The Medicines Co. (MDCO) Q3 Loss Narrower Than Expected

The Medicines Company (NASDAQ:MDCO) reported a loss of 75 cents per share (including the impact of share-based compensation expenses) in the third quarter of 2016, significantly narrower than both the Zacks Consensus Estimate of a loss of $1.38 and the year-ago loss of 94 cents.

Meanwhile, quarterly revenues tanked 34.3% year over year to $37.6 million. Reported revenues were, however, slightly above the Zacks Consensus Estimate of $37 million. Net revenues for the quarter included royalty revenues of $18.8 million derived from gross profit on authorized generic sales of Angiomax by Novartis AG’ (NYSE:NVS) generic arm, Sandoz.

Quarter in Detail

Worldwide sales of Angiomax were down 54.7% to $10.2 million during the reported quarter. In the U.S., the product’s sales plunged 56.4% to $8.2 million, reflecting the Jul 2015 loss of exclusivity.

Sales of other products like Minocin, Orbactiv, Ionsys and the recently divested non-core cardiovascular products were $8.7 million, down 14.7%.

While adjusted research & development (R&D) expenses decreased 14.1% to $22.5 million, adjusted selling, general and administrative (SG&A) spend were down 32.2% to $48.4 million.

2016 Guidance

The company maintained its net revenue guidance in the range of $160–$170 million. R&D expenditures are now expected in the range of $118 million to $128 million on an adjusted basis, narrower that its earlier guidance of $128–$138 million. SG&A are now anticipated in the range of $239 million to $249 million, again narrower than the prior expectations of $247–$257 million.

Zacks Rank & Key Picks

The Medicines Company currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the health care sector include BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) and Exelixis, Inc. (NASDAQ:EXEL) . Both the stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BioMarin’s loss estimates have narrowed from 28 cents to 25 cents for 2016 and from $1.16 to $1.11 for 2017 over the last 60 days.

Exelixis’ loss estimates have narrowed from 71 cents to 63 cents for 2016 and from 19 cents to a gain of 3 cents for 2017 over the last 60 days. The company has posted a positive earnings surprise twice in the four trailing quarters with an average beat of 9.1%. Its share price has surged 100.4% year to date.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>