SCOTTSDALE, Ariz., Feb. 27, 2008 (PRIME NEWSWIRE) -- Medicis (NYSE:MRX) today announced revenues for the three months ended December 31, 2007 of approximately $140.3 million, compared to approximately $99.1 million for the three months ended December 31, 2006, representing an increase of approximately 42%. This increase was primarily due to strength in prescriptions of our core acne products, which include SOLODYN(R), TRIAZ(R) and ZIANA(R). Medicis' net income in accordance with U.S. generally accepted accounting principles ("GAAP") for the three months ended December 31, 2007 was approximately $27.5 million, or approximately $0.41 per diluted share, compared to net income in accordance with GAAP of $17.9 million, or approximately $0.27 per share, for the three months ended December 31, 2006. Non-GAAP net income for the three months ended December 31, 2007 was approximately $36.8 million, or approximately $0.54 per diluted share, compared to GAAP and non-GAAP net income of $17.9 million, or $0.27 per diluted share, for the three months ended December 31, 2006. There were no non-GAAP adjustments for the three months ended December 31, 2006.
Non-GAAP net income and earnings per share for the three months ended December 31, 2007 include adjustments only for $8.0 million of research and development expenses and $1.3 million of selling, general and administrative expenses related to the Company's strategic collaboration agreement with Revance Therapeutics, Inc. ("Revance"). These adjustments totaled $9.3 million pre-tax and net of tax, as the expenses did not generate related income tax benefits.
The Company's achievement of $140 million in revenues and non-GAAP earnings of $0.54 per diluted share compares favorably to the Company's published guidance of approximately $130 million in revenues and approximately $0.43 in non-GAAP earnings per diluted share for the three months ended December 31, 2007.
"We are pleased to announce an exciting and eventful 2007," said Jonah Shacknai, Chairman and Chief Executive Officer of Medicis. "During 2007, our revenues and cash flow reached record levels. Additionally, we launched ZIANA(R) and PERLANE(R), focused vigorously on strategies to protect the SOLODYN(R) franchise, expanded our aesthetic sales force, successfully launched our direct-to-consumer ad campaign for RESTYLANE(R) and submitted the Biologics License Application ("BLA") for RELOXIN(R) in aesthetics to the U.S. Food and Drug Administration ("FDA"), and at present we are working actively with FDA to address and resolve certain questions related to this submission. As we celebrate our 20th anniversary in 2008, the preservation of SOLODYN(R), seeking approval of our RELOXIN(R) BLA and continued business development opportunities are our paramount focus. We thank our physicians and patients for their support, and our shareholders for their loyalty as we remain committed to enhancing long-term value."
Revenues for the twelve months ended December 31, 2007 were approximately $464.7 million, compared to $349.2 million for the twelve months ended December 31, 2006, representing a year-over-year increase of approximately 33%. GAAP net income for the twelve months ended December 31, 2007 was $75.1 million, or $1.14 per diluted share, compared to a GAAP net loss of $75.8 million, or $1.39 per share for the twelve months ended December 31, 2006. Non-GAAP net income for the twelve months ended December 31, 2007 was approximately $88.3 million, or approximately $1.33 per diluted share, compared to non-GAAP net income of $53.0 million, or $0.85 per diluted share, for the twelve months ended December 31, 2006.
Non-GAAP net income and earnings per share for the twelve months ended December 31, 2007 include adjustments for $8.0 million of research and development expenses and $1.3 million of selling, general and administrative expenses related to the Company's investment in Revance, a $4.1 million charge ($2.6 million tax-effected) for the impairment of an intangible asset, and $2.2 million ($1.4 million tax-effected) of professional fees related to the Company's collaboration agreement with Hyperion Therapeutics, Inc. Non-GAAP net income and earnings per share for the twelve months ended December 31, 2006 include adjustments for research and development expenses related to the strategic collaboration with Ipsen for the development of RELOXIN(R), professional fees and other selling, general and administrative expenses related to the strategic collaboration agreement with Ipsen for the development of RELOXIN(R), the impairment of intangible assets and legal settlements.
The Company's achievement of $464.7 million in revenues and non-GAAP earnings of $1.33 per diluted share compares favorably to the Company's most recent published guidance of approximately $454 million in revenues and approximately $1.22 in non-GAAP earnings per diluted share for the twelve months ended December 31, 2007. The Company's non-GAAP earnings per diluted share guidance at the beginning of 2007 was $1.12.
Medicis provides non-GAAP financial information which has been adjusted for items such as research and development milestone and contract payments, certain transaction-related professional fees, impairment of intangible assets and litigation reserves. Adjusted financial information is referred to as "non-GAAP." Further discussion of the non-GAAP financial information, as well as a reconciliation of the non-GAAP financial results to Medicis' GAAP financial results can be found below.
Acne Products
Medicis recorded revenues of approximately $79.5 million from sales of its acne products in the three months ended December 31, 2007, which is a $14.5 million, or 22.3% increase in acne product sales, compared to the three months ended December 31, 2006. Medicis' core acne products include SOLODYN(R), TRIAZ(R) and ZIANA(R).
Non-Acne Products
Medicis recorded revenues of approximately $46.9 million from sales of its non-acne products in the three months ended December 31, 2007, which is a $20.9 million, or 80.1% increase in non-acne product sales, compared to the three months ended December 31, 2006. Revenues for the three months ended December 31, 2006 are net of an $8.9 million increase in sales returns reserves, for VANOS(R). Medicis' non-acne products include primarily PERLANE(R), RESTYLANE(R), LOPROX(R) and VANOS(R).
Other Non-Dermatological Products
Medicis recorded revenues of approximately $13.8 million associated with its other non-dermatological products during the three months ended December 31, 2007, which represented an increase of $5.8 million, or 72.3%, compared to the three months ended December 31, 2006. The increase in other non-dermatological products compared to the three months ended December 31, 2006 was due to increased revenues associated with sales of AMMONUL(R) and BUPHENYL(R), contract revenues associated with the collaboration agreement consummated during the third quarter of 2007 with Hyperion, and authorized generics. Medicis' other non-dermatological products category includes primarily AMMONUL(R), BUPHENYL(R) and contract revenue.
Other Income Statement Items
Gross Profit Margins
Gross profit margin for the three months ended December 31, 2007 was approximately 93.6%, compared to approximately 88.3% for the three months ended December 31, 2006. The increase of 5.3 percentage points was due primarily to the mix of products sold during the three months ended December 31, 2007 as compared to the three months ended December 31, 2006. The increase was driven by sales of high gross margin products such as SOLODYN(R), ZIANA(R), RESTYLANE(R) and PERLANE(R).
Selling, General and Administrative Expenses
GAAP selling, general and administrative ("SG&A") expenses for the three months ended December 31, 2007 were approximately $65.5 million, or approximately 46.7% of revenues, compared to approximately $50.9 million, or approximately 51.4% of revenue, for the three months ended December 31, 2006. The decrease in SG&A as a percentage of revenue was primarily due to the increase in revenue (approximately 42%) outpacing the increase in SG&A. The increase in SG&A as compared to the same period last year was primarily due to personnel costs associated with the aesthetic sales force expansion and annual salary increases, increased professional and consulting expenses, including $1.3 million of professional fees related to our strategic collaboration with and investment in Revance, promotional programs for RESTYLANE(R), and costs related to the development and implementation of our new ERP system. Approximately $5.4 million was recorded in SG&A related to FAS 123R share-based compensation expense for the three months ended December 31, 2007 as compared to $4.8 million for the three months ended December 31, 2006.
Research and Development Expenses
GAAP research and development expenses (R&D) for the three months ended December 31, 2007 were approximately $16.9 million, or approximately 12.1% of revenue, compared to approximately $11.9 million, or approximately 12.0% of revenue, for the three months ended December 31, 2006. GAAP R&D expenses for the three months ended December 31, 2007 included $8.0 million related to the Company's strategic collaboration with Revance. R&D expenses for the three months ended December 31, 2007 and three months ended December 31, 2006 consisted of ongoing expenses related to various R&D projects.
Cash Flow
The Company's cash flow from operations was nearly $159 million for the twelve months ended December 31, 2007. This includes cash payments of approximately $9 million related to our strategic collaboration with and investment in Revance during the three months ended December 31, 2007. The additional $12 million paid to Revance under the strategic collaboration agreement was reflected in cash flow used in investing activities.
2008 Guidance
Based upon information available currently to the Company's management, the Company's financial guidance for 2008 is anticipated as follows:
Calendar 2008
(in millions, except per share amounts)
First Second Third Fourth Calendar
Quarter Quarter Quarter Quarter Year End
(3/31/08) (6/30/08) (9/30/08) (12/31/08) 2008
Estimated Estimated Estimated Estimated Estimated
----------------------------------------------------------
Revenue $130-$133 $132-$135 $132-$135 $134-$137 $528-$540
Non-GAAP
diluted
earnings
per share
objec-
tives $0.32-$0.35 $0.32-$0.35 $0.37-$0.40 $0.42-$0.45 $1.43-$1.56
Other annual 2008 guidance:
-- gross profit margins of approximately 90% of revenues;
-- SG&A expenses of approximately 51-52% of revenues;
-- R&D expenses of approximately 8% of revenues;
-- depreciation and amortization of approximately $27-$28 million
for the year;
-- effective tax rate of approximately 38-39%;
-- diluted earnings per share of $1.43-$1.56;
-- the non-GAAP diluted earnings per share figures above reflect the
impact of FAS 123R, totaling approximately $17-$18 million for the
year; and
-- fully diluted weighted average shares outstanding of approximately
71-73 million shares.
The above guidance excludes certain potential special charges associated with R&D milestones or contract payments, the financial impact of changes in accounting or governmental pronouncements, the impact of a potential generic launch to SOLODYN(R), revenue associated with a RELOXIN(R) approval, and charges related to the accounting for the Revance transaction.
At the time of this disclosure, Medicis believes these objectives are attainable based upon information currently available to the Company's management.
Diluted Earnings Per Share
Diluted earnings per share amounts are calculated using the "if-converted" method of accounting regardless of whether the Company's outstanding convertible bonds meet the criteria for conversion and regardless of whether the bondholders actually convert their bonds into shares.
Use of Non-GAAP Financial Information
The Company has disclosed non-GAAP financial information in this press release to provide meaningful supplemental information regarding its operational performance and to enhance its investors' overall understanding of its core financial performance. Management measures the Company's performance using non-GAAP financial measures such as those that are disclosed in this press release. This information facilitates management's internal comparisons to the Company's historical core operating results, comparisons to competitors' core operating results and is a basis for financial decision making. Management believes that Medicis' investors benefit from seeing the Company's results on the same basis as management, in addition to the GAAP presentation. In our view, the non-GAAP financial measures are informative to investors, allowing them to focus on the ongoing operations and the core results of Medicis' business. Historically, Medicis has reported similar non-GAAP information to its investors and believes that the inclusion of comparative numbers provides consistency in the Company's financial disclosures. This information is not in accordance with, or an alternative for, information prepared using GAAP. It excludes items, such as special charges for R&D, transaction costs, the impairment of long-lived assets, and litigation reserves that may have a material effect on the Company's net income and diluted net income per common share calculated in accordance with GAAP. The Company excludes such charges and the related tax benefits when analyzing its financial results as the items are distinguishable events. Management believes that by viewing the Company's results of operations excluding these charges, investors are given an indication of the ongoing results of the Company's operations.
About Medicis
Medicis is the leading independent specialty pharmaceutical company in the United States focusing primarily on the treatment of dermatological and aesthetic conditions. The Company is dedicated to helping patients attain a healthy and youthful appearance and self-image. Medicis has leading branded prescription products in a number of therapeutic and aesthetic categories. The Company's products have earned wide acceptance by both physicians and patients due to their clinical effectiveness, high quality and cosmetic elegance.
The Company's products include the prescription brands RESTYLANE(R) (hyaluronic acid), PERLANE(R) (hyaluronic acid), DYNACIN(R) (minocycline HCl), LOPROX(R) (ciclopirox), PLEXION(R) (sodium sulfacetamide/sulfur), SOLODYN(R) (minocycline HCl, USP) Extended Release Tablets, TRIAZ(R) (benzoyl peroxide), LIDEX(R) (fluocinonide) Cream, 0.05%, VANOS(R) (fluocinonide) Cream, 0.1%, and ZIANA(R) (clindamycin phosphate 1.2% and tretinoin 0.025%) Gel, BUPHENYL(R) (sodium phenylbutyrate) and AMMONUL(R) (sodium phenylacetate/sodium benzoate), prescription products indicated in the treatment of Urea Cycle Disorder, and the over-the-counter brand ESOTERICA(R). For more information about Medicis, please visit the Company's website at www.medicis.com.
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act. All statements included in this press release that address activities, events or developments that Medicis expects, believes or anticipates will or may occur in the future are forward-looking statements, including:
-- Medicis' future prospects;
-- revenues, gross profit margin, expense, tax rate and earnings
guidance;
-- information regarding business development activities and future
regulatory approval of the Company's products;
-- the commercial success of PERLANE(R), SOLODYN(R) and ZIANA(R);
-- the patentability of certain intellectual property;
-- the potential for generic competition to SOLODYN(R);
-- the future expansion of the aesthetics market; and
-- expectations relating to the Company's product development
pipeline, including the timing associated with the re-submission
to, or acceptance by, the FDA of our Biologics License Application
for RELOXIN(R).
These statements are based on certain assumptions made by Medicis based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. No assurances can be given, however, that these activities, events or developments will occur or that such results will be achieved. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Medicis. The Company's business is subject to all risk factors outlined in the Company's most recent annual report on Form 10-K for the year ended December 31, 2006, and other documents we file with the Securities and Exchange Commission. At the time of this press release, the Company cannot, among other things, assess the likelihood, timing or forthcoming results of R&D projects, the risks associated with the FDA approval process and risks associated with significant competition within the Company's industry, nor can the Company validate its assumptions of the full impact on its business of the approval of competitive generic versions of the Company's primary brands, and any future competitive product approvals that may affect the Company's brands, including the RESTYLANE(R) franchise. The RESTYLANE(R) franchise currently includes PERLANE(R) and RESTYLANE(R).
Additionally, Medicis may acquire and/or license products or technologies from third parties to enter into new strategic markets. The Company periodically makes up-front, non-refundable payments to third parties for R&D work that has been completed and periodically makes additional non-refundable payments for the achievement of various milestones. There can be no certainty about the periods in which these potential payments could be made, nor if any payments such as these will be made at all. Any estimated future guidance does not include, among other things, the potential payments associated with any such transactions.
There are a number of additional important factors that could cause actual results to differ materially from those projected, including:
-- the anticipated size of the markets and demand for Medicis'
products;
-- the availability of product supply or changes in the costs of raw
materials;
-- the receipt of required regulatory approvals;
-- competitive developments affecting our products, such as the
recent FDA approvals of ARTEFILL(R), RADIESSE(R), ELEVESS(TM),
JUVEDERM(TM) Ultra and JUVEDERM(TM) Ultra Plus, competitors to
RESTYLANE(R) and PERLANE(R), and generic forms of our DYNACIN(R)
Tablets, LOPROX(R), PLEXION(R), SOLODYN(R) or TRIAZ(R) products;
-- product liability claims;
-- the introduction of federal and/or state regulations relating to
the Company's business;
-- dependence on sales of key products;
-- changes in the treatment practices of physicians that currently
prescribe the Medicis products, including prescription levels;
-- the uncertainty of future financial results and fluctuations in
operating results, and the factors that may attribute to such
fluctuations as set forth in our SEC filings;
-- dependence on Medicis' strategy (including the uncertainty of
license payments and/or other payments due from third parties);
-- changes in reimbursement policies of health plans and other health
insurers;
-- the timing and success of new product development by Medicis or
third parties;
-- the inability to secure patent protection from filed patent
applications, inadequate protection of Medicis' intellectual
property or challenges to the validity or enforceability of the
Medicis' proprietary rights;
-- the risks of pending and future litigation or government
investigations; and
-- other risks described from time to time in Medicis' filings with
the Securities and Exchange Commission.
Forward-looking statements represent the judgment of Medicis' management as of the date of this release and Medicis disclaims any intent or obligation to update any forward-looking statements contained herein, which speak as of the date hereof.
NOTE: Full prescribing information for any of Medicis' prescription products is available by contacting the Company. RESTYLANE(R) and PERLANE(R) are trademarks of HA North American Sales AB, a subsidiary of Medicis Pharmaceutical Corporation. All other trademarks are the property of their respective owners.
Medicis Pharmaceutical Corporation
Summary Statements of Operations (Unaudited)
--------------------------------------------
(in thousands, except per share data)
Three months ended Twelve months ended
December 31, December 31,
-------------------- --------------------
2007 2006 2007 2006
-------------------- --------------------
Product revenues $ 134,319 $ 95,704 $ 449,125 $ 333,626
Contract revenues 5,932 3,363 15,526 15,617
--------- --------- --------- ---------
Total revenues 140,251 99,067 464,651 349,243
Cost of revenues 8,998 11,626 50,968 41,742
--------- --------- --------- ---------
Gross profit 131,253 87,441 413,683 307,501
Operating expenses:
Selling, general and
administrative 65,477 50,893 247,917 206,822
Impairment of intangible
assets -- -- 4,067 52,586
Research and
development 16,921 11,869 39,428 161,837
Depreciation and
amortization 6,755 5,538 24,548 23,048
--------- --------- --------- ---------
Total operating
expenses 89,153 68,300 315,960 444,293
Operating income (loss) 42,100 19,141 97,723 (136,792)
Interest income, net 7,894 5,918 28,372 20,147
Income tax expense (benefit) 22,515 7,207 51,044 (40,795)
--------- --------- --------- ---------
Net income (loss) $ 27,479 $ 17,852 $ 75,051 $ (75,850)
========= ========= ========= =========
Basic net income (loss) per
common share $ 0.49 $ 0.32 $ 1.34 $ (1.39)
Diluted net income (loss)
per common share $ 0.41 $ 0.27 $ 1.14 $ (1.39)
Shares used in basic net
income (loss) per common
share 56,263 55,139 55,988 54,688
Shares used in diluted net
income (loss) per common
share 70,980 71,314 71,246 54,688
Cash flow from (used in)
operations $ 31,406 $ 33,776 $ 158,944 $ (40,963)
Medicis Pharmaceutical Corporation
Balance Sheets
(in thousands)
December 31, December 31,
2007 2006
----------- -----------
Assets
Cash, cash equivalents & short-term
investments $ 794,680 $ 554,261
Accounts receivable, net 12,377 36,370
Inventory, net 29,973 27,016
Other current assets 18,049 15,990
----------- -----------
Total current assets 855,079 633,637
Property & equipment, net 13,850 6,576
Intangible assets, net 236,561 232,314
Deferred tax asset 59,445 65,234
Long-term investments 17,072 130,290
Other assets 12,622 2,181
----------- -----------
Total assets $ 1,194,629 $ 1,070,232
=========== ===========
Liabilities and stockholders' equity
Contingent convertible senior notes 2.5%,
due 2032 $ -- $ 169,155
Contingent convertible senior notes 1.5%,
due 2033 283,910 --
Other current liabilities 111,090 107,608
----------- -----------
Total current liabilities 395,000 276,763
Contingent convertible senior notes 2.5%,
due 2032 169,145 --
Contingent convertible senior notes 1.5%,
due 2033 -- 283,910
Other liabilities 8,529 --
Stockholders' equity 621,955 509,559
----------- -----------
Total liabilities and stockholders' equity $ 1,194,629 $ 1,070,232
=========== ===========
Working capital $ 460,079 $ 356,874
=========== ===========
Medicis Pharmaceutical Corporation
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands, except per share data)
Three months ended Year ended
December 31, 2007 December 31, 2007
---------------------- ----------------------
Dollar EPS Dollar EPS
Value Impact Value Impact
---------- ---------- ---------- ----------
GAAP net income $ 27,479 $ 0.49 $ 75,051 $ 1.34
Interest expense and
associated bond
offering cost (tax-
effected) 1,505 (a) 6,306 (a)
---------- ----------
GAAP "if-converted"
net income and
diluted EPS $ 28,984 $ 0.41 $ 81,357 $ 1.14
Non-GAAP adjustments:
Research and
development expense
related to strategic
collaboration
with Revance 8,043 0.11 8,043 0.11
Professional fees
related to Revance
strategic
collaboration
agreement 1,277 0.02 1,277 0.02
Impairment of
intangible assets -- -- 4,067 0.06
Professional fees
related to Hyperion
strategic
collaboration
agreement -- -- 2,150 0.03
Income tax effects -- -- (2,257) (0.03)
---------- ---------- ---------- ----------
Non-GAAP "if-
converted" net income
and diluted EPS $ 38,304 $ 0.54 $ 94,637 $ 1.33
========== ========== ========== ==========
Shares used in basic
net income per
common share 56,263 55,988
Shares used in
diluted net income
per common share 70,980 71,246
(a) In order to determine "if-converted" net income, the tax-
effected net interest on the 2.5% and 1.5% contingent
convertible notes and the associated bond offering costs of
$1.5 million and $6.3 million are added back to GAAP net
income for the three months and year ended December 31, 2007,
respectively.
Medicis Pharmaceutical Corporation
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands, except per share data)
Three months ended Year ended
December 31, 2006 December 31, 2006
---------------------- -----------------------
Dollar EPS Dollar EPS
Value Impact Value Impact
---------- ---------- ---------- ----------
GAAP net income
(loss) $ 17,852 $ 0.32 $ (75,850) $ (1.39)
Interest expense and
associated bond
offering costs
(tax-effected) 1,674 (a) 6,703 (a)
---------- ----------
GAAP "if-converted"
net income (loss)
and diluted EPS $ 19,526 $ 0.27 $ (69,147) $ (0.99)
Non-GAAP adjustments:
Research and
development expense
related to strategic
collaboration with
Ipsen for the
development of
Reloxin -- -- 129,191 1.84
Professional fees and
other selling,
general and
administrative
expenses related to
collaboration
agreement with
Ipsen for the
development of
Reloxin -- -- 1,024 0.02
Impairment of
intangible assets -- -- 52,586 0.75
Legal settlements -- -- 7,833 0.11
Income tax effects -- -- (61,783) (0.88)
---------- ---------- ---------- ----------
Non-GAAP "if-
converted" net
income and diluted
EPS $ 19,526 $ 0.27 $ 59,704 $ 0.85
========== ========== ========== ==========
Shares used in
basic net income
per common share 55,139 54,688
Shares used in
diluted net income
per common share 71,314 70,064
(a) In order to determine "if-converted" net income, the tax-
effected net interest on the 2.5% and 1.5% contingent convertible
notes and the associated bond offering costs of $1.7 million
and $6.7 million are added back to GAAP net income for the three
months and year ended December 31, 2006, respectively.
The following table represents a reconciliation of the GAAP effective tax rate to the non-GAAP effective tax rate for the three months and year ended December 31, 2007. All numbers are shown in thousands, except percentages.
Three Months Year
Ended Ended
December 31, December 31,
2007 2007
------------- -----------
GAAP Effective Tax Rate:
------------------------
GAAP net income before income tax expense $ 49,994 $ 126,095
GAAP income tax expense $ 22,515 $ 51,044
GAAP effective tax rate 45.0% 40.5%
Non-GAAP Effective Tax Rate:
----------------------------
GAAP net income before income tax expense $ 49,994 $ 126,095
Non-GAAP adjustments:
---------------------
Research and development expense related to
strategic collaboration with Revance $ 8,043 $ 8,043
Professional fees related to Revance
strategic collaboration agreement $ 1,277 $ 1,277
Impairment of intangible assets $ -- $ 4,067
Professional fees related to Hyperion
strategic collaboration agreement $ -- $ 2,150
--------- ---------
Non-GAAP net income before income tax
expense $ 59,314 $ 141,632
========= =========
GAAP income tax expense $ 22,515 $ 51,044
Non-GAAP adjustments:
---------------------
Income tax benefit related to research and
development expense related to strategic
collaboration with Revance $ -- $ --
Income tax benefit related to professional
fees related to Revance
strategic collaboration agreement $ -- $ --
Income tax benefit related to impairment of
intangible assets $ -- $ 1,477
Income tax benefit related to professional
fees related to Hyperion Strategic
collaboration agreement $ -- $ 780
--------- ---------
Non-GAAP income tax expense $ 22,515 $ 53,301
========= =========
Non-GAAP effective tax rate 38.0% 37.6%