Amgen Inc. said Wednesday that higher sales of its anti-infection drugs helped lift first-quarter profit by 15%, but the biotech drugmaker cautioned that healthcare reform measures will tamp down full-year results.
The company said the recently passed healthcare legislation will trim $200 million to $250 million from fiscal 2010 results. Amgen expects adjusted profit and revenue will come in toward the lower end of its forecast of $5.05 to $5.25 a share on sales of $15.1 billion to $15.5 billion as a result.
Chairman and Chief Executive Kevin Sharer said the company "will take appropriate steps to manage the impact of the new U.S. healthcare reform law."
In after-hours trading, Amgen shares fell 56 cents to $58.05 after closing down 2.4% at $58.71.
For the three months ended March 31, Amgen's profit rose to $1.17 billion, or $1.18 a share, from $1.02 billion, or 98 cents, a year earlier. Excluding one-time costs, Amgen would have earned $1.30 a share — topping the $1.23 estimate of analysts surveyed by Thomson Reuters.
Revenue climbed 9% to $3.59 billion, slightly shy of analysts' $3.65 billion forecast.
Amgen said sales of Neulasta and Neupogen, which help prevent infections in chemotherapy patients, rose 10% to $1.18 billion. The gains came from higher prices and greater demand, especially overseas, as the drugs enter new markets and patients are switched from Neupogen to the newer Neulasta.
Sales of rheumatoid arthritis and psoriasis drug Enbrel increased 6% to $804 million from $758 million.
Sales of Amgen's anemia drugs rebounded 5% to $1.25 billion from $1.19 billion, as a 10% rise in Epogen sales helped offset flat sales of Aranesp.
Use of both anemia drugs began to fall in 2007 after studies linked them to side effects including faster tumor growth. Use of the drugs was restricted, which hurt Amgen's sales growth. The company is hoping to regain sales momentum with its osteoporosis drug Prolia, which is currently being reviewed by the Food and Drug Administration.
The FDA is scheduled to make a decision on Prolia by July 25. Wall Street sees Prolia as a potential billion-seller that could recharge Amgen's revenue growth.
BOEING
Healthcare law leads to charge
The new healthcare law took its toll on Boeing Co. earnings as the aerospace company reported a $150 million non-cash charge, or 20 cents a share, for a future tax benefit that it will lose.
The charge contributed to a 15% drop in Boeing's net income of $519 million, or 70 cents a share, compared with a year earlier. Revenue at the Chicago company fell 8% to $15.2 billion as it delivered fewer airplanes to customers than in the same period in 2009: 108 compared with 121.
However, analysts were encouraged by signs that Boeing operations are getting back on track and that the worst of its development problems with the 787 Dreamliner aircraft and 747-8 jumbo jet appeared be in the past.
Boeing said it intended to begin delivering both aircraft to customers by year-end, turning programs that have been a drain on its finances into sources of revenue.
With global airlines recovering from the recent recession, Boeing is seeing a strong surge in demand for its aircraft and will decide this quarter whether to boost production of its top-seller, the 737 jet, this quarter, CEO Jim McNerney said. The company has already announced plans to speed production rates for the 777 and new, stretched version of the 747.
Boeing also said it had finalized the aerodynamic configuration of the 787. "We have completed sufficient testing to decide that no additional changes to the external lines or shape of the airplane are required," said Scott Fancher, vice president and general manager of the 787 program.
Analysts were encouraged by the improving operating margin for Boeing's commercial airplane business, 9.1% compared with 4.9% a year ago.
But observers continue to closely monitor the cash burned by Boeing as it completes research and development costs on the new planes and advances cash to suppliers who have been squeezed by the long delays to both planes. Boeing and its suppliers aren't fully paid until airplanes are delivered to customers.
Boeing reported negative free cash flow of $471 million for the quarter, but said it still has reserves of $10.4 billion in cash and short-term securities to draw from.
"This was a decent quarter for Boeing," wrote analyst Rob Stallard of Macquarie Securities in a research report.
AT&T
Slow quarter for subscriber growth
AT&T Inc., the largest U.S. phone company, added the fewest mobile subscribers in at least 12 quarters, crimping sales growth and stoking concerns about its reliance on the iPhone.
First-quarter sales of $30.6 billion missed the $30.7-billion average of estimates compiled by Bloomberg. A net new 512,000 contract subscribers signed up, compared with almost 900,000 a year earlier, Dallas-based AT&T said.
