Since 1844, when Dr. Rudolph Bayer opened his medical clinic in Munich, Germany, he has dedicated his time and efforts to researching and developing new ways to improve the health of animals. From his humble beginnings as a humble farmhand helping out with animal husbandry, he learned that all animals are unique and require special care. Animals need their hearts, minds, and bodies treated as people do. Animals must be given the best start possible in life and be kept healthy through nutrition, exercise, and veterinary treatment. As his compassion for animals grew, he developed an interest in finding a way to improve the health and longevity of the animals on his farm. His early research focused on breeding and discovering new types of grasses that were beneficial for the animals.
Bayer Animal Health Products
In order to remain a leader in the animal health industry, Bayer is dedicated to continually researching new solutions and products that will make a difference in the lives of animals and people. With its 20th Anniversary celebration, the company has once again taken on its mission to be a leader in the business. In this effort, the company has formed an independent board to oversee its projects and future milestones. Leveraging its heritage and extensive research capabilities, as well as its core competencies and state-of-the-art facilities, the independent board helps to make important decisions. These include the selection of the next Board Chair, the next CEO, and the next Director of Operations and Commitments.
About Strategic Plan
The new strategic plan is focused on three primary goals: to preserve and protect the long-term value of the company; to strengthen and grow the business in a challenging and evolving market; and to become more globally competitive. This is a strategic plan that includes a description of the acquisition of the animal health business of Bayer, the development of the strategy, and management and staffing strategies. The strategic plan also includes a description of the expected impact to the employees, suppliers, customers, and other key stakeholders of the acquisition. In addition, the acquisition is designed to enhance the overall performance and value of the company.
Information With Respect To The Products
In this section, the company provides information with respect to the items that are not taken into account in the current statement of operations. Specifically, these items include the following items: the impact of the acquisition on the gross margin, cash flow, and other financial measures, and the effect of the adoption of a debt repayment program on liquidity and working capital. The item that most significantly may cause actual results to vary is the gross margin. Since acquisition-related items are considered as an offset to the effect of any negative events or changes that could result in control of the business by our stockholders, a significant potential loss in the gross margin may be occurring.
As discussed in the above-mentioned press release, we believe that the gross margin will begin a period of review for this year and beyond. Specifically, we believe it is necessary to review assumptions regarding pricing, gross margin, and the balance sheet assumptions associated with financing for the pet health industry through the next two years. To date, we have completed only one year of evaluating pricing assumptions. Therefore, we are not able to make a sufficiently complete assessment of the implications of changing pricing assumptions. Likewise, we are not able to assess the implications of changing balance sheet assumptions.
In order to understand the implications of price changes and other non-gaap financial measures for the acquisition and the operation of the pet health industry, it is important to review the operating metrics of the business. As we review the operating metrics of the business, we note that the operational profit and cash flow continue to improve as the gross margin continues to increase. Likewise, the gross profit margin is expected to increase as the gross margin increases. In addition, the gross margin percentage of operating expenses is expected to decrease as the gross margin increases.
Assuming these assumptions continue to be consistent with prior years, the operating profit and cash flow will continue to grow in alignment with the overall health care sector. The adjusted gross margin percentage of the business will likely reduce from the third quarter of fiscal year 2021. In this third quarter, the stock price of the business may remain depressed but the net income per share is expected to increase from the second quarter of fiscal year 2021. These numbers are based on our internal forecast of operating expenses, which are based on our examination of the third quarter financial statements as well as our evaluation of the strength of the pharmaceutical drug portfolio.
As an investor, it is important to understand the key terms that are used in accounting such as gross margin, gross profit, and diluted earnings per share (EPS). It is important to define the adjusted gross profit and diluted EPS because they can vary greatly from year to year. Essentially, profit and EPS are one-time measurements of earnings produced on a business basis. When a company operates in a mixed market or with international business, it is more important to understand what the breakeven or margin for any particular segment is compared to its competitors. We discuss these concepts with you next quarter in our fourth annual update on our website.