Depomed Tumbles on Missed Earnings

By Chris Lange Updated Jan 12, 6:03PM EST · Published Nov 8, 10:25AM EST

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Depomed Tumbles on Missed Earnings — © Thinkstock

When Depomed Inc. (NASDAQ: DEPO) reported its third-quarter financial results after the markets closed on Monday, it posted $0.28 in earnings per share (EPS) and $110.5 million in revenue. The consensus estimates from Thomson Reuters had called for $0.35 in EPS and revenue of $127.22 million. The same period of last year reportedly had EPS of $0.33 and $104.86 million in revenue.

During this quarter, a settlement agreement was reached with activist firm Starboard Value regarding the inclusion of three additional independent directors — James P. Fogarty, Robert G. Savage and James L. Tyree — to Depomed’s board of directors.

Nucynta products had net sales of $65.29 million, also recording an all-time monthly high prescription volume of over 30,000 in August. Gralise third-quarter net sales totaled $21 million and Cambia net sales were a record $9.1 million, an increase of 29% compared to $7 million in the same period last year. Finally, Lazanda net sales were a record $8.2 million, an increase of 50% compared to $5.4 million in the same period last year.

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On the books, Depomed cash, cash equivalents and marketable securities totaled $137.09 million at the end of the quarter, versus $209.77 million at the end of 2015.

Jim Schoeneck, president and chief executive of Depomed, commented:

Although our third quarter revenues increased by 5% over the previous year’s quarter, they did not meet our expectations, as several factors, including a disconnect between prescription demand and wholesaler shipments, influenced net sales of the NUCYNTA franchise and Gralise. Prescriptions for NUCYNTA ER grew 4% over the second quarter, while shipments to wholesalers were down 1%. Prescriptions for NUCYNTA and Gralise were equal to the second quarter, however, shipments were down 6% and 12%, respectively. In addition, we made adjustments to our reserve accounts, including managed care and PBM rebate submissions from prior quarters, which impacted our product net sales.

Shares of Depomed were last seen down 20.5% at $18.20 on Tuesday, with a consensus analyst price target of $26.27 and a 52-week trading range of $12.25 to $27.02.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.