Hi-Tech Pharmacal Reports Strong Sales and a Return to Profitability ...

Tag : Date Syrup
Hi-Tech Pharmacal Co., Inc. (NASDAQ: HITK) today reported resultsfor the quarter and fiscal year ended April 30, 2008.

Fourth Quarter Results

For the three months ended April 30, 2008, the Company reported netsales of $21.0 million, an increase of 57% from $13.3 million forthe same period last year.

During the quarter ended April 30, 2008, net sales of genericpharmaceutical products were $17.0 million, an increase of 52%compared to $11.2 million for the same fiscal 2007 period. Includedin these sales are $2.9 million of sales from MidlothianLaboratories which Hi-Tech acquired in December 2007. Sales ofnewly launched products fluticasone nasal spray, hydrocodone withhomatropine syrup as well as increased sales of promethazineproducts led to the gain.

Sales for the Health Care Products division ("HCP"), which marketsthe Company's branded OTC products, increased 100% to $3.9 millionfor the three months ended April 30, 2008 compared to $1.9 millionfor the same fiscal period in the prior year. Sales of DiabeticTussin(R) and the launch of Zostrix(R) Neuropathy cream led to thestrong results.

The Company reported quarterly net income of $0.3 million or $.02per fully diluted share compared to a net loss of $2.2 million or$.19 for the previous year.

Fiscal Year Results

For the year ended April 30, 2008, the Company reported net salesof $62.0 million, an increase of 5% from net sales of $58.9 millionfor the year ended April 30, 2007.

Generic pharmaceutical product sales were $50.5 million compared to$46.4 million for the years ended April 30, 2008 and 2007,respectively, an increase of 9%. Included in generic sales are $4.2million of sales from the Midlothian Laboratories division whichwas acquired in December 2007. The sales increase was due to theacquisition of the assets of Midlothian as well as new launchesincluding ciclopirox topical solution, fluticasone nasal spray,hydrocodone with homatropine syrup, and ofloxacin otic solution.These increases were offset by sales declines of cough and fluproducts and urea based products.

Net sales for the Health Care Products division were essentiallyunchanged at $10.8 million for both periods. Decreases in sales ofDiabetic Tussin(R) related to the discontinuation of Children'sDiabetic Tussin(R) were offset by increases in sales ofMultibetic(R) and the newly launched Zostrix(R) Neuropathy creamproduct.

Sales of Naprelan(R) declined to $0.7 million from $1.7 million forthe fiscal years ended April 30, 2008 and 2007, respectively.Hi-Tech divested Naprelan(R) in April, 2007, and therefore allsales in the current period were part of that transaction.

Cost of sales as a percentage of sales increased to 65% for thetwelve months ending April 30, 2008 from 61% for Fiscal 2007. Theincrease in cost of sales as a percentage of net sales is due todecreased unit sales of higher margin branded products, increasedunit sales of lower margin products and pricing pressure whichlowered margins on several generic products. Additionally, rawmaterial and component prices have increased due to the price ofoil increasing the costs for plastic bottles, increases in theprice of corn and other sweeteners, and the decline of the U.S.dollar which resulted in price increases from certain foreign rawmaterial suppliers. These trends were partially offset by theacquisition of the assets of Midlothian Laboratories, since, onaverage, this division has higher gross margins than Hi-Tech's coregeneric business.

Selling, general and administrative (SG&A) expenses decreasedto $22.6 million in Fiscal 2008 from $23.9 million in Fiscal 2007due to lower legal expenses and cost reduction efforts bymanagement.

Research & Development expenses increased to $6.2 million infiscal 2008, from $4.7 million for Fiscal 2007, due to increasedspending on external development projects including projects whichrequire clinical trials and patent challenges being developed withanother company.

The Company reported a net loss of $5.1 million or $.45 per fullydiluted share for the year ended April 30, 2008 compared to a netloss of $2.0 million or $0.17 per fully diluted share for the yearended April 30, 2007.

David Seltzer, President and CEO, commented: "Fiscal 2008 ended ona very strong note with very strong sales in the fourth quarter.Newly launched products including hydrocodone with homatropinesyrup and fluticasone nasal spray lead to this growth and should bestrong components of next year's growth. Additionally, we were verypleased with the sales of Midlothian Laboratories which has been asuccessful acquisition. As we look forward to next year and thelaunch of dorzolamide with timolol ophthalmic solution, we seestrong growth for our Company."

Hi-Tech currently has twelve products awaiting approval at the FDA,targeting brand and generic sales of over $0.5 billion. Inaddition, Hi-Tech has twenty products in active developmenttargeting brand sales of over $2 billion, including sterileophthalmic products, oral solutions and suspensions and soliddosage forms.

Hi-Tech is a specialty pharmaceutical company developing,manufacturing and marketing generic and branded prescription andOTC products. The Company specializes in difficult to manufactureliquid and semi-solid dosage forms and produces a range of sterileophthalmic, otic and inhalation products. The Company's Health CareProducts Division is a leading developer and marketer of brandedprescription and OTC products for the diabetes marketplace.

Forward-looking statements (statements which are not historicalfacts) in this Press Release are made pursuant to the safe harborprovisions of the Private Securities Litigation Reform Act of 1995.Forward looking statements are not promises or guarantees andinvestors are cautioned that all forward-looking statements involverisks and uncertainties, including but not limited to the impact ofcompetitive products and pricing, product demand and marketacceptance, new product development, the regulatory environment,including without limitation, reliance on key strategic alliances,availability of raw materials, fluctuations in operating resultsand other results and other risks detailed from time to time in theCompany's filings with the Securities and Exchange Commission.These statements are based on management's current expectations andare naturally subject to uncertainty and changes in circumstances.We caution you not to place undue reliance upon any such forwardlooking statements which speak only as the date made. Hi-Tech isunder no obligation to, and expressly disclaims any such obligationto, update or alter its forward-looking statements, whether as aresults of new information, future events or otherwise. -0- *TTwelve Months Three Months ------------------------------------------------- 4/30/2008 4/30/2007 4/30/2008 4/30/2007------------ ------------ ----------- ------------ Net sales$62,017,000 $58,898,000 $20,970,000 $13,334,000 Cost of goods sold40,505,000 35,704,000 12,243,000 9,946,000 Gross profit 21,512,00023,194,000 8,727,000 3,388,000 Selling, general, administrativeexpenses 22,625,000 23,914,000 5,501,000 5,949,000 Research &product development costs 6,208,000 4,733,000 1,981,000 1,293,000Contract research (income) - (123,000) - (75,000) Interest expense27,000 18,000 10,000 5,000 Interest (income) and other (480,000)(1,314,000) 361,000 (48,000) Total 28,380,000 27,228,000 7,853,0007,124,000 Income before income taxes (6,868,000) (4,034,000)874,000 (3,736,000) Provision for income taxes (1,770,000)(1,998,000) 597,000 (1,524,000) Net income $(5,098,000)$(2,036,000) $ 277,000 $(2,212,000) Basic net earnings per commonshare (.45) (.17) .02 (.19) Diluted net earnings per common share(.45) (.17) .02 (.19) Weighted average common shares outstanding-basic 11,353,000 11,884,000 11,424,000 11,478,000 Effect ofpotential common shares - - 634,000 - Weighted average commonshares outstanding - diluted 11,353,000 11,884,000 12,058,00011,478,000 *T