Disappointments in Hospira Inc.'s third-quarter earnings reportand the caution flag about 2007 that the hospital products makerwaved to analysts convinced a key analyst to question Hospiramanagement's abilities.
Leerink Swann & Co. analyst Bruce Cranna responded to theearnings report by downgrading Hospira's stock to market performfrom outperform.
Hospira last week reported a 6.5 percent drop in third-quarternet income to $55.9 million, or 35 cents per share, as sales acrossits major product lines fell. Chief Executive Christopher Begleyalso told Wall Street analysts that 2007 revenue and earnings-per-share estimates are too high.
There's "poor visibility on sales and earnings growth for nextyear," Cranna said in explaining the downgrade. "There's a lot ofdisappointment in the investment community on how unclear they havebeen on guidance."
Cranna is also concerned about Hospira's execution once the MaynePharma Ltd. acquisition is completed. Hospira announced in Septemberthat it will pay $2 billion to acquire Mayne, Australia's biggestmaker of generic injectable drugs.
"Our change of opinion on the stock reflects our diminishedconfidence in Hospira's ability to execute on its core business orat least communicate its direction effectively to investors," Crannasaid. "While we remain positive on Hospira's bid for . . . Mayne . .. we are unsure that an acquisition of this size if consummated canbe integrated seamlessly."
Hospira, which reaffirmed its 2006 earnings-per-share forecast ofbetween $1.97 and $2.02, "is very confident about our business andability to execute on our business strategies," said spokeswomanTareta Adams.
Hospira's stock closed at $32.16 Friday, down $4.44 for the week.
In other Hospira news, the company elected to its board Roger W.Hale, retired chairman and chief executive of LG&E Energy Corp. Thatexpands Hospira's board to nine directors, eight of whom areindependent.
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WebMD Health Corp. agreed to pay $60 million to acquire Chicago-based Subimo, a six-year-old company that has developed Internettools to help consumers make better health care decisions.
WebMD said the purchase will enable it to better address theemerging consumer-directed health plan market by providing consumersadvanced tools to judge the cost and quality of care.
The purchase price includes $34 million in cash payable on theclosing date and $26 million in WebMD Class A common stock and/orcash, which-ever WebMD decides, to be paid on the second anniversaryof the closing, which is expected before yearend.
Subimo had revenues of roughly $4.1 million and pre-tax income of$790,000 for the six months ended June 30, 2006, the companies said.
Subimo's technology enables consumers to manage and track theirpersonal heath status, select insurance, fund their tax-preferredaccounts, determine costs for care, and select hospitals, medicinesand doctors.
It's estimated that roughly 6 percent of Americans are enrolledin consumer-directed health plans today, but that's expected to growto 25 percent by 2010, WebMD said.
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UnitedHealthcare will pilot a new health insurance program inChicago designed for people 35 to 54 who are working and uninsured.Costs for the high-deductible plans, called Belay, range from $91per month to $166 per month. They cover policyholders in the case ofmajor medical emergencies and include preventive coverage.
The state's second-largest insurer is targeting the 211,000people in Chicago ages 35 to 54 who are working and uninsured.
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The Super Jake Foundation's second annual "Heroes Bash" costumeparty fund-raiser brought in more than $100,000 in funding to helpfind a cure for neuroblastoma, a rare form of cancer that strikeschildren.
The event was held in honor of Jake Widman, who died of thedisease in May 2005 at the age of four, and whose favorite superherowas Spiderman. The fund-raiser took place in Libertyville on Nov. 3,which would have been Jake's sixth birthday.
Jake's family launched the foundation in his honor in March 2005.To date, volunteers have raised more than $400,000 for pediatriccancer research and to aid families of children with cancer.
e-mail: fknowles@suntimes.com
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