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Lannett Company, Inc. (NYSE MKT: LCI) today reported financial results for its fiscal 2014 first quarter ended September 30, 2013.
For the fiscal 2014 first quarter, net sales rose 30% to $45.8 million from $35.3 million for last year’s first quarter. Cost of sales for the fiscal 2014 first quarter included a non-recurring, pre-tax charge of $20.1 million related to the previously announced contract extension with Jerome Stevens Pharmaceuticals, Inc. (JSP) to continue as the exclusive distributor in the United States of three JSP products. Accordingly, gross profit was $1.3 million, or 3% of net sales. Excluding the JSP contract renewal charge, gross profit was $21.4 million, or 47% of net sales, compared with $13.6 million, or 39% of net sales, for the fiscal 2013 first quarter. Research and development (R&D) expenses increased to $4.7 million, compared with $3.8 million for the fiscal 2013 first quarter. Selling, general and administrative (SG&A) expenses increased to $7.2 million, compared with $6.2 million in the same quarter of the prior year. Operating loss for the fiscal 2014 first quarter was $10.6 million. Excluding the JSP contract renewal charge, operating income more than doubled to $9.5 million from $3.7 million in the first quarter of fiscal 2013.
For the fiscal 2014 first quarter, net loss attributable to Lannett Company was $6.0 million, or $0.20 per share. Adjusted net income, which excludes the impact of the non-recurring JSP contract renewal charge equal to $12.7 million after-tax, was $6.7 million, or $0.22 per diluted share, compared to fiscal 2013 first quarter net income attributable to Lannett Company of $2.9 million, or $0.10 per diluted share. The fiscal 2013 first quarter included a favorable pre-tax litigation settlement of $1.3 million, equal to $0.02 per diluted share.
“We continued our positive momentum in the fiscal 2014 first quarter with record net sales,” said Arthur Bedrosian, president and chief executive officer of Lannett. “In addition, excluding the impact of the non-recurring JSP contract renewal charge, our gross profit and bottom-line were the highest in the company’s history. Our excellent financial performance was driven by strong sales of existing products, price increases and favorable product mix.”