The audit committee of the board of directors of Salix Pharmaceuticals, Ltd. (SLXP) announced that the company’s consolidated financial statements for full year 2013 and the first three quarters of 2014 require certain corrections.
The committee said that the company’s total reported net product revenues of $933.8 million for 2013 will decrease by approximately $20.1 million. Also, the committee announced that the company’s diluted earnings per share will go down by approximately $0.18 per share.
Meanwhile, the company’s net product revenues of $384.4 million in the first quarter of 2014 shall be increased by approximately $18.6 million. Diluted net loss per share in the first quarter will reduce by $0.14 per share.
However, the audit committee determined that the company’s reported net product revenues for the second quarter (reported $382 million) and third quarter (reported $354.7 million) of 2014 will be cut by $6.5 million and $12.8 million respectively. Diluted net income per share in the second quarter of 2014 shall reduce by $0.04 and diluted net loss per share in the third quarter will be reduced by $0.09.
However, Salix said that these audit reports are not expected to affect the company’s previously issued 2015 and 2016 guidance. The company had previously announced that it expects to earn $3.10–$4.10 per share on net product revenues of $1.25 billion to $1.35 billion in 2015. Earnings as per the Zacks Consensus Estimate stand at $1.13. Revenues as per the Zacks Consensus Estimate are at $1.34 billion.
For 2016, the company expects to earn $8.50–$9.50 per share on total revenues of $1.9 billion to $2 billion.
Salix has been struggling with inventory issues for some time now. In Nov 2014, shares of the company sunk on inventory issues (read more: Salix Crashes on Inventory Issues, Lowered Outlook).
However, last month, the company announced that it plans to reduce inventory levels of three of its products – Xifaxan 550, Apriso and Uceris – to approximately three-month levels by the end of 2015, a year ahead of its previous expectation. We expect investor focus to stay on this issue going forward.
Salix currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector include Alexion Pharmaceuticals, Inc. (ALXN), Celgene Corp. (CELG) and Regado Biosciences, Inc. (RGDO). All stocks carry a Zacks Rank #1 (Strong Buy).
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