Andrx Corporation Reports Financial Results for 2006 First Quarter

Business Wire, May 4, 2006

FORT LAUDERDALE, Fla. -- Andrx Corporation (Nasdaq:ADRX) ("Andrx" or the "Company") today announced its financial results for the three months ended March 31, 2006 (the "2006 Quarter"), which are discussed more extensively in Andrx's Form 10-Q for the 2006 Quarter ("March 2006 10-Q") being filed today with the U.S. Securities and Exchange Commission (SEC). Andrx's March 2006 Form 10-Q is available on the Company's website at http://www.andrx.com (Investor Relations/SEC filings).

The following was extracted from our unaudited condensed consolidated statements of operations included in the March 2006 10-Q (in thousands, except per share amounts).

Three Months Ended
                                                      March 31,
                                               -----------------------
                                                   2006        2005
                                               ----------- -----------

Total revenues                                 $  241,429  $  278,383

Loss before income taxes and cumulative effect
 of a change in accounting principle           $  (18,435) $  (22,007)

Net (loss) income                              $  (11,306) $   35,337

(Loss) earnings per share
    Basic                                      $    (0.15) $     0.48
    Diluted                                    $    (0.15) $     0.48

On March 12, 2006, Andrx entered into an agreement and plan of merger with Watson whereby each share of its common stock outstanding immediately prior to the merger will be converted into $25.00 in cash. Consummation of the merger is subject to the satisfaction of certain customary closing conditions including, among others, (i) approval of the merger by Andrx's stockholders, (ii) the expiration of the applicable waiting period under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976, as amended, and (iii) no material adverse effect, as defined. Andrx filed its preliminary proxy statement seeking approval of the merger from its stockholders on April 28, 2006. The Company filed a notification and report form (HSR Notification) with the Department of Justice and the Federal Trade Commission (FTC) on March 31, 2006. Andrx and Watson received a second request for additional documentation from the FTC related to the HSR Notification on May 1, 2006.

Andrx Chief Executive Officer, Thomas P. Rice, said: "Over the past two years, we have continued to invest in and improve our quality and manufacturing processes and general operations to support long-term growth of the business, revenues and profits. Our process development, scale-up and manufacturing capabilities have improved significantly to support new, important products from our focused R&D efforts. Our results from operations during the last 18 months reflect the investments we continue to make in our systems, equipment and personnel. This foundation will facilitate our anticipated launch of new products, as well as improve the reliability of our current products. We have also invested in a variety of initiatives within our distribution business to pursue additional market share and improve our electronic ordering systems. These investments have strengthened Andrx for the years to come. Related to these long-term initiatives, our 2006 first quarter results of operations include a $4 million charge to amend our oral contraceptive marketing agreement with Teva. This amendment, among other things, now allows us to utilize contract manufacturers for our OC product line, which will result in significant savings in capital expenditures in the long term, but for the 2006 first quarter, resulted in a $16 million non-cash impairment charge to our future OC manufacturing facilities in Weston, Florida. In addition, the quarter's results included $7 million in consulting fees related to improving our pharmaceutical operations."

"On March 6, 2006, the FDA commenced a cGMP inspection of our Davie, Florida manufacturing facility and on April 18, 2006, the FDA issued a Form 483 List of Inspectional Observations consisting of nine observations. The Company is in the process of finalizing its response to the April 2006 Form 483 and its response will primarily address ongoing and planned improvements to enhance two quality systems. The Company believes it has already implemented responsive actions to certain observations in the April 2006 Form 483, it is in the process of addressing other observations and will address the remainder of the observations within a reasonable period of time."

Mr. Rice continued, "Although our distribution business has not generated consistent sequential growth in revenues over the past two years due to price erosion outpacing new launches, the 2006 quarter was up modestly from the fourth quarter of 2005. The launch of generic Pravachol(R) early in the second quarter of 2006 and projected launch of generic Zocor(R) in June 2006, are expected to fuel growth in our distribution business."

"We continue to work with Takeda on the commercialization of a combination product consisting of our approved 505(b)(2) new drug application (NDA) extended-release metformin and Takeda's Actos(R). In April, we were extremely pleased to announce that Takeda filed the NDA for this combination product, triggering the payment to Andrx of the third $10 million development milestone, which we have received. We anticipate the approval and launch of this product in 2007."