Hi-Tech Pharmacal posts loss as prices decline
Hi-Tech Pharmacal Co. lost money in the February-April period because of lower prices for its popular nasal spray and having to set aside money for potential legal settlements.
The Amityville-based drugmaker Tuesday reported a loss of $4.6 million for its fourth quarter compared with a profit of nearly $10 million for the period a year ago. The company's fiscal year ended April 30.
Sales for the fourth quarter fell 5 percent, year over year, to $58.5 million.
Despite this performance, which was below stock analysts' estimates, Hi-Tech shares Tuesday closed up $1.72, or 5 percent, to $35.25 in Nasdaq trading. Some investors were buoyed by the company's pledge to use some of its more than $100 million in cash to purchase new products.
"We're looking to acquire things," chief executive David Seltzer told analysts in a conference call. "We just want to make sure that they fit strategically and that we don't overpay."
Fluticasone nasal spray -- a generic version of the prescription Flonase used for allergies and sinus infections -- has been the company's primary sales driver. However, competition from another generic drugmaker has pushed prices down.
Hi-Tech would've been in the black if not for the creation of two reserve funds, totaling $16 million, to cover potential expenses from a pricing probe by Texas officials and a class-action lawsuit involving ads for allergy reliever Nasal Ease.
For the full year, the drugmaker reported profits of $16 million compared with $48 million in fiscal 2012. Sales climbed 1 percent to $232 million.
Seltzer promised to roll out at least five generic drugs this year, including another nasal spray. He also predicted a new portfolio of brand-name drugs would boost the bottom line.
"The increase in research and development spending in our generic division enabled us to build a pipeline of products developed in house and some recently licensed products, which will drive our future growth," he added.
The company is in the midst of a $50-million expansion project in Suffolk County that will add about 110 people to its local workforce of 290; most have already been hired.
Fortune magazine has named Hi-Tech one of the fastest-growing U.S. public companies for two consecutive years.