Bristol-Myers Q3 Profit Falls; Lifts FY09 EPS Forecast - Update

(RTTNews) - Drug maker Bristol-Myers Squibb Co. (BMY | Quote | Chart | News | PowerRating), Thursday reported a drop in third quarter profit, mainly due to the absence of a substantial one-time gain recorded in the prior-year quarter from the sales of ConvaTec wound-care business. Excluding items, earnings managed to come in above estimates. Driven by strong revenues from anti-blood clotting drug Plavix and depression drug Abilify, sales, however, grew 4%. Further, Bristol-Myers Squibb raised its full-year 2009 earnings forecast from the prior range.

For the third quarter, net income attributable to Bristol-Myers Squibb dropped to $966 million or $0.48 per share from $2.58 billion or $1.28 per share in the same quarter a year ago. Prior-year results included a gain of $1.99 billion recorded from the sale of ConvaTec wound-care business.

Net earnings from continuing operations attributable to Bristol-Myers Squibb rose to $966 million or $0.48 per share from $588 million or $0.29 per share in the corresponding quarter last year.

On a non-GAAP basis, earnings from continuing operations attributable to Bristol-Myers Squibb was $1.05 million or $0.52 per share, compared to $910 million or $0.45 per share in the comparable quarter a year ago.

On average, 15 analysts polled by Thomson Reuters expected earnings of $0.51 per share for the quarter. Analysts' estimate typically excludes one-time items.

Bristol-Myers Squibb's sales for the quarter improved 4% to $5.49 billion from $5.25 billion in the same quarter a year ago. Excluding the impact of foreign exchange, the increase was 7%. Street expected sales of $5.52 billion for the quarter.

In the preceding second quarter, Bristol-Myers Squibb reported a profit that rose 28.7% to $1.30 billion, benefiting mainly from double-digit sales growth of both its blood-thinning drug Plavix and antipsychotic drug Abilify. Net sales was up 3% at $5.38 billion.

Amongst others in the industry, Drug maker Merck & Co. Inc. (MRK | Quote | Chart | News | PowerRating), reported a surge in third quarter profit helped by the sale of its interest in animal health business Merial Limited, as well as the growth of its key products and cost control. Profit for the quarter was $3.424 billion or $1.61 per share. Sales rose 2% to $6.05 billion.

Another player in the same industry, Swiss drug-maker Novartis AG (NVS | Quote | Chart | News | PowerRating) reported a marginal increase in third-quarter profit, as local currency sales growth at Pharmaceuticals, Consumer Health and Sandoz divisions offset sharply lower sales from Vaccines and Diagnostic segment. Net income attributable to shareholders marginally was US$ 2.1 billion. Sales grew 3% to US$11.09 billion.

For the quarter under review, BioPharmaceuticals net sales of Bristol-Myers Squibb rose 6% to $4.8 billion from the same quarter a year ago. Excluding foreign exchange impact, the increase was 9%. U.S. BioPharmaceuticals net sales increased 12% to $3 billion, while International BioPharmaceuticals net sales decreased 2%, or increased 5% excluding foreign exchange impact, to $1.8 billion.

Sales growth in the BioPharmaceutical segment was led by continued sales increases for Plavix and strong global sales growth for Abilify.

Mead Johnson's net sales totaled $699 million, representing a 6% decrease, or 2% excluding foreign exchange impact, compared to the same period in 2008. Bristol-Myers Squibb also said its share of Mead Johnson's earnings decreased by 20% to $127 million impacted by items attributed to the February 2009 initial public offering, including the 17% reduction in ownership.

Gross profit improved to 71.5% of net sales from 68.9% in the same quarter of 2008, driven by higher biopharmaceutical average prices, realized manufacturing efficiencies, including savings from continuous improvement efforts, favorable foreign exchange impact and favorable worldwide product mix.

Marketing, selling and administrative expenses decreased by 8%, or 5% excluding foreign exchange impact, to $1.1 billion, primarily due to a continued reduction in general and administrative expenses through continuous improvement initiatives.

Research and development expenses were relatively flat or increased 2% excluding foreign exchange impact, to $838 million from the same period in 2008. Based on Mead Johnson Nutrition's announcement that it is considering options to refinance its outstanding inter-company debt, Bristol-Myers Squibb expects to receive approximately $1.75 billion in cash upon closing of the refinancing.

The company maintains a strong net cash position of $1.3 billion. This takes into account the $2.1 billion net impact of the Medarex acquisition.

For the nine-month period, net earnings attributable to Bristol-Myers Squibb decreased to $2.59 billion or $1.30 per share from $4.00 billion or $0.98 per share in the corresponding period a year ago. Prior year results included a gain from discontinued operations of $2.05 billion. Net earnings from continuing operations attributable to Bristol-Myers Squibb increased to $2.59 billion or $1.30 per share from $1.96 billion or $0.98 per share in the prior-year period.

On a non-GAAP basis, earnings increased to $3.11 billion or $1.56 per share from $2.56 billion or $1.28 per share in the year-earlier period. Net sales was $15.89 billion, up compared to $15.35 billion in the year-earlier period.

Looking ahead, Bristol-Myers Squibb said it now sees full-year 2009 earnings from continuing operations in a range of $1.72 to $1.77 per share, while refining its non-GAAP earnings from continuing operations to a range of $2.00 to $2.05 per share.

Previous forecast for full year 2009 earnings was in the range of $1.58 to $1.68 per share and non-GAAP earnings in the range of $1.95 to $2.05 per share. Full year 2009 guidance include mid single-digit revenue growth, a full-year gross margin improvement of approximately 200 basis points and other factors.

The company also reaffirmed non-GAAP earnings from continuing operations attributable to the company to grow at a minimum 15% compounded annual growth rate, from the 2007 base through 2010 without rebasing for the sale of the ConvaTec business, excluding the impact of any U.S. healthcare reforms, costs associated with productivity transformation initiatives and other specified items that have not yet been identified and quantified.

Bristol-Myers Squibb also noted that the financial guidance for 2009 and the three-year compound annual growth rate include the impact of acquisition of Medarex and exclude any potential future strategic acquisitions and divestitures. The acquisition of Medarex is expected to decrease earnings by $0.02 to $0.03 per share in 2009 and $0.07 to $0.09 per share in 2010.

On October 9, 2009, brokerage Wells Fargo initiated an 'Outperform' rating on Bristol-Myers Squibb shares, with a mean target of $23.98.

BMY is currently trading at $22.44, down $0.25 or 1.10%, on a volume of 8.86 million shares. In the last 52-week period, the stock traded in the range of $17.10 to $23.98, with a three-month average volume of 11.04 million shares.

For comments and feedback: contact editorial@rttnews.com Copyright(c) 2009 RTTNews.com, Inc. All Rights Reserved

More News:   Market Updates | Stock Alerts | All Trading News | Stock Index