Salix Pharma Plummets 38% As Q3 Results Miss View, Weak Outlook

(RTTNews) - Shares of Salix Pharmaceuticals, Ltd. (SLXP) plummeted more than 38 percent in extended trading on Thursday after the pharmaceutical products and medical devices company reported results for the third quarter that missed analysts' expectations. The company also provided earnings and revenue guidance for the fourth quarter, well below Street view, and slashed earnings and revenue forecast for the full-year 2014.

Further, the company reported a loss for the quarter compared to a profit last year, hurt by Santarus and Cosmo related transaction costs.

"Within an 84-day period, spanning mid-July to early-October, three new products - RUCONEST, RELISTOR SI for chronic non-cancer pain and UCERIS rectal foam - were granted marketing approval by the Food and Drug Administration. This level of success is noteworthy for any pharmaceutical company, and provides additional evidence of Salix's exceptional track record of in-licensing, developing and bringing to market important drugs for patients who need them," President and CEO Carolyn Logan said in a statement.

Raleigh, North Carolina-based Salix reported a net loss of $88.60 million or $1.39 per share, compared to net income of $47.33 million or $0.71 per share in the prior-year quarter.

Results for the latest quarter include transaction costs of $45.5 million related to the acquisition of Santarus, which was completed on January 2, 2014, as well as the potential merger with Cosmo Technologies Ltd., which was terminated on October 2, 2014.

Excluding items, adjusted net income for the latest quarter was $122.2 million or $1.53 per share, compared to $59.8 million or $0.89 per share in the year-ago quarter.

On average, 18 analysts polled by Thomson Reuters expected the company to report earnings of $1.55 per share for the quarter. Analysts' estimates typically exclude special items.

Net product revenues for the quarter increased 49 percent to $354.72 million from $238.18 million in the same quarter last year, primarily driven by the Santarus acquisition, but missed seventeen Wall Street analysts' consensus estimate of $392.36 million.

Revenues primarily include Xifaxan sales of $159.7 million, Uceris sales of $49.3 million, Glumetza sales of $62.9 million, Apriso sales of $26.5 million, and Zegerid sales of $27.0 million.

Xifaxan 550 mg prescriptions grew 23 percent, and Apriso prescriptions increased 15 percent from last year. Uceris prescriptions surged 76 percent, and Relistor prescriptions improved 24 percent from a year ago.

The company said it has began field promotion for Relistor SI for chronic non-cancer pain in late October and for Ruconest earlier this week. It also expects to launch field promotion for Uceris rectal foam in January 2015.

Total costs and expenses and expenses soared to $434.35 million from $161.87 million in the year-ago quarter, including transaction costs of $45.52 million and change in acquisition-related contingent consideration of $76.55 million.

Looking ahead to the fourth quarter, Salix expects adjusted net income of about $1.16 per share, on projected total net product revenues of about $325.0 million. Analysts expect the company to report fourth-quarter earnings of $1.95 per share on quarterly revenues of $436.03 million.

For fiscal 2014, Salix slashed adjusted earnings guidance to about $5.20 per share from the prior forecast of about $6.16 per share. The company also now expects total net product revenues of about $1.4 billion, down from the previous projection of about $1.6 billion. Street is currently looking for full-year 2014 earnings of $6.17 per share on annual revenues of $1.59 billion.

Separately, Salix appointed Timothy Creech as acting chief financial officer of the Company, effective immediately, to succeed Adam Derbyshire, who resigned from the position.

"Looking ahead, we remain focused on capitalizing on our diversified product base and promising pipeline of new products to realize even greater value from our business. Coupled with our experienced and results-driven research and development organization and proven business development capabilities, this creates a formidable base for continued future success" Logan added.

SLXP closed Thursday's regular trading session at $138.55, down $0.95 or 0.68% on a volume of 6.46 million shares. The stock plummeted a further $53.05 or 38.29% in after-hours trading.