Hospira’s (HSP) fourth-quarter 2014 adjusted earnings of 53 cents per share easily beat the Zacks Consensus Estimate of 41 cents. Earnings were above the year-ago figure by 3.9%, aided by higher revenues.
Including one-time items, the company posted earnings of 21 cents per share in the reported quarter, up 5% from the year-ago figure.
Fourth-quarter net sales climbed 3.9% year over year to $1.1 billion, broadly in line with the Zacks Consensus Estimate. Strong sales of drugs in the company’s Specialty Injectable Pharmaceuticals (SIP) and Other Pharma division benefited the top line.
The company’s full-year adjusted earnings were up 23.9% from the prior year to $2.59 per share, above the Zacks Consensus Estimate of $2.48. Revenues came in at $4.5 billion, increasing 8.7% and broadly in line with the Zacks Consensus Estimate.
The Fourth Quarter in Detail
The SIP segment, the biggest contributor to Hospira’s revenues, performed well in the reported quarter. Favorable pricing and continued supply recovery boosted segmental sales, which climbed 2.7% (up 5% at constant currency) to $752.8 million.
The Medication Management (MM) segment however performed disappointingly during the reported quarter with segmental sales falling 5% (down 2.2% at constant currency) to $210.7 million.
Sales in the Other Pharma division improved 25.4% (up 26.8% at constant currency) to $163 million.
Geographically, the Americas, Europe, Middle East and Africa and the Asia-Pacific markets contributed $911.1 million (up 7.3% at constant currency), $131.5 million (up 2.5% at constant currency) and $83.9 million (up 1% at constant currency), respectively, to total revenues in the fourth quarter of 2014.
Acquisition by Pfizer
The company did not provide any guidance for 2015 considering that it is set to be acquired by Pfizer Inc. (PFE). The deal is expected to close in the second half of 2015. The transaction is valued at approximately $17 billion or $90 per share. The offer price represents a significant premium over Hospira’s price before the announcement was made earlier this month (read more: Pfizer Set to Acquire Hospira for $17B, Shares Up).
Our Take
We are positive on Hospira beating the earnings estimates in the reported quarter. Hospira’s impressive top-line growth in the fourth quarter, driven by its SIP segment, is encouraging. However, the MM segment is still under pressure. Going forward, we believe that investor focus will remain on the updates from the Pfizer transaction.
Hospira carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care space include Alnylam Pharmaceuticals, Inc. (ALNY) and Achillion Pharmaceuticals, Inc. (ACHN). Both stocks hold a Zacks Rank #2 (Buy).
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