shares rose nearly 5% before the bell on Wednesday after the company announced a blow-out second quarter that beat Wall Street estimates by 4 cents a share, while raising revenue guidance for the remainder of the year.
Genzyme reported second-quarter net income of $78.2 million, or 34 cents a share, up from $70.8 million, or 32 cents a share, in the year-ago quarter. Excluding all items, the company said earnings came in at $102.2 million, or 44 cents a share, easily beating the consensus estimate of 40 cents a share and rising 36% from the year-ago $75.3 million, or 34 cents a share.
The company's total revenue was $549.6 million, up 58% from the $347.7 million a year ago and much higher than the $497 million expected by Wall Street. The surging top line growth was driven by strong sales of Febrazyme and Renagel -- and accounting changes. Year-ago results only include the operations of Genzyme General, before Genzyme consolidated its capital structure and eliminated its tracking stocks.
In reaction to the upside surprise, shares of Genzyme were active in premarket action, rising $2.10 to $46.60.
"Genzyme had a very strong first two quarters and is moving forward into the second half of the year with significant momentum," said Henri Termeer, chairman and CEO. "The strength of our top and bottom lines continues to allow us to build and diversify the company by investing in R&D and completing transactions that add important programs."
Going forward, the company said that revenue growth would continue to be strong, with Genzyme forecasting that revenue for 2004 will come in between $2.065 billion and $2.185 billion, higher than the current $2 billion expected by Wall Street and above the company's prior guidance between $1.930 billion and $2.030 billion.
The drugmaker also reiterated earnings guidance for 2004, telling shareholders that GAAP earnings will come in between $1.35 and $1.40 a share, while non-GAAP earnings, which is how Wall Street views the company, will come in between $1.65 and $1.75 a share. Currently, analysts expect the company to earn $1.67 a share in 2004.
In the third quarter, Genzyme said it would earn between 42 and 44 cents a share, which is at the low end of current estimates.
The new guidance reflects the impact of the company's merger plan with
, which Genzyme said would close by the end of the summer. The merger, while good for Genzyme's business, will dilute current shareholders, with Genzyme issuing 22 million new shares bringing the average weighted number of outstanding shares to 240 million.
While earnings and revenue are expected to rise, so are research and development expenses. The company said that R&D spending came in at $97.5 million compared to $58.8 million a year ago. And for 2004 Genzyme expects to spend $410 million to $420 million, up from earlier guidance of $385 million to $395 million.