HAYWARD, Calif., Aug. 9, 2017 /PRNewswire/ -- Impax
Laboratories, Inc. (NASDAQ: IPXL), today announced
second quarter 2017 financial results.
Total revenues in the second quarter 2017 were $202.1 million, an increase of 17.1%, compared to
$172.6 million in the prior year
period, driven by a 24.0% increase in generic product
sales.
GAAP net loss was $20.4 million or
a loss of $0.28 per share for the
second quarter 2017, compared to a loss of $2.7 million or a loss of $0.04 per share in the prior year period,
primarily due to restructuring and severance charges related to the
Company's previously announced consolidation and improvement plan,
charges related to certain potential legal settlements, and higher
acquisition-related amortization expenses compared to the prior
year period.
Adjusted net income was $13.1
million or $0.18 per share in
the second quarter 2017, compared to $15.0
million or $0.21 per share in
the prior year period. Refer to the attached "Non-GAAP Financial
Measures" for a reconciliation of all GAAP to non-GAAP items.
For the second quarter 2017, EBITDA (earnings before interest,
taxes, depreciation and amortization) was $16.6 million, a decrease of 28.8%, compared to
$23.4 million in the prior year
period. Adjusted EBITDA was $39.2
million, a decrease of 3.6%, compared to the prior year
period. Cash and cash equivalents were $171.4 million as of June
30, 2017.
"This was a solid quarter for Impax led by the growth in our
Generics division," said Paul
Bisaro, President and Chief Executive Officer of Impax. "Our
results benefited from the prior year's acquisition of products
from Teva Pharmaceuticals, as well as the successful second quarter
launch of generic Vytorin® and continued growth of our
epinephrine auto-injector product. In addition, we are pleased with
the recent generic product approvals that should benefit future
results, including our AB-rated generic version of
Concerta®, which we expect to launch later this
year."
"In our Specialty Pharma division, a 27% increase in sales of
Rytary® helped to offset a decline in sales of
Albenza®, which experienced a temporary supply
disruption during the quarter."
"We continue to make progress on our consolidation and
improvement plan aimed at enhancing operating efficiencies and
improving our overall cost structure. We have completed the closure
of the Middlesex manufacturing and R&D site, and expect to
close the packaging facility by the end of the first quarter of
2018. Additionally, we recently divested a number of non-strategic
approved products, the vast majority of which were not marketed,
for $12 million and continue to work
towards an efficient and timely exit of the Taiwan facility. These efforts better position
us to advance our strategic objectives of driving earnings growth
and maximizing shareholder value," concluded Bisaro.
Business Segment Information
The Company has two reportable segments, the Impax Generics
division and the Impax Specialty Pharma division and does not
allocate general corporate services to either segment. All
information presented is on a GAAP basis unless otherwise
noted.
Impax Generics
Division Information
|
(Unaudited; In
thousands)
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenues:
|
|
|
|
|
|
|
|
Impax Generics Product
sales, net
|
$ 150,889
|
|
$ 121,695
|
|
$ 285,036
|
|
$ 291,774
|
Cost of
revenues
|
108,901
|
|
82,794
|
|
212,236
|
|
192,916
|
Cost of revenues
impairment charges
|
-
|
|
1,545
|
|
39,280
|
|
1,545
|
Gross
profit
|
41,988
|
|
37,356
|
|
33,520
|
|
97,313
|
Operating
expenses:
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
8,034
|
|
1,565
|
|
14,502
|
|
6,339
|
Research and
development
|
20,995
|
|
16,143
|
|
38,391
|
|
30,738
|
In-process research
and development impairment
charges
|
-
|
|
946
|
|
6,079
|
|
946
|
Patent litigation
expense
|
319
|
|
155
|
|
687
|
|
269
|
Total operating
expenses
|
29,348
|
|
18,809
|
|
59,659
|
|
38,292
|
Income (loss) from
operations
|
$
12,640
|
|
$
18,547
|
|
$ (26,139)
|
|
$
59,021
|
|
|
|
|
|
|
|
|
Gross
margin
|
27.8%
|
|
30.7%
|
|
11.8%
|
|
33.4%
|
Adjusted gross profit
(a)
|
$
64,113
|
|
$
48,945
|
|
$ 116,097
|
|
$ 115,760
|
Adjusted gross margin
(a)
|
42.5%
|
|
40.2%
|
|
40.7%
|
|
39.7%
|
(a)
|
Adjusted gross profit
is calculated as total revenues less adjusted cost of revenues.
Adjusted gross margin is calculated as adjusted gross profit
divided by total revenues. Refer to the "Non-GAAP Financial
Measures" for a reconciliation of GAAP to non-GAAP
items.
|
Total revenues for the Impax Generics division in the second
quarter 2017 were $150.9 million, an
increase of 24.0%, compared to the prior year period. The increase
was primarily due to the addition of products acquired as part of
the products acquisition from Teva (the "Teva Transaction") and
sales from new product launches including generic Vytorin, as well
as higher sales of epinephrine auto-injector.
Gross margin in the second quarter 2017 was 27.8%, compared to
30.7% in the prior year period. Adjusted gross margin in the second
quarter 2017 was 42.5%, compared to 40.2% in the prior year period,
driven largely by product sales mix.
Total operating expenses in the second quarter 2017 were
$29.3 million, compared to
$18.8 million in the prior year
period, primarily due to higher selling, general and administrative
expenses as a result of higher failure-to-supply fees in the
current period, while the prior year period included a credit for
such fees, and increased investments in research and development
projects during the current period.
Impax Specialty
Pharma Division Information
|
(Unaudited; In
thousands)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenues:
|
|
|
|
|
|
|
|
Rytary® sales,
net
|
$
21,922
|
|
$
17,297
|
|
$
41,827
|
|
$
32,223
|
Zomig® sales,
net
|
12,325
|
|
13,256
|
|
22,182
|
|
24,706
|
All Other Specialty
Pharma Product sales, net
|
16,946
|
|
20,342
|
|
37,440
|
|
49,395
|
Total
revenues
|
51,193
|
|
50,895
|
|
101,449
|
|
106,324
|
Cost of
revenues
|
20,775
|
|
15,267
|
|
37,672
|
|
28,063
|
Gross
profit
|
30,418
|
|
35,628
|
|
63,777
|
|
78,261
|
Operating
expenses:
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
16,814
|
|
16,133
|
|
33,144
|
|
29,951
|
Research and
development
|
5,852
|
|
4,657
|
|
10,945
|
|
9,084
|
Patent litigation
expense
|
851
|
|
1,774
|
|
1,555
|
|
2,979
|
Total operating
expenses
|
23,517
|
|
22,564
|
|
45,644
|
|
42,014
|
Income from
operations
|
$
6,901
|
|
$
13,064
|
|
$
18,133
|
|
$
36,247
|
|
|
|
|
|
|
|
|
Gross
margin
|
59.4%
|
|
70.0%
|
|
62.9%
|
|
73.6%
|
Adjusted gross profit
(a)
|
$
36,258
|
|
$
43,044
|
|
$
73,451
|
|
$
89,320
|
Adjusted gross margin
(a)
|
70.8%
|
|
84.6%
|
|
72.4%
|
|
84.0%
|
(a)
|
Adjusted gross profit
is calculated as total revenues less adjusted cost of revenues.
Adjusted gross margin is calculated as adjusted gross profit
divided by total revenues. Refer to the "Non-GAAP Financial
Measures" for a reconciliation of GAAP to non-GAAP
items.
|
Total revenues for the Impax Specialty Pharma division in the
second quarter 2017 were $51.2
million, an increase of 0.6%, compared to the prior year
period, as higher sales of Rytary were primarily offset by lower
sales of anthelmintic products due to a temporary supply disruption
of Albenza during the second quarter of 2017.
Gross margin in the second quarter 2017 was 59.4%, compared to
70.0% in the prior year period. Adjusted gross margin in the second
quarter 2017 was 70.8%, compared to 84.6% in the prior year period,
primarily due to product sales mix.
Total operating expenses in the second quarter 2017 were
$23.5 million, compared to
$22.6 million in the prior year
period, primarily due to higher research and development expenses
partially offset by lower patent litigation expenses.
Corporate and
Other Information
|
(Unaudited; In
thousands)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
General and
administrative expenses
|
$
26,767
|
|
$
27,210
|
|
$
51,024
|
|
$
52,916
|
Unallocated corporate
expenses
|
$
(26,767)
|
|
$
(27,210)
|
|
$
(51,024)
|
|
$
(52,916)
|
General and administrative expenses in the second quarter 2017
were $26.8 million, a decrease of
1.6% compared to the prior year period.
Interest expense in the second quarter 2017 was $13.4 million, an increase of $4.9 million compared to the prior year period,
due to the $400.0 million Term Loan
Facility entered into by the Company in the third quarter 2016 to
finance the Teva Transaction.
2017 Financial Guidance
The Company's full year 2017 financial guidance is noted below.
The Company's full year 2017 estimates are based on management's
current expectations, including with respect to prescription
trends, pricing levels, inventory levels, and the anticipated
timing of future product launches and events. The estimates
exclude the cost savings and one-time charges from the new cost
savings initiatives of $85.0 million
as outlined in the consolidation and improvement plan announced on
May 10, 2017.
The Company does not provide forward-looking guidance metrics as
outlined below on a GAAP basis as certain financial information,
such as restructuring and impairment charges and other items used
to determine such measures are not available and cannot be
reasonably estimated. The following statements are forward looking
and actual results could differ materially depending on market
conditions and the factors set forth under "Safe Harbor" below.
- Adjusted gross margins as a percent of total revenue are
expected to be approximately 47% to 49%.
- UPDATED - Adjusted research and development expenses, including
patent litigation expenses, across the generic and brand divisions
of approximately $93 million to $97
million (previously $90 million to
$95 million).
- Adjusted selling, general and administrative expenses of
approximately $190 million to $195
million.
- Adjusted interest expense of approximately $28 million.
- Capital expenditures of approximately $25 million to $30 million.
- UPDATED - Effective tax rate of approximately 33% (previously
33% to 34%).
- Full year 2017 adjusted net income per share of $0.55 to $0.70
Conference Call Information
The Company will host a conference call with a slide
presentation on August 9, 2017 at
8:30 a.m. ET to discuss its results.
The call and presentation can also be accessed via a live Webcast
through the Investor Relations section of the Company's Web site,
www.impaxlabs.com. The number to call from within the United States is (877) 356-3814 and (706)
758-0033 internationally. The conference ID is 48618927. A replay
of the conference call will be available shortly after the call for
a period of seven days. To access the replay, dial (855) 859-2056
(in the U.S.) and (404) 537-3406 (international callers).
About Impax Laboratories, Inc.
Impax Laboratories, Inc. (Impax) is a specialty pharmaceutical
company applying its formulation expertise and drug delivery
technology to the development of controlled-release and specialty
generics in addition to the development of central nervous system
disorder branded products. Impax markets its generic products
through its Impax Generics division and markets its branded
products through the Impax Specialty Pharma division. Additionally,
where strategically appropriate, Impax develops marketing
partnerships to fully leverage its technology platform and pursues
partnership opportunities that offer alternative dosage form
technologies, such as injectables, nasal sprays, inhalers, patches,
creams, and ointments. For more information, please visit the
Company's Web site at: www.impaxlabs.com.
"Safe Harbor" statement under the Private Securities
Litigation Reform Act of 1995:
To the extent any statements made in this news release contain
information that is not historical; these statements are
forward-looking in nature and express the beliefs and expectations
of management. Such statements are based on current expectations
and involve a number of known and unknown risks and uncertainties
that could cause the Company's future results, performance, or
achievements to differ significantly from the results, performance,
or achievements expressed or implied by such forward-looking
statements. Such risks and uncertainties include, but are not
limited to: fluctuations in the Company's operating results and
financial condition; the volatility of the market price of the
Company's common stock; the Company's ability to successfully
develop and commercialize pharmaceutical products in a timely
manner; the impact of competition; the effect of any manufacturing
or quality control problems; the Company's ability to manage
its growth; risks related to acquisitions of or investments in
technologies, products or businesses; the risks related to the sale
or closure of our Taiwan
manufacturing facility; effects from fluctuations in currency
exchange rates between the U.S. dollar and the Taiwan dollar; risks relating to goodwill and
intangibles; the reduction or loss of business with any significant
customer; the substantial portion of the Company's total revenues
derived from sales of a limited number of products; the impact of
consolidation of the Company's customer base; the Company's ability
to sustain profitability and positive cash flows; the impact of any
valuation allowance on the Company's deferred tax assets; the
restrictions imposed by the Company's credit facility and
indenture; the Company's level of indebtedness and liabilities and
the potential impact on cash flow available for operations; the
availability of additional funds in the future; any delays or
unanticipated expenses in connection with the operation of the
Company's manufacturing facilities; the effect of foreign economic,
political, legal and other risks on the Company's operations
abroad; the uncertainty of patent litigation and other legal
proceedings; the increased government scrutiny on the Company's
agreements to settle patent litigations, product development risks
and the difficulty of predicting FDA filings and approvals;
consumer acceptance and demand for new pharmaceutical products; the
impact of market perceptions of the Company and the safety and
quality of the Company's products; the Company's determinations to
discontinue the manufacture and distribution of certain products;
the Company's ability to achieve returns on its investments in
research and development activities; changes to FDA approval
requirements; the Company's ability to successfully conduct
clinical trials; the Company's reliance on third parties to conduct
clinical trials and testing; the Company's lack of a license
partner for commercialization of Numient® (IPX066) outside of
the United States; impact of
illegal distribution and sale by third parties of counterfeits or
stolen products; the availability of raw materials and impact of
interruptions in the Company's supply chain; the Company's policies
regarding returns, rebates, allowances and chargebacks; the use of
controlled substances in the Company's products; the effect of
current economic conditions on the Company's industry, business,
results of operations and financial condition; disruptions or
failures in the Company's information technology systems and
network infrastructure caused by third party breaches or other
events; the Company's reliance on alliance and collaboration
agreements; the Company's reliance on licenses to proprietary
technologies; the Company's dependence on certain employees; the
Company's ability to comply with legal and regulatory requirements
governing the healthcare industry; the regulatory environment; the
effect of certain provisions in the Company's government contracts;
the Company's ability to protect its intellectual property;
exposure to product liability claims; changes in tax regulations;
uncertainties involved in the preparation of the Company's
financial statements; the Company's ability to maintain an
effective system of internal control over financial reporting; the
effect of terrorist attacks on the Company's business; the location
of the Company's manufacturing and research and development
facilities near earthquake fault lines; expansion of social media
platforms and other risks described in the Company's periodic
reports filed with the Securities and Exchange Commission.
Forward-looking statements speak only as to the date on which they
are made, and the Company undertakes no obligation to update
publicly or revise any forward-looking statement, regardless of
whether new information becomes available, future developments
occur or otherwise.
Company
Contact:
Mark Donohue
Investor Relations and Corporate
Communications
(215)
558-4526
www.impaxlabs.com
Impax
Laboratories, Inc.
|
Consolidated Statements of
Operations
|
(Unaudited; In
thousands, except share and per share data)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenues:
|
|
|
|
|
|
|
|
Impax Generics,
net
|
$
150,889
|
|
$
121,695
|
|
$
285,036
|
|
$
291,774
|
Impax Specialty
Pharma, net
|
51,193
|
|
50,895
|
|
101,449
|
|
106,324
|
Total
revenues
|
202,082
|
|
172,590
|
|
386,485
|
|
398,098
|
Cost of
revenues
|
129,676
|
|
98,061
|
|
249,908
|
|
220,979
|
Cost of revenues
impairment charges
|
-
|
|
1,545
|
|
39,280
|
|
1,545
|
Gross
profit
|
72,406
|
|
72,984
|
|
97,297
|
|
175,574
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
51,615
|
|
44,908
|
|
98,670
|
|
89,206
|
Research and
development
|
26,847
|
|
20,800
|
|
49,336
|
|
39,822
|
In-process research
and development impairment
charges
|
-
|
|
946
|
|
6,079
|
|
946
|
Patent
litigation
|
1,170
|
|
1,929
|
|
2,242
|
|
3,248
|
Total operating
expenses
|
79,632
|
|
68,583
|
|
156,327
|
|
133,222
|
(Loss) income from
operations
|
(7,226)
|
|
4,401
|
|
(59,030)
|
|
42,352
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest
expense
|
(13,369)
|
|
(8,454)
|
|
(26,749)
|
|
(16,785)
|
Interest
income
|
155
|
|
340
|
|
309
|
|
673
|
Reserve
for Turing receivable
|
(2,353)
|
|
-
|
|
(2,670)
|
|
(48,043)
|
Gain on
sale of intangible assets
|
11,850
|
|
-
|
|
11,850
|
|
-
|
Loss on
debt extinguishment
|
-
|
|
-
|
|
(1,215)
|
|
-
|
Other,
net
|
(9,994)
|
|
(237)
|
|
(10,962)
|
|
359
|
Loss before income
taxes
|
(20,937)
|
|
(3,950)
|
|
(88,467)
|
|
(21,444)
|
(Benefit from)
provision for income taxes
|
(520)
|
|
(1,249)
|
|
30,381
|
|
(8,335)
|
Net loss
|
$ (20,417)
|
|
$
(2,701)
|
|
$
(118,848)
|
|
$
(13,109)
|
|
|
|
|
|
|
|
|
Net loss per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
(0.28)
|
|
$
(0.04)
|
|
$
(1.66)
|
|
$
(0.18)
|
Diluted
|
$
(0.28)
|
|
$
(0.04)
|
|
$
(1.66)
|
|
$
(0.18)
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
71,803,920
|
|
71,100,123
|
|
71,699,775
|
|
70,882,759
|
Diluted
|
71,803,920
|
|
71,100,123
|
|
71,699,775
|
|
70,882,759
|
Impax
Laboratories, Inc.
|
Condensed
Consolidated Balance Sheets
|
(Unaudited; In
thousands)
|
|
|
June
30,
|
|
December
31,
|
|
2017
|
|
2016
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and
cash equivalents
|
$
171,396
|
|
$
180,133
|
Accounts
receivable, net
|
219,735
|
|
257,368
|
Inventory, net
|
200,410
|
|
175,230
|
Prepaid
expenses and other current assets
|
36,936
|
|
18,410
|
Total
current assets
|
628,477
|
|
631,141
|
Property, plant and
equipment, net
|
232,480
|
|
233,372
|
Intangible assets,
net
|
540,655
|
|
620,466
|
Goodwill
|
207,329
|
|
207,329
|
Deferred income
taxes, net
|
35,825
|
|
69,866
|
Other non-current
assets
|
56,342
|
|
60,844
|
Total
assets
|
$
1,701,108
|
|
$
1,823,018
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable and accrued expenses
|
$
322,678
|
|
$
303,605
|
Current
portion of contingent consideration
|
18,746
|
|
-
|
Current
portion of long-term debt, net
|
17,824
|
|
17,719
|
Total
current liabilities
|
359,248
|
|
321,324
|
Long-term debt,
net
|
766,460
|
|
813,545
|
Other non-current
liabilities
|
49,963
|
|
64,175
|
Total
liabilities
|
1,175,671
|
|
1,199,044
|
Total stockholders'
equity
|
525,437
|
|
623,974
|
Total liabilities and
stockholders' equity
|
$
1,701,108
|
|
$
1,823,018
|
Impax
Laboratories, Inc.
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited; In
thousands)
|
|
|
|
Six Months
Ended
|
|
|
June
30,
|
|
|
2017
|
|
2016
|
Cash flows from
operating activities:
|
|
|
|
Net loss
|
$
(118,848)
|
|
$
(13,109)
|
Adjustments to
reconcile net loss to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
53,964
|
|
36,419
|
|
Non-cash interest
expense
|
12,742
|
|
10,714
|
|
Share-based
compensation expense
|
13,182
|
|
15,662
|
|
Deferred income
taxes, net and uncertain tax positions
|
35,437
|
|
(21,294)
|
|
Intangible asset
impairment charges
|
45,359
|
|
2,491
|
|
Reserve for Turing
receivable
|
2,670
|
|
48,043
|
|
Gain on sale of
intangible assets
|
(11,850)
|
|
-
|
|
Loss on debt
extinguishment
|
1,215
|
|
-
|
|
Other
|
1,663
|
|
(144)
|
|
Changes in assets and
liabilities which provided cash
|
22,657
|
|
(50,196)
|
|
Net cash provided by
operating activities
|
58,191
|
|
28,586
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
Purchases of
property, plant and equipment
|
(18,993)
|
|
(20,512)
|
|
Proceeds from sales
of property, plant and equipment
|
350
|
|
1,346
|
|
Proceeds from sales
of intangible assets
|
11,850
|
|
-
|
|
Proceeds from cash
surrender value of life insurance policy
|
529
|
|
-
|
|
Payments for
licensing agreements
|
-
|
|
(3,500)
|
|
Proceeds from
repayment of Tolmar loan
|
-
|
|
15,000
|
|
Net cash used in
investing activities
|
(6,264)
|
|
(7,666)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
Repayment of term
loan
|
(60,000)
|
|
-
|
|
Payment of deferred
financing fees
|
(818)
|
|
-
|
|
Payment of
withholding taxes related to restricted stock awards
|
(1,889)
|
|
(4,263)
|
|
Proceeds from
exercise of stock options and ESPP
|
591
|
|
9,178
|
|
Net cash (used in)
provided by financing activities
|
(62,116)
|
|
4,915
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
1,452
|
|
660
|
|
|
|
|
Net (decrease)
increase in cash and cash equivalents
|
(8,737)
|
|
26,495
|
Cash and cash
equivalents, beginning of period
|
180,133
|
|
340,351
|
Cash and cash
equivalents, end of period
|
$
171,396
|
|
$
366,846
|
Impax
Laboratories, Inc.
|
Non-GAAP Financial
Measures
|
|
Adjusted net income,
adjusted net income per diluted share, EBITDA, adjusted EBITDA,
adjusted cost of revenues, adjusted research and development
expenses and adjusted selling, general and administrative expenses
are not measures of financial performance under generally accepted
accounting principles (GAAP) and should not be construed as
substitutes for, or superior to, GAAP net loss, GAAP net loss per
diluted share, GAAP cost of revenues, GAAP research and development
expenses and GAAP selling, general and administrative expenses as a
measure of financial performance. However, management uses both
GAAP financial measures and the disclosed non-GAAP financial
measures internally to evaluate and manage the Company's operations
and to better understand its business. Further, management believes
the addition of non-GAAP financial measures provides meaningful
supplementary information to, and facilitates analysis by,
investors in evaluating the Company's financial performance,
results of operations and trends. The Company's calculations of
adjusted net income, adjusted net income per diluted share, EBITDA,
adjusted EBITDA, adjusted cost of revenues, adjusted research and
development expenses and adjusted selling, general and
administrative expenses, may not be comparable to similarly
designated measures reported by other companies, since companies
and investors may differ as to what type of events warrant
adjustment.
|
|
The following table
reconciles reported net loss to adjusted net income:
|
(Unaudited; In
thousands, except per share data)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net loss
|
$
(20,417)
|
|
$
(2,701)
|
|
$
(118,848)
|
|
$
(13,109)
|
Adjusted to add
(deduct):
|
|
|
|
|
|
|
|
Amortization
(a)
|
17,219
|
|
12,469
|
|
34,451
|
|
21,237
|
Non-cash interest
expense (b)
|
6,430
|
|
5,409
|
|
12,742
|
|
10,714
|
Business development
expenses (c)
|
99
|
|
1,448
|
|
150
|
|
2,216
|
Intangible asset
impairment charges (d)
|
-
|
|
2,491
|
|
45,359
|
|
2,491
|
Reserve for Turing receivable (e)
|
2,353
|
|
-
|
|
2,670
|
|
48,043
|
Turing legal expenses
(f)
|
89
|
|
-
|
|
(406)
|
|
-
|
Restructuring and
severance charges (g)
|
10,599
|
|
5,022
|
|
16,737
|
|
6,590
|
Fixed asset impairment
charges (h)
|
1,894
|
|
-
|
|
1,894
|
|
-
|
Gain on sale of
intangible assets (i)
|
(11,850)
|
|
-
|
|
(11,850)
|
|
-
|
Gain on sale of
property plant and equipment (j)
|
(350)
|
|
-
|
|
(350)
|
|
-
|
Loss on debt
extinguishment (k)
|
-
|
|
-
|
|
1,215
|
|
-
|
Middlesex plant
closure (l)
|
3,344
|
|
-
|
|
4,980
|
|
-
|
Legal
settlements(m)
|
7,900
|
|
-
|
|
7,900
|
|
-
|
Other
(n)
|
2,286
|
|
-
|
|
3,217
|
|
300
|
Income tax effect
(o)
|
(6,456)
|
|
(9,130)
|
|
21,007
|
|
(32,620)
|
Adjusted net
income
|
$
13,140
|
|
$
15,008
|
|
$
20,868
|
|
$
45,862
|
|
|
|
|
|
|
|
|
Adjusted net income
per diluted share
|
$
0.18
|
|
$
0.21
|
|
$
0.29
|
|
$
0.64
|
Net loss per diluted
share
|
$
(0.28)
|
|
$
(0.04)
|
|
$
(1.66)
|
|
$
(0.18)
|
|
|
|
|
|
|
|
|
Impax
Laboratories, Inc.
|
Non-GAAP Financial
Measures
|
|
(a)
|
Reflects amortization
of intangible assets from the portfolio of products acquired from
Teva Pharmaceuticals Industries Ltd. and affiliates of Allergan plc
(the "Teva Transaction") in August 2016 and from the acquisition of
Tower Holdings, Inc. and its subsidiaries in March 2015 (the "Tower
Acquisition").
|
(b)
|
Related to non-cash
accretion of debt discount attributable to deferred financing costs
associated with the $400.0 million Term Loan Facility to finance
the Teva Transaction and the $600.0 million of outstanding 2%
convertible senior notes, as well as bifurcation of the conversion
option of the convertible notes.
|
(c)
|
Professional fees
primarily related to the Teva Transaction.
|
(d)
|
The Company
recognized a total of $45.4 million in intangible asset impairment
charges, of which $39.3 million was recognized in cost of revenues
impairment charges and $6.1 million was recognized in in process
research and development ("IPR&D") impairment charges, almost
entirely attributable to three products (two currently marketed and
one IPR&D), acquired as part of the Teva Transaction. For the
currently marketed products, the impairment charge was the result
of continued significant price and volume erosion during the
quarter with no offsetting increase in customer demand, resulting
in lower expected future cash flows. For the IPR&D product, the
impairment charge was the result of increased expected research and
development expenses and a delay in anticipated product launch due
to a change in the regulatory strategy to secure FDA approval.
|
(e)
|
The Company recorded
a reserve in the amount of $48.0 million during the first quarter
2016, representing the full amount of the estimated receivable due
from Turing Pharmaceuticals AG as a result of the uncertainty of
the Company collecting the reimbursement amounts owed by Turing
related to the Company's sale of Daraprim® to Turing.
During the fourth quarter of 2016, the Company received $7.7
million in payments from Turing. During the six month period ended
June 30, 2017, the Company increased the reserve balance by $3.6
million to reflect additional estimated Medicaid rebate claims due
from Turing. The Company received an additional $0.9 million of
payments from Turing during the second quarter of 2017. As of June
30, 2017, the $43.0 million estimated receivable due from Turing
was fully reserved.
|
(f)
|
The Company recorded
a credit in the first quarter 2017 for legal fees incurred as a
result of the Company's litigation against Turing alleging breach
of the terms of the Turing Asset Purchase Agreement in the
Company's sale of Daraprim® resulting from Turing's
failure to reimburse the Company for chargebacks and Medicaid
rebate liability.
|
(g)
|
During the second
quarter 2017, the Company recorded restructuring and severance
charges of $4.9 million related to the March 2016 announced closure
of the Company's Middlesex, New Jersey manufacturing and packaging
site. Additionally, the Company recorded restructuring and
severance charges of $5.7 million in the second quarter 2017
primarily related to the closure of generic research and
development activities in Middlesex as well as the sale or closure
of its Taiwan manufacturing facility as part of the Company's
consolidation and improvement plan announced in May 2017. During
the second quarter of 2016, the Company recorded restructuring and
severance charges of $5.0 million related to the closure of its
Middlesex manufacturing and packaging site.
|
(h)
|
The Company recorded
an impairment charge relating to obsolete software in the second
quarter 2017.
|
(i)
|
During the second
quarter 2017, the Company recorded a gain on the sale of 29 ANDAs
and one NDA for non-strategic approved generic products, the vast
majority of which were not marketed, and all acquired as part of
the Tower Acquisition.
|
(j)
|
The Company received
a non-refundable deposit related to the then pending sale of a
storage warehouse located in Hayward, California. The sale
subsequently closed in July 2017.
|
(k)
|
In the first quarter
2017, the Company voluntarily prepaid $50.0 million of principal on
its $400.0 million Term Loan Facility, resulting in a loss on debt
extinguishment of $1.2 million incurred to write-off a pro-rated
portion of the related deferred debt issuance costs.
|
(l)
|
During the second
quarter 2017, the Company recorded underabsorption charges in cost
of goods sold related to the closure of its Middlesex, New Jersey
facility, which ceased production activities at the end of the
first quarter 2017.
|
(m)
|
During the second
quarter 2017, the Company recorded $7.9 million of legal settlement
expenses related to the potential settlement of certain current
outstanding litigation, a portion of which includes the expenses
related to the settlement of the contract dispute with Endo
International plc.
|
(n)
|
During the second
quarter 2017, the Company recorded charges totaling $2.3 million
related to a milestone payment to a third party partner under the
terms of a research and development agreement and the change in the
fair value of a contingent consideration due to Teva related to
methylphenidate hydrochloride.
|
(o)
|
Adjusted income taxes
are calculated by tax effecting adjusted pre-tax income at the
applicable effective tax rate that will be determined by reference
to statutory tax rates in the relevant jurisdiction in which the
Company operates and includes current and deferred income tax
expense commensurate with the non-GAAP measure of
profitability.
|
The following table
reconciles reported net loss to adjusted EBITDA:
|
(Unaudited, In
thousands)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net loss
|
$
(20,417)
|
|
$
(2,701)
|
|
$
(118,848)
|
|
$
(13,109)
|
Adjusted to add
(deduct):
|
|
|
|
|
|
|
|
Interest
expense
|
13,369
|
|
8,454
|
|
26,749
|
|
16,785
|
Interest
income
|
(155)
|
|
(340)
|
|
(309)
|
|
(673)
|
Income
taxes
|
(520)
|
|
(1,249)
|
|
30,381
|
|
(8,335)
|
Depreciation and
amortization
|
24,355
|
|
19,195
|
|
48,453
|
|
34,293
|
EBITDA
|
16,632
|
|
23,359
|
|
(13,574)
|
|
28,961
|
|
|
|
|
|
|
|
|
Adjusted to add
(deduct):
|
|
|
|
|
|
|
|
Share-based
compensation expense
|
6,225
|
|
8,384
|
|
13,182
|
|
15,662
|
Business development
expenses
|
99
|
|
1,448
|
|
150
|
|
2,216
|
Intangible asset
impairment charges
|
-
|
|
2,491
|
|
45,359
|
|
2,491
|
Reserve for Turing receivable
|
2,353
|
|
-
|
|
2,670
|
|
48,043
|
Turing legal
expenses
|
89
|
|
-
|
|
(406)
|
|
-
|
Restructuring and
severance charges
|
10,599
|
|
5,022
|
|
16,737
|
|
6,590
|
Fixed asset impairment
charges
|
1,894
|
|
-
|
|
1,894
|
|
-
|
Gain on sale of
intangible assets
|
(11,850)
|
|
-
|
|
(11,850)
|
|
-
|
Gain on sale of
property, plant and equipment
|
(350)
|
|
-
|
|
(350)
|
|
-
|
Loss on debt
extinguishment
|
-
|
|
-
|
|
1,215
|
|
-
|
Middlesex plant
closure
|
3,344
|
|
-
|
|
4,980
|
|
-
|
Legal
settlements
|
7,900
|
|
-
|
|
7,900
|
|
-
|
Other
|
2,286
|
|
-
|
|
3,217
|
|
300
|
Adjusted
EBITDA
|
$
39,221
|
|
$
40,704
|
|
$
71,124
|
|
$
104,263
|
Impax
Laboratories, Inc.
|
Non-GAAP Financial
Measures
|
(Unaudited; In
thousands)
|
|
The following table
reconciles reported cost of revenues, research and development
expenses, and selling, general and administrative expenses to
adjusted cost of revenues, adjusted gross profit, adjusted gross
margin, adjusted research and development expenses, and adjusted
selling, general and administrative expenses:
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Cost of
revenues
|
$ 129,676
|
|
$
98,061
|
|
$ 249,908
|
|
$ 220,979
|
Cost of revenues
impairment charges
|
-
|
|
1,545
|
|
39,280
|
|
1,545
|
Adjusted to
deduct:
|
|
|
|
|
|
|
|
Amortization
|
17,219
|
|
12,469
|
|
34,451
|
|
21,237
|
Intangible asset
impairment charges
|
-
|
|
1,545
|
|
39,280
|
|
1,545
|
Business
development
|
49
|
|
-
|
|
58
|
|
-
|
Restructuring and
severance charges
|
7,402
|
|
4,991
|
|
13,540
|
|
6,724
|
Middlesex plant
closure
|
3,344
|
|
-
|
|
4,980
|
|
-
|
Adjusted cost of
revenues
|
$ 101,662
|
|
$
80,601
|
|
$ 196,879
|
|
$ 193,018
|
|
|
|
|
|
|
|
|
Adjusted gross profit
(a)
|
$ 100,420
|
|
$
91,989
|
|
$ 189,606
|
|
$ 205,080
|
Adjusted gross margin
(a)
|
49.7%
|
|
53.3%
|
|
49.1%
|
|
51.5%
|
|
|
|
|
|
|
|
|
Research and
development expenses
|
$
26,847
|
|
$
20,800
|
|
$
49,336
|
|
$
39,822
|
In-process research
and development impairment charges
|
-
|
|
946
|
|
6,079
|
|
946
|
Adjusted to
deduct:
|
|
|
|
|
|
|
|
Intangible asset
impairment charges
|
-
|
|
946
|
|
6,079
|
|
946
|
Restructuring and
severance charges
|
2,926
|
|
-
|
|
2,926
|
|
-
|
Other
|
1,825
|
|
-
|
|
2,475
|
|
300
|
Adjusted research and
development expenses
|
$
22,096
|
|
$
20,800
|
|
$
43,935
|
|
$
39,522
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
$
51,615
|
|
$
44,908
|
|
$
98,670
|
|
$
89,206
|
Adjusted to
deduct:
|
|
|
|
|
|
|
|
Business development
expenses
|
50
|
|
1,448
|
|
92
|
|
2,216
|
Turing legal
expenses
|
89
|
|
-
|
|
(406)
|
|
-
|
Restructuring and
severance charges
|
271
|
|
31
|
|
271
|
|
41
|
Adjusted selling,
general and administrative expenses
|
$
51,205
|
|
$
43,429
|
|
$
98,713
|
|
$
86,949
|
(a)
|
Adjusted gross profit
is calculated as total revenues less adjusted cost of revenues.
Adjusted gross margin is calculated as adjusted gross profit
divided by total revenues.
|
Impax
Laboratories, Inc.
|
Non-GAAP Financial
Measures
|
(Unaudited; In
thousands)
|
|
The following tables
reconcile the Impax Generics and Impax Specialty Pharma Divisions
reported cost of revenues to adjusted cost of revenues, adjusted
gross profit and adjusted gross margin:
|
|
Impax Generics
Division Information
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Cost of
revenues
|
$
108,901
|
|
$
82,794
|
|
$
212,236
|
|
$
192,916
|
Cost of revenues
impairment charges
|
-
|
|
1,545
|
|
39,280
|
|
1,545
|
Adjusted to
deduct:
|
|
|
|
|
|
|
|
Amortization
|
13,385
|
|
5,053
|
|
26,783
|
|
10,178
|
Intangible asset
impairment charges
|
-
|
|
1,545
|
|
39,280
|
|
1,545
|
Restructuring and
severance charges
|
5,396
|
|
4,991
|
|
11,534
|
|
6,724
|
Middlesex plant
closure
|
3,344
|
|
-
|
|
4,980
|
|
-
|
Adjusted cost of
revenues
|
$
86,776
|
|
$
72,750
|
|
$
168,939
|
|
$
176,014
|
|
|
|
|
|
|
|
|
Adjusted gross profit
(a)
|
$
64,113
|
|
$
48,945
|
|
$
116,097
|
|
$
115,760
|
Adjusted gross margin
(a)
|
42.5%
|
|
40.2%
|
|
40.7%
|
|
39.7%
|
Impax Specialty
Pharma Division Information
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Cost of
revenues
|
$
20,775
|
|
$
15,267
|
|
$
37,672
|
|
$
28,063
|
Adjusted to
deduct:
|
|
|
|
|
|
|
|
Amortization
|
3,834
|
|
7,416
|
|
7,668
|
|
11,059
|
Restructuring and severance charges
|
2,006
|
|
-
|
|
2,006
|
|
-
|
Adjusted cost of
revenues
|
$
14,935
|
|
$
7,851
|
|
$
27,998
|
|
$
17,004
|
|
|
|
|
|
|
|
|
Adjusted gross profit
(a)
|
$
36,258
|
|
$
43,044
|
|
$
73,451
|
|
$
89,320
|
Adjusted gross margin
(a)
|
70.8%
|
|
84.6%
|
|
72.4%
|
|
84.0%
|
(a)
|
Adjusted gross profit
is calculated as total revenues less adjusted cost of revenues.
Adjusted gross margin is calculated as adjusted gross profit
divided by total revenues.
|
|
Impax
Laboratories, Inc.
|
Non-GAAP Financial
Measures
|
(Unaudited; In
thousands)
|
|
The following tables
reconcile the Impax Generics and Impax Specialty Pharma Divisions
reported (loss) income from operations to adjusted income from
operations:
|
|
Impax Generics
Division Information
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
GAAP income (loss)
from operations
|
$
12,640
|
|
$
18,547
|
|
$ (26,139)
|
|
$
59,021
|
Adjusted to add
(deduct):
|
|
|
|
|
|
|
|
Amortization
|
13,385
|
|
5,053
|
|
26,783
|
|
10,178
|
Intangible asset
impairment charges
|
-
|
|
2,491
|
|
45,359
|
|
2,491
|
Restructuring and
severance charges
|
8,322
|
|
4,991
|
|
14,460
|
|
6,724
|
Payments for licensing
agreements
|
1,825
|
|
-
|
|
2,475
|
|
300
|
Middlesex plant
closure
|
3,344
|
|
-
|
|
4,980
|
|
-
|
Adjusted income from
operations
|
$
39,516
|
|
$
31,082
|
|
$
67,918
|
|
$
78,714
|
Impax Specialty
Pharma Division Information
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
GAAP income from
operations
|
$
6,901
|
|
$
13,064
|
|
$
18,133
|
|
$
36,247
|
Adjusted to
add:
|
|
|
|
|
|
|
|
Amortization
|
3,834
|
|
7,416
|
|
7,668
|
|
11,059
|
Restructuring and severance charges
|
2,006
|
|
-
|
|
2,006
|
|
-
|
Adjusted income from
operations
|
$
12,741
|
|
$
20,480
|
|
$
27,807
|
|
$
47,306
|
View original
content:http://www.prnewswire.com/news-releases/impax-reports-solid-second-quarter-2017-results-with-total-revenues-increasing-17-to-202-million-300501621.html
SOURCE Impax Laboratories, Inc.