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Lannett Reports Net Sales of $93 Million, EPS of $0.94 For Fiscal 2015 First Quarter

Company Raises Outlook for Fiscal 2015

Philadelphia, PA – November 3, 2014 – Lannett Company, Inc. (NYSE: LCI) today reported financial results for its fiscal 2015 first quarter ended September 30, 2014.\ For the fiscal 2015 first quarter, net sales doubled to $93.4 million from $45.8 million in last year’s first quarter. Gross profit was $71.6 million, or 77% of net sales. This compares with fiscal 2014 first quarter gross profit of $1.3 million, or 3% of net sales, which included a non-recurring pre-tax charge of $20.1 million related to the contract extension with Jerome Stevens Pharmaceuticals, Inc. (JSP). Excluding the JSP contract renewal charge, gross profit was $21.4 million, or 47% of net sales. Research and development expenses increased to $6.4 million from $4.7 million for the fiscal 2014 first quarter. Selling, general and administrative expenses were $10.6 million, compared with $7.2 million in the same quarter of the prior year. Operating income was $54.7 million versus an operating loss of $10.6 million for the prior year first quarter. Excluding the JSP contract renewal charge, operating income for the fiscal 2014 first quarter was $9.5 million. Net income attributable to Lannett Company was $34.9 million, or $0.94 per diluted share, versus net loss attributable to Lannett of $6.0 million, or $0.20 per share. Adjusted net income, which excludes the impact of the JSP contract renewal charge equal to $12.7 million after-tax, was $6.7 million, or $0.22 per diluted share, in the first quarter of fiscal 2014.

“The fiscal 2015 first quarter represents the eighth consecutive quarter of record net sales, as well as the eleventh consecutive quarter in which net sales and adjusted EPS exceeded the comparable prior-year period,” said Arthur Bedrosian, president and chief executive officer of Lannett. “Strong sales across a number of product categories, including cardiovascular, gallstone, glaucoma, migraine and thyroid deficiency, drove our excellent financial results. The quarter also benefited from increased sales of our CTopical® and recently launched Oxycodone HCl Oral Solution products.”

Guidance for Fiscal 2015
Based on Lannett’s current outlook, the company raised its financial guidance for the fiscal 2015 full year as follows:

  • Net sales in the range of $370 million to $390 million, up 6% from previous guidance of $350 million to $370 million;
  • Gross margin as a percentage of net sales of approximately 73% to 75%, up from 70% to 72%;
  • R&D expense in the range of $34 million to $36 million, down from previous guidance of $36 million to $38 million;
  • SG&A expense ranging from $46 million to $48 million, down from $47 million to $49 million;
  • The full year effective tax rate to be in the range of 36% to 38%, unchanged from previous guidance; and
  • Capital expenditures in fiscal 2015 in the range of $40 million to $50 million, which includes $7 million to continue the partial fit-out of two buildings recently acquired by the company, unchanged from previous guidance.

Conference Call Information and Forward-Looking Statements
Later today, the company will host a conference call at 4:30 p.m. ET to review its results of operations for the fiscal 2015 first quarter ended September 30, 2014. The conference call will be available to interested parties by dialing 877-261-8992 from the U.S. or Canada, or 847-619-6548 from international locations, passcode 38313448. The call will also be available through a live, listen-only audio broadcast via the Internet at www.lannett.com. A playback of the call will be archived and accessible at this site for at least three months.

Discussion during the conference call may include forward-looking statements regarding such topics as, but not limited to, the company’s financial status and performance, regulatory and operational developments, and any comments the company may make about its future plans or prospects in response to questions from participants on the conference call.

About Lannett Company, Inc.:
Lannett Company, founded in 1942, develops, manufactures, packages, markets and distributes generic pharmaceutical products for a wide range of medical indications. For more information, visit the company’s website at www.lannett.com.

This news release contains certain statements of a forward-looking nature relating to future events or future business performance. Any such statements, including, but not limited to, achieving the financial metrics stated in the company’s guidance for fiscal 2015; expected product approvals; the successful commercialization of products in development, acquired products, products included in the strategic relationships and recently approved products; and product applications pending at the FDA, whether expressed or implied, are subject to risks and uncertainties which can cause actual results to differ materially from those currently anticipated due to a number of factors which include, but are not limited to, the difficulty in predicting the timing or outcome of FDA or other regulatory approvals or actions, the ability to successfully commercialize products upon approval, Lannett’s estimated or anticipated future financial results, future inventory levels, future competition or pricing, future levels of operating expenses, product development efforts or performance, and other risk factors discussed in the company’s Form 10-K and other documents filed with the Securities and Exchange Commission from time to time. These forward-looking statements represent the company's judgment as of the date of this news release. The company disclaims any intent or obligation to update these forward-looking statements.

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