Hi-Tech Pharmacal swings to a loss in Q4
Shares of Hi-Tech Pharmacal Co., (Nasdaq: HITK) slid 9.4%, or $1.04, to $10.05 after the specialty pharmaceutical company reported it swung to a net loss in the fourth quarter.
For the three months ended April 30, 2007, Hi-Tech Pharmacal recorded a net loss of $2.2 million, compared with net income of $2.1 million in the fourth quarter last year.
The Amityville, N.Y.-based company said the net loss was due to a 19% decrease in net sales of its generic pharmaceutical products, which was due to pricing declines, and a 24% sales decrease in its over the counter products. Total net sales for the fourth quarter were $13.3 million, a decrease of 27% compared with net sales of $18.8 million in the fourth quarter last year.
Michael Donohue at Matrix USA, who has a strong “sell” on the stock, says Hi-Pharmacal is trading ahead of fundamentals. “Their return on capital went from 20% in January 2006 to -0.3% last quarter,” said Donohue. “Their EVA [economic value added] went from $7 million in January of 2006 to -$6 million in January 2007.” According to Donohue, the stock is the lowest ranked in Matrix’s universe--in the fifth percentile.
The manufacturer and marketer of generic and branded prescription and OTC products also reported fiscal year results today for the year ended April 30, 2007. The company reported a net loss of $2.0 million, or $0.17 per share for the year, compared with net income of $11.5 million, or $0.85 per fully diluted share, for 2006. Two analysts polled by Thomson Financial expected EPS for the fiscal year 2007 of $0.02.
Hi-Tech Pharmacal reported net sales of $58.9 million, a decrease of 25% from net sales of $78.0 million for fiscal year 2006. Hi-Tech Pharmacal said Urea based products incurred the most significant declines in both price and unit volume. Overall unit volume for the company was down by 3%.
“Fiscal 2007 was challenging as we faced generic pricing pressure and increased competition,” Hi-Tech Pharmacal CEO David Seltzer said. “In addition we were delayed in launching several products.”
Hi-Tech Pharmacal currently has thirteen products awaiting approval at the FDA, targeting brand and generic sales of over $1.5 billion. Additionally, Hi-Tech has twenty products in active development targeting brand sales of over $2 billion, including sterile ophthalmic products, oral solutions and suspensions and nasal sprays.
