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Impax Laboratories (IPXL) Q2 Earnings Beat, Revenues Up Y/Y


Impax Laboratories Inc.’s IPXL shares have risen almost 10% since it announced robust results on Aug 9. The company reported second-quarter 2017 adjusted earnings of 18 cents per share, beating the Zacks Consensus Estimate of 14 cents. However, earnings were down 14.3% from 21 cents in the year-ago period due to higher costs.

Total revenue increased 17.1% year over year to $202.1 million on growth in Generic division sales.

Revenues also surpassed the Zacks Consensus Estimate of $196.14 million in the reported quarter.

In fact, year to date, Impax shares are up 37.4%, while the industry declined 17.3%.

Quarter in Detail

During the reported quarter, Impax Generic division revenues increased 24% from the year-ago quarter to $150.8 million. The increase in revenues was due to higher sales of epinephrine auto-injector, oxymorphone ER and products acquired from Teva Pharmaceuticals Industries Ltd. TEVA and launch of generic version of Merck & Co., Inc’s MRK Vytorin this quarter.

The Impax Specialty Pharma division recorded revenues of $51.2 million, up 26.7% year over year, largely due to higher sales of Rytary. However, Zomig sales were down 7% to $12.3 million.

Adjusted research and development (R&D) expenses grew 6.2% to $22.1 million in the reported quarter.

Adjusted selling, general and administrative expenses (SG&A) increased 17.9% to $51.2 million.

Other Details

Subsequent to the quarter, in July, the company received approval for generic versions of Focalin XR (25 and 35 mg) and Concerta (18, 27, 36 and 54 mg) from the FDA. The approval of generic Focalin XR complemented its portfolio of generic Focalin XR, which included 5, 10, 15, 20 and 30 mg capsules. These are already marketed.

In April, Impax announced it that it has received final FDA approval for a generic version of Vytorin (ezetimibe/simvastatin tablets), 10/10, 10/20, 10/40 and 10/80 mg, and immediately initiated commercialization activities of this first-to-market opportunity.

Toward the end of March, the company had announced that the U.S. District Court, District of Delaware ruled in favor of it and AstraZeneca plc AZN in a patent infringement case regarding the generic version of Zomig.

2017 Outlook Updated

The company expects its full-year adjusted earnings to be in the range of 55 cents to 70 cents per share.

The company expects adjusted gross margin in the range of 47% to 49%.

Adjusted research and development expenses, including patent litigation expenses, across the generic and brand divisions are forecast to be in the range of $93 million to $97 million (previously $90 million to $95 million).

Adjusted selling, general and administrative expenses are expected to be in the range of $190 million to $195 million.

Our Take

In its first quarter release, Impax had discussed its cost saving initiatives, which included several processes to improve efficiencies and margins, and focus on growth opportunities. Savings in annualized costs to the tune of $85 million is expected, with limited savings in 2017 and a projection to save a total of $130 million by the end of 2019. However, the headwinds in the generic segment are likely to continue through 2017, which may impact the top line in the upcoming quarters.

Impax Laboratories, Inc. Price, Consensus and EPS Surprise

Impax Laboratories, Inc. Price, Consensus and EPS Surprise | Impax Laboratories, Inc. Quote

Zacks Rank

Impax currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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