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Genzyme Turns To Profit In Q4 On Strong Drug Sales; Guides Q1, FY08 - Update [GENZ]

2/13/2008 10:50:53 AM Wednesday morning, biotechnology company Genzyme Corp. (GENZ) reported a profit for the fourth quarter, compared to net loss in the year-ago quarter. Results for the latest quarter were boosted by strong drug sales, in addition to acquisition-related charges in the prior-year period. Adjusted earnings per share for the quarter climbed 18%. In addition, the company provided earnings outlook for the first quarter, and earnings as well as revenue outlook for fiscal year 2008.

Fourth Quarter Results

The Cambridge, Massachusetts-based company's net income for the fourth quarter was $78.90 million, or $0.29 per share compared to net loss of $268.23 million, or $1.02 per share in the same quarter of the prior year.

On a non-GAAP basis, the company's net income grew 19% to $249.2 million from $209.0 million in the prior-year quarter, while non-GAAP earnings per share increased 18% to $0.91 from $0.77 a year ago. On average, nineteen analysts polled by First Call/Thomson Financial expected earnings of $0.92 per share for the quarter.

The company's total revenues for the quarter were $1.04 billion, up 21% from $854.24 million in the same quarter last year. Analysts had a consensus revenue estimate of $1.01 billion for the quarter.

Total operating costs and expenses for the quarter declined to $920.03 million from $1.24 billion in the previous-year quarter. Of this, selling, general and administrative expenses rose to $307.63 million from $266.56 million in the year-ago period. Research and development expenses increased to $191.59 million from $166.39 million in the prior-year quarter. Purchase of in-process research and development in the quarter was $106.35 million, compared to $552.90 million a year ago.

Operating income for the latest quarter was $116.73 million, compared to operating loss of $383.55 million in the year-ago quarter.

Genzyme reported a provision for income taxes of $53.77 million in the quarter, compared to income tax benefit of $96.72 million a year ago.

Product wise, sales of Gaucher disease treatment Cerezyme rose 15% in the quarter to $301 million from $262 million a year ago, while sales of Pompe disease treatment Myozyme more than doubled in the fourth quarter to $62 million from $30 million in the year-ago period. Sales of Aldurazyme, which is indicated for the treatment of mucopolysaccharidosis I, increased to $34 million from $26 million in the previous-year quarter. Fourth quarter sales of Thyrogen surged 26% to $31 million from $25 million in the year-ago quarter, while sales of Renagel rose 23% to $167 million from $135 million in the prior-year quarter. Sales of the company's Fabry disease treatment Fabrazyme increased 18% to $114 million from $97 million in the same quarter last year.

Fiscal Year 2007 Results

For Fiscal year 2007, the company's net income was $480.19 million, or $1.74 per share, compared to net loss of $16.80 million, or $0.06 per share last year.

Non-GAAP net income for the year increased 27% to $939.93 million from $742.7 million a year ago, while earnings per share climbed 25% to $3.47 from $2.77 in the prior year. Analysts expected earnings of $3.47 per share for the year.

Total revenues for the year increased 20% to $3.81 billion from $3.19 billion a year ago. Wall Street analysts expected revenues of $3.78 billion for the year.

Outlook

Looking ahead to the first quarter of fiscal year 2008, Genzyme forecast earnings in the low $0.90s. Analysts expect the company to report earnings of $0.94 per share for the quarter.
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