Shire Q2 Results Beat View; Backs 2018 Outlook

(RTTNews) - Shire plc (SHPG, SHP.L) reported that its net income for the second-quarter significantly increased to $615.5 million from $240.3 million last year. Earnings per American Depository Share increased 154% to $2.01 from last year's $0.79, due to a decline in integration and acquisition costs and lower expense related to the unwind of inventory fair value adjustments. The second-quarter of 2017 also reflected costs related to R&D license arrangements which did not recur in the second-quarter of 2018.

Non GAAP earnings per ADS increased 4% to $3.88 from the prior year's $3.73 as increased product sales were offset by lower gross margins. Analysts polled by Thomson Reuters expected the company to report earnings of $3.67 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenues for the quarter grew about 5 percent to $3.92 billion from $3.75 billion in the prior year. Wall Street analysts had a consensus revenue estimate of $3.80 billion.

Product sales increased 6% to $3.809 billion from last year, driven by Immunology, up 13%, Internal Medicine, up 61%, and Ophthalmics, up 75%. Excluding the impact of Established Brands, product sales increased 10%.

The company said its 2018 guidance, which continues to include our Oncology franchise, remains unchanged. Guidance will be updated to remove the Oncology franchise after the close of the sale to Servier S.A.S., which is expected in the third-quarter of 2018. Similarly, 2020 guidance remains unchanged and will be updated to remove the Oncology franchise after the close of this pending sale.

Looking ahead for 2018, the company still expects earnings per ADS to be in the range of $7.30 - $7.90, Non-GAAP earnings per ADS of $14.90 - $15.50. Analysts expect annual earnings of $15.22 per share for 2018. For 2018, the company still expects total revenue to be in the range of $15.4 billion - $15.9 billion. Wall Street expects revenues of $15.49 billion.

Wall Street currently is looking for fiscal year 2018 earnings of $15.22 per share on annual revenues of $15.49 billion.

The Board resolved to pay an interim dividend of 5.60 U.S. cents per Ordinary Share, compared to 5.09 U.S. cents per Ordinary Share paid last year.

On May 8, 2018, the Boards of Takeda and Shire announced that they had reached agreement on the terms of a recommended offer pursuant to which Takeda will acquire the entire issued and to be issued ordinary share capital of Shire. The acquisition is expected to close in the first-half of 2019, subject to a number of conditions, including receipt of regulatory clearances and approval by the shareholders of both companies.

On April 16, 2018, Shire announced it had entered into a definitive agreement with Servier to sell its Oncology franchise for $2.4 billion. Activities to conclude the sale are on track and the closing of the transaction is expected to occur in third-quarter 2018.