Questcor Reports Fourth Quarter and Full Year 2013 Financial Results

     Questcor Reports Fourth Quarter and Full Year 2013 Financial Results

- Fourth Quarter Net Sales $243 Million; Increase 51% Year-over-Year -

- Fourth Quarter GAAP EPS of $1.44, Non-GAAP EPS of $1.67 up 53% -

- Full Year 2013 Net Sales $799 Million; Increase 57% Year-over-Year -

- Full Year GAAP EPS of $4.76, Non-GAAP EPS of $5.48 up 65% -

- Rheumatology Largest Growth Contributor -

- Approximately One Million Shares Repurchased in Fourth Quarter -

PR Newswire

ANAHEIM, Calif., Feb. 25, 2014

ANAHEIM, Calif., Feb. 25, 2014 /PRNewswire/ --Questcor Pharmaceuticals, Inc.
(NASDAQ: QCOR) today reported financial results for the fourth quarter and
full year ended December 31, 2013.

                  Three Months Ended       Three Months Percentage Change
                 12/31/13                   Ended 12/31/12
Net Sales        $242.9 Million             $160.5 Million  51%
GAAP Diluted EPS $1.44                      $1.03           40%
Non-GAAP Diluted $1.67                      $1.09           53%
EPS



                     Year Ended 12/31/13 Year Ended         Percentage Change
                                         12/31/12
GAAP Net Sales       $798.9 Million      $509.3 Million     57%
Non-GAAP Net Sales   $810.4 Million      $509.3 Million     59%
GAAP Diluted EPS     $4.76               $3.14              52%
Non-GAAP Diluted EPS $5.48               $3.33              65%

Net sales for the fourth quarter ended December 31, 2013 were $242.9 million,
up 51 percent from $160.5 million in the fourth quarter of 2012. The increase
was driven by the expanded usage of H.P. Acthar^® Gel (repository
corticotropin injection) in multiple therapeutic areas. The most significant
increase in net sales was driven by rheumatologists prescribing Acthar for
patients suffering from dermatomyositis, polymyositis, rheumatoid arthritis,
and systemic lupus erythematosus. The increase in net sales was also driven by
the increased prescribing of Acthar by nephrologists in the treatment of
proteinuria associated with nephrotic syndrome (NS) and by neurologists in the
treatment of multiple sclerosis (MS) relapses and infantile spasms (IS).
BioVectra, the Company's specialty manufacturing subsidiary which Questcor
acquired in January 2013, had net sales of $12.6 million in the fourth quarter
of 2013. GAAP earnings for the fourth quarter of 2013 were $1.44 per diluted
common share, up 40 percent from the year ago quarter.Fourth quarter 2013
non-GAAP earnings per share were $1.67, an increase of 53 percent from the
prior year period driven by non cash and one time related items as outlined in
the Non-GAAP Adjusted Financial Disclosure attached to the Consolidated
Statement of Income. 

Questcor shipped 8,100 vials of Acthar during the fourth quarter of 2013
compared to 6,330 vials in the year ago quarter. For the full year of 2013,
Questcor shipped 28,112 vials of Acthar compared to 20,741 vials in 2012. As
the Company has previously disclosed, quarterly vial shipments are subject to
significant variation due to the size and timing of individual orders received
from Questcor's distributor.The timing of when these orders are received and
filled can significantly affect net sales and net income in any particular
quarter. The Company believes that investors should consider the Company's
results over several quarters when analyzing the Company's performance.

"In 2013, Acthar net sales grew in all therapeutic areas, with the biggest
growth occurring in rheumatology," said Don M. Bailey, President and CEO of
Questcor. "At the same time, the body of evidence related to Acthar expanded
from investments in multiple company-sponsored clinical and non-clinical
studies, as well as our ongoing support for investigator-initiated studies. In
addition, we began diversifying and globalizing our business while still
returning substantial cash to shareholders."

"As we turn to 2014, our highest priority is to continue our commercial
momentum, while further building the body of scientific evidence for Acthar
and actively exploring various strategic alternatives," continued Mr. Bailey.
"Management is working closely with the Board's newly formed Strategic
Advisory Committee to support the Company's investigation and evaluation of
potential strategies to use its future potential cash flow to generate
long-term growth and value for shareholders, patients and the healthcare
community."

"New paid prescriptions for Acthar continued to be strong across all of our
markets, and grew about 30% in the fourth quarter from the year ago period to
approximately 2,450 to 2,500," commented Steve Cartt, Chief Operating Officer
of Questcor. "Prescribing of Acthar in the FDA-approved rheumatology-related
indications of dermatomyositis, polymyositis, lupus and rheumatoid arthritis
remained strong with 540 to 550 new paid Acthar prescriptions in the fourth
quarter, up about 20% from the third quarter. Notably, rheumatology
prescriptions now account for nearly 30% of total Acthar business after only
our third full quarter of educating rheumatologists on Acthar."

Mr. Cartt continued, "There were also 390 to 400 new paid prescriptions for NS
in the quarter, up about 5% year-over-year. Net sales resulting from NS
prescriptions currently account for approximately a third of our Acthar
business. During the fourth quarter there were also 1,345 to 1,355 new paid
prescriptions for MS relapse patients, up about 9% year-over-year. Net sales
generated from MS relapse prescriptions currently represent over 25% of our
Acthar business. There were also 180 to 185 new paid prescriptions for IS
during the quarter, an increase of 3% year-over-year, but down significantly
from the prior quarter."

"Regarding our newest commercial endeavor, in January we fielded a small pilot
sales force to educate pulmonologists about Acthar in the treatment of
respiratory manifestations of symptomatic sarcoidosis, an orphan inflammatory
disease with high unmet medical need for which Acthar is FDA-approved. While
still very early in this pilot selling effort, we have already begun to see
encouraging results and look forward to providing further updates in the
coming months," concluded Mr. Cartt.

The Company believes that insurance coverage for Acthar continues to remain
favorable, when Acthar is prescribed for patients in need of an FDA-approved
treatment alternative.

To allow comparable analysis, the Company has defined "new paid" prescriptions
in the above paragraphs to include prescriptions covered by commercial
carriers, Medicare, Medicaid and Tricare in all periods regardless of the
rebate percentage applicable in those periods. The numbers are based on
internal company estimates.

Full Year Financial Results

Net sales for the full year of 2013 were $798.9 million, with BioVectra
contributing $37.6 million. Net sales for the full year of 2013 include the
effect in the second quarter of the Company's decision to accrue, based on
information received in the second quarter, an incremental Medicaid rebate
liability of $11.5 million related to Questcor's 2001 entry into the Medicaid
system subsequent to Questcor's acquisition of Acthar in 2001. The incremental
liability covers periods from 2002 to 2009. Due to health care legislation
passed in early 2010, there is no incremental liability for periods subsequent
to 2009. On a non-GAAP basis, excluding this charge, net sales for 2013 were
$810.4 million, up 59% from $509.3 million in the full year of 2012. GAAP
earnings for the full year of 2013 were $4.76 per diluted common share,
compared to $3.14 per diluted common share for the comparable period of 2012.

Research and Development Progress

Research and development (R&D) investment increased 62% to $19.6 million in
the three months ended December 31, 2013, as compared to $12.1 million for the
year ago period. R&D investments were $59.7 million for the full year of 2013,
as compared to $34.3 million for the year ago period. The increased R&D
investment reflects the Company's efforts to further clarify the potential
immune-modulating properties of Acthar and Synacthen (the product licensed
from Novartis) and identify mechanisms of action applicable to other
inflammatory and auto-immune diseases with high unmet medical need. The
Company is also identifying new patient populations in which to evaluate
Acthar and Synacthen through clinical studies. Questcor is funding research
and development, both in-house and through independent physician sponsored
studies, for the following:

New Indications for Label Enhancement Programs:

  oAcute Respiratory Distress Syndrome (ARDS): Site selection has been
    initiated for a Phase 2 study to explore the safety and efficacy of Acthar
    in patients with ARDS. ARDS is an acute life threatening lung condition
    that can result from pulmonary and non-pulmonary infections or a multitude
    of other serious conditions.
  oAmyotrophic Lateral Sclerosis (ALS): Patient enrollment has been completed
    in a company-sponsored dose-ranging Phase 2 clinical trial to evaluate the
    safety and tolerability of Acthar in patients with ALS, often referred to
    as Lou Gehrig's disease. ALS is a life-threatening, progressive
    neurodegenerative disease that affects nerve cells in the brain and the
    spinal cord.
  oDiabetic Nephropathy: Enrollment continues in a company-sponsored Phase 2
    trial to evaluate the efficacy and safety of Acthar in patients with
    diabetic nephropathy, one of the most common causes of end-stage renal
    disease in the United States.

Research Regarding Approved Indications:

  oIdiopathic Membranous Nephropathy: Enrollment continues in a
    company-sponsored Phase 4 trial in idiopathic membranous nephropathy.
    Patients enrolled in this study are refractory, or non-responsive, to
    current standard therapies or have relapsed after partial remission on
    current standard therapies.
  oLupus: Enrollment continues in a company-sponsored multi-site Phase 4
    company-sponsored clinical trial to evaluate the efficacy and safety of
    daily Acthar administration over a 6-month period in patients with
    persistently active lupus.

Preclinical work related to the evaluation of a select group of potential
Synacthen indications is in progress. Questcor will provide further updates
on this development program in future communications.

Cash, Share Repurchase Program and Dividends

As of February 21, 2014, Questcor had cash, cash equivalents and short-term
investments of $379 million, including restricted cash of $75 million set
aside to secure certain post-closing payment obligations related to Questcor's
acquisition of Synacthen. During the fourth quarter of 2013, Questcor used
$53.1 million in cash to repurchase 960,000 shares of its common stock in open
market transactions, at an average price of $55.26 per common share. As of
December 31, 2013, there are approximately 5.3 million shares authorized
remaining under the stock repurchase plan. Diluted shares outstanding for the
three months ended December 31, 2013 were 62.3 million shares.

The Company announced on February 14, 2014 that its Board of Directors
declared a quarterly cash dividend of $0.30 per share ($1.20 per share on an
annual basis). The dividend will be paid on or about April 25, 2014 to
shareholders of record at the close of business on April 18, 2014. Questcor
currently intends to pay regular quarterly cash dividends for the foreseeable
future.

2013 Corporate Highlights

  oApproximately 7,400 patients with serious diseases were treated with
    Acthar by approximately 3,000 physicians.
  oQuestcor acquired BioVectra, providing the Company with third party
    manufacturing capabilities and enabling Questcor to further secure the
    manufacturing process trade secrets surrounding Acthar.
  oQuestcor acquired the rights to develop Synacthen and Synacthen Depot in
    the U.S. Subject to certain closing conditions, Questcor also acquired
    rights to Synacthen^® and Synacthen Depot^® in certain countries outside
    the U.S.
  oThe Company completed hiring and training its Rheumatology Sales Force and
    began the process of educating rheumatologists about the several
    FDA-approved rheumatology indications on the Acthar label. Questcor also
    initiated a pilot commercialization effort in pulmonology.
  oQuestcor initiated company-sponsored, multi-center clinical trials in
    Amyotrophic Lateral Sclerosis (ALS) and Acute Respiratory Distress
    Syndrome (ARDS). Questcor also provided financial grantsto an increased
    number of investigator-initiated studies, some of which have resulted in
    important publications in peer-reviewed journals. The Company also began
    preclinical work on Synacthen, its first non Acthar U.S. pipeline program.
  oThe Board of Directors of Questcor formed two new committees. The Science
    Committee is charged with providing advice and counsel on all of the
    Company's scientific and R&D efforts. The Strategic Advisory Committee was
    formed to help management's investigation and evaluation of strategic
    alternatives, including business development opportunities, partnering,
    in-licensing, acquisitions, mergers, other strategic transactions and
    financial transactions.
  oQuestcor also continued to demonstrate its commitment to returning capital
    to shareholders, by returning over $100 million to shareholders through
    dividend payouts, which were increased twice during 2013, and through
    share repurchases.

Following the end of the fourth quarter of 2013:

  oOn February 5, 2014, Questcor strengthened its management team with the
    appointment of Rajesh (Raj) Asarpota as the Company's new Chief Financial
    Officer, effective February 17, 2014. Michael H. Mulroy, the Company's
    prior CFO, was appointed Executive Vice President, Strategic Affairs and
    General Counsel, to spend increased time on the Company's initiative to
    investigate and evaluate potential strategic transactions to enhance
    shareholder value.

Acthar Label Information

The product label for Acthar includes 19 FDA-approved indications.
Substantially all of the Company's net sales currently result from Acthar
prescriptions for the following on-label indications of:

  oNephrotic Syndrome (NS): "to induce a diuresis or a remission of
    proteinuria in the nephrotic syndrome without uremia of the idiopathic
    type or that due to lupus erythematosus." NS can result from several
    underlying conditions, and prescribing physicians indicate that Acthar is
    most commonly being prescribed for patients who have proteinuria and
    suffer from NS due to idiopathic membranous nephropathy, focal segmental
    glomerulosclerosis (FSGS), IgA nephropathy, minimal change disease and
    lupus nephritis.
  oRheumatology Related Conditions: Acthar is approved for the following
    rheumatology related conditions: (i) Collagen Diseases: Acthar is
    indicated "during an exacerbation or as maintenance therapy in selected
    cases of systemic lupus erythematosus, systemic dermatomyositis
    (polymyositis)" and (ii) Rheumatic Disorders: Acthar is indicated as
    "adjunctive therapy for short-term administration (to tide the patient
    over an acute episode or exacerbation) in: Psoriatic arthritis, Rheumatoid
    arthritis, including juvenile rheumatoid arthritis (selected cases may
    require low-dose maintenance therapy), Ankylosing spondylitis."
  oMultiple Sclerosis (MS): "for the treatment of acute exacerbations of
    multiple sclerosis in adults. Clinical controlled trials have shown H.P.
    Acthar Gel to be effective in speeding the resolution of acute
    exacerbations of multiple sclerosis. However, there is no evidence that it
    affects the ultimate outcome or natural history of the disease." When
    Acthar is used, it is typically prescribed as second line treatment for
    patients with MS exacerbations.
  oInfantile Spasms (IS): "as monotherapy for the treatment of infantile
    spasms in infants and children under 2 years of age."

Non-GAAP Financial Measures

The Company believes it is important to share non-GAAP financial measures with
investors as these measures may better represent the ongoing economics of the
business and reflect how we manage the business. Accordingly, management
believes investors' understanding of the Company's financial performance is
enhanced as a result of the disclosure of these non-GAAP financial measures.
Non-GAAP financial measures should not be viewed in isolation, or as a
substitute for, or as superior to, reported GAAP financial measures. The
reconciliation between GAAP and Non-GAAP financial measures are provided with
the financial tables included with this release.

Conference Call and Webcast Details

The Company will host a conference call and slide presentation via webcast
today, February 25, 2014, at 4:30 p.m. ET/ 1:30 p.m. PT. The call can be
accessed three ways:

  oBy webcast: At Questcor's investor relations website,
    http://ir.questcor.com/.
  oBy telephone: For both "listen-only" participants and those participants
    who wish to take part in the question-and-answer portion of the call, the
    dial-in number in the U.S. is (877) 354-0215. For participants outside the
    U.S., the dial-in number is (253) 237-1173.
  oBy audio replay: A replay of the conference call will be available for
    seven business days following conclusion of the live call. The telephone
    dial-in number for U.S. participants is (855) 859-2056. For participants
    outside the U.S., the replay dial-in number is (404) 537-3406. The replay
    access code for all callers is 55826448.

About Questcor


Questcor Pharmaceuticals, Inc. is a biopharmaceutical company focused on the
treatment of patients with serious, difficult-to-treat autoimmune and
inflammatory disorders. Questcor also provides specialty contract
manufacturing services to the global pharmaceutical industry through its
wholly-owned subsidiary BioVectra Inc. For more information about Questcor,
please visit www.questcor.com. 

Note: Except for the historical information contained herein, this press
release contains forward-looking statements that have been made pursuant to
the Private Securities Litigation Reform Act of 1995. These statements relate
to future events or our future financial performance. In some cases, you can
identify forward-looking statements by terminology such as "believes,"
"continue," "could," "ensuring," "estimates," "expects," "growth," "may,"
"momentum," "plans," "potential," "remain," "should," "start," "substantial,"
"sustainable" or "will" or the negative of such terms and other comparable
terminology. These statements are only predictions. Actual events or results
may differ materially. Factors that could cause or contribute to such
differences include, but are not limited to, the following:

  oOur reliance on Acthar for substantially all of our net sales and profits;
  oReductions in vials used per prescription resulting from changes in
    treatment regimens by physicians or patient compliance with physician
    recommendations;
  oOur ability to receive high reimbursement levels from third party payers;
  oThe complex nature of our manufacturing process and the potential for
    supply disruptions or other business disruptions;
  oThe lack of patent protection for Acthar; and the possible FDA approval
    and market introduction of additional competitive products;
  oOur ability to continue to generate revenue from sales of Acthar to treat
    on-label indications associated with NS, rheumatology-related conditions,
    MS, or IS, and our ability to develop other therapeutic uses for Acthar;
  oResearch and development risks, including risks associated with Questcor's
    work in the area of NS and Lupus, efforts to develop and obtain FDA
    approval of Synacthen, our reliance on third-parties to conduct research
    and development, our ability to conduct our own clinical trial research
    and development projects, and the ability of research and development to
    generate successful results;
  oThe results of any pending or future litigation, investigations or claims,
    including government investigations and private securities litigation;
  oOur ability to comply with federal and state regulations, including
    regulations relating to pharmaceutical sales and marketing practices;
  oRegulatory changes or other policy actions by governmental authorities and
    other third parties in connection with U.S. health care reform or efforts
    to reduce federal and state government deficits;
  oAn increase in the proportion of our Acthar unit sales comprised of
    Medicaid-eligible patients and government entities;
  oOur ability to estimate reserves required for Acthar used by government
    entities and Medicaid-eligible patients and the impact that unforeseen
    invoicing of historical Medicaid prescriptions may have upon our results;
  oOur ability to effectively manage our growth, including the expansion of
    our sales forces, planned international expansion, and our reliance on key
    personnel;
  oOur ability to successfully identify, acquire or integrate acquisition
    targets or other business combinations;
  oOur ability to integrate the BioVectra business with our business and to
    manage, and grow, a contract manufacturing business;
  oOur ability to comply with foreign regulations related to the operation of
    BioVectra's business and the international sales of Synacthen;
  oThe impact to our business caused by economic conditions;
  oOur ability to protect our trade secrets and other proprietary rights;
  oThe risk of product liability lawsuits;
  oOur ability to successfully enter into, and operate in, international
    markets;
  oThe risk of unfavorable changes in currency exchange rates;
  oUnforeseen business interruptions and security breaches;
  oVolatility in Questcor's Acthar shipments, estimated channel inventory,
    and end-user demand, as well as volatility in our stock price;
  oOur ability and willingness to continue to pay our quarterly dividend or
    make future increases in our quarterly dividend; and
  oOther risks discussed in Questcor's annual report on Form 10-K for the
    year ended December 31, 2012 as filed with the Securities and Exchange
    Commission, or SEC, on February 27, 2013, and other documents filed with
    the SEC.

The risk factors and other information contained in these documents should be
considered in evaluating Questcor's prospects and future financial
performance.

Questcor undertakes no obligation to publicly release the result of any
revisions to these forward-looking statements, which may be made to reflect
events or circumstances after the date of this release.

For more information, please visit www.questcor.com or www.acthar.com.



QUESTCOR PHARMACEUTICALS, INC

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In thousands, except net income per share data)

(unaudited)
                                                     

                            Three Months Ended        Twelve Months Ended

                            December 31,              December 31,
                            2013         2012         2013         2012
Revenue
Pharmaceutical net sales    $230,234     $160,532     $761,347     $509,292
Contract manufacturing net  12,647       —            37,582       —
sales
Net sales                   242,881      160,532      798,929      509,292
 Cost of sales
(exclusive of amortization  20,921       9,156        74,365       28,555
of purchased technology and
IPR&D asset)
Gross profit                221,960      151,376      724,564      480,737
Operating expenses:
 Selling and   38,784       33,051       152,856      114,139
marketing
 General and   15,305       11,175       56,408       33,596
administrative
 Research and  19,603       12,122       59,730       34,269
development
 Depreciation  976          268          4,055        1,219
and amortization
 Change in
fair value of contingent    10,958       —            10,958       —
consideration
 Impairment of —            —            719          987
goodwill and intangibles
Total operating expenses    85,626       56,616       284,726      184,210
Income from operations      136,334      94,760       439,838      296,527
Interest and other income   2,488        167          (298)        703
(expense), net
Income before income taxes  138,822      94,927       439,540      297,230
Income tax expense          48,839       32,987       146,931      99,555
Net income                  $ 89,983     $ 61,940     $292,609     $197,675
Net income per share:
Basic                       $   1.51  $   1.07  $   4.99  $   3.28
Diluted                     $   1.44  $   1.03  $   4.76  $   3.14
Shares used in computing
net income per share:
Basic                       59,406       58,009       58,616       60,243
Diluted                     62,280       60,266       61,447       63,045
Reconciliation of Non-GAAP
Adjusted Financial
Disclosure
Adjusted net income         $103,697     $65,705      $336,514     $209,644
Share-based compensation    (5,358)      (3,590)      (19,149)     (10,502)
expense (1)
Depreciation and            (3,171)      (175)        (9,439)      (811)
amortization expense (2)
Other non-cash expense
(income) related to         (4,076)      —            (4,912)      —
acquisition of BioVectra
(3)
Other non-cash expense
(income) related to         (1,109)      —            (2,267)      —
acquisition of Synacthen
(4)
Change in accounting        —            —            (7,659)      —
estimate (5)
Impairment of goodwill and  —            —            (479)        (656)
intangibles (6)
Net income – GAAP           $89,983      $61,940      $292,609     $197,675
Adjusted net income per     $   1.75  $   1.13  $   5.74  $   3.48
share – basic
Share-based compensation    (0.09)       (0.06)       (0.33)       (0.17)
expense (1)
Depreciation and            (0.05)       (0.00)       (0.16)       (0.01)
amortization expense (2)
Other non-cash expense
(income) related to         (0.07)       —            (0.08)       —
acquisition of BioVectra
(3)
Other non-cash expense
(income) related to         (0.02)       —            (0.04)       —
acquisition of Synacthen
(4)
Change in accounting        —            —            (0.13)       —
estimate (5)
Impairment of goodwill and  —            —            (0.01)       (0.01)
intangibles (6)
Net income per share –      $   1.51  $   1.07  $   4.99  $   3.28
basic
Adjusted net income per     $   1.67  $   1.09  $   5.48  $   3.33
share – diluted
Share-based compensation    (0.09)       (0.06)       (0.31)       (0.17)
expense (1)
Depreciation and            (0.05)       (0.00)       (0.15)       (0.01)
amortization expense (2)
Other non-cash expense
(income) related to         (0.07)       —            (0.08)       —
acquisition of BioVectra
(3)
Other non-cash expense
(income) related to         (0.02)       —            (0.04)       —
acquisition of Synacthen
(4)
Change in accounting        —            —            (0.12)       —
estimate (5)
Impairment of goodwill and  —            —            (0.01)       (0.01)
intangibles (6)
Net income per share –      $   1.44  $   1.03  $   4.76  $   3.14
diluted
Pharmaceuticals net sales   $230,234     $160,532     $761,347     $509,292
Contract manufacturing net  12,647       —            37,582       —
sales
Consolidated net sales      242,881      160,532      798,929      509,292
Medicaid adjustment         —            —            11,500       —
Adjusted consolidated net   $242,881     $160,532     $810,429     $509,292
sales



Notes to Reconciliation of Non-GAAP Adjusted Financial Disclosure
Net income per share – basic and diluted may not foot due to rounding.
Use of Non-GAAP Financial Measures
Our "non-GAAP adjusted net income" excludes the following items from GAAP
net income:
1. Share-based compensation expense.
2. Depreciation and amortization expense, including amortization expense on
our purchased intangibles.
3. Expense associated with the net present value adjustment on our contingent
consideration.
4. Expense associated with the net present value adjustment on the R&D
liability in conjunction with acquisition of Synacthen.
5. Medicaid adjustment for prior period 2002 – 2009.
6. Impairment of purchased technology related to our acquisition of
Doral.



QUESTCOR PHARMACEUTICALS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share information)

(unaudited)
                                                        December31,
                                                        2013        2012
ASSETS
Current assets:
Cash and cash equivalents                               $ 175,840   $ 80,608
Short-term investments                                  69,166      74,705
Total cash, cash equivalents and short-term             245,006     155,313
investments
Accounts receivable, net of allowances for doubtful
accounts of $475 and $0 at December 31, 2013 and        87,069      61,417
December 31, 2012, respectively
Inventories, net of allowances of $1,329 and $52 at     16,368      9,909
December 31, 2013 and December 31, 2012, respectively
Restricted cash - current portion                       25,000      —
Prepaid expenses and other current assets               7,124       4,900
Deferred tax assets                                     16,209      5,737
Total current assets                                    396,776     237,276
Property and equipment, net                             31,733      2,073
Purchased technology, net                               —           1,493
Goodwill                                                20,464      —
In process R&D asset                                    191,451     —
Intangibles and other non current assets                30,131      —
Restricted cash                                         50,000      —
Deposits and other assets                               389         70
Deferred tax assets                                     15,410      11,519
Total assets                                            $ 736,354   $ 252,431
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable                                        $ 14,302    $ 13,069
Accrued compensation                                    16,489      21,300
Sales-related reserves                                  35,370      37,376
Accrued royalties                                       35,163      9,802
Dividend payable                                        18,093      —
Current portion of contingent consideration             4,238       —
Current portion of in process R&D liability             25,000      —
Income taxes payable                                    3,693       7,360
Current portion of long-term debt                       1,665       —
Other accrued liabilities                               7,159       1,492
Total current liabilities                               161,172     90,399
Long-term debt, less current portion                    13,998      —
Contingent consideration                                33,224      —
In process R&D liability                                115,066     —
Non current deferred tax liability                      10,569      —
Other non current liabilities                           2,961       203
Total liabilities                                       336,990     90,602
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value, 5,334,285 shares         —           —
authorized; none outstanding
Common stock, no par value, 105,000,000 shares
authorized, 60,137,758 and 58,544,206 shares issued     30,386      15,938
and outstanding at December 31, 2013 and December31,
2012, respectively
Retained earnings                                       372,231     145,851
Accumulated other comprehensive income (loss)           (3,253)     40
Total shareholders' equity                              399,364     161,829
Total liabilities and shareholders' equity              $ 736,354   $ 252,431





QUESTCOR PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)
                                            Years Ended December31,
                                            2013        2012        2011
Cash Flows From Operating Activities
Net income                                  $ 292,609   $ 197,675   $  79,591
Adjustments to reconcile net income to net
cash provided by operating activities:
Share-based compensation expense            28,753      15,792      7,326
Deferred income taxes                       (14,849)    241         (4,896)
Amortization of investments                 412         1,330       1,250
Depreciation and amortization               14,172      1,219       1,044
Impairment of goodwill and intangibles      719         987         299
Loss on disposal of property and equipment  95          72          11
Changes in fair value of contingent         6,429       —           —
consideration
Imputed interest for contingent             4,529       —           —
consideration and in-process R&D
 Other compensation expense           1,892
Changes in operating assets and
liabilities:
Accounts receivable                         (19,155)    (33,616)    (16,673)
Inventories                                 4,577       (4,683)     (1,500)
Prepaid income taxes                        —           6,940       (3,408)
Prepaid expenses and other current assets   (1,335)     (1,509)     (1,527)
Accounts payable                            (589)       7,566       1,634
Accrued compensation                        (4,811)     9,710       7,432
Accrued royalties                           25,361      5,463       3,030
Sales-related reserves                      (2,006)     3,257       12,608
Income taxes payable                        (3,667)     7,360       —
Other accrued liabilities                   3,307       1,317       (504)
Other non-current liabilities               1,335       (84)        (118)
Net cash provided by operating activities   337,778     219,037     85,599
Cash Flows From Investing Activities
Purchase of short-term investments          (120,645)   (145,384)   (162,301)
Proceeds from the sale and maturities of    125,737     191,105     112,636
short-term investments
Purchase of property, equipment and         (3,536)     (1,065)     (1,823)
leasehold improvements
Restricted cash associated with the         (75,000)    —           —
acquisition of Synacthen
Acquisition of BioVectra, net of cash       (46,692)    —           —
acquired
Acquisition of Synacthen                    (60,000)    —           —
Proceeds from sale of Doral                 700         —           —
Changes in deposits and other assets        2,119       (14)        9
Net cash (used in) / provided by investing  (177,317)   44,642      (51,479)
activities
Cash Flows From Financing Activities
Repayment of funded long-term debt          (1,219)     —           —
Repayment of other long-term debt           (491)       —           —
Income tax benefit realized from            22,809      7,488       17,712
share-based compensation plans
Issuance of common stock, net               15,940      6,335       6,582
Dividends paid                              (48,136)    (23,533)    —
Repurchase of common stock                  (53,054)    (261,830)   (11,453)
Net cash (used in) / provided by financing  (64,151)    (271,540)   12,841
activities
Impact of exchange rate on cash flows       (1,078)     —           —
Increase (decrease) in cash and cash        95,232      (7,861)     46,961
equivalents
Cash and cash equivalents at beginning of   80,608      88,469      41,508
year
Cash and cash equivalents at end of year    $ 175,840   $ 80,608    $  88,469
Supplemental disclosures of Cash Flow
Information:
Cash paid for interest                      $ 704       $ 23        $  16
Cash paid for income taxes                  $ 141,515   $ 77,556    $  25,278
Supplemental disclosures of Investing and
Financing Activities:
Dividend payable                            $ 18,093    $ 11,691    $  —
Supplemental disclosure of non-cash
investing and financing activities:
Capital lease obligation                    $ —         $ 31        $  34
In conjunction with the acquisition of
BioVectra at January 18, 2013:
Incremental fair value of assets acquired,  $ 80,698
net
Less: fair value of contingent              (30,383)
consideration
                                            50,315
Loss on foreign exchange rate               488
Total cash paid for acquisition of          $ 50,803
BioVectra

SOURCE Questcor Pharmaceuticals, Inc.

Website: http://www.questcor.com
Contact: Questcor Investor and Media Relations, 714-497-4899
 
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