Hot Off the Press: Questcor's Earnings Surprise

Questcor (NASDAQ: QCOR  ) shares were up 5% on Tuesday with investors anticipating good news. The company reported its fourth quarter and full year earnings after the market closed. Was the eagerness of those investors rewarded? Let's take a look.

By the numbers
Net sales for the quarter jumped 113% year-over-year to $160.5 million. GAAP earnings came in at $1.03 per diluted share, up 115% compared to the same quarter in 2011. Non-GAAP earnings looked even better, increasing by 132% to $1.09 per diluted share. This easily beat the average analyst estimate of $1.00 per share.

For the full year, Questcor reported net sales of $509.3 million. That's up 133% from the $218.2 million reported for 2011. GAAP earnings for 2012 were $3.14 per diluted share, compared to $1.21 per diluted share the prior year. On a non-GAAP basis, the company reported earnings of $3.33 per diluted share, an increase of 162% over the $1.27 per diluted share reported in 2011.

Questcor also boosted its dividend by 25% to $0.25 per share. The company reiterated its comments to continue paying dividends for the foreseeable future.

Beyond the numbers
All of the numbers looked great -- except for one teensie weensie detail. For the first quarter in almost five years, sales for Acthar in treating multiple sclerosis, or MS, dropped compared to the previous quarter. Questcor stated that fourth quarter sales for MS decreased around 8% in the fourth quarter from third quarter levels, but were still up 40% year-over-year.

How big of a deal is this? Enough for shares to fall around 5% lower in after-hours trading, giving up most of Tuesday's gains. Those in the anti-Questcor camp are likely already claiming this MS drop as a precursor to the prophesied demise of the company. Those claims might be exaggerated, but this isn't good news no matter how you look at it. However, the impact of the decline is cushioned by a pick-up in prescriptions of Acthar for nephrotic syndrome.

Questcor just completed a major expansion of its rheumatology sales force. The company also is actively exploring other indications for Acthar. If the fourth quarter decrease in MS sales is more than just a blip, those efforts will be key to the company's continued success. 

What's next for Questcor
Will the dire predictions for Questcor come true? Will insurance companies continue to cover the drug? Will a government investigation lead to huge fines? We highlight these high-profile issues inside our brand new premium research report on Questcor. In it, you'll learn about the key opportunities and threats facing the company, as well as multiple reasons to buy and sell the stock. We're providing a full year of analyst updates as key news hits, so make sure to claim a copy today by clicking here now.


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