Could the picture get worse for Lannett Company (NYSE:LCI)? The generic drugmaker's shares were down more than 30% year to date coming into this week. This slide started with Lannett's disappointing fiscal 2020 third-quarter results announced in May. 

Lannett announced its fourth-quarter results after the market closed on Wednesday. Its shares fell in after-hours trading. Here are the highlights from the company's Q4 update.

Dollar signs in pill blister packs.

Image Source: Getty Images.

By the numbers

Lannett reported Q4 revenue of $137.9 million, a 3% increase from the $133.8 million reported in the same quarter of the previous year. This result was higher than the average analysts' revenue estimate of $134.26 million.

The company announced a net loss in the fourth quarter of $9.7 million, or $0.25 per share based on generally accepted accounting principles (GAAP). This reflected deterioration from Lannett's GAAP net loss of $7.6 million, or $0.20 per share, posted in the prior-year period.

Lannett recorded adjusted net income of $13.4 million, or $0.31 per share, in the fourth quarter. This was well below the adjusted earnings of $14.7 million, or $0.37 per share, generated in the same period in 2019. However, the result beat the average analysts' earnings estimate of $0.29 per share.

Behind the numbers

How did Lannett top expectations in Q4? CEO Tim Crew's answer was that the company's base portfolio turned in a strong performance. He also credited part of the success to Lannett's launches of multiple new products, including six in the fourth quarter.

To be sure, there were quite a few weak spots. Sales slipped year over year for Lannett's antipsychotic, central nervous system, respiratory/allergy/cough/cold, and urinary products. The company also saw sales plunge for its analgesic and cardiovascular drugs.

However, Lannett's infectious disease sales skyrocketed 483% year over year to $21.5 million. Sales for its gastrointestinal and migraine products increased by 9% and 20%, respectively. The company also more than doubled its contract manufacturing revenue in the fourth quarter.

Lannett kept spending under control, with its research and development and selling, general, and administrative costs declining from the prior-year period. Its bottom line looked worse compared to fiscal 2019 Q4, though, primarily because of asset impairment charges in the recent quarter of $18.8 million.

Looking ahead

Crew said that Lannett is "especially excited and optimistic about recent clinical progress related to a number of drug candidates in our portfolio that have very large addressable markets." He added, "We believe these products also have durable value and the potential to be catalysts for significant growth." 

With better-than-expected Q4 results and this optimism, why did the pharma stock sink in after-hours trading on Wednesday? Probably because of Lannett's full-year 2021 outlook.

The company expects that its GAAP and non-GAAP net sales for the fiscal year will be between $520 million and $545 million. The midpoint of that range is lower than the consensus analysts' revenue estimate of $542.1 million. Crew said that this outlook "reflects recent and anticipated competitive pressure on certain key products, as well as lower operating expenses as a result of our recently announced restructuring and cost reduction plan."

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