A month has gone by since the last earnings report for Impax Laboratories, Inc. . Shares have lost about 2.4% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Impax Misses on Q1 Earnings, Initiates Cost Savings Plan
Impax posted first-quarter 2017 adjusted earnings of $0.11 per share, missing the Zacks Consensus Estimate of $0.12. Earnings were down 74.4% from $0.43 in the year-ago period due to lower revenues and higher costs.
Total revenue decreased 18.2% year over year to $184.4 million due to a decline in Generic division sales.
Moreover, revenues were well below the Zacks Consensus Estimate of $190.7 million in the reported quarter.
Cost Savings Plan
In its effort to save costs, Impax has initiated several processes to improve efficiencies and margins, and focus on growth opportunities. The company has consolidated its generics R&D and manufacturing and packing operation in the U.S. to its Hayward, CA facility. Also, the company closed its manufacturing and R&D site in Middlesex, NJ.
As part of the strategic restructuring, the company has already ceased manufacturing in Taiwan. A decision on the sale or closure of the unit is yet to be taken.
The company is also modifying its generic portfolio so as to eliminate low-value products and streamline operations.
The company expects the above actions to save annualized costs to the tune of $85 million. All these initiatives are projected to save a total of $130 million by the end of 2019. However, the company expects a one-time charge of $65 million to fully achieve its cost saving goals.
Quarter in Detail
During the reported quarter, Impax Generic division revenues declined 21.1% from the year-ago quarter to $134.1 million. The decline in revenues was due to decreased sales of Voltaren Gel (diclofenac gel), metaxalone, fenofibrate and mixed amphetamine salts ER as a result of increased competition and pricing pressure. However, the decline was partially offset by increased sales of epinephrine auto-injector, oxymorphone ER and products acquired from Teva Pharmaceuticals Industries Ltd. and affiliates of Allergan plc.
However, the company’s generic business showed improved margins.
The Impax Specialty Pharma division recorded revenues of $50.3 million, down 9.3% year over year, largely due to lower sales of Zomig and the anthelmintic products franchise.
Adjusted research and development (R&D) expenses grew 16.6% to $21.8 million in the reported quarter.
Adjusted selling, general and administrative expenses (SG&A) increased 9.2% to $47.5 million.
Sanofi (SNY) has filed a suit for patent infringement against Impax’s abbreviated new drug application (ANDA) for the generic version of the former’s multiple sclerosis drug, Aubagio.
Also, the company reduced its outstanding debt and is focused on saving costs.
2017 Guidance
The company expects its full-year adjusted earnings to be in the range of $0.55 to $0.70 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 $90 million to $95 million.
Adjusted selling, general and administrative expenses are expected to be in the range of $190 million to $195 million.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Impax Laboratories, Inc. Price and Consensus
VGM Scores
Currently, Impax's stock has a nice Growth Score of 'B', though it is lagging on the momentum front with a 'D'. The stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.
Image: Bigstock
Why Is Impax (IPXL) Down 2.4% Since the Last Earnings Report?
A month has gone by since the last earnings report for Impax Laboratories, Inc. . Shares have lost about 2.4% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Impax Misses on Q1 Earnings, Initiates Cost Savings Plan
Impax posted first-quarter 2017 adjusted earnings of $0.11 per share, missing the Zacks Consensus Estimate of $0.12. Earnings were down 74.4% from $0.43 in the year-ago period due to lower revenues and higher costs.
Total revenue decreased 18.2% year over year to $184.4 million due to a decline in Generic division sales.
Moreover, revenues were well below the Zacks Consensus Estimate of $190.7 million in the reported quarter.
Cost Savings Plan
In its effort to save costs, Impax has initiated several processes to improve efficiencies and margins, and focus on growth opportunities. The company has consolidated its generics R&D and manufacturing and packing operation in the U.S. to its Hayward, CA facility. Also, the company closed its manufacturing and R&D site in Middlesex, NJ.
As part of the strategic restructuring, the company has already ceased manufacturing in Taiwan. A decision on the sale or closure of the unit is yet to be taken.
The company is also modifying its generic portfolio so as to eliminate low-value products and streamline operations.
The company expects the above actions to save annualized costs to the tune of $85 million. All these initiatives are projected to save a total of $130 million by the end of 2019. However, the company expects a one-time charge of $65 million to fully achieve its cost saving goals.
Quarter in Detail
During the reported quarter, Impax Generic division revenues declined 21.1% from the year-ago quarter to $134.1 million. The decline in revenues was due to decreased sales of Voltaren Gel (diclofenac gel), metaxalone, fenofibrate and mixed amphetamine salts ER as a result of increased competition and pricing pressure. However, the decline was partially offset by increased sales of epinephrine auto-injector, oxymorphone ER and products acquired from Teva Pharmaceuticals Industries Ltd. and affiliates of Allergan plc.
However, the company’s generic business showed improved margins.
The Impax Specialty Pharma division recorded revenues of $50.3 million, down 9.3% year over year, largely due to lower sales of Zomig and the anthelmintic products franchise.
Adjusted research and development (R&D) expenses grew 16.6% to $21.8 million in the reported quarter.
Adjusted selling, general and administrative expenses (SG&A) increased 9.2% to $47.5 million.
Sanofi (SNY) has filed a suit for patent infringement against Impax’s abbreviated new drug application (ANDA) for the generic version of the former’s multiple sclerosis drug, Aubagio.
Also, the company reduced its outstanding debt and is focused on saving costs.
2017 Guidance
The company expects its full-year adjusted earnings to be in the range of $0.55 to $0.70 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 $90 million to $95 million.
Adjusted selling, general and administrative expenses are expected to be in the range of $190 million to $195 million.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Impax Laboratories, Inc. Price and Consensus
Impax Laboratories, Inc. Price and Consensus | Impax Laboratories, Inc. Quote
VGM Scores
Currently, Impax's stock has a nice Growth Score of 'B', though it is lagging on the momentum front with a 'D'. The stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.