Hospira Inc. Earnings: Margins Suffer as Costs Rise

S&P 500 (NYSE:SPY) component Hospira Inc. (NYSE:HSP) reported its results for the fourth 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 Fourth Quarter

Results: Reported a loss of $214 million ($1.30 per diluted share) in the quarter. Hospira Inc. had a net income of $60.6 million or 36 cents per share in the year earlier quarter.

Revenue: Rose 2.2% to $1.01 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: Hospira Inc. reported adjusted net income of 51 cents per share. By that measure, the company beat the mean estimate of 45 cents per share. It beat the average revenue estimate of $952.5 million.

Quoting Management: “While 2011 was a challenging year as a result of our quality transformation efforts, we met our revised financial expectations, generating over $4 billion in sales, and advanced our remediation efforts,” said F. Michael Ball, chief executive officer. “We made significant progress on many fronts during the year, including the launch in the United States of two important oncolytic products and an anti-infective drug, as well as initiating the Phase III U.S. clinical program for our biosimilar erythropoietin. We remain firmly committed to reinforcing our foundation and instilling a culture of high quality throughout the organization, actions we believe will create a strong competitive advantage for Hospira and position us for sustainable, long-term growth and increased shareholder value.”

Key Stats:

Gross margin shrank 7.3 percentage points to 27.7%. The contraction appeared to be driven by increased costs, which rose 13.8% from the year earlier quarter while revenue rose 2.2%.

Revenue has now gone up for three straight quarters. In the third quarter, revenue rose 2.9% to $976.7 million while the figure rose 9.9% in the second quarter from the year earlier.

The company beat estimates last quarter after being in line with expectations in the third quarter with net income of 66 cents per share.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the first quarter of the next fiscal year has moved down from 53 cents a share to 49 cents over the last sixty days. For the fiscal year, the average estimate has moved down from $3 a share to $2.98 over the last thirty days.

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

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com