EXHIBIT 99
KV PHARMACEUTICAL COMPANY
CONTACT:
CATHERINE M. BIFFIGNANI
VICE PRESIDENT, INVESTOR RELATIONS
314-645-6600
[KV PHARMACEUTICAL logo]
FOR IMMEDIATE RELEASE
KV PHARMACEUTICAL REPORTS RECORD REVENUES FOR FISCAL 2005 THIRD
QUARTER AND NINE MONTHS
THIRD QUARTER REVENUES UP 25%
ALL THREE DIVISIONS SHOW SALES INCREASES OF AT LEAST 20%; BRANDED
AND GENERIC BUSINESSES UP 25%
St. Louis, MO., February 1, 2005 - KV Pharmaceutical Company (NYSE: KVa/KVb)
today reported results for the third quarter and nine months of fiscal 2005
ended December 31, 2004.
Net revenues for the third quarter increased 25% to $86.9 million, compared
to $69.6 million for the third quarter of fiscal 2004. The Company's branded
business, Ther-Rx Corporation, as well as the Company's generic/non-branded
division, ETHEX Corporation, both saw net revenue increases of 25% for the
third quarter. Particle Dynamics' net revenues increased by 20%. Net income
increased 18% to $13.6 million, or $0.25 per diluted share, compared with
$11.5 million, or $0.21 per diluted share in the prior year period.
For the nine months ended December 31, 2004, net revenues increased 16% to
$232.3 million, compared with $200.0 million for the comparable year-ago
period. Net income improved 4% to $33.8 million, or $0.62 per diluted share
for the nine months ended December 31, 2004, compared with $32.3 million, or
$0.60 per diluted share for the prior year period.
Per share figures reflect the Company's adoption of the Emerging Issues Task
Force's (EITF) ruling, EITF 04-8, effective December 15, 2004, which
requires companies to calculate diluted earnings per share by including
common stock underlying contingent convertible securities. This adoption has
resulted in adjustments to the Company's earnings per share in order to
reflect the common stock underlying the Company's $200 million principal
amount of Convertible Subordinated Notes issued in May 2003. The Company has
restated prior period results for comparative purposes to reflect the
change.
Marc S. Hermelin, Vice Chairman of the Board and Chief Executive Officer
stated, "For the third quarter of fiscal 2005 all three of our marketing
units, Ther-Rx, ETHEX and Particle Dynamics posted revenue increases of 20%
or greater. Ther-Rx crossed the $25 million quarterly revenue threshold for
the first time in the third quarter, and with its recent NDA approval for
Clindesse(TM), Ther-Rx is well positioned to leverage this new product for
bacterial vaginosis with its existing position via Gynazole-1(R). On the
generic side, ETHEX has a strong pipeline of products and anticipates
receiving more approvals as we move through the remainder of fiscal 2005 and
into fiscal 2006."
Gross profit for the third quarter increased to $56.9 million, up $10.1
million, or 22%, over the prior year's quarter. Gross profit for the first
nine months of fiscal 2005 increased 15% to $151.7 million, compared to
$132.1 million for the same period of the prior year.
Pretax income for the third quarter of fiscal 2005 was $20.1 million, an
increase of $2.2 million, or 12%, compared to $17.9 million in the third
quarter of fiscal 2004. Pretax income for the first nine months of fiscal
2005 was $51.2 million, compared to $50.1 million for the first nine months
of fiscal 2004. Higher pretax income for both periods was achieved despite a
35% increase in selling and administrative costs for the fiscal third
quarter. Higher selling and administrative costs reflect activities to
support the on-going promotion of existing and new branded products.
Research and Development expenses for the quarter increased to $6.0 million,
an increase of 14% over the same period of the prior year as the Company has
continued to increase new drug development efforts over the past two years.
OPERATING HIGHLIGHTS:
THER-RX CORPORATION REVENUES UP 25% - ALL PRODUCT SEGMENTS EXHIBIT CONTINUED
GROWTH; COMPANY RECEIVES NDA APPROVAL FOR CLINDESSE(TM)
Ther-Rx branded marketing division net revenues for the fiscal third quarter
were up 25% to $26.2 million, compared to $20.9 million in the prior year
period. Year-to-date net revenues increased to $64.5 million, up 23%,
compared to $52.6 million in the first nine months of fiscal 2004. The
increases in branded product sales were due primarily to continued growth of
Gynazole-1(R), our vaginal antifungal cream product, and our two hematinic
product lines.
GYNAZOLE-1(R) SALES SET PACE; CLINDESSE(TM) APPROVED. Gynazole-1(R), the
only one-dose prescription vaginal antifungal cream treatment, saw continued
growth in volume of total filled prescriptions during the third quarter over
the year ago period, representing the highest volume growth in three years
and has now captured 31% of the prescription vaginal antifungal cream
market. Gynazole-1(R) net revenues for the third quarter of fiscal 2005 were
$9.9 million, an increase of 90% from $5.2 million in the third quarter of
fiscal 2004. For the nine months ended December 31, 2004, Gynazole-1(R) net
revenues were $18.7 million, compared to $11.9 for the same period of the
prior year, or a 58% increase.
In the third quarter of fiscal 2005, KV received approval from the United
States Food and Drug Administration (FDA) to market Clindesse(TM)
(clindamycin phosphate) Vaginal Cream, 2%, a
single-dose prescription cream therapy indicated to treat bacterial
vaginosis ("BV"). Clindesse(TM), the first ever approved single-dose therapy
for patients with bacterial vaginosis, the most common form of vaginitis,
was demonstrated in clinical trials to effectively treat BV and its symptoms
with results equivalent to seven days of Cleocin(R) vaginal cream.
Just after the close of the third quarter, the Company entered into an
additional international licensing agreement for the marketing of both
Gynazole-1(R) and the recently approved Clindesse(TM) with RIMSA of Mexico.
This represents the first international licensing agreement for
Clindesse(TM) and further expands the territories into which Gynazole-1(R)
will be marketed.
HEMATINIC SALES SHOW MOMENTUM. Contributing 30% of the growth at Ther-Rx
during the quarter were the two anemia product lines, Niferex(R) and
Chromagen(R). Combined net revenues for the two products were $6.6 million,
compared to $5.1 million in the fiscal 2004 third quarter, or a 31%
increase. Sales of the two products totaled $18.2 million for the first nine
months, up $6.7 million or a 58% increase from the first nine months of
fiscal 2004.
Total prescription growth for the anemia product line showed a 52% increase
this quarter over the prior quarter. The Niferex(R) product line reported
the second highest level of prescriptions filled in 16 quarters with 44%
growth compared to the year ago period, while the Chromagen(R) product line
reported the highest level of prescriptions in four years with a 58% growth
over the year ago quarter. Chromagen Forte(R) is now the #1 newly prescribed
branded oral prescription hematinic product in the United States.
PRENATAL VITAMIN SHARE REMAINS STRONG. Ther-Rx's market leading PreCare(R)
prenatal vitamin product line contributed $7.0 million and $21.1 million of
sales during the three-month and nine-month periods respectively. During the
first nine months of fiscal 2005, continued growth was generated by
PrimaCare(R), our prescription prenatal with essential fatty acids, coupled
with strong results from PrimaCare(R) ONE, our proprietary line extension to
PrimaCare(R) that was launched in the second quarter of this fiscal year.
Ther-Rx's portfolio of prenatal vitamins now comprises 41% of all new
branded prenatal vitamin prescriptions, almost double the nearest competing
prenatal vitamin franchise.
ETHEX CORPORATION THIRD QUARTER REVENUES UP 25%
Specialty generic net revenues for ETHEX Corporation for the third quarter
of fiscal 2005 were $55.1 million, compared to $44.1 million for the same
period of the prior year, for an increase of 25%. ETHEX net revenues for the
nine-month period were $151.7 million, up 15%, compared to $132.3 million
for the first nine months of fiscal 2004.
The growth in specialty generic sales resulted from increased sales volume
from existing products principally in our cardiovascular and pain management
lines, as well as incremental sales volume from new product introductions
primarily in our cough/cold product line.
To date, through the first nine months of fiscal 2005, ETHEX has introduced
six new products and is optimistic about the possibility of future product
introductions as it moves through the remainder of fiscal 2005 and into the
new fiscal year.
PARTICLE DYNAMICS, INC THIRD QUARTER REVENUES UP 20%
Net revenues of specialty material products were up 20% to $4.7 million for
the third quarter of fiscal 2005, compared to $3.9 million for the same
period of the prior year. Year-to-date net revenues were $13.8 million,
compared to $12.1 million for the same period of the prior year, an increase
of 14%.
The increases in specialty material product sales for the three-month and
nine-month periods were primarily due to successful new product launches
into the over-the-counter marketplace.
ABOUT KV PHARMACEUTICAL COMPANY
KV Pharmaceutical Company is a fully integrated specialty pharmaceutical
company that develops, acquires, manufactures and markets and acquires
technology-distinguished branded and generic/non-branded prescription
pharmaceutical products. The Company markets its technology distinguished
products through ETHEX Corporation, a national leader in pharmaceuticals
that compete with branded products, and Ther-Rx Corporation, its emerging
branded drug subsidiary. KV has consistently ranked as one of America's
fastest growing small companies, most recently by Forbes' in its November
2004 issue.
For further information about KV Pharmaceutical Company, please visit the
Company's corporate website at www.kvpharmaceutical.com.
For full prescribing information, please see:
www.gynazole-1.com and www.clindesse.com
SAFE HARBOR AND PRODUCT RISK FACTORS
The information in this release may contain various forward-looking
statements within the meaning of the United States Private Securities
Litigation Reform Act of 1995 ("PSLRA") and which may be based on or include
assumptions, concerning KV's operations, future results and prospects. Such
statements may be identified by the use of words like "plans", "expect",
"aim", "believe", "projects", "anticipate", "commit", "intend", "estimate",
"will", "should", "could", and other expressions that indicate future events
and trends.
All statements that address expectations or projections about the future,
including without limitation, statements about the Company's strategy for
growth, product development, regulatory approvals, market position,
expenditures and financial results, are forward-looking statements.
All forward-looking statements are based on current expectations and are
subject to risk and uncertainties. In connection with the "safe harbor"
provisions, KV provides the following cautionary statements identifying
important economic, political and technology factors which, among others,
could cause the actual results or events to differ materially from those set
forth or implied by the forward-looking statements and related assumptions.
Such factors include (but are not limited to) the following: (1) changes in
the current and future business environment, including interest rates and
capital and consumer spending; (2) the difficulty of predicting local
regulatory approvals including the timing; (3) acceptance and demand for new
pharmaceutical products; (4) the impact of competitive products and pricing;
(5) new product development and launch including but limited to the
possibility that any product launch may be delayed or that product
acceptance may be less than anticipated; (6) reliance on key strategic
alliances; (7) the availability of raw materials; (8) the regulatory
environment; (9) the risk that market size estimates may be more or less
than estimated; 10) fluctuations in operating results; (11) the difficulty
of predicting the pattern of inventory movements by the Company's customers;
(12) the impact of competitive response to the Company's sales, marketing
and strategic efforts; (13) risks that the company may not ultimately
prevail in its litigation; and (14) the risks detailed from time to time in
the Company's filings with the Securities and Exchange Commission.
This discussion is by no means exhaustive, but is designed to highlight
important factors that may impact the Company's outlook.
# # #
KV PHARMACEUTICAL COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL RESULTS
(unaudited; in thousands, except per share data)
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
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2004 2003 2004 2003
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Net revenues...................................... $ 86,857 $ 69,598 $ 232,266 $ 199,996
Cost of sales..................................... 29,935 22,761 80,525 67,891
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Gross profit...................................... 56,922 46,837 151,741 132,105
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Operating expenses:
Research and development..................... 5,988 5,239 16,813 14,808
Selling and administrative................... 29,176 21,536 79,009 62,429
Amortization of intangible assets............ 1,172 1,112 3,441 3,336
Litigation................................... - - (843) (1,700)
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Total operating expenses................. 36,336 27,887 98,420 78,873
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Operating income.................................. 20,586 18,950 53,321 53,232
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Other expense (income):
Interest expense............................. 1,242 1,826 4,276 4,611
Interest and other income.................... (718) (750) (2,151) (1,523)
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Total other expense (income), net........ 524 1,076 2,125 3,088
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Income before income taxes........................ 20,062 17,874 51,196 50,144
Provision for income taxes........................ 6,510 6,345 17,407 17,801
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Net income........................................ $ 13,552 $ 11,529 $ 33,789 $ 32,343
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Net income per Common share - diluted............. $ 0.25 $ 0.21 $ 0.62 $ 0.60
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Average shares outstanding - diluted.............. 59,477 59,669 59,448 58,410
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CONDENSED CONSOLIDATED FINANCIAL INFORMATION
2004 2003
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Balance Sheet Information (as of December 31)
Cash and cash equivalents................................................. $ 169,954 $ 223,171
Marketable securities..................................................... 35,516 -
Receivables, net.......................................................... 78,174 56,713
Inventory, net............................................................ 49,278 54,281
Prepaid and other current assets.......................................... 7,317 8,314
Deferred tax asset........................................................ - 10,150
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Total current assets.................................................. 340,239 352,629
Property and equipment, net............................................... 119,473 69,615
Intangible assets and goodwill............................................ 78,319 80,960
Other assets.............................................................. 13,160 10,794
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$ 551,191 $ 513,998
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Current liabilities....................................................... $ 38,178 $ 45,318
Long-term debt and other long-term liabilities............................ 220,265 224,849
Shareholders' equity...................................................... 292,748 243,831
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$ 551,191 $ 513,998
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Working capital........................................................... $ 302,061 $ 307,311
Working capital ratio..................................................... 8.9 to 1 7.8 to 1
Debt to equity ratio...................................................... .74 to 1 .93 to 1
Cash Flow Information (nine months ended December 31)
Net cash provided by (used in):
Operating activities.................................................. $ 27,969 $ 11,485
Investing activities.................................................. (59,753) (28,009)
Financing activities.................................................. 157 143,407
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Increase (decrease) in cash and cash equivalents.......................... (31,627) 126,883
Cash and cash equivalents, beginning of year.............................. 201,581 96,288
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Cash and cash equivalents, end of period.................................. $ 169,954 $ 223,171
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