Matrixx Posts Wider 2Q Loss on Costs
© 2006 The Associated Press
July 24, 2006, 4:43PM
PHOENIX — Health care products maker Matrixx Initiatives Inc. reported a much wider second-quarter loss on Monday due to mounting legal costs and a ramp-up of research and development spending.
The company, which makes over-the-counter products such as cold remedies, lost $1.9 million, or 19 cents per share, in the latest quarter, compared with a loss of $505,000, or 5 cents per share, a year prior. Revenue increased 31.2 percent to $8.2 million from $6.3 million in what the company said is a historically weak quarter for sales.
Analysts polled by Thomson Financial expected a loss of 10 cents per share on revenue of $7.9 million.
Research and development spending doubled to $1.9 million as the company said it scaled up products and focused more on its oral care and antacid concepts. Adding to the company's costs was $2.8 million in spending on legal expense _ compared with $1.4 million a year prior _ on product liability issues and a Federal Trade Commission request for information on advertising claims made by the company for its Zicam cold remedies.
Rising legal costs weighed more heavily on this year's results, due to the absence of a $600,000 insurance reimbursement that helped offset the costs last year.
Carl Johnson, President and CEO, said, "We reviewed sales of all of our products to rationalize our product line and decided to discontinue three of our cough items (Honey-Lemon, Kids, and Kids +D) and Zicam Nasal Moisturizer. We expect the three new items introduced this year, which will generally replace the space allocated to the discontinued items, will have higher sales per point of distribution than the discontinued items and generate more sales for our retail customers."
The company said it continues to see 2006 earnings growth of 15 percent to 25 percent over last year's operating profit of $7.6 million, and sales growth of 25 percent to 35 percent over the $90.5 million recorded in 2005.
Shares of Matrixx rose 52 cents, or 3.6 percent, to close earlier at $15.17 on the Nasdaq. |
