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 2008 THIRD QUARTER AND
YEAR-TO-DATE ON A PRELIMINARY BASIS
THIRD QUARTER REVENUES UP 38.8%, NINE-MONTH REVENUES UP 40.6%
ETHEX REVENUE UP 57.8% FOR THIRD QUARTER, UP 65.2% FOR NINE MONTHS
THER-RX REVENUE UP 16.6% FOR THIRD QUARTER, UP 15.2% FOR NINE MONTHS
St. Louis, MO, February 27, 2008 - KV Pharmaceutical Company (NYSE: KVa/KVb)
today reported preliminary financial results for the third quarter and first
nine months of fiscal 2008 ended December 31, 2007. The results reflected
continued acceleration of revenue and profits at both the Company's branded
drug subsidiary Ther-Rx Corporation, and generic/non-branded drug subsidiary
ETHEX Corporation.
Net revenue, net income and diluted earnings per share amounts for both the
third quarter and interim year-to-date periods are preliminary and subject to
possible adjustments based upon completion of our financial statements which
are being restated to reflect the outcome of a previously disclosed
investigation into the Company's stock option grant practices. As previously
reported, the New York Stock Exchange has granted an extension for trading of
the Company's shares through March 31, 2008 required under the Exchange's
rules due to the Company's delayed filing of its fiscal 2007 Annual Report on
Form 10-K with the Securities and Exchange Commission. The Company expects by
this date to have resolved all outstanding issues needed to make this filing
and to complete its fiscal 2007 filings and restatements of previously
reported results for the fiscal years 1996-2006.
THIRD QUARTER RESULTS
Net revenues for the third quarter increased 38.8% to $163.7 million, compared
to $117.9 million for the third quarter of fiscal 2007. Ther-Rx net revenue
grew 16.6% to $56.3 million, while ETHEX net revenues rose 57.8% to $102.2
million. ETHEX net revenue growth was positively affected by important ANDA
products including the 100 mg and 200 mg strengths of Metoprolol Succinate
Extended Release Tablets (generic alternative to Toprol(R) XL, Astra Zeneca)
and Diltiazem HCl Extended-Release Capsules (generic alternative to Tiazac(R),
Forest Laboratories).
Consolidated gross profit margin for the third quarter was 69.3%, compared
with 67.4% in the year-ago period. Gross profit margin during the third
quarter for ETHEX improved to 66.5%, compared to 58.9% during the third
quarter of fiscal 2007, with Ther-Rx gross profit also improving to 90.2%,
compared to 88.0% during the third quarter of fiscal 2007.
Net income for the quarter was $32.0 million, or $0.56 per diluted Class A
share, compared to $18.5 million, or $0.33 per diluted Class A share for the
third quarter of fiscal 2007.
Marc S. Hermelin, Chairman of the Board and Chief Executive Officer stated,
"KV enjoyed a solid third quarter, including growth at ETHEX due to continued
revenue contribution from the 100 mg and 200 mg strengths of
Metoprolol Succinate Extended Release Tablets and our Diltiazem HCl
Extended-Release Capsules. With continuing momentum in our branded business,
as well as the anticipated launch of Evamist(TM) during the fourth quarter, we
expect to capitalize on our performance momentum during the remainder of
fiscal 2008 and beyond."
NINE-MONTH RESULTS
Net revenue for the fiscal 2008 nine-month period improved 40.6% to $454.4
million, compared to $323.1 million for the corresponding year-ago period. For
the nine months ended December 31, 2007, net income was $79.9 million, or
$1.40 per diluted Class A share, compared to $40.6 million, or $0.74 per
diluted Class A share, in the prior year period.
Net income for the nine-month period included a write-off of $6.5 million (net
of tax) of in-process research and development costs related to the previously
reported acquisition of Evamist(TM), a transdermal estradiol spray for the
treatment of vasomotor symptoms associated with menopause. Excluding this
write-off, earnings (non-GAAP) for the nine-month period would have been $86.4
million, or $1.51 per diluted Class A share. A reconciliation of GAAP
(Generally Accepted Accounting Principles) earnings per diluted Class A share
to adjusted non-GAAP earnings per diluted Class A share is presented in a
table below. We believe this information is useful for understanding the
changes in results between prior year and current year periods, because this
write-off is a charge resulting from the Company's investment in acquiring a
new product and does not directly relate to underlying operations on an
ongoing basis. Earnings and earnings per diluted share for the nine months
ended December 31, 2007 shown in the accompanying reconciliation are presented
on a non-GAAP basis. This reconciliation may not be comparable to other
companies or more useful than the GAAP presentation.
The nine-month results reflected continued strong performance by ETHEX
Corporation, with net revenues up 65.2% or $111.0 million, and the $21.1
million increase in net revenues reported by Ther-Rx Corporation.
Gross profit for the recently completed nine-month period increased $106.7
million, or 50.2% over the corresponding prior year period, to $319.1 million.
During the first nine months of fiscal 2008, consolidated gross margin was
70.2% compared to 65.7% for the prior year period. Gross margin for the
branded business was 89.6% for the first nine months, compared to 88.3% for
the prior year period. ETHEX Corporation reported that its gross margin for
the first nine months of fiscal 2008 improved to 65.9%, compared to 57.5% for
the corresponding period of fiscal 2007.
OPERATING REVIEW
Selling, general and administrative expenses increased $10.2 million and $24.3
million for the three-month and nine-month periods, respectively. These
increases were primarily due to planned promotional expenses for branded
products, as well as personnel costs related to the Company's decision to add
approximately 30 sales representatives to the Ther-Rx branded specialty sales
force in anticipation of the previously disclosed launch of Evamist(TM) during
the fourth quarter of fiscal 2008 and the continued support of Ther-Rx's
existing line of specialized women's healthcare products.
Research and development expenses of $11.3 million for the third quarter of
fiscal 2008 were up $2.9 million, or 35.3% compared to the prior year period
and reflected an increase of 44.7% to $32.7 million for the nine-month period.
FINANCIAL HIGHLIGHTS:
o 40.6% increase in year-to-date net revenues
o 50.2% increase in year-to-date gross profit
o 96.8% increase in year-to-date net income
o 89.2% increase in year-to-date diluted earnings per Class A Common
Share
BUSINESS SEGMENT HIGHLIGHTS:
THER-RX CORPORATION
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o 15.2% revenue growth year-to-date
o Clindesse(R) currently holds 27.9% of total prescription volume in
the intra-vaginal bacterial vaginosis market, more than all other
Clindomycin-based intra-vaginal products combined
o Gynazole-1(R) remains the #1 branded prescription vaginal yeast
product in the United States
o Ther-Rx continues to be the leading provider of prescription
prenatal vitamins in the United States with 42.5% of the branded
prescription prenatal market
o Repliva 21/7(TM) continues to be the fastest growing prescription
oral iron supplement in the United States improving its market share
by 47.2% since the end of December 2006
Net revenues for the Ther-Rx branded marketing subsidiary increased 16.6% for
the quarter to $56.3 million, compared to $48.3 million for the third quarter
of fiscal 2007. Net revenues increased 15.2% for the nine-month period to
$159.5 million, compared to $138.5 million in the prior year period. Gross
margin for the nine-month period reached 89.6% up from 88.3% for the first
nine months of fiscal 2007.
Ther-Rx prescription prenatal vitamins contributed $23.2 million and $64.2
million of net revenues for the third quarter and nine months of fiscal 2008,
up 4.5% and 8.5%, respectively, from the prior year periods. PrimaCare(R)
brand remains the #1 filled brand among prescription prenatal vitamins in the
United States. During the first nine months of fiscal 2008, the PrimaCare(R)
brand captured 52.3% of the growing essential fatty acid (EFA) segment of the
branded prescription marketplace, with PrimaCare(R) ONE alone capturing a
45.3% share at the end of December 2007.
Ther-Rx's anemia franchise had total prescriptions grow 4.5% for the first
nine months of fiscal 2008 versus the prior year nine-month period and
contributed $13.9 million and $37.9 million in net revenues in the third
quarter and nine-month periods of fiscal 2008, respectively. Repliva 21/7(TM)
remains the #1 branded oral iron product in the United States and reported an
81.6% increase in total prescriptions for the first nine months of fiscal 2008
compared to the prior year period.
During the third quarter, the Company's anti-infective products, Clindesse(R)
and Gynazole-1(R), contributed $15.6 million of net sales. Year to date,
revenues for the products were $27.8 million and $20.4 million for
Clindesse(R) and Gynazole-1(R), respectively, combining for an 18.3% increase
from their aggregate net revenues in the corresponding period a year ago.
The Company is prepared for the anticipated launch of Evamist(TM) during the
fourth quarter of fiscal 2008. KV believes Evamist(TM), the first estradiol
transdermal spray to receive U.S. Food and Drug Administration (FDA) approval,
will offer therapeutic effectiveness with estradiol dosing that is among the
lowest available for this indication in a manner that is also cosmetically
appealing for women. Evamist(TM) targets an annual $1.3 billion estrogen
replacement market (Source: IMS NSP Audit, January 2006-December 2006) where
patients are seeking an effective and safe, low-dose estrogen product.
The Company believes Evamist(TM) could attain peak annual sales of
approximately $125 million with gross margins consistent with those currently
being achieved by Ther-Rx Corporation. The Company expects Evamist(TM) to
significantly augment the women's health offerings of Ther-Rx Corporation.
ETHEX CORPORATION
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o 65.2% net revenue growth year to date
o Gross profit improving 89.2% through nine months of fiscal 2008,
resulting in gross profit margin of 65.9%
o 76.4% market share of new prescriptions for the 100 mg strength and
62.7% market share of new prescriptions for the 200 mg strength of
Metoprolol Succinate Extended Release Tablets as of the end of
December 2007
o Net revenues for the 100 mg and 200 mg strengths of Metoprolol
Succinate Extended Release Tablets contributed $36.4 million during
third quarter of fiscal 2008 resulting in revenues for the six
months since launch of $86.8 million
o Net revenues for all six strengths of Diltiazem HCl Extended-Release
Capsules (generic alternative to Tiazac(R), Forest Laboratories)
contributed $6.4 million during the third quarter of fiscal 2008, up
5.0% compared to $6.1 million reported for the third quarter of
fiscal 2007
Net revenues for the Company's specialty generic/non-branded business
increased 57.8%, to $102.2 million for the third quarter of fiscal 2008,
compared to $64.7 million for the third quarter of fiscal 2007. For the
nine-month period, ETHEX reported net revenues of $281.0 million, or a 65.2%
improvement over revenues of $170.1 million in the prior year period. Gross
margins for the third quarter of fiscal 2008 reached 66.5%, up from 58.9% in
the prior year quarter and were 65.9% year to date, compared to 57.5% last
year.
Both revenue and margin growth during the quarter and nine-month period were
favorably impacted by the launch of the 100 mg and 200 mg strengths of
Metoprolol Succinate Extended Release Tablets, as well as growth in existing
product categories, including cardiovascular and pain management.
The Company is expecting to receive approval during the fourth quarter of
fiscal 2008 for its Abbreviated New Drug Applications (ANDAs) on the 25 mg and
50 mg strengths of Metoprolol Succinate Extended Release Tablets which will
enable it to provide all four strengths to its customer base.
The Company remains optimistic about the potential FDA approval of significant
new ANDAs from its robust internal pipeline as it moves through fiscal 2009,
which are expected to beneficially impact the overall performance of its
generic/non-branded marketing business.
FINANCIAL CONDITION
As of December 31, 2007, the Company held cash and marketable securities of
$196.4 million. The Company is actively evaluating and pursuing acquisition
and other commercial opportunities that are consistent with its strategic
goals.
DISCUSSION OF AUCTION RATE SECURITIES
As of February 24, 2008 the Company held auction-rate debt securities in the
aggregate principal amount of $83.9 million. The auction-rate securities are
triple-A rated, long-term debt obligations secured by student loans, which are
guaranteed by the U.S. Government. Liquidity for these securities has been
provided by an auction process that resets the applicable interest rate at
pre-determined intervals, up to 35 days. In the past, the auction process has
allowed investors to obtain immediate liquidity by selling the securities at
their face amounts. Current disruptions in credit markets, however, have
adversely affected the auction market for these types of securities. During
the week of February 11, 2008, the auctions for auction rate debt securities
with a face value of $16.4 million in our portfolio failed to produce
sufficient bidders to allow for successful auctions. This is the first time
the Company has experienced this type of event within its portfolio of auction
rate securities. We understand that the failure of auctions is broad based and
not limited to those securities held by the Company. Further, the Company
cannot predict how long the current imbalance in the auction market will
continue. As a result, for a period of time, the Company may or may not be
able to liquidate some or all of its remaining auction-rate securities prior
to their maturities at prices approximating their face amounts. The Company is
currently evaluating the market for these securities to determine if
impairment of the carrying value of the securities has occurred due to the
loss of liquidity. Impairment of the carrying value of these securities could
cause us to recognize a material charge to the Company's net income for the
period ending March 31, 2008 or thereafter. However, the Company believes that
based on its current cash, cash equivalents and marketable securities balances
of $112 million (exclusive of auction rate
securities) and its current borrowing capacity of $290 million under its
credit facility, the current lack of liquidity in the auction rate market will
not have a material impact on its ability to fund its operations or interfere
with the Company's external growth plans.
ABOUT KV PHARMACEUTICAL COMPANY
KV Pharmaceutical Company is a fully integrated specialty pharmaceutical
company that develops, manufactures, 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 branded
prescription pharmaceutical subsidiary.
For further information about KV Pharmaceutical Company, please visit the
Company's corporate website at www.kvpharmaceutical.com.
SAFE HARBOR
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", "expects", "aims", "believes",
"projects", "anticipates", "commits", "intends", "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, product launches, regulatory approvals, market
position, market share increases, acquisitions, revenues, expenditures and
other 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 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 FDA approvals,
including timing, and that any period of exclusivity may not be realized; (3)
acceptance and demand for new pharmaceutical products; (4) the impact of
competitive products and pricing, including as a result of so-called
authorized-generic drugs; (5) new product development and launch, including
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 and/or products manufactured
for the Company under contract manufacturing arrangements with third parties;
(8) the regulatory environment, including regulatory agency and judicial
actions and changes in applicable law or regulations; (9) fluctuations in
revenues; (10) the difficulty of predicting international regulatory approval,
including timing; (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 litigation; (14) the restatement of the
Company's financial statements for fiscal periods from 1996 through 2006 and
for the quarter ended June 30, 2006, as well as completion of the Company's
financial statements for the second, third and fourth quarters of fiscal 2007
and for the full fiscal year ended March 31, 2007, and for the first, second
and third quarters of fiscal 2008; (15) actions by the Securities and Exchange
Commission and the Internal Revenue Service with respect to the Company's
stock option grants and accounting practices; (16) the risks detailed from
time to time in the Company's filings with the Securities and Exchange
Commission;(17) actions by NYSE Regulation, Inc. with respect to the continued
listing of the Company's stock on the New York Stock Exchange; and (18) the
impact of credit market disruptions on the fair value of auction rate
securities that we have acquired as short-term investments.
This discussion is by no means exhaustive, but is designed to highlight
important factors that may impact the Company's outlook. We are under no
obligation to update any of the forward-looking statements after the date of
this release.
RECONCILIATION OF GAAP BASED EARNINGS AND EARNINGS PER CLASS
A COMMON SHARE TO ADJUSTED NON-GAAP EARNINGS AND EARNINGS
PER CLASS A COMMON SHARE FOR THE NINE MONTHS ENDED DECEMBER 31, 2007
(UNAUDITED)
INCOME EFFECT
-------------
Per Share Amount
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Income as reported (GAAP) $1.40 $79,900,000
After-tax effect of write-off of acquired in-process research
and development $ .11 $6,500,000
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Earnings and Earnings per Class A common share -
assuming dilution, excluding effect of acquired in-process
research and development write-off $1.51 $86,400,000
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