Hospira (NYSE:HSP) took a $134 million charge during the 1st quarter on its plan to "retire" some of its older, trouble-plagued infusion pumps and lowered its sales and earnings guidance.
Investors sent HOSP shares down some 2% today in response.
Lake Forest, Ill.-based Hospira said it will gradually phase out its Symbiq, GemStar and Plum infusion pumps over the next 2-3 years as it brings newer devices into the pipeline. The company has struggled since the FDA last year banned importation of some of its infusion pumps made in Costa Rica.
The decision pushed Hospira’s sales down 8.5% to $884.0 million during the 3 months ended March 31, plunging the company into red ink for the quarter. Losses reached $76.6 million, or 46¢ per share, compared with profits of $40.2 million, or 24¢ per share, during Q1 2013.
Adjusted to exclude the 1-time items, earnings per share topped Wall Street’s forecast by 8¢, at 52¢ per share. Still, HOSP shares were off 2.6% today as of about 1:10 p.m., trading at $32.25 each.
"Given the ever-expanding focus in healthcare on improving patient safety and clinical outcomes, we see our device business as a major strategic growth driver for Hospira and are committed to sustaining our leadership position through current and future investments," chief commercial officer Richard Davies said in prepared remarks. "Hospira is acutely aware of the importance of our devices globally to the patients we serve, and we will work closely with our customers to ensure a seamless transition throughout this process."
Hospira said it now expects to post sales declines of -2% to -4% or -1% to 1% excluding the impact of the phase-outs. Adjusted EPS are forecast to be $2-$2.10 for the year, down from prior guidance of $2.05 to $2.20.
Hospira recalled the Symbiq in November 2012 over a touchscreen issue. The FDA gave that recall its highest-risk Class I status over concerns that the software could prevent the pump from responding correctly to user selections. Later that month the federal watchdog agency blocked new imports of Symbiq systems into the U.S.
Just months before the Symbiq recall, the FDA had chided Hospira over violations at the Costa Rica facility, saying that the company mishandled a September 2011 recall of the Plum infusion pumps.
The FDA cited Hospira for a "failure to identify the actions needed to correct and prevent recurrence of nonconforming product and other quality problems" as well as a "failure to implement and record changes in methods and procedures needed to correct and prevent identified quality problems."
