Akorn, Inc. (Nasdaq: AKRX), a leading specialty generic
pharmaceutical company, today announced its financial results for
the year ended 2018.
Fourth Quarter 2018 and Recent Business
Highlights
- Net revenue was $153 million, a decline of $33 million, or
17.6%, compared to the fourth quarter of 2017, predominantly due to
the effect of competition on key products and shortfalls in
supply
- Net loss was $215 million compared to a net loss of $65 million
in the fourth quarter of 2017. Adjusted EBITDA was $(20)
million compared to $28 million in the fourth quarter of 2017
- Continued progress on completion of FDA action items related to
the inspections of our facilities in Decatur and Somerset
- Appointed Douglas Boothe as President and Chief Executive
Officer, bringing significant generic and specialty pharmaceutical
leadership experience
- Announced new additions to Board of Directors and Executive
Management team adding significant expertise to the Company’s
leadership
- Focused on moving forward and rebuilding shareholder value as
an independent company following the terminated Fresenius Kabi AG
merger agreement
- Engaged financial, operational, and legal advisors to help
develop and execute long-term growth plan
- Healthy cash position of $225 million as of December 31,
2018
Douglas Boothe, Akorn’s President and Chief Executive Officer,
commented, “I am excited to join Akorn at such a critical time for
the Company. Our recent financial results reflect the many
challenges that have impacted our business of late, including
increased competition for many of our generic and promoted
products, supply issues, and regulatory and legal challenges.
Despite these significant headwinds, we have strong fundamentals to
build upon, including a diverse product portfolio, a solid
pipeline, niche manufacturing capabilities and, most importantly, a
dedicated and extremely talented workforce.”
“During my first two months with Akorn, we have made structural
and organizational changes to emphasize compliance, transparency,
and accountability. Additionally, we have decided to explore
strategic alternatives to exit our India facility. I believe
these initial changes provide the foundational elements that will
strengthen our business and enhance trust with our many
stakeholders,” stated Boothe. “I look forward to providing
updates in the coming months on our go-forward strategy and plan to
rebuild value for all of our stakeholders.”
Summary Financial Results for the Quarter Ended December
31, 2018:
Akorn reported revenues of $153.4 million for the three month
period ended December 31, 2018, representing a decrease of
$32.7 million, or 17.6%, as compared to net revenue of $186.1
million for the three month period ended December 31, 2017.
The decrease in net revenue in the period was primarily due to
$32.6 million decline in organic revenue. The $32.6 million
decline in organic revenue was due to approximately $39.9 million,
or 21.4% in volume declines partially offset by an increase of $7.3
million, or 3.9% in price. The organic revenue decline was
principally due to the effect of competition on Ephedrine Sulfate
Injection, Nembutal Injection and Clobetasol Cream, and shortfalls
in supply due to slower than expected resumption in manufacturing
at our Decatur and Somerset manufacturing facilities after their
extended planned shutdowns.
Gross profit for the quarter ended December 31, 2018 was
$25.2 million, or 16.4% of net revenue, compared to $82.9 million,
or 44.6% of net revenue, in the corresponding prior year
quarter. The decline in the gross profit percentage was
principally due to: unfavorable variances related to decreased
production at our Decatur and Somerset manufacturing facilities,
increased operating costs associated with FDA compliance related
improvement activities, as well as unfavorable product mix.
Net loss for the fourth quarter 2018 was $215.0 million, or
$(1.71) per diluted share, compared to net loss of $65.2 million,
or $(0.52) per diluted share, in the same quarter of 2017.
Including a net adjustment of $179.2 million to net income for
non-GAAP items, adjusted diluted earnings per share for the fourth
quarter 2018 were $(0.29), compared to $0.14 in the same quarter
2017, after a net adjustment of $82.4 million to net income for
non-GAAP items.
Earnings before interest, taxes, depreciation and amortization
(EBITDA) was $(174.1) million for the fourth quarter 2018, compared
to $(98.4) million for the fourth quarter 2017. Adjusted
EBITDA, which is another non-GAAP measure used by management to
evaluate the operations of the Akorn business, was $(19.9) million
for the fourth quarter 2018, compared to $28.3 million for the
fourth quarter 2017. See “Non-GAAP Financial Measures”
below.
Summary Financial Results for the Year Ended December
31, 2018:
Net revenue was $694.0 million for the twelve month period ended
December 31, 2018, representing a decrease of $147.0 million, or
17.5%, as compared to net revenue of $841.0 million for the twelve
month period ended December 31, 2017. The decline was
principally due to the effect of competition on Ephedrine Sulfate
Injection, Nembutal, Lidocaine Ointment and Clobetasol Cream.
In addition, the Company experienced lower net revenue as a result
of extended planned shutdowns at our Decatur and Somerset
manufacturing facilities during the year.
Gross profit for the twelve month period ended December 31, 2018
was $246.0 million, or 35.4% of revenue, compared to $432.2
million, or 51.4% of revenue, for the twelve month period ended
December 31, 2017. The decline in the gross profit percentage
was principally due to unfavorable product mix, unfavorable
variances due to decreased production at our Decatur and Somerset
manufacturing facilities, as well as increased operating costs
associated with FDA compliance related improvement activities.
Net loss for 2018 was $401.9 million, or $(3.21) per diluted
share, compared to net loss of $24.6 million, or $(0.20) per
diluted share, for 2017. Including a net adjustment of $378.2
million to net income for non-GAAP items, adjusted diluted earnings
per share for 2018 were $(0.19), compared to $0.93 for 2017, after
a net adjustment of $141.0 million to net income for non-GAAP
items.
EBITDA was $(309.5) million for 2018, compared to $64.0 million
for 2017. Adjusted EBITDA was $49.3 million for 2018,
compared to $245.5 million for 2017. See “Non-GAAP Financial
Measures” below.
Conference Call and Webcast Details:
As previously announced, Akorn’s management will hold a
conference call with interested investors and analysts at 10:00
a.m. EST on February 28, 2019 to discuss these results and
updates in more detail. The dial-in number to access the call is
(844) 249-9382 in the U.S. and Canada and (270) 823-1530 for
international callers. The conference ID is 4099919. To access the
live webcast, please go to Akorn’s Investor Relations web site at
http://investors.akorn.com.
A webcast replay of the conference call will be available
shortly following the conclusion of the call and will be available
for 90 days following the call. To access the webcast replay,
please go to Akorn’s Investor Relations web site at
http://investors.akorn.com.
About Akorn:
Akorn, Inc. is a specialty generic pharmaceutical company
engaged in the development, manufacture and marketing of
multisource and branded pharmaceuticals. Akorn has manufacturing
facilities located in Decatur, Illinois; Somerset, New Jersey;
Amityville, New York; Hettlingen, Switzerland and Paonta Sahib,
India that manufacture ophthalmic, injectable and specialty sterile
and non-sterile pharmaceuticals. Additional information is
available on Akorn’s website at www.akorn.com.
Non-GAAP Financial Measures:
To supplement Akorn’s financial results presented in accordance
with U.S. generally accepted accounting principles ("GAAP"), the
Company uses certain non-GAAP (also referred to as “adjusted” or
“non-GAAP adjusted”) financial measures in this press release and
the accompanying tables, including (1) EBITDA, (2) adjusted EBITDA,
(3) adjusted net income, (4) adjusted diluted earnings per share,
(5) net debt, and (6) net debt to adjusted EBITDA ratio. These
non-GAAP measures adjust for certain specified items that are
described in this release. The Company believes that each of these
non-GAAP financial measures is helpful in understanding its past
financial performance and potential future results. The non-GAAP
financial measures are not meant to be considered in isolation or
as a substitute for or superior to comparable GAAP measures.
Akorn’s management uses EBITDA, adjusted EBITDA, adjusted net
income and adjusted diluted earnings per share in managing and
analyzing its business and financial condition. Akorn’s management
believes that the presentation of these and other non-GAAP
financial measures provide investors greater transparency into
Akorn’s ongoing results of operations allowing investors to better
compare the Company’s results from period to period.
Investors should note that these non-GAAP financial measures
used to present financial guidance are not prepared under any
comprehensive set of accounting rules or principles and do not
reflect all of the amounts associated with the Company’s results of
operations as determined in accordance with GAAP. Investors should
also note that these non-GAAP financial measures have no
standardized meaning prescribed by GAAP and, therefore, have limits
in their usefulness to investors. In addition, from time-to-time in
the future there may be other items that the Company may exclude
for purposes of its non-GAAP financial measures; likewise, the
Company may in the future cease to exclude items that it has
historically excluded for purposes of its non-GAAP financial
measures. Because of the non-standardized definitions, the non-GAAP
financial measures as used by Akorn in this press release and the
accompanying tables may be calculated differently from, and
therefore may not be directly comparable to, similarly titled
measures used by the Company’s competitors and other companies.
Set forth below is the definition of each non-GAAP financial
measure as used by the Company in this press release and a full
reconciliation of each non-GAAP financial measure to the most
directly comparable GAAP financial measures.
EBITDA, as defined by the Company, represents
net income before net interest expense, income tax expense,
depreciation and amortization.
Adjusted EBITDA, as defined by the Company, is
calculated as follows:
Net (loss) income, (minus) plus:
- Interest income (expense), net
- Provision for income taxes
- Depreciation and amortization
- Non-cash expenses, such as impairment of long-lived assets,
share-based compensation expense, and amortization of deferred
financing costs
- Other adjustments, such as legal settlements, restatement
expenses and various merger and acquisition-related expenses, fixed
asset impairment, executive termination payments, data integrity
investigations & assessment, and Fresenius transaction &
litigation
Adjusted EBITDA is deemed by the Company to be a useful
performance indicator because it includes an add back of non-cash
or non-recurring operating expenses that have no impact on
continuing cash flows as well as other items that are not expected
to recur and therefore are not reflective of continuing operating
performance.
Adjusted net (loss) income, as defined by the
Company, is calculated as follows:
Net (loss) income, (minus) plus:
- Intangible asset amortization and impairment
- Non-cash expenses, such as, share-based compensation expense,
and amortization of financing costs
- Other adjustments, such as legal settlements, restatement
expenses and various merger and acquisition-related expenses, fixed
asset impairment, executive termination payments, data integrity
investigations & assessment, and Fresenius transaction &
litigation
- Less an estimated tax provision, net of the benefit from
utilizing net operating loss carry-forwards effected for the
adjustments noted above
Adjusted diluted earnings per share, as defined
by the Company, is equal to adjusted net income divided by the
actual or anticipated diluted share count for the applicable
period. The Company believes that adjusted net income and adjusted
diluted earnings per share are meaningful financial indicators, to
both Company management and investors, in that they exclude
non-cash income and expense items that have no impact on current or
future cash flows, as well as other income and expense items that
are not expected to recur and therefore are not reflective of
continuing operating performance.
The shortcomings of non-GAAP financial measures as guidance or
performance measures are that they provide a view of the Company’s
results of operations without including all events during a period.
For example, Adjusted EBITDA does not take into account the impact
of capital expenditures on either the liquidity or the financial
performance of the Company and likewise omits share-based
compensation expenses, which may vary over time and may represent a
material portion of overall compensation expense. Adjusted net
income does not take into account non-cash expenses that reflect
the amortization of past expenditures, or include share-based
compensation, which is an important and material element of the
Company's compensation package for its directors, officers and
other key employees. Due to the inherent limitations of non-GAAP
financial measures, investors should consider non-GAAP measures
only as a supplement to, not as a substitute for or as a superior
measure to, measures of financial performance prepared in
accordance with GAAP. Investors and other readers are encouraged to
review the related GAAP financial measures and the reconciliation
of non-GAAP measures to their most directly comparable GAAP
measures as presented in this press release.
Cautionary Note Regarding Forward-Looking
Statements
This press release includes statements that may constitute
"forward looking statements", including expectations regarding
financial performance, rebuilding shareholder value, capital
expenditures, growth, and other Akorn plans and strategy. When used
in this document, the words “will,” “expect,” “continue,"
“believe,” “estimate,” “intend,” “could,” “strives” and similar
expressions are generally intended to identify forward-looking
statements. These statements are made pursuant to the safe harbor
provisions of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. A number of important factors could cause actual results
of Akorn and its subsidiaries to differ materially from those
indicated by such forward-looking statements. These factors
include, but are not limited to: (i) the effect of the Delaware
court’s recent decision against Akorn on Akorn’s ability to retain
and hire key personnel, its ability to maintain relationships with
its customers, suppliers and others with whom it does business, or
its operating results and business generally, (ii) the risk that
ongoing or future litigation related to the court’s decision may
result in significant costs of defense, indemnification and/or
liability, (iii) the outcome of the investigation conducted by
Akorn with the assistance of outside consultants, into alleged
breaches of FDA data integrity requirements relating to product
development at Akorn and any actions taken by Akorn, third parties
or the FDA as a result of such investigations, (iv) the difficulty
of predicting the timing or outcome of product development efforts,
including FDA and other regulatory agency approvals and actions, if
any, (v) the timing and success of product launches, (vi)
difficulties or delays in manufacturing, and (vii) such other risks
and uncertainties outlined in the risk factors detailed in Part I,
Item 1A, “Risk Factors,” of Akorn’s Annual Report on Form 10-K and
other risk factors identified from time to time in our filings with
the SEC. Readers should carefully review these risk factors, and
should not place undue reliance on our forward-looking statements.
These forward-looking statements are based on information, plans
and estimates at the date of this report. Akorn undertakes no
obligation to update any forward-looking statements to reflect
changes in underlying assumptions or factors, new information,
future events or other changes.
|
AKORN, INC. |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
(LOSS) INCOME |
(In Thousands, Except Per Share
Data) |
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
REVENUES |
$ |
153,386 |
|
|
$ |
186,057 |
|
|
$ |
694,018 |
|
|
$ |
841,045 |
|
Cost of sales
(exclusive of amortization of intangibles, included within
operating expenses below) |
128,139 |
|
|
103,152 |
|
|
448,002 |
|
|
408,839 |
|
GROSS PROFIT |
25,247 |
|
|
82,905 |
|
|
246,016 |
|
|
432,206 |
|
Selling, general and
administrative expenses |
69,778 |
|
|
61,356 |
|
|
279,628 |
|
|
216,324 |
|
Acquisition-related
costs |
22 |
|
|
38 |
|
|
121 |
|
|
159 |
|
Research and
development expenses |
10,867 |
|
|
10,592 |
|
|
47,321 |
|
|
44,988 |
|
Amortization of
intangibles |
13,487 |
|
|
15,152 |
|
|
53,472 |
|
|
61,443 |
|
Impairment of
intangible assets |
118,088 |
|
|
112,449 |
|
|
231,086 |
|
|
128,127 |
|
Litigation rulings and
settlements |
8,870 |
|
|
4,919 |
|
|
22,814 |
|
|
4,049 |
|
TOTAL
OPERATING EXPENSES |
221,112 |
|
|
204,506 |
|
|
634,442 |
|
|
455,090 |
|
OPERATING
(LOSS) |
(195,865 |
) |
|
(121,601 |
) |
|
(388,426 |
) |
|
(22,884 |
) |
Amortization of
deferred financing costs |
(1,304 |
) |
|
(1,304 |
) |
|
(5,216 |
) |
|
(5,216 |
) |
Interest expense,
net |
(13,569 |
) |
|
(9,532 |
) |
|
(45,900 |
) |
|
(38,070 |
) |
Other non-operating
income (expense), net |
1,378 |
|
|
3,100 |
|
|
1,360 |
|
|
6,972 |
|
(LOSS) INCOME BEFORE
INCOME TAXES |
(209,360 |
) |
|
(129,337 |
) |
|
(438,182 |
) |
|
(59,198 |
) |
Income tax provision
(benefit) |
5,678 |
|
|
(64,120 |
) |
|
(36,273 |
) |
|
(34,648 |
) |
NET
(LOSS) |
$ |
(215,038 |
) |
|
$ |
(65,217 |
) |
|
$ |
(401,909 |
) |
|
$ |
(24,550 |
) |
NET (LOSS) PER COMMON
SHARE: |
|
|
|
|
|
|
|
NET
(LOSS), BASIC |
$ |
(1.71 |
) |
|
$ |
(0.52 |
) |
|
$ |
(3.21 |
) |
|
$ |
(0.20 |
) |
NET
(LOSS), DILUTED |
$ |
(1.71 |
) |
|
$ |
(0.52 |
) |
|
$ |
(3.21 |
) |
|
$ |
(0.20 |
) |
SHARES USED IN
COMPUTING NET (LOSS) PER COMMON SHARE: |
|
|
|
|
|
|
|
BASIC |
125,492 |
|
|
125,083 |
|
|
125,383 |
|
|
124,790 |
|
DILUTED |
125,492 |
|
|
125,083 |
|
|
125,383 |
|
|
124,790 |
|
COMPREHENSIVE
(LOSS): |
|
|
|
|
|
|
|
Net
(loss) |
$ |
(215,038 |
) |
|
$ |
(65,217 |
) |
|
$ |
(401,909 |
) |
|
$ |
(24,550 |
) |
Unrealized holding (loss) gain on available-for-sale securities,
net of tax of $6 and ($157) for the years ended December 31,
2018 and 2017, respectively. |
(12 |
) |
|
— |
|
|
(21 |
) |
|
267 |
|
Foreign
currency translation gain (loss) for the years ended December 31,
2018 and 2017, respectively. |
3,866 |
|
|
2,022 |
|
|
(8,001 |
) |
|
6,150 |
|
Pension
liability adjustment, net of tax of $389 and ($403) for the year
ended December 31, 2018 and 2017, respectively. |
(1,541 |
) |
|
1,311 |
|
|
(1,529 |
) |
|
1,582 |
|
COMPREHENSIVE
(LOSS) |
$ |
(212,725 |
) |
|
$ |
(61,884 |
) |
|
$ |
(411,460 |
) |
|
$ |
(16,551 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AKORN, INC. |
CONSOLIDATED BALANCE SHEETS |
(In Thousands, |
Except Share Data) |
|
|
December 31, |
|
2018 |
|
2017 |
ASSETS |
|
|
|
CURRENT ASSETS |
|
|
|
Cash and
cash equivalents |
$ |
224,868 |
|
|
$ |
368,119 |
|
Trade
accounts receivable, net |
153,126 |
|
|
141,383 |
|
Inventories, net |
173,645 |
|
|
183,568 |
|
Prepaid
expenses and other current assets |
32,180 |
|
|
37,081 |
|
TOTAL
CURRENT ASSETS |
583,819 |
|
|
730,151 |
|
PROPERTY, PLANT AND
EQUIPMENT, NET |
334,853 |
|
|
313,418 |
|
OTHER LONG-TERM
ASSETS |
|
|
|
Goodwill |
283,879 |
|
|
285,310 |
|
Intangible assets, net |
284,976 |
|
|
569,484 |
|
Deferred
tax assets |
— |
|
|
6,521 |
|
Other
non-current assets |
7,730 |
|
|
4,627 |
|
TOTAL
OTHER LONG-TERM ASSETS |
576,585 |
|
|
865,942 |
|
TOTAL
ASSETS |
$ |
1,495,257 |
|
|
$ |
1,909,511 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
CURRENT
LIABILITIES |
|
|
|
Trade
accounts payable |
$ |
39,570 |
|
|
$ |
51,976 |
|
Purchase
consideration payable |
— |
|
|
3,901 |
|
Income
taxes payable |
— |
|
|
15,775 |
|
Accrued
royalties |
6,786 |
|
|
5,902 |
|
Accrued
compensation |
19,745 |
|
|
12,286 |
|
Accrued
administrative fees |
36,767 |
|
|
38,598 |
|
Accrued
legal fees and contingencies |
52,413 |
|
|
28,293 |
|
Accrued
expenses and other liabilities |
15,542 |
|
|
14,358 |
|
TOTAL
CURRENT LIABILITIES |
170,823 |
|
|
171,089 |
|
LONG-TERM
LIABILITIES |
|
|
|
Long-term
debt (net of non-current deferred financing costs) |
820,411 |
|
|
815,195 |
|
Deferred
tax liability |
566 |
|
|
43,404 |
|
FIN 48
reserve |
49,990 |
|
|
40,300 |
|
Other
long-term liabilities |
9,601 |
|
|
8,278 |
|
TOTAL
LONG-TERM LIABILITIES |
880,568 |
|
|
907,177 |
|
TOTAL
LIABILITIES |
1,051,391 |
|
|
1,078,266 |
|
SHAREHOLDERS’
EQUITY |
|
|
|
Preferred
stock, $1 par value —5,000,000 shares authorized; no shares issued
or outstanding at December 31, 2018 and 2017 |
— |
|
|
— |
|
Common
stock, no par value — 150,000,000 shares authorized; 125,492,373
and 125,090,522 shares issued and outstanding at December 31, 2018
and 2017 |
574,553 |
|
|
550,472 |
|
(Accumulated deficit) Retained earnings |
(107,168 |
) |
|
294,741 |
|
Accumulated other comprehensive loss |
(23,519 |
) |
|
(13,968 |
) |
TOTAL
SHAREHOLDERS’ EQUITY |
443,866 |
|
|
831,245 |
|
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ |
1,495,257 |
|
|
$ |
1,909,511 |
|
|
|
|
|
|
|
|
|
|
AKORN, INC. |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(In Thousands) |
|
|
Year ended December 31, |
|
2018 |
|
2017 |
OPERATING
ACTIVITIES: |
|
|
|
Net (loss) |
$ |
(401,909 |
) |
|
$ |
(24,550 |
) |
Depreciation and amortization |
82,805 |
|
|
85,173 |
|
Impairment of intangible assets |
231,086 |
|
|
128,127 |
|
Fixed
asset impairment |
6,135 |
|
|
— |
|
Amortization of deferred financing fees |
5,216 |
|
|
5,216 |
|
Non-cash
stock compensation expense |
21,503 |
|
|
21,018 |
|
Non-cash
interest expense |
— |
|
|
— |
|
Income
from available-for-sale securities |
— |
|
|
(3,032 |
) |
Deferred
income taxes, net |
(37,396 |
) |
|
(115,249 |
) |
Gain on
sale of available-for-sale security |
— |
|
|
199 |
|
Other |
421 |
|
|
(307 |
) |
Changes
in operating assets and liabilities: |
|
|
|
Trade
accounts receivable, net |
(11,627 |
) |
|
141,979 |
|
Inventories, net |
9,694 |
|
|
(8,367 |
) |
Prepaid
expenses and other current assets |
3,847 |
|
|
(12,232 |
) |
Other
non-current assets |
(3,120 |
) |
|
(3,519 |
) |
Trade
accounts payable |
(5,002 |
) |
|
(9,223 |
) |
Accrued
legal fees and contingencies |
24,120 |
|
|
21,492 |
|
FIN48
Reserve |
9,690 |
|
|
38,999 |
|
Accrued
expenses and other liabilities |
(4,357 |
) |
|
(18,091 |
) |
NET CASH (USED IN)
PROVIDED BY OPERATING ACTIVITIES |
(68,894 |
) |
|
247,633 |
|
INVESTING
ACTIVITIES: |
|
|
|
Proceeds from disposal
of assets |
30 |
|
|
4,815 |
|
Payments for other
intangible assets |
(50 |
) |
|
(200 |
) |
Purchases of property,
plant and equipment |
(69,111 |
) |
|
(95,170 |
) |
NET CASH USED IN
INVESTING ACTIVITIES |
(69,131 |
) |
|
(90,555 |
) |
FINANCING
ACTIVITIES: |
|
|
|
Proceeds under stock
option and stock purchase plans |
546 |
|
|
9,320 |
|
Stock compensation plan
withholdings from employee taxes |
(777 |
) |
|
(1,726 |
) |
Payments of contingent
acquisition liabilities |
(4,793 |
) |
|
— |
|
Lease Payments |
(14 |
) |
|
— |
|
NET CASH (USED IN)
PROVIDED BY FINANCING ACTIVITIES |
(5,038 |
) |
|
7,594 |
|
Effect of changes in
exchange rates on cash and cash equivalents |
(1,032 |
) |
|
1,183 |
|
(DECREASE)
INCREASE IN CASH AND CASH EQUIVALENTS |
(144,095 |
) |
|
165,855 |
|
CASH AND CASH
EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF YEAR |
369,889 |
|
|
204,034 |
|
CASH AND CASH
EQUIVALENTS, AND RESTRICTED CASH AT END OF YEAR |
$ |
225,794 |
|
|
$ |
369,889 |
|
|
|
|
|
|
|
|
|
|
AKORN, INC. |
Reconciliation of GAAP Net (LOSS) to Non-GAAP
EBITDA and Adjusted EBITDA |
(In Thousands) |
|
|
Three Months Ended |
|
Year Ended |
|
|
December 31, |
|
December 31, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
NET
(LOSS) |
$ |
(215,038 |
) |
|
$ |
(65,217 |
) |
|
$ |
(401,909 |
) |
|
$ |
(24,550 |
) |
|
|
|
|
|
|
|
|
|
ADJUSTMENTS
TO ARRIVE AT EBITDA: |
|
|
|
|
|
|
|
|
Depreciation
expense |
8,217 |
|
|
6,228 |
|
|
29,333 |
|
|
23,730 |
|
|
Amortization
expense |
13,487 |
|
|
15,152 |
|
|
53,472 |
|
|
61,443 |
|
|
Interest expense,
net |
13,569 |
|
|
9,532 |
|
|
45,900 |
|
|
38,070 |
|
|
Income tax provision
(benefit) |
5,678 |
|
|
(64,120 |
) |
|
(36,273 |
) |
|
(34,648 |
) |
EBITDA |
$ |
(174,087 |
) |
|
$ |
(98,425 |
) |
|
$ |
(309,477 |
) |
|
$ |
64,045 |
|
|
|
|
|
|
|
|
|
|
NON-CASH
AND OTHER NON-RECURRING INCOME AND EXPENSES |
|
|
|
|
|
|
|
|
Data Integrity
investigations & assessment |
6,021 |
|
|
514 |
|
|
28,420 |
|
|
514 |
|
|
Fresenius transaction
& litigation |
8,303 |
|
|
— |
|
|
43,305 |
|
|
7,354 |
|
|
Non-cash stock
compensation expense |
4,304 |
|
|
5,392 |
|
|
21,503 |
|
|
21,018 |
|
|
Impairment of
intangible assets |
118,088 |
|
|
112,449 |
|
|
231,086 |
|
|
128,127 |
|
|
Loss (Gain) from asset
sales |
— |
|
|
3 |
|
|
(201 |
) |
|
(2,802 |
) |
|
Amortization of
deferred financing costs |
1,304 |
|
|
1,304 |
|
|
5,216 |
|
|
5,216 |
|
|
Restatement
expenses |
(273 |
) |
|
1,555 |
|
|
(1,018 |
) |
|
17,311 |
|
|
Executive termination
payments |
6,455 |
|
|
— |
|
|
6,455 |
|
|
— |
|
|
Fixed asset
impairment |
6,081 |
|
|
533 |
|
|
6,058 |
|
|
481 |
|
|
Litigation rulings and
settlements |
3,870 |
|
|
4,919 |
|
|
17,814 |
|
|
4,049 |
|
|
Merger and
Acquisition-related expenses |
22 |
|
|
38 |
|
|
121 |
|
|
159 |
|
ADJUSTED
EBITDA |
$ |
(19,912 |
) |
|
$ |
28,282 |
|
|
$ |
49,282 |
|
|
$ |
245,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The table below sets forth expenses included in Net (loss) that
have not been included as adjustments to arrive at EBITDA and
Adjusted EBITDA in the preceding table.
|
|
|
|
|
($ in thousands) |
|
Three Months Ended |
|
Year Ended |
|
|
December 31, |
|
December 31, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
FDA compliance related
expenses |
12,517 |
|
|
— |
|
|
22,251 |
|
|
— |
|
|
Failure to supply
penalties (recorded as a contra-revenue) |
7,462 |
|
|
4,446 |
|
|
22,453 |
|
|
18,231 |
|
|
TheraTears®
direct-to-consumer advertising campaign |
6,219 |
|
|
13,118 |
|
|
17,393 |
|
|
14,070 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AKORN, INC. |
Reconciliation of GAAP Net (Loss) to Non-GAAP
Adjusted Net (Loss) Income and |
Adjusted Diluted (Loss) Earnings Per
Share |
(In Thousands, Except Per Share
Data) |
|
|
Three Months Ended |
|
Year Ended |
|
December 31, |
|
December 31, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
NET (LOSS) |
$ |
(215,038 |
) |
|
$ |
(65,217 |
) |
|
$ |
(401,909 |
) |
|
$ |
(24,550 |
) |
Income tax provision
(benefit) |
5,678 |
|
|
(64,120 |
) |
|
(36,273 |
) |
|
(34,648 |
) |
|
|
|
|
|
|
|
|
(LOSS) BEFORE INCOME
TAXES |
$ |
(209,360 |
) |
|
$ |
(129,337 |
) |
|
$ |
(438,182 |
) |
|
$ |
(59,198 |
) |
|
|
|
|
|
|
|
|
ADJUSTMENTS TO ARRIVE
AT ADJUSTED NET (LOSS) INCOME: |
|
|
|
|
|
|
|
Acquisition-related costs (1) |
22 |
|
|
38 |
|
|
121 |
|
|
159 |
|
Data Integrity
investigations & assessment (2) |
6,021 |
|
|
514 |
|
|
28,420 |
|
|
514 |
|
Fresenius
transaction & litigation (2, 9) |
8,303 |
|
|
— |
|
|
43,305 |
|
|
7,354 |
|
Restatement
expenses (2) |
(273 |
) |
|
1,555 |
|
|
(1,018 |
) |
|
17,311 |
|
Non-cash stock
compensation expense (2, 3, 4) |
4,304 |
|
|
5,392 |
|
|
21,503 |
|
|
21,018 |
|
Amortization
expense (5) |
13,487 |
|
|
15,152 |
|
|
53,472 |
|
|
61,443 |
|
Loss from asset
sales (6) |
— |
|
|
3 |
|
|
(201 |
) |
|
(2,802 |
) |
Impairment of
intangible assets (7) |
118,088 |
|
|
112,449 |
|
|
231,086 |
|
|
128,127 |
|
Amortization of
deferred financing costs (8) |
1,304 |
|
|
1,304 |
|
|
5,216 |
|
|
5,216 |
|
Executive
termination payments (2, 3) |
6,455 |
|
|
— |
|
|
6,455 |
|
|
— |
|
Fixed asset
impairment (2) |
6,081 |
|
|
533 |
|
|
6,058 |
|
|
481 |
|
Litigation
rulings and settlements (9) |
3,870 |
|
|
4,919 |
|
|
17,814 |
|
|
4,049 |
|
|
|
|
|
|
|
|
|
ADJUSTED (LOSS) INCOME
BEFORE INCOME TAX |
$ |
(41,698 |
) |
|
$ |
12,522 |
|
|
$ |
(25,951 |
) |
|
$ |
183,672 |
|
|
|
|
|
|
|
|
|
Option exercise and RSU
vesting tax impact (10) |
(332 |
) |
|
11,705 |
|
|
(2,748 |
) |
|
12,994 |
|
ADJUSTMENTS TO INCOME
TAX PROVISION (BENEFIT) |
(5,547 |
) |
|
(16,403 |
) |
|
466 |
|
|
54,191 |
|
TOTAL ADJUSTED INCOME
TAX PROVISION (BENEFIT) |
$ |
(5,879 |
) |
|
$ |
(4,698 |
) |
|
$ |
(2,282 |
) |
|
$ |
67,185 |
|
|
|
|
|
|
|
|
|
ADJUSTED NET (LOSS)
INCOME |
$ |
(35,819 |
) |
|
$ |
17,220 |
|
|
$ |
(23,669 |
) |
|
$ |
116,487 |
|
|
|
|
|
|
|
|
|
ADJUSTED DILUTED (LOSS)
EARNINGS PER SHARE (10) |
$ |
(0.29 |
) |
|
$ |
0.14 |
|
|
$ |
(0.19 |
) |
|
$ |
0.93 |
|
|
|
|
|
|
|
|
|
(1) -
Excluded from Acquisition-related costs |
(2) -
Excluded from SG&A expenses |
(3) -
Excluded from R&D expenses |
(4) -
Excluded from Cost of sales |
(5) -
Excluded from Amortization of intangibles |
(6) -
Excluded from Other non-operating (expense) income, net |
(7) -
Excluded from Impairment of intangible assets |
(8) -
Excluded from Amortization of deferred financing costs |
(9) -
Excluded from Litigation rulings and settlements |
(10) -
Included in Income tax expense |
|
|
|
|
|
|
|
|
|
AKORN, INC. |
Reconciliation of GAAP Debt to Non-GAAP Net
Debt and Net Debt to Adjusted EBITDA Ratio |
(In Thousands, Except Net Debt to Adjusted
EBITDA Ratio) |
|
|
December 31, 2018 |
GAAP Debt |
$ |
820,411 |
|
Deferred financing
costs |
11,527 |
|
Total term loans
outstanding |
$ |
831,938 |
|
Cash and cash
equivalents |
224,868 |
|
Net debt
(1) |
$ |
607,070 |
|
|
|
Adjusted EBITDA, year
ended |
$ |
49,282 |
|
|
|
Net debt to adjusted
EBITDA ratio (2) |
12.3 |
|
(1) Net debt, as defined by the Company, is
gross debt including Akorn’s term loan and revolving debt balances
(if applicable) less cash and cash equivalents.
(2) Net debt to Adjusted EBITDA ratio, as
defined by the Company, is net debt divided by the trailing twelve
months Adjusted EBITDA.
Investors/Media:(847)
279-6162Investor.relations@akorn.com
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