Allergan PLC on Wednesday said it would return more cash to shareholders because the drugmaker isn't interested in a making a megadeal.
Shares edged up slightly in premarket trading even as the company reported weaker-than-expected quarterly results and lowered its outlook.
Allergan said it was expanding its share repurchase program to $15 billion, from $10 billion and that it would start paying a quarterly cash dividend.
Chief Executive Brent Saunders said recently completed deals had netted capital for the company, but that Allergan couldn't find a large acquisition that made sense and would instead focus on steppingstone transactions and returning some ofthe money to shareholders.
"There was no deal out there was as accretive or compelling as our own stock," Mr. Saunders said.
Allergan and Pfizer Inc. earlier this year terminated a planned $150 billion merger after the Obama administration took aim at the so-called inversion deal.
Allergan completed the sale of its generics business to Teva Pharmaceutical Industries Ltd. during the third quarter. In September, Allergan agreed to buy Tobira Therapeutics Inc., a biopharmaceutical company that develops therapies for liver diseases, in a deal worth as much as $1.7 billion.
On Wednesday, the company said it plans to buy $10 billion in its shares through an accelerated buyback program, which typically means it will work with a financial-services company to obtain a large block of its shares at once instead of buying them over months on the open market.
Allergan also said it would pay an initial quarterly dividend of 70 cents in March2017.
As for the third quarter, Allergan reported a profit of $15.22 billion, or $38.58 a share, compared with a profit of $5.3 billion, or $13.29 a share, a year prior. Much of the increase came from the impact of discontinued operations.
Excluding special charges and items related to acquisitions and divestitures, earnings were $3.32 a share. Revenue rose 4.4% to $3.62 billion.
Analysts had projected adjusted earnings of $3.56 a share on revenue of $3.68 billion, according to Thomson Reuters.
For the year, Allergan said it now expects revenue of $14.45 billion to $14.65 billion, down from $14.65 billion to $14.9 billion previously. It also expects adjusted earnings of $13.30 to $13.50 a share, down from a prior forecast of $13.75 to $14.20 a share.
In its third quarter, margins were lower than expected on increased investment in manufacturing, sales and marketing, and research and development.
Meanwhile, several drugs acrossAllergan's portfolio logged double-digit sales increases, with revenue from antiwrinkle treatment Botox increasing 14% to $689.7 million and sales of transplant drug Restasis sales rising 13% to $371.8 million.
Sales in its U.S. general medicine segment fell 4.1% to $1.49 billion, as the Namenda IR Alzheimer's treatment lost exclusivity. U.S. specialized therapeutics revenue grew 12% to $1.45 billion on growth in eye care, facial aesthetics and medical dermatology. International sales grew 5.6% to $697.8 million on eye care and facial aesthetics.
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(END) Dow Jones Newswires
November 02, 2016 09:05 ET (13:05 GMT)
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