February 8, 2023
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Olaplex struggles despite beating expectations

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Montecito-based Olaplex beat analysts’ expectations with its financials for the third quarter of 2022, but the company’s shares are still struggling after it slashed its full-year guidance.

Olaplex, a seller of hair-care products, reported revenue of $176.5 million for the quarter ended Sept. 30, an increase of 9.2% from the same period a year ago. 

In the last quarter, net sales decreased 4.3% in the U.S. and 27.8% in international markets. When broken down by category, specialty retail increased 60.1% to reach $74.2 million, professional use slid 16.0% to sit at $63 million, and direct to consumer declined 2.6% hitting $39.3 million.

Net income for the company was also up slightly, rising 7.4% to $60.7 million, or nine cents per share. Adjusted for one-time losses, Olaplex produced earnings worth 11 cents per share, beating analysts’ expectations according Zacks’ Consensus Estimate.  

“Our third quarter performance was in line with the preliminary estimates in our business update in October 2022,” JuE Wong, Olaplex’s president and CEO, said in a press release. 

In October, Wong said stylist customers are, “buying less and buying closer to need as they report clients lengthening the time between salon visits and spending less for services and take-home products.”

As a result, the company slashed its guidance for the remainder of the year.

Executives said on Oct. 18 that net sales are expected to be in the range of $704 million to $711 million, a big cutback from the company’s original $796 to $826 million guidance.

Adjusted earnings were also slashed by nearly $100 million, from between $504 million to $526 million to an estimated $425 million to $431 million.

Wong said the reduction was due to a “slowdown in sales momentum that it attributes to macro-economic pressures, increased competitive activity including discounting, and a moderation in new customer acquisition.”

Olaplex shares closed at $4.24 on Oct. 19, down 56.7% from the previous day’s close.

Since that announcement, shares have bounced back, closing at $5.67 on Nov. 16.

Olaplex ended the quarter with cash and cash equivalents worth $249.3 million.

TEVA SETTLEMENT CHECKS

California’s attorney general Rob Bonta said Nov. 15 that the first wave of checks are being sent out to more than 6,000 consumers of Provigil, Nuvigil and Modafinil.

The checks are from a $69 million settlement payout by pharmaceutical company Teva — secured by the California Department of Justice (DOJ) — to resolve allegations that a Teva subsidiary forced consumers to pay a higher cost by illegally maintaining its monopoly over Provigil sales between 2006 and 2012. 

California residents who were hurt by Teva’s allegedly anticompetitive practices during that period, and who filed claims that were verified, will receive the checks in the next few weeks.

Provigil, Nuvigil and Modafinil are widely prescribed for the treatment of certain sleep disorders and narcolepsy and for work shift management. 

Californians have until Jan. 9, 2023 to file a late claim and receive some of the settlement money if they were affected.

“No one should have to scrimp and save to be able to afford basic medication,” Bonta said in a press release. “Anticompetitive pay-for-delay agreements are illegal. We will not tolerate greedy drug companies trying to cheat the system to line their pockets, while keeping Californians from accessing the prescription medications they need to stay healthy. Ensuring access to equal and affordable healthcare, including critical prescription medication, is a top priority at the California Department of Justice.”

The suit against Teva was originally filed in 2019.

Of the $69 million settlement, $25.25 million of it was to be created to pay Californians back.

On Oct. 11, the court allowed California to use that fund to send direct cash payments to 6,169 eligible residents or former residents who had filed a claim and whose claims had been verified. 

Each claimant’s share was calculated based on the court-approved rate of $32.01 per prescription.

NEW YEAR, LABOR LAWS

More than 100 new labor laws and regulations will come into effect with the new year, according to Camarillo-based employment law firm Light Gabler. Among them are new minimum wage increases, the end of board of director quotas for public companies which were found unconstitutional earlier in the year, mandatory unpaid bereavement leave, a ban on off-duty cannabis use discrimination and the extension of COVID-19 notices. In addition, companies that instituted 401(k) plans or took other steps to comply with California’s new mandated savings accounts will have to update their handbooks to conform to the new plans.