Hospira Inc. Earnings: Margins Shrink on Rising Costs, Net Income Falls

S&P 500 (NYSE:SPY) component Hospira Inc. (NYSE:HSP) reported its results for the first quarter. Hospira is a global specialty pharmaceutical and medication delivery company that develops products that help improve the safety and productivity of patient care.

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Hospira Earnings Cheat Sheet for the First Quarter

Results: Net income for Hospira Inc. fell to $40.2 million (24 cents per share) vs. $149.9 million (88 cents per share) a year earlier. This is a decline of 73.2% from the year-earlier quarter.

Revenue: Fell 3.6% to $965.9 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Hospira Inc. fell short of the mean analyst estimate of 46 cents per share. Analysts were expecting revenue of $951 million.

Quoting Management: “Hospira delivered first-quarter results in line with our expectations, which reflects a difficult year-over-year comparison and the impact of our quality improvement initiatives,” said F. Michael Ball, chief executive officer. “Going forward, we remain firmly focused on advancing our remediation efforts and, at the same time, expanding our global footprint and capacity to capitalize on our growth opportunities. We believe these initiatives will position Hospira with an even stronger competitive advantage, creating sustainable, long-term shareholder value.”

Key Stats:

Gross margin went down 8.8 percentage points to 31.1%. The change appeared to be caused by costs, which went up 10.4% from the year-earlier quarter, while revenue fell 3.6%.

A year-over-year revenue decrease last quarter snaps a streak of three consecutive quarters of revenue increases. Revenue rose 2.2% in the fourth quarter of the last fiscal year, 2.9%in the third quarter of the last fiscal year and 9.9% in the second quarter of the last fiscal year.

The company fell short of estimates last quarter after beating the mark the quarter before with net income of 51 cents versus a mean estimate of net income of 45 cents per share.

HSP reported a profit in the latest quarter, breaking a two-quarter streak of losses. The company reported a net loss of $214 million in the fourth quarter of the last fiscal year and a loss of $88.9 million in the third quarter of the last fiscal year.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the second quarter has moved down from 60 cents a share to 54 cents over the last ninety days. For the fiscal year, the average estimate has moved down from $2.50 a share to $2.17 over the last ninety days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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