Hi-Tech Pharmacal first quarter sales increase 43% to $56.2 million

Hi-Tech Pharmacal Co., Inc. (NASDAQ: HITK) today reported results for the Company's fiscal first quarter ended July 31, 2011.

“We are pleased with our strong performance this quarter. In particular, our success with Fluticasone Propionate nasal spray has enabled us to reinvest in the business which can be seen in both the increased R&D spending and the addition of several product lines to the ECR business.”

Quarterly Results

Net sales for the three months ended July 31, 2011 were $56,211,000, an increase of $16,902,000 or 43% compared to the net sales of $39,309,000, for the three months ended July 31, 2010.

Net sales for generic pharmaceuticals for the three months ended July 31, 2011 were $48,969,000, an increase of $16,684,000 or 52%, compared to sales of $32,285,000 for the respective prior fiscal period. The increase was primarily due to stronger sales of Fluticasone Propionate nasal spray. Sales of Fluticasone Propionate increased to $26,200,000 from $11,700,000 in the comparable quarter as the Company sold more units at a higher average price. The Company also benefited from sales of Gabapentin oral solution, launched in February 2011, and Levofloxacin oral solution, launched in June 2011.

ECR Pharmaceuticals contributed $3,707,000 to sales in the current period, an increase of $213,000 or 6%, compared to sales of $3,494,000 for the respective fiscal 2011 period. The increase was primarily due to sales of recently acquired products. These increases were partially offset by lower sales of the Lodrane^® line of antihistamines.

Net sales for the Health Care Products division, which markets the Company's OTC branded products, were $3,535,000, an increase of $5,000 compared to $3,530,000 reported for the same period last year.

Cost of goods sold increased to $22,975,000 or 41% of net sales, for the three months ended July 31, 2011 from $16,767,000, or 43% of net sales, for the three months ended July 31, 2010. The decrease in cost of goods sold as a percentage of net sales is primarily due to increased sales of Fluticasone Propionate nasal spray at higher average prices. Additionally, newly launched products such as Gabapentin oral solution and Levofloxacin oral solution have higher than average margins.

Research and product development costs for the three months ended July 31, 2011 increased to $3,399,000, compared to $1,946,000 for the same period ended July 31, 2010. The Company has increased spending on internal projects for the generic division including three generic projects requiring clinical trials which it has undertaken with partners.

Selling, general and administrative expense increased to $9,571,000 from $9,020,000 for the three months ended July 31, 2011 and 2010, respectively. This increase is primarily due to increased advertising in the Health Care Products division and increased amortization associated with ECR Pharmaceuticals.

For the three months ended July 31, 2011, the Company recorded net income from continuing operations of $13,773,000 or $1.05 per diluted share, or 58% compared to net income of $8,675,000 or $0.66 per diluted share, for the same period in the prior year.

David Seltzer, President and CEO, commented on the results: "We are pleased with our strong performance this quarter. In particular, our success with Fluticasone Propionate nasal spray has enabled us to reinvest in the business which can be seen in both the increased R&D spending and the addition of several product lines to the ECR business."