Lannett Company, Inc. (LCI) swung to a net profit for the quarter ended Mar. 31, 2017. The company has made a net profit of $14.93 million, or $ 0.40 a share in the quarter, against a net loss of $5.49 million, or $0.15 a share in the last year period. On the other hand, adjusted net income for the quarter stood at $29.20 million, or $0.77 a share compared with $27.89 million or $0.75 a share, a year ago.
Revenue during the quarter grew 15.42 percent to $161.72 million from $140.11 million in the previous year period. Gross margin for the quarter expanded 376 basis points over the previous year period to 44.79 percent. Total expenses were 73.02 percent of quarterly revenues, down from 86.71 percent for the same period last year. This has led to an improvement of 1370 basis points in operating margin to 26.98 percent.
Operating income for the quarter was $43.64 million, compared with $18.62 million in the previous year period.
However, the adjusted operating income for the quarter stood at $59.90 million compared to $65.17 million in the prior year period. At the same time, adjusted operating margin contracted 948 basis points in the quarter to 37.04 percent from 46.51 percent in the last year period.
"Net sales in our fiscal 2017 third quarter increased compared with the same quarter last year, largely due to volume increases, even though sales were reduced by $4.5 million as a result of Medicaid's Inflation-Adjusted Rebate program," said Arthur Bedrosian, chief executive officer of Lannett. "The program began being applied to generic drugs for the first time in calendar 2017. Despite higher net sales, our financial results were not at the level we expected due to competitive pricing pressure across a number of products, product mix and changes within distribution channels. "Looking ahead, our business remains strong. We paid down $100 million of debt during the recently completed quarter, lowering annualized cash interest expense by approximately $5.5 million. In addition, we have a number of drug applications pending at the FDA and anticipate launching recently approved products in the first half of fiscal 2018."
Working capital declines
Lannett Company, Inc. has witnessed a decline in the working capital over the last year. It stood at $343.79 million as at Mar. 31, 2017, down 19.06 percent or $80.93 million from $424.72 million on Mar. 31, 2016. Current ratio was at 2.63 as on Mar. 31, 2017, down from 3.40 on Mar. 31, 2016.
Cash conversion cycle (CCC) has decreased to 146 days for the quarter from 232 days for the last year period. Days sales outstanding went down to 125 days for the quarter compared with 136 days for the same period last year.
Days inventory outstanding has decreased to 62 days for the quarter compared with 132 days for the previous year period. At the same time, days payable outstanding went up to 41 days for the quarter from 37 for the same period last year.
Debt comes down
Lannett Company, Inc. has recorded a decline in total debt over the last one year. It stood at $937.06 million as on Mar. 31, 2017, down 11.08 percent or $116.80 million from $1,053.85 million on Mar. 31, 2016. Total debt was 57.59 percent of total assets as on Mar. 31, 2017, compared with 60.14 percent on Mar. 31, 2016. Debt to equity ratio was at 1.69 as on Mar. 31, 2017, down from 1.92 as on Mar. 31, 2016. Interest coverage ratio improved to 1.95 for the quarter from 0.69 for the same period last year.
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