By Jon Kamp
Of DOW JONES NEWSWIRES
Hospira Inc.'s (HSP) third-quarter profit jumped 42% as results surged ahead of analysts' expectations with help from a generic version of a Sanofi-Aventis SA (SNY, SAN.FR) colon-cancer drug and a cost-cutting plan.
The maker of injectable drugs and medical devices boosted its already twice-increased 2009 earnings outlook thanks to a tax benefit, and it affirmed its full-year sales-growth outlook.
Shares of the Lake Forest, Ill., company moved higher in premarket trading Tuesday and were recently up 4.5% to $48.38. Through Monday, Hospira shares had risen about 73% so far this year.
The company reported earnings of $116.2 million, or 71 cents a share, up from $81.8 million, or 51 cents a share, a year earlier. Excluding one-time items, including mostly charges linked to the restructuring plan in the recent quarter, earnings rose to 90 cents from 63 cents.
Analysts surveyed by Thomson Reuters had forecast, on average, earnings of 69 cents in the recent quarter.
Gross margin rose to 39.3% from 36.1%.
Quarterly sales for Hospira, which spun off from Abbott Laboratories (ABT) in 2004, topped the 1 billion mark for the first time by reaching $1.01 billion, far ahead of Wall Street's $936.2 million projection.
Sales were up 8.9% from a year ago, or 10.8% excluding the impact of foreign currency.
The driver was Hospira's business for specialty injectable drugs, where sales surged about 24% to $575.7 million. Due in part to unfavorable currency rates, other major product categories saw year-over-year declines in the third quarter.
Christopher B. Begley, Hospira's chairman and chief executive, said results were helped by the restructuring program launched in March and the launch of a generic version of the Sanofi drug, which is known as Eloxatin.
There is an ongoing patent fight concerning the drug, and a federal appeals court ruled in Sanofi's favor in September while throwing out an earlier trial-court ruling in favor of generic competitors including Hospira. Hospira kept shipping the drug, and noted in a regulatory filing Tuesday that a trial is expected in 2010.
The restructuring plan announced in March, called "Project Fuel," includes a 10% work force reduction and the slimming down of Hospira's product offerings alongside the potential sale of non-core businesses.
Despite the strong third quarter, Hospira backed the forecast for 5% to 7% sales growth this year excluding the impact of foreign currency. Based on a tax benefit, the company hiked its adjusted earnings guidance by 5 cents to a range of $2.85 to $2.90 per share. Including items, full-year earnings are seen at $2.25 to $2.30 a share.
-By Jon Kamp, Dow Jones Newswires; 617-654-6728; jon.kamp@dowjones.com