|
|
|
|
|
|
|
|
|
|
Weighted Average
Common Shares Outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
172.8
|
|
|
167.7
|
|
|
3.0 %
|
|
Diluted
|
176.1
|
|
|
170.0
|
|
|
3.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Gross
Profit(1)(2)
|
$ 527.8
|
|
|
$ 464.3
|
|
|
13.7 %
|
|
Adjusted Income From
Operations(1)
|
$ 226.9
|
|
|
$ 179.3
|
|
|
26.5 %
|
|
Adjusted Net
Income(1)
|
$ 150.2
|
|
|
$ 122.1
|
|
|
23.0 %
|
|
Adjusted Diluted
Earnings Per Share(1)
|
$ 0.85
|
|
|
$ 0.72
|
|
|
18.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statistics (as a % of
Net sales, except for income tax rate)
|
|
|
|
|
|
GAAP Three Months
Ended June 30,
|
|
|
Adjusted(1) Three Months Ended June
30,
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
Gross
Profit(2)
|
43.9 %
|
|
|
35.2 %
|
|
|
44.6 %
|
|
|
40.9 %
|
|
Income From
Operations
|
18.5 %
|
|
|
8.8 %
|
|
|
19.2 %
|
|
|
15.8 %
|
|
Net Income
|
12.3 %
|
|
|
6.2 %
|
|
|
12.7 %
|
|
|
10.8 %
|
|
Income Tax
Rate
|
30.2 %
|
|
|
23.3 %
|
|
|
30.6 %
|
|
|
28.2 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Adjusted financial
measures are Non-GAAP measures and exclude specified items as
described and reconciled to comparable GAAP financial measures in
the Reconciliation of GAAP to Non-GAAP Financial Measures contained
in this press release.
|
|
|
|
(2)
|
Gross profit is
defined as Net sales less Cost of products sold. Adjusted gross
profit excludes specified items, as indicated in the previous
footnote.
|
|
Hospira,
Inc.
|
|
Condensed
Consolidated Statements of Income
|
|
(Unaudited)
|
|
(dollars and
shares in millions, except for per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
%
Change
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
Net sales
|
$ 2,358.5
|
|
|
$ 2,186.6
|
|
|
7.9 %
|
|
|
|
|
|
|
|
|
|
Cost of products
sold
|
1,315.6
|
|
|
1,417.0
|
|
|
(7.2)%
|
|
Restructuring and
impairment
|
30.8
|
|
|
14.2
|
|
|
116.9 %
|
|
Research and
development
|
225.2
|
|
|
158.9
|
|
|
41.7 %
|
|
Selling, general and
administrative
|
434.9
|
|
|
397.4
|
|
|
9.4 %
|
|
Total operating costs
and expenses
|
2,006.5
|
|
|
1,987.5
|
|
|
1.0 %
|
|
Income From
Operations
|
352.0
|
|
|
199.1
|
|
|
76.8 %
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
30.2
|
|
|
39.7
|
|
|
(23.9)%
|
|
Other income,
net
|
(6.1)
|
|
|
(2.8)
|
|
|
117.9 %
|
|
Income Before Income
Taxes
|
327.9
|
|
|
162.2
|
|
|
102.2 %
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
110.1
|
|
|
35.4
|
|
|
211.0 %
|
|
Equity income from
affiliates, net
|
(2.9)
|
|
|
(12.0)
|
|
|
(75.8)%
|
|
Net Income
|
$ 220.7
|
|
|
$ 138.8
|
|
|
59.0 %
|
|
|
|
|
|
|
|
|
|
Earnings Per Common
Share:
|
|
|
|
|
|
|
|
|
Basic
|
$ 1.28
|
|
|
$ 0.83
|
|
|
54.2 %
|
|
Diluted
|
$ 1.26
|
|
|
$ 0.82
|
|
|
53.7 %
|
|
|
|
|
|
|
|
|
|
Weighted Average
Common Shares Outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
172.1
|
|
|
167.1
|
|
|
3.0 %
|
|
Diluted
|
175.6
|
|
|
169.8
|
|
|
3.4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Gross
Profit(1)(2)
|
$ 1,066.3
|
|
|
$ 884.2
|
|
|
20.6 %
|
|
Adjusted Income From
Operations(1)
|
$ 474.1
|
|
|
$ 330.8
|
|
|
43.3 %
|
|
Adjusted Net
Income(1)
|
$ 320.3
|
|
|
$ 223.8
|
|
|
43.1 %
|
|
Adjusted Diluted
Earnings Per Share(1)
|
$ 1.82
|
|
|
$ 1.32
|
|
|
37.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statistics (as a % of
Net sales, except for income tax rate)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Six Months Ended
June 30,
|
|
|
Adjusted (1) Six Months Ended June
30,
|
|
|
|
|
2015
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
Gross
Profit(2)
|
|
44.2 %
|
|
35.2 %
|
|
|
45.2 %
|
|
|
40.4 %
|
|
Income From
Operations
|
|
14.9 %
|
|
9.1 %
|
|
|
20.1 %
|
|
|
15.1 %
|
|
Net Income
|
|
9.4 %
|
|
6.3 %
|
|
|
13.6 %
|
|
|
10.2 %
|
|
Income Tax
Rate
|
|
33.6 %
|
|
21.8 %
|
|
|
29.5 %
|
|
|
26.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Adjusted financial
measures are Non-GAAP measures and exclude specified items as
described and reconciled to comparable GAAP financial measures in
the Reconciliation of GAAP to Non-GAAP Financial Measures contained
in this press release.
|
|
|
|
(2)
|
Gross profit is
defined as Net sales less Cost of products sold. Adjusted gross
profit excludes specified items, as indicated in the previous
footnote.
|
|
Hospira,
Inc.
|
|
Reconciliation of
GAAP to Non-GAAP Financial Measures
|
|
(Unaudited)
|
|
(dollars in
millions, except for per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, 2015 Reconciliation of GAAP to Non-GAAP Financial
Measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit(1)
|
|
Income From
Operations
|
|
Net Income
|
|
Diluted
EPS
|
|
GAAP Financial
Measures
|
$ 519.4
|
|
$ 218.6
|
|
$ 145.1
|
|
$ 0.82
|
|
Specified
Items(2)
|
|
|
|
|
|
|
|
|
Device
Strategy(A)
|
(14.5)
|
|
(18.0)
|
|
(11.8)
|
|
(0.07)
|
|
Amortization of
certain intangible assets(B)
|
8.9
|
|
8.9
|
|
6.2
|
|
0.04
|
|
Certain quality and
product related (releases)(C)
|
(5.7)
|
|
(5.7)
|
|
(3.6)
|
|
(0.02)
|
|
Capacity expansion
related charges(D)
|
16.8
|
|
16.8
|
|
10.9
|
|
0.06
|
|
Acquisition and
integration related charges(E)
|
0.9
|
|
1.1
|
|
0.8
|
|
0.01
|
|
Facilities
optimization charges(F)
|
2.0
|
|
4.7
|
|
2.9
|
|
0.02
|
|
Pfizer transaction
and integration related charges(G)
|
—
|
|
8.9
|
|
5.6
|
|
0.03
|
|
Other restructuring
charges(H)
|
—
|
|
0.5
|
|
0.3
|
|
—
|
|
Litigation
settlements(I)
|
—
|
|
(8.9)
|
|
(6.2)
|
|
(0.04)
|
|
Adjusted financial
measures(3)
|
$ 527.8
|
|
$ 226.9
|
|
$ 150.2
|
|
$ 0.85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP results for the
three months ended June 30, 2015 include:
|
|
(A)
|
Device Strategy:
($14.5) million reported in Cost of products sold and ($3.5)
million reported in Restructuring and impairment. Income relates to
the release of customer accommodations and severance accruals, and
charges related to consulting and other costs associated with
Hospira's Device Strategy.
|
|
|
|
|
(B)
|
Amortization of
certain intangible assets reported in Cost of products sold
resulting from acquisitions including Mayne Pharma Limited ("Mayne
Pharma") (which closed in 2007) and both a generic injectable
business (which closed in 2010) and an active pharmaceutical
ingredient business (which closed in 2014) by Hospira Healthcare
India Private Limited ("Hospira India").
|
|
|
|
|
(C)
|
Certain quality and
product related (releases) charges reported in Cost of products
sold primarily include releases of previously recorded accruals to
address identified issues. These activities are primarily
associated with Hospira's response to certain United States Food
and Drug Administration ("FDA") warning letters and certain device
related remediation activities.
|
|
|
|
|
(D)
|
Capacity expansion
related charges reported in Cost of products sold include start-up
charges related to manufacturing capacity expansion in
India.
|
|
|
|
|
(E)
|
Acquisition and
integration related charges related to the acquisition and
integration of an active pharmaceutical ingredient
business.
|
|
|
|
|
(F)
|
Facilities
optimization charges: $2.0 million reported in Cost of products
sold and $2.7 million reported in Restructuring and impairment.
These charges are primarily related to the announced closure of the
Clayton, North Carolina manufacturing facility and the
discontinuation of research and development related activities at
the Boulder, Colorado facility.
|
|
|
|
|
(G)
|
Legal, advisory and
other transaction related fees as well as integration costs
associated with the proposed merger with Pfizer Inc.
|
|
|
|
|
(H)
|
Other restructuring
charges reported in Restructuring and impairment include severance
costs associated with Hospira's commercial
reorganization.
|
|
|
|
|
(I)
|
Certain litigation
settlements associated with the favorable resolution of vendor and
customer disputes.
|
|
|
|
|
|
Three Months Ended
June 30, 2014 Reconciliation of GAAP to Non-GAAP Financial
Measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit(1)
|
|
Income From
Operations
|
|
Net Income
|
|
Diluted
EPS
|
|
GAAP Financial
Measures
|
$ 400.0
|
|
$ 99.5
|
|
$ 70.9
|
|
$ 0.42
|
|
Specified
Items(2)
|
|
|
|
|
|
|
|
|
Device Strategy
charges(A)
|
6.1
|
|
7.0
|
|
5.9
|
|
0.03
|
|
Amortization of
certain intangible assets(B)
|
17.9
|
|
17.9
|
|
12.3
|
|
0.07
|
|
Impairment of certain
assets(C)
|
—
|
|
6.1
|
|
3.8
|
|
0.02
|
|
Certain quality and
product related charges(D)
|
26.2
|
|
26.2
|
|
16.6
|
|
0.10
|
|
Capacity expansion
related charges(E)
|
14.1
|
|
14.1
|
|
9.2
|
|
0.05
|
|
Acquisition and
integration related charges(F)
|
—
|
|
1.9
|
|
(0.7)
|
|
—
|
|
Facilities
optimization charges(G)
|
—
|
|
5.0
|
|
3.1
|
|
0.02
|
|
Other restructuring
charges(H)
|
—
|
|
1.6
|
|
1.0
|
|
0.01
|
|
Adjusted financial
measures(3)
|
$ 464.3
|
|
$ 179.3
|
|
$ 122.1
|
|
$ 0.72
|
|
|
|
|
|
|
|
|
|
|
GAAP results for the
three months ended June 30, 2014 include:
|
|
(A)
|
Device Strategy
charges: $6.1 million reported in Cost of products sold and $0.9
million reported in Restructuring and impairment. These charges
include consulting, customer accommodations, accelerated
depreciation, and other costs associated with Hospira's Device
Strategy.
|
|
|
|
|
(B)
|
Amortization of
certain intangible assets reported in Cost of products sold
resulting from acquisitions including Mayne Pharma and a generic
injectable business by Hospira India.
|
|
|
|
|
(C)
|
Impairment of certain
property and equipment assets reported in Restructuring and
impairment.
|
|
|
|
|
(D)
|
Certain quality and
product related charges reported in Cost of products sold primarily
include third party oversight and consulting costs, extended
production downtime related costs, and device product review and
remediation costs to address identified issues. These charges are
primarily associated with Hospira's response to the FDA warning
letters and charges related to certain device related remediation
activities.
|
|
|
|
|
(E)
|
Capacity expansion
related charges reported in Cost of products sold include start-up
charges related to manufacturing capacity expansion in
India.
|
|
|
|
|
(F)
|
Acquisition and
integration related charges (gains): $1.9 million reported in
Selling, general, and administrative and $(3.1) million reported in
Other income, net. These amounts include purchase price hedge gains
and costs for the then pending acquisition and integration of an
active pharmaceutical ingredient business.
|
|
|
|
|
(G)
|
Facilities
optimization charges reported in Restructuring and impairment
related to the sale of the Buffalo, New York manufacturing
facility.
|
|
|
|
|
(H)
|
Other restructuring
charges reported in Restructuring and impairment. These charges
include severance costs associated with Hospira's commercial
reorganization.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Gross profit is
defined as Net sales less Cost of products sold.
|
|
|
|
(2)
|
Specified items are
shown net of tax in aggregate of $3.3 million and $25.5 million for
the three months ended June 30, 2015 and 2014, respectively, based
on the statutory tax rates in the various tax jurisdictions in
which the items occurred.
|
|
|
|
(3)
|
The Non-GAAP
financial measures contained in this press release (including
Adjusted Gross Profit, Adjusted Income From Operations, Adjusted
Net Income and Adjusted Diluted Earnings Per Share) adjust for
specified items. Management believes the Non-GAAP financial
measures represent the amounts directly related to the ongoing
operations of the business and uses these measures in evaluating
performance. All Non-GAAP financial measures are intended to
supplement the applicable GAAP measures and should not be
considered in isolation from, or a replacement for, financial
measures prepared in accordance with GAAP and may not be comparable
to, or calculated in the same manner as, Non-GAAP financial
measures published by other companies. Refer to Hospira's Form 8-K
furnished on July 29, 2015.
|
|
Hospira,
Inc.
|
|
Reconciliation of
GAAP to Non-GAAP Financial Measures
|
|
(Unaudited)
|
|
(dollars in
millions, except for per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June
30, 2015 Reconciliation of GAAP to Non-GAAP Financial
Measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit(1)
|
|
Income From
Operations
|
|
Net Income
|
|
Diluted
EPS
|
|
GAAP Financial
Measures
|
|
$ 1,042.9
|
|
$ 352.0
|
|
$ 220.7
|
|
$ 1.26
|
|
Specified
Items(2)
|
|
|
|
|
|
|
|
|
|
Device
Strategy(A)
|
|
(23.0)
|
|
(8.9)
|
|
(3.7)
|
|
(0.02)
|
|
Amortization of
certain intangible assets(B)
|
|
17.5
|
|
17.5
|
|
12.1
|
|
0.07
|
|
Certain quality and
product related charges(C)
|
|
(5.1)
|
|
(5.1)
|
|
(3.2)
|
|
(0.02)
|
|
Capacity expansion
related charges(D)
|
|
31.1
|
|
31.1
|
|
20.1
|
|
0.11
|
|
Acquisition and
integration related charges(E)
|
|
0.9
|
|
1.6
|
|
1.1
|
|
0.01
|
|
Facilities
optimization charges(F)
|
|
2.0
|
|
17.6
|
|
11.0
|
|
0.06
|
|
Pfizer transaction
and integration related charges(G)
|
|
—
|
|
25.1
|
|
16.6
|
|
0.09
|
|
Research and
development charges(H)
|
|
—
|
|
51.0
|
|
51.0
|
|
0.29
|
|
Other restructuring
charges(I)
|
|
—
|
|
1.1
|
|
0.8
|
|
0.01
|
|
Litigation
settlements(J)
|
|
—
|
|
(8.9)
|
|
(6.2)
|
|
(0.04)
|
|
Adjusted financial
measures(3)
|
|
$ 1,066.3
|
|
$ 474.1
|
|
$ 320.3
|
|
$ 1.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP results for the
six months ended June 30, 2015 include:
|
|
(A)
|
Device Strategy:
($23.0) million reported in Cost of products sold and $14.1 million
reported in Restructuring and impairment. Income relates to the
release of customer accommodation accruals, and charges include
severance, consulting and other costs associated with Hospira's
Device Strategy.
|
|
|
|
|
(B)
|
Amortization of
certain intangible assets reported in Cost of products sold
resulting from acquisitions including Mayne Pharma and both a
generic injectable business and an active pharmaceutical ingredient
business by Hospira India.
|
|
|
|
|
(C)
|
Certain quality and
product related (releases) charges reported in Cost of products
sold primarily include releases of previously recorded accruals to
address identified issues. These activities are primarily
associated with Hospira's response to certain FDA warning
letters.
|
|
|
|
|
(D)
|
Capacity expansion
related charges reported in Cost of products sold include start-up
charges related to manufacturing capacity expansion in
India.
|
|
|
|
|
(E)
|
Acquisition and
integration related charges related to the acquisition and
integration of an active pharmaceutical ingredient
business.
|
|
|
|
|
(F)
|
Facilities
optimization charges: $2.0 million reported in Cost of products
sold and $15.6 million reported in Restructuring and impairment.
These charges are primarily related to the announced closure of the
Clayton, North Carolina manufacturing facility and the
discontinuation of research and development related activities at
the Boulder, Colorado facility.
|
|
|
|
|
(G)
|
Legal, advisory and
other transaction related fees as well as integration costs
associated with the proposed merger with Pfizer Inc.
|
|
|
|
|
(H)
|
Research and
development charges include an upfront milestone payment related to
a global collaboration agreement with Pfenex, Inc. ("Pfenex") to
develop and commercialize PF582, Pfenex's biosimilar candidate for
ranibizumab.
|
|
|
|
|
(I)
|
Other restructuring
charges reported in Restructuring and impairment include severance
costs associated with Hospira's commercial
reorganization.
|
|
|
|
|
(J)
|
Certain litigation
settlements associated with the favorable resolution of vendor and
customer disputes.
|
|
|
|
|
|
Six Months Ended June
30, 2014 Reconciliation of GAAP to Non-GAAP Financial
Measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit(1)
|
|
Income From
Operations
|
|
Net Income
|
|
Diluted
EPS
|
|
GAAP Financial
Measures
|
|
$ 769.6
|
|
$ 199.1
|
|
$ 138.8
|
|
$ 0.82
|
|
Specified
Items(2)
|
|
|
|
|
|
|
|
|
|
Device Strategy
charges(A)
|
|
12.0
|
|
13.3
|
|
10.5
|
|
0.06
|
|
Amortization of
certain intangible assets(B)
|
|
35.4
|
|
35.4
|
|
24.6
|
|
0.14
|
|
Impairment of certain
assets(C)
|
|
—
|
|
6.1
|
|
3.8
|
|
0.02
|
|
Certain quality and
product related charges(D)
|
|
39.1
|
|
39.1
|
|
25.1
|
|
0.15
|
|
Capacity expansion
related charges(E)
|
|
28.1
|
|
28.1
|
|
18.5
|
|
0.11
|
|
Acquisition and
integration related charges(F)
|
|
—
|
|
2.8
|
|
(1.8)
|
|
(0.01)
|
|
Facilities
optimization charges(G)
|
|
—
|
|
5.0
|
|
3.1
|
|
0.02
|
|
Other restructuring
charges(H)
|
|
—
|
|
1.9
|
|
1.2
|
|
0.01
|
|
Adjusted financial
measures(3)
|
|
$ 884.2
|
|
$ 330.8
|
|
$ 223.8
|
|
$ 1.32
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP results for the
six months ended June 30, 2014 include:
|
|
(A)
|
Device Strategy
charges: $12.0 million reported in Cost of products sold and $1.3
million reported in Restructuring and impairment. These charges
include consulting, customer accommodations, accelerated
depreciation, and other costs associated with Hospira's Device
Strategy.
|
|
|
|
|
(B)
|
Amortization of
certain intangible assets reported in Cost of products sold
resulting from acquisitions including Mayne Pharma and a generic
injectable business by Hospira India.
|
|
|
|
|
(C)
|
Impairments of
certain property and equipment assets reported in Restructuring and
impairment.
|
|
|
|
|
(D)
|
Certain quality and
product related charges reported in Cost of products sold primarily
include third party oversight and consulting costs, extended
production downtime related costs, and device product review and
remediation costs to address identified issues. These charges are
primarily associated with Hospira's response to the FDA warning
letters and charges related to certain device related remediation
activities.
|
|
|
|
|
(E)
|
Capacity expansion
related charges reported in Cost of products sold include start-up
charges related to manufacturing capacity expansion in
India.
|
|
|
|
|
(F)
|
Acquisition and
integration related charges (gains): $2.8 million reported in
Selling, general and administrative and $(5.8) million reported in
Other (income) expense, net. These amounts include costs for the
acquisition and integration and foreign exchange hedge gains of an
active pharmaceutical ingredient business.
|
|
|
|
|
(G)
|
Facilities
optimization charges reported in Restructuring and impairment
related to the sale of the Buffalo, New York manufacturing
facility.
|
|
|
|
|
(H)
|
Other restructuring
charges reported in Restructuring and impairment. These charges
include severance costs associated with Hospira's commercial
reorganization.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Gross profit is
defined as Net sales less Cost of products sold.
|
|
|
|
(2)
|
Specified items are
shown net of tax in aggregate of $22.6 million and $40.9 million
for the six months ended June 30, 2015 and 2014, respectively,
based on the statutory tax rates in the various tax jurisdictions
in which the items occurred.
|
|
|
|
(3)
|
The Non-GAAP
financial measures contained in this press release (including
Adjusted Gross Profit, Adjusted Income From Operations, Adjusted
Net Income and Adjusted Diluted Earnings Per Share) adjust for
specified items. Management believes the Non-GAAP financial
measures represent the amounts directly related to the ongoing
operations of the business and uses these measures in evaluating
performance. All Non-GAAP financial measures are intended to
supplement the applicable GAAP measures and should not be
considered in isolation from, or a replacement for, financial
measures prepared in accordance with GAAP and may not be comparable
to, or calculated in the same manner as, Non-GAAP financial
measures published by other companies. Refer to Hospira's Form 8-K
furnished on July 29, 2015.
|
|
Hospira,
Inc.
|
|
Condensed
Consolidated Balance Sheets
|
|
(Unaudited)
|
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December
31,
|
|
|
|
|
|
|
2015
|
|
2014
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$ 819.9
|
|
$ 802.4
|
|
Trade receivables,
less allowances of $6.8 and $9.6, respectively
|
|
588.0
|
|
601.9
|
|
Inventories,
net
|
|
1,222.4
|
|
1,133.3
|
|
Deferred income taxes
and other
|
|
197.2
|
|
230.0
|
|
Prepaid
expenses
|
|
73.5
|
|
69.3
|
|
Other
receivables
|
|
108.7
|
|
117.3
|
|
Total Current
Assets
|
|
3,009.7
|
|
2,954.2
|
|
Property and
equipment, net
|
|
1,909.3
|
|
1,816.7
|
|
Intangible assets,
net
|
|
116.6
|
|
123.4
|
|
Goodwill
|
|
1,073.7
|
|
1,089.1
|
|
Deferred income
taxes
|
|
287.3
|
|
295.4
|
|
Investments
|
|
255.0
|
|
252.2
|
|
Other
assets
|
|
132.2
|
|
119.0
|
|
Total
Assets
|
|
$ 6,783.8
|
|
$ 6,650.0
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Short-term
borrowings
|
|
$ 2.8
|
|
$
6.8
|
|
Trade accounts
payable
|
|
378.0
|
|
414.5
|
|
Salaries, wages and
commissions
|
|
205.4
|
|
252.0
|
|
Other accrued
liabilities
|
|
606.5
|
|
626.8
|
|
Total Current
Liabilities
|
|
1,192.7
|
|
1,300.1
|
|
Long-term
debt
|
|
1,748.1
|
|
1,749.2
|
|
Deferred income
taxes
|
|
4.4
|
|
5.4
|
|
Post-retirement
obligations and other long-term liabilities
|
|
225.0
|
|
258.7
|
|
Commitments and
Contingencies
|
|
|
|
|
|
Total Shareholders'
Equity
|
|
3,613.6
|
|
3,336.6
|
|
Total Liabilities and
Shareholders' Equity
|
|
$ 6,783.8
|
|
$ 6,650.0
|
|
Hospira,
Inc.
|
|
Condensed
Consolidated Statements of Cash Flows
|
|
(Unaudited)
|
|
(dollars in
millions)
|
|
|
|
Six Months Ended June
30,
|
|
Cash Flow From
Operating Activities:
|
|
2015
|
|
2014
|
|
Net Income
|
|
$ 220.7
|
|
$ 138.8
|
|
Adjustments to
reconcile Net Income to net cash from operating
activities-
|
|
|
|
|
|
Depreciation
|
|
94.9
|
|
87.1
|
|
Amortization of
intangible assets
|
|
24.0
|
|
43.9
|
|
Stock-based
compensation expense
|
|
29.1
|
|
28.7
|
|
Undistributed equity
income from affiliates
|
|
(2.9)
|
|
(12.0)
|
|
Deferred income taxes
and other tax adjustments
|
|
22.7
|
|
32.7
|
|
Impairments and other
asset charges
|
|
1.8
|
|
7.3
|
|
Loss on disposal of
assets
|
|
—
|
|
5.0
|
|
Changes in assets and
liabilities, net of the effects of acquisitions-
|
|
|
|
|
|
Trade
receivables
|
|
(1.8)
|
|
(71.9)
|
|
Inventories
|
|
(98.8)
|
|
(96.1)
|
|
Prepaid expenses and
other assets
|
|
(2.8)
|
|
(22.0)
|
|
Trade accounts
payable
|
|
(28.3)
|
|
27.1
|
|
Other
liabilities
|
|
(91.2)
|
|
(2.3)
|
|
Other, net
|
|
18.8
|
|
9.2
|
|
Net Cash Provided by
Operating Activities
|
|
186.2
|
|
175.5
|
|
|
|
|
|
|
Cash Flow From
Investing Activities:
|
|
|
|
|
|
Capital expenditures
(including instruments placed with or leased to
customers)
|
|
(221.4)
|
|
(184.8)
|
|
Acquisitions, net of
cash acquired
|
|
—
|
|
(9.0)
|
|
Purchases of
intangibles and other investments
|
|
(20.1)
|
|
(4.3)
|
|
Proceeds from
disposal of businesses and assets
|
|
—
|
|
16.9
|
|
Net Cash Used in
Investing Activities
|
|
(241.5)
|
|
(181.2)
|
|
|
|
|
|
|
Cash Flow From
Financing Activities:
|
|
|
|
|
|
Other borrowings,
net
|
|
(5.4)
|
|
(77.2)
|
|
Excess tax benefit
from stock-based compensation arrangements
|
|
37.6
|
|
2.6
|
|
Proceeds from stock
options exercised less taxes paid related to net share settlements
of $29.3 and $5.0, respectively
|
|
50.0
|
|
78.0
|
|
Net Cash Provided by
Financing Activities
|
|
82.2
|
|
3.4
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(9.4)
|
|
0.7
|
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
|
17.5
|
|
(1.6)
|
|
Cash and cash
equivalents at beginning of period
|
|
802.4
|
|
798.1
|
|
Cash and cash
equivalents at end of period
|
|
$ 819.9
|
|
$ 796.5
|
|
|
|
|
|
|
Supplemental Cash
Flow Information:
|
|
|
|
|
|
Cash paid during the
period-
|
|
|
|
|
|
Interest
|
|
$ 51.5
|
|
$ 51.1
|
|
Income taxes, net of
refunds
|
|
$ 11.1
|
|
$ 8.8
|
|
Accrued capital
expenditures
|
|
$ 38.9
|
|
$ 25.7
|
|
Hospira,
Inc.
|
|
|
Net Sales by
Product Line
|
|
|
(Unaudited)
|
|
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
2015
|
|
2014
|
|
% Change at
Actual Currency
Rates
|
|
% Change at
Constant Currency
Rates(1)
|
|
|
Americas—
|
|
|
|
|
|
|
|
|
|
Specialty Injectable
Pharmaceuticals
|
$ 650.4
|
|
$ 625.5
|
|
4.0 %
|
|
5.3 %
|
|
|
Medication
Management
|
168.9
|
|
176.2
|
|
(4.1)%
|
|
(1.5)%
|
|
|
Other
Pharma
|
145.1
|
|
111.5
|
|
30.1 %
|
|
30.9 %
|
|
|
Total
Americas
|
964.4
|
|
913.2
|
|
5.6 %
|
|
7.1 %
|
|
|
|
|
|
|
|
|
|
|
|
EMEA—
|
|
|
|
|
|
|
|
|
|
Specialty Injectable
Pharmaceuticals
|
86.8
|
|
84.6
|
|
2.6 %
|
|
25.4 %
|
|
|
Medication
Management
|
21.4
|
|
27.9
|
|
(23.3)%
|
|
(5.7)%
|
|
|
Other
Pharma
|
20.9
|
|
20.2
|
|
3.5 %
|
|
16.8 %
|
|
|
Total EMEA
|
129.1
|
|
132.7
|
|
(2.7)%
|
|
17.6 %
|
|
|
|
|
|
|
|
|
|
|
|
APAC—
|
|
|
|
|
|
|
|
|
|
Specialty Injectable
Pharmaceuticals
|
75.1
|
|
75.2
|
|
(0.1)%
|
|
13.7 %
|
|
|
Medication
Management
|
11.7
|
|
11.4
|
|
2.6 %
|
|
14.0 %
|
|
|
Other
Pharma
|
3.3
|
|
3.3
|
|
—%
|
|
3.0 %
|
|
|
Total APAC
|
90.1
|
|
89.9
|
|
0.2 %
|
|
13.3 %
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
$ 1,183.6
|
|
$ 1,135.8
|
|
4.2 %
|
|
8.8 %
|
|
|
|
|
|
|
|
|
|
|
|
Global—
|
|
|
|
|
|
|
|
|
|
Specialty Injectable
Pharmaceuticals
|
$ 812.3
|
|
$ 785.3
|
|
3.4 %
|
|
8.3 %
|
|
|
Medication
Management
|
202.0
|
|
215.5
|
|
(6.3)%
|
|
(1.2)%
|
|
|
Other
Pharma
|
169.3
|
|
135.0
|
|
25.4 %
|
|
28.1 %
|
|
|
Net Sales
|
$ 1,183.6
|
|
$ 1,135.8
|
|
4.2 %
|
|
8.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The Non-GAAP
financial measures contained in this press release include
comparisons of net sales at constant currency rates, which reflect
comparative local currency balances at prior period foreign
exchange rates. Hospira calculated these percentages by taking
current period reported net sales less the respective prior period
reported net sales, divided by the prior period reported net sales,
all at the respective prior period's foreign exchange rates. This
measure provides information on the change in net sales assuming
that foreign currency exchange rates have not changed between the
prior and the current period. Management believes the use of this
measure aids in the understanding of our change in net sales
without the impact of foreign currency and provides greater
transparency into Hospira's results of operations.
|
|
|
|
|
|
Hospira,
Inc.
|
|
Net Sales by
Product Line
|
|
(Unaudited)
|
|
(dollars in
millions)
|
|
|
Six Months Ended June
30,
|
|
2015
|
|
2014
|
|
% Change at
Actual Currency
Rates
|
|
% Change at
Constant Currency
Rates(1)
|
|
Americas—
|
|
|
|
|
|
|
|
|
Specialty Injectable
Pharmaceuticals
|
$ 1,315.9
|
|
$ 1,196.1
|
|
10.0 %
|
|
11.2 %
|
|
Medication
Management
|
340.7
|
|
346.8
|
|
(1.8)%
|
|
0.7 %
|
|
Other
Pharma
|
284.7
|
|
212.1
|
|
34.2 %
|
|
34.7 %
|
|
Total
Americas
|
1,941.3
|
|
1,755.0
|
|
10.6 %
|
|
12.0 %
|
|
|
|
|
|
|
|
|
|
EMEA—
|
|
|
|
|
|
|
|
|
Specialty Injectable
Pharmaceuticals
|
161.9
|
|
170.5
|
|
(5.0)%
|
|
15.5 %
|
|
Medication
Management
|
43.0
|
|
53.6
|
|
(19.8)%
|
|
(2.2)%
|
|
Other
Pharma
|
42.7
|
|
41.4
|
|
3.1 %
|
|
16.2 %
|
|
Total EMEA
|
247.6
|
|
265.5
|
|
(6.7)%
|
|
12.0 %
|
|
|
|
|
|
|
|
|
|
APAC—
|
|
|
|
|
|
|
|
|
Specialty Injectable
Pharmaceuticals
|
143.0
|
|
135.0
|
|
5.9 %
|
|
18.8 %
|
|
Medication
Management
|
22.1
|
|
21.4
|
|
3.3 %
|
|
13.1 %
|
|
Other
Pharma
|
4.5
|
|
9.7
|
|
(53.6)%
|
|
(52.6)%
|
|
Total APAC
|
169.6
|
|
166.1
|
|
2.1 %
|
|
13.9 %
|
|
|
|
|
|
|
|
|
|
Net Sales
|
$ 2,358.5
|
|
$ 2,186.6
|
|
7.9 %
|
|
12.1 %
|
|
|
|
|
|
|
|
|
|
Global—
|
|
|
|
|
|
|
|
|
Specialty Injectable
Pharmaceuticals
|
$ 1,620.8
|
|
$ 1,501.6
|
|
7.9 %
|
|
12.3 %
|
|
Medication
Management
|
405.8
|
|
421.8
|
|
(3.8)%
|
|
1.0 %
|
|
Other
Pharma
|
331.9
|
|
263.2
|
|
26.1 %
|
|
28.6 %
|
|
Net Sales
|
$ 2,358.5
|
|
$ 2,186.6
|
|
7.9 %
|
|
12.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The Non-GAAP
financial measures contained in this press release include
comparisons of net sales at constant currency rates, which reflect
comparative local currency balances at prior period foreign
exchange rates. Hospira calculated these percentages by taking
current period reported net sales less the respective prior period
reported net sales, divided by the prior period reported net sales,
all at the respective prior period's foreign exchange rates. This
measure provides information on the change in net sales assuming
that foreign currency exchange rates have not changed between the
prior and the current period. Management believes the use of this
measure aids in the understanding of our change in net sales
without the impact of foreign currency and provides greater
transparency into Hospira's results of operations.
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/hospira-reports-second-quarter-2015-results-300120421.html
SOURCE Hospira, Inc.