Hospira’s 1Q results lower, but meet expectations
Lake Forest Drug maker Hospira, Inc. said first quarter net sales decreased four percent as the company struggled to overcome quality issues at some of its facilities and the release of a generic version of its chemotherapy drug docetaxel.
Net sales were $966 million in the first quarter of 2012, the company reported. Diluted earnings per share were 47 cents per share, excluding certain specified items.
Despite the loss, Hospira CEO F. Michael Ball said the results were in line with the company’s projections.
“Going forward, we remain firmly focused on advancing our remediation efforts and, at the same time, expanding our global footprint and capacity to capitalize on our growth opportunities,” Ball said. “We believe these initiatives will position Hospira with an even stronger competitive advantage, creating sustainable, long-term shareholder value.”
Adjusted income from operations decreased 49 percent to $104 million in the first quarter of 2012, compared to $203 million in the first quarter of 2011. The majority of the decline reflects the decrease in net sales as well as the impact of costs associated with certain quality actions and inventory losses, the company said in a release. Operating costs also increased in the first quarter of 2012 due to expected higher research and development spending, as well as higher selling and promotional costs.
The effective tax rate on an adjusted basis in the quarter was 19.0 percent compared to 23.0 percent in the first quarter of 2011. The decrease is primarily due to lower operating income in higher-tax-rate jurisdictions.
Cash flow from operations for the first quarter of 2012 was $87 million compared to $6 million in the first quarter of 2011. The increase is a result of lower investments in working capital, offset by lower net income in the first quarter of 2012. Capital expenditures were $67 million for the first quarter of 2012, compared to $62 million for the same period in 2011. The increase was mainly due to the company’s manufacturing capacity expansion initiatives in Vizag, India.