Financial Outlook
Adam Derbyshire, Executive Vice President and Chief Financial Officer, stated, “We continue to see considerable momentum in our business, which we expect to accelerate through the second half of the year. We have achieved several key milestones over the last several months, our new sales infrastructure is beginning to gain traction and prescriptions for our key products are growing. Our third quarter outlook reflects our expectation for some adjustments in the supply chain to continue into the quarter as wholesalers more closely manage inventory levels. However, we expect to see a strong fourth quarter, which historically has been our strongest quarter, as the business continues to realize the combined impact of strong prescription growth and rising productivity of our new digestive disease sales force.”
Current annualized run rates, based on dollarizing June 2014 prescription data, are approximately $712 million for XIFAXAN®; $124 million for UCERIS®; $159 million for APRISO®; $227 million for GLUMETZA®, $108 million for ZEGERID®; $99 million for MOVIPREP®/OSMOPREP®; $45 million for RELISTOR®; and $76 million for Salix’s “other products”.
For the full year 2014, Salix expects:
Total net product revenue of approximately $1.6 billion.
Gross margins of approximately 78%.
Non-GAAP research and development costs of approximately $165 million.
Non-GAAP selling, general and administrative expenses of approximately $430 million.
EBITDA, excluding expenses associated with the acquisition of Santarus and the pending merger with Cosmo Technologies, of approximately $650 million.
Non-GAAP net income of approximately $475 million, or $6.16 per diluted share. The change in per share amount from prior guidance is due to the effect of the Company’s higher stock price on the fully diluted share calculation.
Assumes a cash income tax rate of approximately 12%.
Fully diluted shares of 77.0 million.
For the third quarter of 2014, Salix expects:
Total net product revenue of approximately $395.0 million.
Gross margins of approximately 78%.
Non-GAAP research and development costs of approximately $45 million.
Non-GAAP selling, general and administrative expenses of approximately $110 million.
EBITDA, excluding expenses associated with the acquisition of Santarus and the pending merger with Cosmo Technologies, of approximately $155.0 million.
Non-GAAP net income of approximately $121.0 million, or $1.53 per diluted share.
Assumes a cash income tax rate of approximately 6%.
Fully diluted shares of 79.0 million.
The following table reconciles future guidance for non-GAAP measures to the most closely related GAAP measures. See “Use of Non-GAAP Financial Measures” below.
Salix Pharmaceuticals, Ltd.
Reconciliation of GAAP Guidance to Non-GAAP Guidance
(In millions, except per share data)