The Medicines Company Reports Second Quarter and First Half 2008 Financial Results and Raises Full Year Top Line Guidance

23 Jul 2008

PARSIPPANY, N.J.--(BUSINESS WIRE)--July 23, 2008--The Medicines Company (NASDAQ: MDCO) today announced its financial results for the second quarter and first half of 2008.

    Financial highlights for the second quarter of 2008:

    --  Net revenue increased by 54% to $86.7 million for the second
        quarter of 2008 from $56.4 million for the second quarter of
        2007.

        --  Angiomax(R) (bivalirudin) U.S. sales increased by 53% to
            $84.5 million for the second quarter of 2008 from $55.2
            million for the second quarter of 2007.

        --  Angiomax/Angiox international net revenue in the second
            quarter of 2008 increased $1.0 million to $2.2 million
            compared to $1.2 million in the second quarter of 2007.

    --  Net income for the second quarter of 2008 was $4.1 million, or
        $0.08 per share, compared to net income of $0.8 million, or
        $0.02 per share, for the second quarter of 2007.

    --  Excluding stock-based compensation expense and non-cash income
        taxes, the Company reported second quarter of 2008 non-GAAP
        net income of $14.5 million, or $0.28 per share, compared to
        non-GAAP net income of $5.1 million, or $0.10 per share, for
        the second quarter of 2007.

John Kelley, President and Chief Operating Officer, stated, "We continue to execute our Angiomax strategy to gain market share and further penetrate the PCI market. We look forward to hearing from the FDA on our Cleviprex submission and continue to build our European infrastructure which will lead to multiple revenue sources in the near future."

    Financial highlights for the first half of 2008:

    --  Net revenue increased by 35% to $166.2 million for the first
        half of 2008 from $123.0 million for the same period in 2007.

        --  Angiomax U.S. sales increased by 33% to $161.4 million for
            the first half of 2008 from $121.5 million for the first
            half of 2007.

        --  Angiomax/Angiox international net revenue in the first
            half of 2008 increased $3.3 million to $4.8 million
            compared to $1.5 million in the first half of 2007.

    --  Net income for the first half of 2008 was $8.9 million, or
        $0.17 per share, compared to net income of $3.9 million, or
        $0.07 per share, for the first half of 2007.

    --  Excluding stock-based compensation expense and non-cash income
        taxes, the Company reported first half of 2008 non-GAAP net
        income of $26.9 million, or $0.51 per share, compared to
        non-GAAP net income of $13.3 million, or $0.25 per share, for
        the first half of 2007.

The following table provides reconciliations between GAAP and non-GAAP net income for the second quarter (Q2) and first half (1H) of 2008 and 2007. Non-GAAP net income excludes stock-based compensation expense and the non-cash provision for income taxes:

                                 FAS 123R      Non-Cash
                                Stock-Based    Provision    Non-GAAP
                Reported GAAP   Compensation  for Income    Net Income
  (in millions)   Net Income      Expense        Taxes         (1)
--------------- -------------- ------------- ------------- -----------
Q2 2008                   $4.1         $ 6.9          $3.6       $14.5
--------------- -------------- ------------- ------------- -----------
Q2 2007                   $0.8         $ 3.7          $0.6       $ 5.1
1H 2008                   $8.9         $11.4          $6.6       $26.9
--------------- -------------- ------------- ------------- -----------
1H 2007                   $3.9         $ 7.2          $2.2       $13.3

Note: Amounts may not sum due to rounding.

(1)Excluding stock-based compensation expense and the non-cash provision for income taxes

Reconciliations between GAAP and non-GAAP fully diluted earnings per share (EPS) for the second quarter (Q2) and first half (1H) of 2008 and 2007 are provided in the following table:

                            FAS 123R Stock-
                                 Based        Non-Cash
                  Reported   Compensation    Provision for  Non-GAAP
  (per share)      GAAP EPS     Expense      Income Taxes     EPS(1)
----------------- --------- --------------- -------------- -----------
Q2 2008               $0.08           $0.13          $0.07       $0.28
----------------- --------- --------------- -------------- -----------
Q2 2007               $0.02           $0.07          $0.01       $0.10
1H 2008               $0.17           $0.22          $0.13       $0.51
----------------- --------- --------------- -------------- -----------
1H 2007               $0.07           $0.14          $0.04       $0.25

Note: Amounts may not sum due to rounding.

(1)Excluding stock-based compensation expense and the non-cash provision for income taxes

The Company believes that presenting the non-GAAP information contained in the financial tables and in this press release assists investors and others in gaining a better understanding of the Company's core operating results and future prospects, expected growth rates or forecasted guidance, particularly as related to stock-based compensation expense and the non-cash provision for income taxes. Management uses this non-GAAP information, in addition to the GAAP information, as the basis for measuring the Company's core operating performance and comparing such performance to that of prior periods and to the performance of its competitors. Such measures are also used by management in its financial and operating decision-making. Non-GAAP information is not meant to be considered superior to or a substitute for the Company's results of operations prepared in accordance with GAAP. A reconciliation of GAAP results with non-GAAP results may also be found in the attached financial tables.

Revised 2008 Guidance

Based upon results of the first half of 2008, the Company provided revised 2008 guidance as follows:

    --  Full year net revenue of $335 million to $355 million,
        including:

        --  U.S. net revenue for Angiomax of $320 million to $330
            million

    --  SG&A expense of $153 million to $159 million (GAAP)

        --  $135 million to $140 million excluding stock-based
            compensation expense

    --  Total stock-based compensation expense of $22 million to $24
        million

The Company reaffirmed 2008 guidance on other line items as follows:

                                           Original        Revised
                                       ---------------- --------------
 (in millions, except percentages and
          per share amounts)
Net Sales
  U.S. Angiomax                             $  310-$320      $320-$330
  International Angiox                      $    10-$15
  US Cleviprex                              $     5-$10
  Total                                     $  325-$345      $335-$355

Cost of revenue                                     25%

R&D (GAAP)                                  $    79-$83
-------------------------------------- ---------------- --------------
        (w/o 123R)                          $    75-$79
-------------------------------------- ---------------- --------------

SG&A (GAAP)                                 $  146-$153      $153-$159
-------------------------------------- ---------------- --------------
          (w/o 123R)                        $  130-$135      $135-$140
-------------------------------------- ---------------- --------------

Stock Based Comp -123R (1)                  $    20-$22      $  22-$24

Investment Income                           $      6-$8

Effective Tax Rate                              50%-55%

Net Income - GAAP                           $    12-$16
-------------------------------------- ---------------- --------------
                    - Non GAAP              $    41-$49
-------------------------------------- ---------------- --------------

EPS - GAAP                                  $0.22-$0.30
-------------------------------------- ---------------- --------------
EPS - Non GAAP                              $0.77-$0.92
-------------------------------------- ---------------- --------------

(1) Note that GAAP reporting of R&D and SG&A include stock based compensation expense

There will be a conference call with management today at 8:30 a.m. Eastern Time to discuss second quarter and first half 2008 financial results, guidance and operational developments. The conference call will be available via phone and webcast. The webcast can be accessed at The Medicines Company website at www.themedicinescompany.com.

The dial in information is listed below:
Domestic Dial In: 877-419-6590
International Dial In: 719-325-4894

Replay is available from 11:30 a.m. Eastern Time following the conference call through August 6, 2008. To hear a replay of the call, dial 888-203-1112 (domestic) and 719-457-0820 (international). Passcode for both dial in numbers is 4642411.

MDCO-F

About The Medicines Company: The Medicines Company (NASDAQ: MDCO) is focused on advancing the treatment of critical care patients through the delivery of innovative, cost-effective medicines to the worldwide hospital marketplace. The Company markets Angiomax(R) (bivalirudin) in the United States and other countries for use in patients undergoing coronary angioplasty, a procedure to clear restricted blood flow in arteries around the heart. The Company also has two products in late-stage development, Cleviprex(TM) (clevidipine butyrate) injectable emulsion and cangrelor. The Company's website is www.themedicinescompany.com.

This document is intended to assist listeners of The Medicines Company's quarterly results conference call available via webcast at www.themedicinescompany.com. In this document and the call, statements about The Medicines Company that are not purely historical, and all other statements that are not purely historical, may be deemed to be forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Without limiting the foregoing, the words "believes," "anticipates" and "expects" and similar expressions, including our 2008 guidance, are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by these forward-looking statements. Important factors that may cause or contribute to such differences include the extent of the commercial success of Angiomax, whether the Company's products will advance in the clinical trials process on a timely basis or at all, whether the Company will make regulatory submissions for product candidates on a timely basis, whether its regulatory submissions will receive approvals from regulatory agencies on a timely basis or at all, whether physicians, patients and other key decision makers will accept clinical trial results, risks associated with the establishment of international operations, and such other factors as are set forth in the risk factors detailed from time to time in the Company's periodic reports and registration statements filed with the Securities and Exchange Commission including, without limitation, the risk factors detailed in the Company's Quarterly Report on Form 10-Q filed on May 12, 2008, which are incorporated herein by reference. The Company specifically disclaims any obligation to update these forward-looking statements.

                        The Medicines Company
                Consolidated Statements of Operations
                             (unaudited)
(in thousands, except per share data)     Three months ended June 30,
                                          ----------------------------
                                                 2008         2007
                                          ----------------------------

Net revenue                                  $     86,731 $     56,399
Operating expenses:
   Cost of revenue                                 21,939       15,094
   Research and development                        19,781       15,729
   Selling, general and administrative             38,789       26,819
                                          --------------- ------------
        Total operating expenses                   80,509       57,642
                                          --------------- ------------
Income (loss) from operations                       6,222      (1,243)
Other income                                        1,805        2,719
                                          --------------- ------------
Income before income taxes                          8,027        1,476
Provision for income taxes                        (3,971)        (659)
                                          --------------- ------------

Net income                                   $      4,056 $        817
                                          =============== ============

Basic earnings per common share              $       0.08 $       0.02
                                          =============== ============
Shares used in computing basic earnings
 per common share                                  51,834       51,638
                                          =============== ============

Diluted earnings per common share            $       0.08 $       0.02
                                          =============== ============
Shares used in computing diluted earnings
 per common share                                  52,441       52,294
                                          =============== ============
                        The Medicines Company
                Consolidated Statements of Operations
                             (unaudited)
(in thousands, except per share data)     Six Months Ended June 30,
                                       -------------------------------
                                                   2008           2007
                                       -------------------------------
Net revenue                            $        166,159 $      123,046
Operating expenses:
   Cost of revenue                               41,032         32,874
   Research and development                      38,443         35,208
   Selling, general and administrative           74,139         53,957
                                       ---------------- --------------
        Total operating expenses                153,614        122,039
                                       ---------------- --------------
Income from operations                           12,545          1,007

Other income                                      4,186          5,302
                                       ---------------- --------------
Income before income taxes                       16,731          6,309
Provision for income taxes                      (7,821)        (2,444)
                                       ---------------- --------------
Net income                             $          8,910 $        3,865

Basic earnings per common share        $           0.17 $         0.07
                                       ================ ==============
Shares used in computing basic
 earnings per common share                       51,792         51,578
                                       ================ ==============

Diluted earnings per common share      $           0.17 $         0.07
                                       ================ ==============
Shares used in computing diluted
 earnings per common share                       52,361         52,587
                                       ================ ==============
                        The Medicines Company
                Condensed Consolidated Balance Sheets
                             (unaudited)

                                               June 30,   December 31,
(in thousands)                                       2008         2007
                                             ------------ ------------

                   ASSETS
Cash, cash equivalents and available for
 sales securities                               $ 238,068     $222,113
Accrued interest receivable                         1,071        1,598
Accounts receivable, net                           25,081       25,584
Inventory                                          29,567       35,468
Prepaid expenses and other current assets          10,949        7,425
                                             ------------ ------------
    Total current assets                          304,736      292,188
                                             ------------ ------------

Fixed assets, net                                   4,054        3,245
Intangible assets, net                             14,641       14,929
Restricted cash                                     5,000        5,000
Deferred tax assets                                39,433       46,018
Other assets                                          181          136
                                             ------------ ------------
    Total assets                                $ 368,045     $361,516
                                             ============ ============

    LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities                             $  68,454     $ 83,620
Stockholders' equity                              299,591      277,896
                                             ------------ ------------
    Total liabilities and stockholders'
     equity                                     $ 368,045     $361,516
                                             ============ ============
The Medicines Company
Reconciliation of GAAP to non-GAAP Measures
(Amounts in thousands, except per share data)
(Unaudited)
                                 Three Months Ended June 30,
                       -----------------------------------------------
                                            2008
                       -----------------------------------------------
                        GAAP (1)               Non-Cash      Non-GAAP
                           As                     Tax         (4) As
                         Reported  SFAS123R     Provision     Adjusted
                       ---------- ---------   -----------   ----------
Net revenue            $   86,731 $       -   $         -   $   86,731

Operating expenses:
   Cost of revenue         21,939     (219)(2)          -       21,720
   Research and
    development            19,781   (1,192)(2)          -       18,589
   Selling, general and
    administrative         38,789   (5,451)(2)          -       33,338
                       ---------- ---------   -----------   ----------
      Total operating
       expenses            80,509   (6,862)             -       73,647

Income from operations      6,222     6,862             -       13,084

   Other income             1,805         -             -        1,805
                       ---------- ---------   -----------   ----------
Income before income
 taxes                      8,027     6,862             -       14,889
   Provision for income
    taxes                 (3,971)         -         3,586(3)     (385)
                       ---------- ---------   -----------   ----------
Net income                  4,056     6,862         3,586       14,504

Basic earnings per
 common share          $     0.08 $    0.13   $      0.07   $     0.28
                       ========== =========   ===========   ==========

Shares used in
 computing basic
 earnings per common
 share                     51,834    51,834        51,834       51,834
                       ========== =========   ===========   ==========

Diluted earnings per
 common share          $     0.08 $    0.13   $      0.07   $     0.28
                       ========== =========   ===========   ==========


Shares used in
 computing diluted
 earnings per common
 share                     52,441    52,441        52,441       52,441
                       ========== =========   ===========   ==========

(1) GAAP Results
(2) Non-cash stock compensation expense
(3) Non-cash tax provision
(4) Non-GAAP Results
The Medicines Company
Reconciliation of GAAP to non-GAAP Measures
(Amounts in thousands, except per share data)
(Unaudited)
                                  Six Months Ended June 30,
                       -----------------------------------------------
                                            2008
                       -----------------------------------------------
                        GAAP (1)               Non-Cash      Non-GAAP
                           As                     Tax         (4) As
                         Reported  SFAS123R     Provision     Adjusted
                       ---------- ---------   -----------   ----------
Net revenue            $  166,159 $       -   $         -   $  166,159

Operating expenses:
   Cost of revenue         41,032     (356)(2)          -       40,676
   Research and
    development            38,443   (1,872)(2)          -       36,571
   Selling, general and
    administrative         74,139   (9,196)(2)          -       64,943
                       ---------- ---------   -----------   ----------
      Total operating
       expenses           153,614  (11,424)             -      142,190

Income from operations     12,545    11,424             -       23,969

   Other income             4,186         -             -        4,186
                       ---------- ---------   -----------   ----------
Income before income
 taxes                     16,731    11,424             -       28,155
   Provision for income
    taxes                 (7,821)         -         6,602(3)   (1,219)
                       ---------- ---------   -----------   ----------
Net income                  8,910    11,424         6,602       26,936

Basic earnings per
 common share          $     0.17 $    0.22   $      0.13   $     0.52
                       ========== =========   ===========   ==========

Shares used in
 computing basic
 earnings per common
 share                     51,792    51,792        51,792       51,792
                       ========== =========   ===========   ==========

Diluted earnings per
 common share          $     0.17 $    0.22   $      0.13   $     0.51
                       ========== =========   ===========   ==========

Shares used in
 computing diluted
 earnings per common
 share                     52,361    52,361        52,361       52,361
                       ========== =========   ===========   ==========

(1) GAAP Results
(2) Non-cash stock compensation expense
(3) Non-cash tax provision
(4) Non-GAAP Results

    CONTACT: The Medicines Company
             Robyn Brown, 973-656-1616
             Vice President, Investor Relations
             investor.relations@themedco.com

    SOURCE: The Medicines Company