CONTACT: Kara Stancell,
Investor Relations & Corporate Communications, (602) 808-3854
MEDICIS REPORTS SECOND QUARTER FISCAL 2005 FINANCIAL RESULTS;
31% Increase in Revenues and 50% Increase in Earnings Per Share,
Absent Special Charges
SCOTTSDALE, Arizona--January 20, 2005--Medicis (NYSE:MRX) today announced second
quarter fiscal 2005 net revenue growth of approximately 31% to $92.3 million
with "if-converted" net income of $25.4 million, or $0.36 per diluted share,
absent a $3.5 million tax-effected special charge associated with a research and
development collaboration, compared to second quarter fiscal 2004 net revenues
of $70.6 million with "if-converted" net income of $16.9 million, or $0.24 per
diluted share, absent a $1.6 million tax-effected special charge associated with
a research and development collaboration. Including the tax-effected special
charge of $3.5 million, the Company reported Generally Accepted Accounting
Principles ("GAAP") net income of $20.2 million, or $0.31 per diluted share for
the second quarter of fiscal 2005. Including the tax-effected special charge of
$1.6 million, the Company reported GAAP net income of $13.6 million, or $0.21
per diluted share for the second quarter of fiscal 2004. Diluted per share
amounts are calculated using the "if-converted" method of accounting in
accordance with GAAP.
Second quarter fiscal 2005 net revenues increased primarily due to RESTYLANE(R)
and PLEXION(R). At the end of the second quarter, the Company's core brands
included RESTYLANE(R), DYNACIN(R), LOPROX(R), OMNICEF(R), PLEXION(R) and
TRIAZ(R). For the second quarter of fiscal 2005, the Company's core brands
represented approximately 78% of total revenue. Additionally, the Company's
gross profit margin for second quarter fiscal 2005 increased to approximately
85% from approximately 84% over the prior year.
For the first six months of fiscal 2005, Medicis reported net revenue growth of
approximately 35% to $181.2 million with "if-converted" net income of $47.4
million, or $0.66 per diluted share, absent a $19.4 million tax-effected special
charge associated with the SubQ(TM) transaction reported in the first quarter of
fiscal 2005 and absent a $3.5 million tax-effected special charge associated
with a research and development collaboration with Ansata Therapeutics reported
in second quarter fiscal 2005. Including the tax-effected special charges of
$22.9 million reported in the first half of fiscal 2005, Medicis reported net
income of $21.2 million, or $0.34 per diluted share for the first six months of
fiscal 2005.
For the first six months of fiscal 2004, Medicis reported net revenues of $133.9
million with "if-converted" net income of $29.0 million, or $0.41 per diluted
share, absent a $37.5 million tax-effected loss associated with the early
extinguishment of debt reported in the first quarter of fiscal 2004 and absent a
$1.6 million tax-effected special charge associated with a research and
development collaboration reported in second quarter fiscal 2004. Including the
tax-effected special charges of $37.5 million and $1.6 million reported in the
first half of fiscal 2004, Medicis reported a net loss of $13.5 million, or
$(0.25) per diluted share for the first six months of fiscal 2004.
The 35% increase in net revenues for the first six months of fiscal 2005 was
primarily attributable to growth in the RESTYLANE(R), DYNACIN(R) and PLEXION(R)
brands. In the first half of fiscal 2005, the Company's core brands represented
approximately 77% of total revenue. Additionally, the Company's gross profit
(more)
margin for the first half of fiscal 2005 increased to approximately 85% from 84%
over the prior year.
Selling, general and administrative expenses in second quarter fiscal 2005 were
$32.3 million, or approximately 35% of revenues compared to $29.1 million, or
approximately 41% of revenues in the second quarter fiscal 2004, a decrease as a
percentage of revenues of approximately 6 percentage points. The $3.2 million
increase in selling, general and administrative expenses primarily was due to
incremental costs associated with RESTYLANE(R). The decrease in percentage of
revenues primarily was due to second quarter fiscal 2005 revenues outpacing the
increase in selling, general and administrative spending.
Research and development expenses for the second quarter of fiscal 2005
increased approximately 31% to $4.4 million, or approximately 5% of revenues,
absent special charges, compared to $3.3 million, or approximately 5% of
revenues, in second quarter fiscal 2004.
"We are pleased to announce a solid second quarter," said Jonah Shacknai,
Chairman and Chief Executive Officer of Medicis. "Continued growth of
RESTYLANE(R), LOPROX(R) Shampoo and DYNACIN(R) Tablets highlighted the quarter,
along with the introduction of our innovative PLEXION(R) Cleansing Cloths. We
were delighted to enter into a research and development collaboration with
Ansata Therapeutics for a unique peptide technology. As we enter the second half
of fiscal 2005, we anticipate continuation of our `emergence' theme with the
goal of introducing at least one new product from our vigorous research and
development pipeline. Our commitment to shareholder value, physicians and
patients remains resolute."
In second quarter fiscal 2005, approximately $84 million of common shares were
repurchased under the stock repurchase program approved by the Company's Board
of Directors in August 2004 (2,177,286 shares at an average market price of
$38.65). As of December 31, 2004, the repurchase authorization amount of up to
$150 million in common stock under the new program has been met.
Medicis previously released updated fiscal 2005 revenue guidance of
approximately $375 million and earnings per share guidance of $1.42. The Company
is raising its previous fiscal 2005 revenue guidance by $1 million to
approximately $376 million, and earnings per share guidance by $0.01 to $1.43,
excluding special charges. Based upon information available currently to the
Company and as a result of the second quarter fiscal 2005 results, the Company's
financial guidance is as follows:
Fiscal Year 2005
ending June 30, 2005
(in millions, except per share amounts)
First Quarter Second Quarter Third Quarter Fourth Quarter Fiscal Year
(9/30/04) (12/31/04) (3/31/05) (6/30/05) 2005
Actual Actual Estimated Estimated Estimated
------------- -------------- ------------- -------------- -----------
Current revenue
objectives $89 $92 $95 $100 $376
Previous EPS guidance* $0.29 $0.35 $0.36 $0.42 $1.42
Current EPS objectives,
including EITF Issue
04-8 impact of contingent
convertible securities* $0.30 $0.36 $0.36 $0.41 $1.43
*Excluding tax-effected special charges relating to research and development
collaborations and including the application of the "if-converted" method in
accordance with GAAP.
(more)
At its June 30-July 1, 2004 meeting, the Emerging Issues Task Force ("EITF")
began discussing Issue 04-8, "Accounting Issues Related to Certain Features of
Contingently Convertible Debt and the Effect on Diluted Earnings per Share," and
the accounting for contingently convertible debt instruments, commonly referred
to as "CoCos." At its subsequent September 29-30, 2004 meeting, the EITF reached
a conclusion that CoCos should be included in diluted earnings per share
computations (if dilutive) regardless of whether the market price trigger has
been met, effective for periods ending after December 15, 2004.
As a result of the EITF's conclusion, second quarter fiscal 2005 and second
quarter fiscal 2004 diluted per share amounts and year-to-date diluted per share
amounts are calculated using the "if-converted" method of accounting in
accordance with GAAP regardless of whether the outstanding 2.5% Convertible
Senior Notes and 1.5% Convertible Senior Notes meet the criteria for conversion
and regardless of whether the bondholders actually convert their bonds into
shares. For second quarter fiscal 2004, the dilutive shares relative to the
convertible notes do not impact GAAP earnings per share, as they are
anti-dilutive.
At the time of this disclosure, Medicis believes these objectives are attainable
based upon information currently available to the Company. The Company's
business is subject to all risk factors outlined in the Company's most recent
annual report on Form 10-K and other filed documents with the Securities and
Exchange Commission. At the time of this release, the Company cannot, among
other things, assess the forthcoming results of the Company's research and
development projects and the risks associated with the FDA approval process,
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 core brands, in
particular, the recent approval of a generic LOPROX(R) Cream or a substitutable
DYNACIN(R) Tablet form, any future competitive product approvals that may affect
the Company's brands. 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 research and development work which has been completed and periodically
makes additional non-refundable payments for the achievement of various
milestones. There can be no certainty which periods these potential payments
could be made, nor if any payments such as these will be made at all. The above
estimated future guidance does not include the potential payments associated
with any such transactions.
Medicis is the leading independent specialty pharmaceutical company in the
United States focusing primarily on the treatment of dermatological and
podiatric conditions and aesthetics medicine. 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
categories, including acne, eczema, fungal infections, psoriasis, rosacea,
seborrheic dermatitis and skin and skin-structure infections. 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), DYNACIN(R)
(minocycline HCl), LOPROX(R) (ciclopirox), OMNICEF(R) (cefdinir), PLEXION(R)
(sodium sulfacetamide/sulfur), TRIAZ(R) (benzoyl peroxide), LIDEX(R)
(fluocinonide), and SYNALAR(R) (fluocinolone acetonide), the over-the-counter
brand ESOTERICA(R), and BUPHENYL(R) (sodium phenylbutyrate), a prescription
product indicated in the treatment of Urea Cycle Disorder. For more information
about Medicis, please visit the Company's website at www.medicis.com.
Except for historical information, this press release includes "forward-looking
statements" within the meaning of the 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. This includes earnings estimates,
future financial performance and other matters. 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
(more)
in the circumstances. Such statements are subject to a number of assumptions,
risks and uncertainties, many of which are beyond the control of Medicis. Any
such projections or statements include the current views of Medicis with respect
to future events and financial performance. No assurances can be given, however,
that these events will occur or that such results will be achieved. Medicis
cannot validate its assumptions of the full impact on its business of the
approval of competitive generic versions of its core brands, including
DYNACIN(R) Tablets and/or LOPROX(R), or any future competitive product approvals
that may affect its brands. Also, 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, the availability of
product supply, the receipt of required regulatory approvals, the ability to
realize anticipated synergies and benefits of the Q-Med transactions, the risks
and uncertainties normally incident to the pharmaceutical industry, dependence
on sales of key products, the uncertainty of future financial results and
fluctuations in operating results, dependence on Medicis' strategy including the
uncertainty of license payments and/or other payments due from third parties,
the timing and success of new product development by Medicis or third parties,
product introductions, the risks of pending or future litigation, and other
risks described from time to time in Medicis' SEC filings including its Annual
Report on Form 10-K for the year ended June 30, 2004. There can be no assurance
as to when or if any of the holders of the Notes will have the right to convert
or if the Notes will be converted, and what impact the increase in the number of
shares outstanding will have on its results of operations. 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.
NOTE: Full prescribing information for any Medicis prescription product is
available by contacting the Company. OMNICEF(R) is a registered trademark of
Abbott Laboratories, Inc. under a license from Fujisawa Pharmaceutical Co., Ltd.
RESTYLANE(R) is a registered trademark of HA North American Sales AB, a
subsidiary of Medicis Pharmaceutical Corporation. All other marks (or brands)
and names are the property of Medicis or its Affiliates.
(more)
Medicis
Summary Statements of Operations
(in thousands, except per share data)
Three Months Ended Six Months Ended
December 31, December 31,
---------------------------------- --------------------------------------
2004 2003 2004 2003
---------------------------------- --------------------------------------
Revenues $ 92,349 $ 70,633 $181,167 $ 133,929
Cost of sales 13,438 11,237 27,270 21,418
-------- -------- -------- ---------
Gross profit 78,911 59,396 153,897 112,511
Operating expenses:
Selling, general and administrative 32,283 29,102 64,459 59,114
Research and development 9,904(a) 5,753(b) 46,417(c) 9,291(b)
Depreciation and amortization 5,189 3,740 10,222 7,166
-------- -------- -------- ---------
Total operating expenses 47,376 38,595 121,098 75,571
Operating income 31,535 20,801 32,799 36,940
Interest (income) expense, net 101 (164) 248 115
Loss on early extinguishment of debt ---- ---- ---- 58,660
Income tax expense (benefit) 11,233 7,338 11,328 (8,298)
-------- -------- -------- ---------
Net income (loss) $ 20,201 $ 13,627 $ 21,223 $ (13,537)
======== ======== ======== =========
Basic net income (loss) per common share $0.37 $0.25 $0.38 $(0.25)
===== ===== ===== =======
Diluted net income (loss) per common share $0.31 $0.21 $0.34 $(0.25)
===== ===== ===== =======
Shares used in basic net income (loss) per common share 54,716 54,965 55,972 54,780
Shares used in diluted net income (loss) per common 70,843 71,312 72,160 54,780
share
Cash flow from operations $ 31,559 $ 6,230 $ 45,465 $ 39,981
- -----------------------------------------------------------------------------------------------------------------------------------
GAAP Net income (loss) $ 20,201 $ 13,627 $ 21,223 $ (13,537)
Interest expense and associated bond offering costs
(tax-effected) 1,674(d) 1,667(d) 3,351(e) 3,477(e)
Special charge for R&D (tax-effected) 3,482(a) 1,575(b) 22,855(c) 1,575(b)
Loss on early extinguishment of debt(tax-effected) ----- ----- ------ 37,474
-------- -------- -------- ---------
"If-converted" net income absent special charge
and loss on early extinguishment of debt $ 25,357 $ 16,869 $ 47,429 $ 28,989
======== ======== ======== =========
Shares used in diluted net income per common
share 70,843 71,312 72,160 71,015
Diluted net income per common share $0.36 $0.24 $0.66 $0.41
===== ===== ===== =======
- -----------------------------------------------------------------------------------------------------------------------------------
(a) Reported R&D expenses include a special charge of $5.5 million ($3.5 million
tax-effected) relating to a research & development collaboration.
(b) Reported R&D expenses include a special charge of $2.4 million ($1.6 million
tax-effected) relating to a research & development collaboration.
(c) Reported R&D expenses include a special charge of $36.3 million ($22.9
million tax-effected) relating to research & development collaborations.
(d) To calculate diluted earnings per share, tax-effected net interest on the
2.5% and 1.5% contingent convertible notes and associated bond offering costs of
$1.7 million and $1.7 million are added back to GAAP net income for the three
months ended December 31, 2004 and 2003, respectively, and divided by shares
used in diluted net income per common share.
(e) To calculate diluted earnings per share, tax-effected net interest on the
2.5% and 1.5% contingent convertible notes and associated bond offering costs of
$3.4 million and $3.5 million are added back to GAAP net income for the six
months ended December 31, 2004 and 2003, respectively, and divided by shares
used in diluted net income per common share. For GAAP diluted net income per
common share for the six months ended December 31, 2003, the dilutive shares
relative to the convertible notes are not included as they are anti-dilutive.
Balance Sheets
At December 31, 2004 At June 30, 2004
(unaudited)
Assets
Cash, cash equivalents & short-term investments $ 532,518 $ 634,040
Accounts receivable, net 45,716 47,858
Inventory, net 16,919 19,540
Other current assets 36,875 32,425
-------- --------
Total current assets 632,028 733,863
Property and equipment, net 6,429 5,842
Intangible assets, net 334,944 331,144
Other assets 6,470 7,535
-------- --------
Total assets $ 979,871 $ 1,078,384
=========== ===========
Liabilities and stockholders' equity
Current liabilities $ 79,637 $ 67,120
Contingent convertible senior notes 2.5% due 2032 169,155 169,157
Contingent convertible senior notes 1.5% due 2033 283,910 283,910
Deferred tax liability 2,342 2,894
Stockholders' equity 444,827 555,303
-------- --------
Total liabilities and stockholders' equity $ 979,871 $ 1,078,384
=========== ===========
Working capital $ 552,391 $ 666,743
=========== ===========
# # #