Shire doubles third quarter revenues, operates with net loss in Q3

UK based pharmaceutical company Shire has more than doubled its third quarter revenues and total sales in 2016 compared to the same period in 2015, however it has reported net loss on a US GAAP basis, of $406 million in Q3 2016 compared to Q3 2015,
operating income of $456 million.

 

The operating loss in Q3 2016 was primarily due to the impact of acquisition accounting, including higher amortization of inventory fair value step up and amortization of acquired intangible assets, combined with higher integration and acquisition costs. Non GAAP operating income increased 73% to $1,254 million (Q3 2015: $725 million), primarily due
to the inclusion of a full quarter of Baxalta operating income and higher
revenue from legacy Shire products.

The company has reported third quarter product sales of $3,315 million, which is 110% better than the same period last year. Total revenues, driven by January acquired Baxalta were 109% better than third quarter of 2015, and accumulated to $3,452 million.

Shire has had $1,769 million of product sales even excluding Baxalta products, which is 12% growth.

Flemming Ornskov, M.D., M.P.H., Shire Chief Executive Officer, commented:

“During the third quarter, we made rapid progress integrating our new company while delivering record quarterly product sales growth and remaining on track to meet our full year Non GAAP guidance. The launch of XIIDRA is off to a very strong start, and we are using this momentum to build a leadership position in pharmaceutical ophthalmics. Commercial execution remains a top priority across the business. Also, our robust pipeline is continuing to advance, and we look forward to highlighting key programs during our upcoming Investor Day. The changes we are applying to the legacy Baxalta business are similar to the One Shire initiative we undertook in 2013-2014, which set off a period of strong growth and profitability. I am highly confident about Shire’s future growth prospects.”

Outlook

The full year 2016 guidance includes the legacy Baxalta business as of June 3, 2016. The guidance includes expected operating cost synergy savings for 2016 based on target of at least $700 million in year three post close.

Shire says that the Non GAAP diluted earnings per ADS forecast assumes a weighted average number of 778 million fully diluted ordinary shares outstanding for 2016 following the equity issuance for the Baxalta transaction.

The company says that its US GAAP diluted earnings per ADS outlook has been updated to reflect an increase in integration costs related to the Baxalta transaction, costs related to licensing SHP647 and reorganization costs associated with the planned closure of a facility in our Los Angeles manufacturing site.

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