Jones Pharma Reports Third Quarter 1998 EPS of 30 Cents — Up 36 Percent Over 1997

Business Wire, Oct 21, 1998

ST. LOUIS--(BUSINESS WIRE)--Oct. 21, 1998--Jones Pharma Inc. (Nasdaq:JMED) announced earnings per share from continuing operations of 30 cents and 83 cents, respectively, for the quarter and nine months ended Sept. 30, 1998, excluding the nonrecurring items reported in the second quarter of 1998.

Comparable results in 1997 were 22 cents and 60 cents, respectively, representing increases in 1998 of 36 percent and 38 percent over the same periods in prior year. Sales were $26.4 million and $76.8 million, respectively, for the quarter and nine months ended Sept. 30, 1998, up from $22.2 million and $62.8 million for the same periods of 1997.

Third quarter sales of Endocrine products, including Levoxyl, Tapazole and Cytomel, totaled $14.0 million compared to $10.8 million in the third quarter of 1997. The 29 percent growth in the Endocrine product sales is due to the continued strong unit growth in both Levoxyl and Tapazole. Endocrine product sales for the nine months ended Sept. 30, 1998, totaled $43.7 million vs. $31.7 million in 1997. Approximately $3.1 million of the year-to-date increase results from the acquisition of Cytomel on June 30, 1997. The remaining $8.9 million year-to-date increase represents a 28 percent increase over 1997 and is primarily attributable to the growth in Levoxyl and Tapazole.

Sales of Critical Care products, including Thrombin, Brevital, and Triostat, increased 9 percent to $10 million in the third quarter of 1998. The majority of the third quarter increase in Critical Care product sales relates to the increase in Brevital which was backordered at the end of the second quarter of 1998. Year-to-date sales of Critical Care products were $26 million, up 4 percent over 1997. The Critical Care product growth rate in 1998 gives effect to the decline in Thrombin sales to Johnson & Johnson of approximately $2.4 million. The lack of Thrombin contract sales to Johnson & Johnson in 1998 was expected and has allowed JMED to dedicate the production capacity of its Gentrac facility to the exclusive manufacture of JMI-Thrombin.

Sales of Veterinarian products, including Soloxine and Tussigon were relatively flat at $2.3 million in the third quarter of 1998 vs. $2.2 million in 1997. The third quarter Veterinarian product sales would have reflected a 21 percent increase over the same quarter of 1997 except for a customer-requested delayed shipment of Soloxine approximating $.4 million. For the nine months ended Sept. 30, 1998, sales of Veterinarian products totaled $6.9 million as compared to $6.0 million in 1997, representing a year-to-date sales increase of 15 percent. The Veterinarian product sales increase is primarily due to unit volume increases in Soloxine and Tussigon.

Gross margin for the third quarter of 1998 increased to 77 percent compared to 72 percent for the third quarter of 1997. Year-to-date gross margin increased to 76 percent compared to 71 percent in the prior year. The improved gross margins result from the decline in the lower-margin Thrombin contract sales to Johnson & Johnson coupled with the increase in sales of the higher-margin products such as Brevital, Triostat, Levoxyl, Tapazole, and Cytomel.

Dennis Jones, chairman and CEO, stated, "The third quarter of 1998 was an opportunity to present our internal growth rate without the effects of acquisitions. Sales in the third quarter of 1998 increased 19 percent over the same quarter of 1997; EPS increased 36 percent. We feel this shows we are much more than just an acquisition company -- we are capable of impressive growth rates without acquisition. We are, however, continuing to pursue acquisitions with the same intensity as in the past and are hopeful that current economic changes may result in the availability of products that are likely to benefit from our sales and marketing efforts."

Jones Pharma Inc., founded in 1981, is an emerging specialty pharmaceutical company with an uninterrupted 17 year history of record profits. The company's strategy has been to acquire growing, under-promoted, niche pharmaceutical products from other pharmaceutical companies and then aggressively market these growing products. This strategy has allowed JMED to minimize the risks associated with new drug development and the costly FDA approval process.

For further information, please contact Investor Relations: 314/576-6100. -0-

                          Jones Pharma Inc.
                          _________________
                           (000's omitted)

                                                  Nine Months Ended
                        Quarter Ended Sept. 30         Sept. 30
                        ______________________ ______________________
                            1998       1997        1998        1997
                          ________   ________    ________    ________

Sales from continuing
 operations               $ 26,387   $ 22,168    $ 76,806    $ 62,804
Gross profit              $ 20,362   $ 16,053    $ 58,737    $ 44,780
Income from continuing
 operations               $  8,652   $  6,366    $ 13,919    $ 17,417
Income from discontinued
 operations               $    -     $  1,751    $ 18,768    $  5,194
Net income                $  8,652   $  8,117    $ 32,687    $ 22,611

Diluted earnings per
 share:
  Continuing operations   $   0.30   $   0.22    $   0.48    $   0.60
  Discontinued operations $    -     $   0.06    $   0.64    $   0.18
                          ________   ________    ________    ________
                          $   0.30   $   0.28    $   1.12    $   0.78
                          ________   ________    ________    ________
                          ________   ________    ________    ________

(a) Reflects the comparative results for the quarter and nine months
    ended Sept. 30, excluding the $17 million after-tax gain on sale
    of discontinued operations and the $10.5 million nonrecurring
    after-tax charge, both of which were recorded in the second
    quarter of 1998.

                                     (Excluding Nonrecurring Items(a))
                                             Nine Months Ended
                                                  Sept. 30
                                            ____________________
                                              1998        1997
                                            ________    ________

Sales from continuing operations            $ 76,806    $ 62,804
Gross profit                                $ 58,737    $ 44,780
Income from continuing operations           $ 24,419    $ 17,417
Income from discontinued operations         $  1,689    $  5,194
Net income                                  $ 26,108    $ 22,611

Diluted earnings per share:
 Continuing operations                      $   0.83    $   0.60
 Discontinued operations                    $   0.06    $   0.18
                                            ________    ________
                                            $   0.89    $   0.78
                                            ________    ________
                                            ________    ________