Shire Q2 Results Top Estimates; Explores Review Of Neuroscience Franchise

(RTTNews) - Shire plc (SHP.L, SHPG) reported that its net income for the second-quarter was $240.3 million compared to a loss of $162.1 million last year. The company cut its outlook for fiscal year 2017. It explores strategic review of Neuroscience franchise, including potential of independent public listing. The company updated guidance for 2017.

Earnings per American Depositary Shares for the second-quarter were $0.79, compared to loss per ADS of $0.71 in the prior year, primarily due to higher operating income due to the inclusion of a full quarter of Baxalta income and the impact of lower losses from discontinued operations related to the divested Dermagraft business.

Shire said it remains ahead of schedule to deliver at least $700 million in cost synergies from the Baxalta integration by Year 3.

Flemming Ornskov, M.D., M.P.H., Shire Chief Executive Officer, said, "As we enter the second half of 2017, we are focused on generating strong organic growth while continuing to deliver on our key priorities - launching more than 80 products globally by leveraging our expanded commercial platform, progressing our late-stage pipeline, integrating Baxalta, and paying down debt. We have updated our 2017 full year guidance and remain very confident about Shire's long-term prospects."

Flemming Ornskov, said "By year end, we expect to complete a formal evaluation of the full range of strategic options for the neuroscience franchise, including the potential for its independent public listing."

The company updated guidance for 2017. The guidance incorporates accelerated synergy capture as well as an updated view on product sales, primarily due to a new generic LIALDA competitor. It also revised depreciation estimate to be $450 - $500 million, based on updates resulting from the Baxalta integration, and lowered capital expenditure forecast to $800 - $900 million.

Non GAAP EPS has been upgraded by raising the midpoint of guidance range by 10 cents to $15.00, driven by cost discipline and accelerated synergy capture.

For 2017, the company now expects earnings per ADS to be in the range of $5.65 - $6.05, non-GAAP earnings per ADS of $14.80 - $15.20, and Total product sales of $14.3 billion- $14.6 billion. Previously, the company expected earnings per ADS to be in the range of $6.95 - $7.55, non-GAAP earnings per ADS of $14.60 - $15.20, and Total product sales of $14.5 billion- $14.8 billion for 2017. Wall Street currently is looking for fiscal year 2017 earnings of $14.84 per share on annual revenues of $15.05 billion.

Non GAAP earnings per ADS for the second-quarter increased 10% to $3.73 from $3.38 last year, as higher Non GAAP operating income more than offset the impact of additional shares issued as consideration for the Baxalta transaction. Analysts polled by Thomson Reuters expected the company to report earnings of $3.54 per share. Analysts' estimates typically exclude special items.

Operating income increased 315% to $399 million from the prior year's $96 million, primarily due to the inclusion of a full quarter of Baxalta operating income and higher revenue from Internal Medicine franchise, partially offset by higher amortization of acquired intangible assets and higher costs relating to licensing arrangements.

Product sales increased 55% to $3.592 billion from last year, primarily due to the inclusion of a full quarter of legacy Baxalta sales of $1.710 billion in the second-quarter of 2017.

Total revenues grew to $3.75 billion from $2.43 billion last year. Wall Street analysts had a consensus revenue estimate of $3.7 billion.

The Board resolved to pay an interim dividend of 5.09 U.S. cents per Ordinary Share, compared to 4.63 U.S. cents per Ordinary Share paid last year.