Shares of Obagi Medical Products, which makes prescription and over-the-counter skin creams, plunged in premarket trading Friday after the company cut its profit guidance following a negative regulatory decision in Texas.

Thursday, the company announced quarterly loss $2.4 million, or 13 cents per share, compared with profit of $1.9 million, or 9 cents per share, during the same period a year prior. Revenue rose 3 percent to $26.5 million from $25.7 million.

Excluding charges, the company said it earned 16 cents per share. Analysts polled by FactSet expected profit of 13 cents per share on $27.1 million in revenue.

The charges included costs for a legal settlement with Zein Obagi and ZO Skin Health Inc. in a trademark dispute. They also included a sales return provision following a ruling by regulatory authorities in Texas to disallow the shipping of 4-percent hydroquinone products in the state. It is a key ingredient in certain Obagi products.

He said Texas accounted for 8.8 percent of the company's revenue in 2010.

The regulatory decision is a key factor in the company's lower-than-expected second-quarter guidance and lower full-year guidance.

Obagi expects profit between 15 cents and 17 cents on revenue between $26.5 million and $28 million in the second quarter. Analysts expect 18 cents per share in profit on $28.9 million in revenue.

For the full year, the company now expects profit between 75 cents and 78 cents per share on revenue between $114 million and $116 million, down from prior guidance of 87 cents to 91 cents per share in profit on revenue between $119 million and $122 million.

Analysts had expected full-year profit of 81 cents per share on $117.7 million in revenue.

( Associated Press )