Salix Pharmaceuticals (SLXP) Stock Pummeled on Earnings, Guidance
Shares of the Salix Pharmaceuticals Inc. (SLXP) were down -50.80 or -36.67 percent to $87.75 per share in Friday's premarket after the company announced lower than expected earnings and lowered its full year forecast yesterday after the market close. Salix Pharmaceutical stock closed at $138.55, off -0.95 or -0.68 percent in Thursday's regular trading session.
Salix reported a loss of -$88.6 million or -$1.39 per share for the company's fiscal third quarter ended on September 30th, versus net income of $47.3 million or $0.71 per share in the same period one year ago. Revenue for the quarter increased +49 percent to $355 million.
Third quarter results included transaction costs related to the acquisition of Santarus and a potential merger with Cosmo Technologies Limited, which fell through on October 2, 2014. After the exclusion of several items, the company reported earnings of $1.53 per share. Analysts expected the company to report a profit of $1.55 per share on revenue of $392.4 million.
Carolyn Logan, President and Chief Executive Officer, stated in the company's press release that, "Within an 84-day period, spanning mid-July to early-October, three new products - RUCONESTÂ®, RELISTORÂ® SI for chronic non-cancer pain and UCERISÂ® rectal foam - were granted marketing approval by the Food and Drug Administration. This level of success is noteworthy for any pharmaceutical company, and provides additional evidence of Salix's exceptional track record of in-licensing, developing and bringing to market important drugs for patients who need them. These important milestones should enhance our competitive position and expand our market opportunities .
Despite the optimism of CEO Logan, Salix's wholesale inventories for four of the company's key drugs showed the company was holding about five months' worth of stock, which was expected to last just a few weeks. The company had previously stated that it did not expect the impact from destocking to go beyond the third quarter, nevertheless, inventory levels continued to be approximately 50 percent since January and now total $155 million.
Salix had been in talks to be acquired by Allergan (AGN) earlier this year, which would have provided Allergan with a poison pill to fend off a hostile takeover from Valeant (VRX) and Pershing Square. However, backed up inventories remained an issue and Allergan cancelled the deal after realizing the company had an inventory surplus.
Salix now expects full year 2014 profit of $5.20 per share on revenue of $1.4 billion before special items. The company had previously forecast a profit of $6.16 per share on revenue of $1.6 billion. The analyst consensus was for the company to earn $6.17 per share on revenue of $1.6 billion. Shares are trading sharply lower this morning, which expresses the level of disappointment among shareholders.
Other News About Salix Pharmaceuticals
Salix Audit Committee to Review Inventory as CFO Resigns
Company has hired attorneys to review how wholesale inventories were characterized.
Salix Pharmaceuticals Appoints Acting Chief Financial Officer
Company appoints Timothy J. Creech as Acting Chief Financial Officer.
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