Lake Forest's Hospira beats sales expectations

Hospira Inc., a provider of injectable drugs and infusion technologies, and a global leader in biosimilars, today reported first-quarter 2015 results that beat expectations.

Pharmaceutical giant Pfizer offered to buy the Lake Forest company in February for about $15.23 billion. For the first quarter of 2015, net sales were $1.2 billion.

"Hospira started out the year with very strong sales and profitability, driven primarily by continued momentum in our Specialty Injectable Pharmaceuticals business," said CEO F. Michael Ball. "In addition to our strong financial performance, we made significant progress on many fronts, including enhancing our biosimilars pipeline, launching new generic injectable products and advancing our device strategy. Going forward, we remain keenly focused on our key growth areas of biosimilars, generic injectables and devices, as well as on meeting the needs of our customers and health care systems around the world."

In the first quarter, Hospira and Pfizer Inc. NYSE: PFE announced 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. The merger, which is subject to customary closing conditions, including regulatory approvals in several jurisdictions and approval of the merger by Hospira's shareholders, is expected to close in the second half of 2015.

Net sales increased 11.8 percent to $1.2 billion in the first quarter of 2015. Excluding the impact of foreign currency fluctuations, net sales increased 15.7 percent.

The majority of the increase was due to continued strong net sales of Specialty Injectable Pharmaceuticals in the United States. Also contributing to the quarter's net sales performance were sales of biosimilars in the Europe, Middle East and Africa (EMEA) segment and device sales globally. The strong net sales growth more than offset the expected decline of PrecedexT, Hospira's proprietary sedation drug, which lost market exclusivity in the second half of 2014.

Adjusted income from operations increased 63.2 percent to $247 million in the first quarter of 2015, compared to $152 million in the first quarter of 2014. Improved adjusted gross margin performance reflected the impact of the strong growth in net sales.

Cash flow from operations for the first three months of 2015 was an outflow of $100 million, compared to an inflow of $18 million in the first three months of 2014. The decrease is primarily due to the upfront R&D milestone payment to Pfenex, higher employee incentive payments and higher investments in working capital.

Capital expenditures were $103 million for the first three months of 2015, compared to $95 million for the same period in 2014.

Given the announcement early in the first quarter that Hospira and Pfizer had entered into a merger agreement, the company has not provided annual projections for 2015.