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Jazz Pharmaceuticals plc (JAZZ - Analyst Report) reported third quarter 2012 earnings (including share-based compensation charges but excluding other special items) of $1.20 per share, above the year-ago earnings of 87 cents per share but in line with the Zacks Consensus Estimate. Higher revenues boosted earnings in the third quarter of 2012.

Quarterly revenues increased 139.5% to $175.5 million. However, third quarter revenues were below the Zacks Consensus Estimate of $180 million. Higher revenues were attributable to the addition of Azur Pharma and EUSA Pharma's US commercial businesses. Strong sales of Xyrem (sodium oxybate) also aided revenues.

Quarter in Detail

In the third quarter of 2012, Xyrem sales increased 64% to $102.6 million. During the quarter, approximately 10,200 patients were on Xyrem compared to slightly over 9,000 in the year-ago period.

Erwinaze, which received approval in the US in November 2011, generated sales of $31.7 million. We note that the company reported pro forma net sales of $32.9 million in the previous quarter.

Prialt sales increased 9% to $5.4 million, while sales of psychiatry products, Luvox CR (fluvoxamine maleate), FazaClo HD (clozapine, USP) and FazaClo LD, went up 7% to $21 million in the third quarter, on a pro forma basis.

Other Details

Jazz Pharma’s adjusted selling, general and administrative (SG&A) expenses shot up 131.9% to $57.0 million, primarily due to an increase in the number of employees following the integration of Azur Pharma and EUSA Pharma's US commercial businesses.

During the quarter, adjusted research and development (R&D) expenses amounted to $6.9 million, reflecting an increase of 111%.

2012 Outlook

For 2012, Jazz Pharma expects adjusted earnings (excluding share-based compensation) in the range of $4.65 – $4.75 per share. Share-based compensation is expected in the range of $23 – $24 million.

Jazz Pharma expects 2012 revenues in the range of $575 – $585 million with Xyrem and Erwinaze contributing $375–$380 million and $65–$69 million, respectively.

Adjusted (excluding share-based compensation) SG&A and R&D expenses combined are expected to be between $200 million and $205 million.

Jazz Pharma was in the news a few weeks back when it sold its women's health business to Meda Pharmaceuticals Inc., the US subsidiary of Meda AB.

The sale of the women’s health business should allow Jazz Pharma to focus on its core areas like narcolepsy, oncology, pain and psychiatry. However, these markets are highly competitive with the presence of big companies like Teva Pharmaceutical (TEVA - Analyst Report), Roche Holdings AG (RHHBY - Analyst Report) and Bristol-Myers Squibb Company (BMY - Analyst Report).

Currently, we have a Neutral recommendation on Jazz Pharma. The stock carries a Zacks #3 Rank (Hold rating) in the short run.
 

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