Lannett (LCI) has gone through some rough patches in recent years. The stock was sizzling hot in 2019, skyrocketing 78%, but that sizzle has fizzled out so far in 2020.

Investors hoping for a spark from Lannett's second-quarter results had some things to like. The generic-drug maker reported its Q2 results after the market closed on Wednesday. Here are the highlights from Lannett's quarterly update.

Multicolored pills forming a dollar sign

Image source: Getty Images.

By the numbers

Lannett announced Q2 revenue of $136.1 million, a sharp decline from the $193.7 million reported in the same quarter of the previous year. There was some good news, though: This result handily beat the average analysts' Q2 revenue estimate of $128.6 million.

The drugmaker's gross profit in the second quarter totaled $41.3 million, down from $69.8 million in the prior-year period. Lannett reported net income in the second quarter of $5.1 million, or $0.13 per share, based on generally accepted accounting principles (GAAP). This represented a decrease from GAAP earnings of $12.4 million, or $0.32 per share, posted in the prior-year period.

Lannett's Q2 adjusted non-GAAP results looked better. The company announced adjusted net income of $11.7 million, or $0.27 per diluted share. Although that was lower than the adjusted earnings of $33.6 million, or $0.86 per diluted share, recorded in Q2 of 2018, it met the consensus Wall Street earnings estimate.

Behind the numbers

Lannett CEO Tim Crew said that "strong sales across multiple product categories drove solid increases to our net sales and net income over our fiscal 2020 first-quarter results." He added that the company's "improved topline was due in part to the introduction of seven new products in the second quarter of fiscal 2020, as well as a full quarter of sales of Posaconazole."

Those product categories driving Lannett's sales growth included its antipsychosis, central nervous system, gastrointestinal, and infectious disease drugs. This growth was partially offset, though, by lower sales in other categories, especially endocrinology.

There was no way for Lannett to avoid taking a hit to its bottom line with its significant year-over-year revenue drop. However, the company tightened its belt, with total operating expenses in the second quarter declining 26% from the prior-year period. Its Q2 earnings were also boosted by an income tax benefit of $5.3 million. 

Looking ahead

Lannett now expects net sales for fiscal 2020 of between $530 million and $550 million. That's up from the company's previous guidance of $525 million to $545 million. However, this improved revenue outlook isn't expected to impact adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). Lannett maintained its adjusted EBITDA guidance range for 2020 of $145 million to $160 million.

Crew said that Lannett plans to launch "an additional 10 or so products in the second half of the year." Those product launches notably include Numbrino, an anesthetic that was recently approved by the FDA. He added that the company is also "making excellent progress advancing multiple products in our pipeline that have significant upside."

2020 could be a volatile year for pharmaceutical stocks, though. The U.S. presidential campaign could ignite worries similar to those from four years ago. Generic-drug companies won't necessarily be exempt from the potential fallout if political candidates target the pharmaceutical industry.