Allergan CEO takes blame for big miss on quarterly earnings
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The Allergan logo is seen in this photo illustration November 23, 2015. REUTERS/Thomas White/Illustration/File Photo
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By Ransdell Pierson and Natalie Grover
(Reuters) - Allergan Plc's chief executive officer on Wednesday took the blame for disappointing quarterly earnings as the drugmaker underestimated sales declines for its older medicines, forcing it to cut its 2016 profit forecast.
Allergan (NYSE: AGN) shares fell 4 percent in late-morning trading amid slight gains for the drug sector.
CEO Brent Saunders, who has snapped up a number of smaller drugmakers since Allergan's planned $160 billion merger with Pfizer Inc (NYSE: PFE) collapsed in April, said the company overlooked sales trends for some of its older products, including Asacol for ulcerative colitis and Alzheimer's dementia treatment Namenda.
"The miss wasn't in our promoted products," Saunders said, but instead "in some products we don't pay much attention to. It's not an excuse; hopefully it won't happen again ... I accept full accountability for the situation."
But the company was able to cheer investors, saying it expanded its share buyback program by $5 billion to $15 billion and initiated a first-ever quarterly dividend of 70 cents per share, beginning in the first quarter of 2017.
In May, Allergan said it would buy back up to $10 billion in stock, and on Wednesday said it had repurchased $5 billion in shares ahead of schedule.
The Dublin-based company earned $3.32 per share, excluding special items, in the third quarter, widely missing the average analyst estimate of $3.56, according to Thomson Reuters I/B/E/S.
The profit miss was driven by weaker-than-expected sales, slightly lower gross margins and higher expenses, Evercore ISI's Umer Raffat wrote in a note.
Net revenue rose 4.4 percent to $3.62 billion but was less than the average analyst estimate of $3.68 billion.
The company was created when Dublin-based Actavis, under Saunders' leadership, bought the Botox maker in March 2015, snatching it from hostile bidder Valeant Pharmaceuticals Inc (NYSE: VRX), and taking the Allergan name. Saunders has been one of the industry's most active dealmakers.
The net loss from continuing operations, net of tax, narrowed to $380.1 million, or $1.15 per share, from $875 million, or $2.40, a year earlier.
The company cut its adjusted full-year net revenue forecast for continuing operations to $14.45 billion-$14.65 billion from $14.65 billion-$14.90 billion.
Allergan also reduced its full-year adjusted profit to a range of $13.30-$13.50 per share from a previous range of $13.75- $14.20.
Shares dropped $8.26, or 4 percent, to $200.43. Up to Tuesday's close, Allergan's stock had fallen 33 percent this year.
(The story was refiled to fix a typo in the eighth paragraph)
(Reporting by Natalie Grover in Bengaluru and Ransdell Pierson in New York; Editing by Sriraj Kalluvila and Jeffrey Benkoe)
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Related EntitiesDividend, Stock Buyback, Earnings, Definitive Agreement, Umer Raffat
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