Schering-Plough's Adjusted Profits Top Estimates
Shares of Schering-Plough (SGP) climbed Tuesday after the company reported better-than-expected results for the fourth quarter.
Earnings, excluding special items, of 27 cents a share beat the Wall Street consensus by 3 cents. The stock rose $1.12, or 5.4%, by early afternoon. Schering-Plough didn't make predictions about the first quarter or the full year.
On a GAAP basis, the October-to-December quarter was affected by $3.81 billion in net charges related to its Nov. 19 acquisition of Organon BioSciences from Akzo Nobel (AKZOY).
When all special items are included, Schering-Plough lost $3.4 billion, or $2.08 a share, on revenue of $3.72 billion. The revenue figure includes six weeks' worth of Organon sales commencing from the day the deal closed. Analysts polled by Thomson First Call had been forecasting sales of $3.1 billion. For the fourth quarter of 2006, the company earned $182 million, or 12 cents a share, on sales of $2.65 million.The GAAP numbers exclude sales from Schering-Plough's joint venture with Merck (MRK) to sell the cholesterol drugs Vytorin and Zetia. Vytorin is a combination pill containing Schering-Plough's Zetia and Merck's Zocor. The cholesterol franchise is Schering-Plough's biggest source of profit, and the company's 50% share of the joint venture means these drugs added $722 million to fourth-quarter sales. Fourth-quarter results were unaffected by the ongoing controversy over the publication of a Vytorin clinical trial. Preliminary test results were released in mid-January -- a more detailed account is expected in March -- amid a chorus of medical critics' and legislators' questions about the test. The last patient visit for the test took place in April 2006. Schering-Plough says the results were first made available to a "small group of scientists" on Dec. 31. Prescriptions for Vytorin and Zetia have been hurt since the results were revealed. Many analysts have reduced their cholesterol franchise revenue expectations, even though they say they believe legislators, doctors and patients have overreacted to the Vytorin news. After the test was made public, Schering-Plough's stock was pounded, provoking some analysts to recommend buying the shares on what they believe is a temporary weakness. The two companies "acted with integrity and good faith with respect to that trial," Fred Hassan, the chairman and CEO of Schering-Plough, said Tuesday. "We stand behind Vytorin and Zetia
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