Forest Laboratories said Tuesday quarterly earnings fell 7 percent, hurt by a charge related to a product-licensing deal, and posted revenue that missed Wall Street expectations.
Shares slumped 3.5 percent in early trading as some analysts also pointed to a disappointing forecast for the remainder of the fiscal year.
Net income fell to $225.2 million, or 71 cents per share, in the fiscal second quarter that ended Sept. 30, from $241.1 million, or 75 cents per share, a year earlier.
Results were hurt by a charge of 15 cents per share, net of tax, related to the product-licensing deal.
Excluding that charge, earnings were 86 cents a share, according to Reuters Estimates, 8 cents above analysts' average forecast.
Revenue rose 8.5 percent to almost $919 million, below analysts' average forecast of $930 million.
"The upside was primarily driven by lower costs as revenues were below our expectations," Goldman Sachs analyst James Kelly said in a research note, adding that the earnings quality was "low."
Sales of its Lexapro anti-depressant rose 7 percent in the quarter to $559 million. Sales of its Namenda Alzheimer's disease drug climbed 24 percent to $193 million.
Forest raised its fiscal-year profit forecast, projecting earnings per share, excluding the 15-cent charge, of $3.10 to $3.20, compared with its prior view of $3.05 to $3.15.
However, because the 5-cent increase to the forecast lagged the quarterly beat, Wall Street may interpret the company as projecting a gloomier second half of the year, Natixis Bleichroeder analyst Corey Davis said.
"We would not be surprised to see the Street penalize Forest a bit for an insufficient raise," Davis said in a note to clients.
Forest shares fell $1.43 to $38.95 on the New York Stock Exchange. Analysts also said shares may be under pressure from mixed results released late on Monday on an experimental schizophrenia drug.
Forest is trying to shore up its product line before Lexapro and Namenda lose U.S. patent protection in the coming years.
Its shares have fallen 23 percent this year amid concerns the company will fail to replace revenue lost when generic versions erode sales of those top-selling drugs.