Delivers Strong Bottom Line Performance with
$0.67 Diluted EPS
CINGAL Revenue Drives International
Viscosupplement Revenue Growth of 28% Year-over-Year
Announces Decision to Advance CINGAL Program
Towards U.S. Regulatory Approval
Raises Full Year 2019 Revenue and Adjusted
EBITDA Guidance
Anika Therapeutics, Inc. (NASDAQ: ANIK), a global, integrated
orthopedic and regenerative medicines company specializing in
therapeutics based on its proprietary hyaluronic acid (“HA”)
technology, today reported financial results for the second quarter
ended June 30, 2019, and provided an update on its business
progress in the period.
“Anika delivered strong earnings and cash flow in the second
quarter, while we continued our transformation into a global
commercial company,” said Joseph Darling, President and Chief
Executive Officer of Anika Therapeutics. “With an ongoing
commitment to our people, products and performance, during the
quarter we further strengthened our executive leadership team,
continued to realize the benefits of our international expansion
efforts and prepared for the launch of our first
surgically-delivered therapy for bone repair procedures in the U.S.
under our hybrid commercial model in the third quarter of 2019.
Additionally, based on extensive analysis and discussions, and
building on the strength of our international viscosupplement
results, we have decided to move forward with our efforts to obtain
regulatory approval for CINGAL in the U.S. Anika remains well
positioned to deliver a continuum of orthopedic and regenerative
medicine therapies and create sustained value for patients and
shareholders.”
Second Quarter Financial Results
- Total revenue for the second quarter of 2019 was $30.4 million,
compared to $30.5 million for the second quarter of 2018.
- Global Viscosupplement revenue decreased slightly
year-over-year for the second quarter of 2019. U.S. Viscosupplement
revenue decreased 6% year-over-year for the quarter, due primarily
to lower ORTHOVISC revenue. International Viscosupplement revenue
increased 28% year-over-year for the quarter, primarily due to
international CINGAL revenue growth of 125%.
- Total operating expenses for the second quarter of 2019
decreased to $18.5 million, compared to $19.3 million for the
second quarter of 2018. The decrease in total operating expenses
was due to lower cost of product revenue and research and
development expenses, partially offset by higher selling, general
and administrative expenses.
- Net income for the second quarter of 2019 was $9.4 million, or
$0.67 per diluted share, compared to net income of $10.1 million,
or $0.68 per diluted share, for the second quarter of 2018. The
decrease in net income was due primarily to tax benefits from
employee stock option exercises in the second quarter of 2018.
- Adjusted EBITDA (see description below) for the second quarter
of 2019 increased to $14.8 million, compared to $14.0 million for
the second quarter of 2018. The increase in adjusted EBITDA is
primarily due to improvements in product gross profit and operating
income as a result of more favorable revenue mix and a reduction in
inventory related charges.
- Cash, cash equivalents and investments were $141.5 million as
of June 30, 2019, compared to $159.0 million as of December 31,
2018. The decrease in cash, cash equivalents and investments was
due to the Company’s $30.0 million accelerated share repurchase
program announced in May 2019, partially offset by strong operating
cash flow for the first half of 2019. Cash provided by operating
activities was $13.9 million for the first half of 2019.
Recent Business Highlights
- Completed the evaluation of CINGAL’s clinical, regulatory, and
commercial path forward, and determined to initiate a pilot study
as the next step to advance CINGAL towards regulatory approval in
the U.S. market. The pilot study is expected to enroll
approximately 240 patients across 15 sites primarily located in the
U.S. Patients will be randomized to receive either CINGAL, a
steroid (triamcinolone hexacetonide), or saline placebo. The
Company expects the pilot study to commence in the first half of
2020 and to take approximately one year to complete.
- Strengthened the executive leadership team with the appointment
of James Loerop to the newly created position of Executive Vice
President of Business Development and Strategic Planning. Mr.
Loerop will oversee the Company’s global business development
function and advance its efforts to identify and evaluate potential
acquisitions, partnerships, alliances, and licensing opportunities
to expand the Company’s commercial portfolio and global
footprint.
- Continued to execute commercial expansion plans, including
hiring three Regional Sales Directors to drive the upcoming launch
of the Company’s first surgically-delivered therapy for bone repair
procedures in the U.S. utilizing a hybrid commercial model, which
is planned for the third quarter of 2019.
- Executed a $30.0 million accelerated share repurchase (ASR)
program in the second quarter of 2019, and received an initial
delivery of approximately 450,000 shares of common stock. Anika
expects the ASR program to be completed no later than the first
quarter of 2020.
- Executing its five-year strategic plan, which Anika intends to
present at its Analyst and Investor Day on September 18 in
Boston.
Full Year 2019 Revised Corporate Outlook Based on
currently available information, the Company expects total revenue
growth to be in the range of 1% to 4% for the full year of 2019.
Total operating expenses are now anticipated to be in the high $70
million range, as a result of internal cost control initiatives.
Adjusted EBITDA is now expected to be in the high $30 million to
low $40 million range, which is based on anticipated U.S. GAAP net
income around the mid $20 million range.
Non-GAAP Information To supplement the financial measures
prepared in accordance with U.S. generally accepted accounting
principles (GAAP), the Company is reporting Adjusted EBITDA, which
is a non-GAAP financial measure and should not be considered an
alternative to net income or other measurements under GAAP. The
Company believes that Adjusted EBITDA provides additional useful
information to investors in their assessment of its operating
performance as it is a metric routinely used by management to
evaluate the Company’s performance. Adjusted EBITDA is not
calculated identically by all companies, and therefore the
Company’s measurements of Adjusted EBITDA may not be comparable to
similarly titled measures reported by other companies. Adjusted
EBITDA is defined by the Company as GAAP net income excluding
depreciation and amortization, interest and other income (expense),
income taxes and stock-based compensation expense. A reconciliation
of Adjusted EBITDA to net income, the most directly comparable
financial measure calculated and presented in accordance with GAAP,
is shown in the table below for the three- and six-month periods
ended June 30, 2019 and 2018 (in thousands).
For the Three Months Ended June 30,
For the Six Months Ended June 30,
2019
2018
2019
2018
Net income
$
9,435
$
10,092
$
13,942
$
3,405
Interest and other income, net
(533
)
(290
)
(1,031
)
(385
)
Provision for income taxes
3,013
1,444
4,486
394
Depreciation and amortization
1,466
1,447
2,943
2,920
Stock-based compensation expense
1,443
1,322
2,829
8,887
Adjusted EBITDA
$
14,824
$
14,015
$
23,169
$
15,221
Conference Call Information Anika’s management will hold
a conference call and webcast to discuss its financial results and
business highlights today, Wednesday, July 24 at 5:00 pm ET. The
conference call can be accessed by dialing 1-855-468-0611
(toll-free domestic) or 1-484-756-4332 (international). A live
audio webcast will be available in the "Investor Relations" section
of Anika’s website, www.anikatherapeutics.com, An accompanying
slide presentation may also be accessed via the Anika website. A
replay of the webcast will be available on Anika’s website
approximately two hours after the completion of the event.
About Anika Therapeutics, Inc. Anika Therapeutics, Inc.
(NASDAQ: ANIK) is a global, integrated orthopedic and regenerative
medicines company based in Bedford, Massachusetts. Anika is
committed to improving the lives of patients with degenerative
orthopedic diseases and traumatic conditions with clinically
meaningful therapies along the continuum of care, from palliative
pain management to regenerative tissue repair. The Company has over
two decades of global expertise developing, manufacturing, and
commercializing more than 20 products based on its proprietary
hyaluronic acid (HA) technology. Anika's orthopedic medicine
portfolio includes ORTHOVISC®, MONOVISC®, and CINGAL®,
viscosupplements which alleviate pain and restore joint function by
replenishing depleted HA, and HYALOFAST, a solid HA-based scaffold
to aid cartilage repair and regeneration. For more information
about Anika, please visit www.anikatherapeutics.com.
Forward-Looking Statements The statements made in the
second and third sentences of the second paragraph, the first,
third, and fourth bullet points in the section captioned “Recent
Business Highlights,” as well as the section captioned “Full Year
2019 Revised Corporate Outlook” of this press release, which are
not statements of historical fact, are forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These statements include, but are not limited to, those
relating to the Company’s plans for the launch of its
surgically-delivered therapy for bone repair, the Company’s plans
to advance CINGAL for approval in the United States initially via a
pilot study, the timing associated with the Company’s ongoing ASR
program, and the Company’s revised expectations with respect to its
2019 financial performance. These statements are based upon the
current beliefs and expectations of the Company’s management and
are subject to significant risks, uncertainties, and other factors.
The Company’s actual results could differ materially from any
anticipated future results, performance, or achievements described
in the forward-looking statements as a result of a number of
factors including, but not limited to, (i) the Company’s ability to
successfully commence and/or complete clinical trials of its
products on a timely basis or at all; (ii) the Company’s ability to
obtain pre-clinical or clinical data to support domestic and
international pre-market approval applications, 510(k)
applications, or new drug applications, or to timely file and
receive FDA or other regulatory approvals or clearances of its
products; (iii) that such approvals will not be obtained in a
timely manner or without the need for additional clinical trials,
other testing or regulatory submissions, as applicable; (iv) the
Company’s research and product development efforts and their
relative success, including whether we have any meaningful sales of
any new products resulting from such efforts; (v) the cost
effectiveness and efficiency of the Company’s clinical studies,
manufacturing operations, and production planning; (vi) the
strength of the economies in which the Company operates or will be
operating, as well as the political stability of any of those
geographic areas; (vii) future determinations by the Company to
allocate resources to products and in directions not presently
contemplated; (viii) the Company’s ability to successfully
commercialize its products, in the U.S. and abroad; (ix) quarterly
sales volume variation experienced by the Company, which can make
future results difficult to predict and period-to-period
comparisons potentially less meaningful; (x) the Company’s ability
to provide an adequate and timely supply of its products to its
customers; and (xi) the Company’s ability to achieve its growth
targets. Additional factors and risks are described in the
Company’s periodic reports filed with the Securities and Exchange
Commission, and they are available on the SEC’s website at
www.sec.gov. Forward-looking statements are made based on
information available to the Company on the date of this press
release, and the Company assumes no obligation to update the
information contained in this press release.
Anika Therapeutics, Inc. and Subsidiaries
Consolidated Statements of Operations (in thousands,
except per share data) (unaudited)
For the
Three Months Ended June 30, For the Six Months Ended
June 30,
2019
2018
2019
2018
Product revenue
$
30,413
$
30,542
$
55,130
$
51,800
Licensing, milestone and contract revenue
5
6
11
12
Total revenue
30,418
30,548
55,141
51,812
Operating expenses: Cost of product revenue
6,836
8,152
14,147
15,996
Research and development
4,165
4,733
8,423
9,895
Selling, general and administrative
7,502
6,417
15,174
22,507
Total operating expenses
18,503
19,302
37,744
48,398
Income from operations
11,915
11,246
17,397
3,414
Interest and other income, net
533
290
1,031
385
Income before income taxes
12,448
11,536
18,428
3,799
Provision for income taxes
3,013
1,444
4,486
394
Net income
$
9,435
$
10,092
$
13,942
$
3,405
Basic net income per share: Net income
$
0.68
$
0.69
$
0.99
$
0.23
Basic weighted average common shares outstanding
13,916
14,652
14,054
14,666
Diluted net income per share: Net income
$
0.67
$
0.68
$
0.98
$
0.23
Diluted weighted average common shares outstanding
14,088
14,915
14,203
15,045
Anika Therapeutics, Inc. and
Subsidiaries Consolidated Balance Sheets (in
thousands, except per share data) (unaudited)
June 30, December 31, ASSETS
2019
2018
Current assets: Cash, cash equivalents and investments
$
141,452
$
159,014
Accounts receivable, net
23,073
20,775
Inventories, net
22,986
21,300
Prepaid expenses and other current assets
2,413
1,854
Total current assets
189,924
202,943
Property and equipment, net
52,960
54,111
Operating lease right-of-use assets
23,495
-
Other long-term assets
4,884
4,897
Intangible assets, net
8,303
9,191
Goodwill
7,798
7,851
Total assets
$
287,364
$
278,993
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities: Accounts payable
$
2,287
$
3,143
Accrued expenses and other current liabilities
8,101
8,146
Total current liabilities
10,388
11,289
Other long-term liabilities
373
550
Deferred tax liability
3,683
3,542
Operating lease liabilities
21,974
-
Commitments and contingencies Stockholders’ equity:
Preferred stock, $0.01 par value
-
-
Common stock, $0.01 par value
138
142
Additional paid-in-capital
24,329
50,763
Accumulated other comprehensive loss
(5,696
)
(5,526
)
Retained earnings
232,175
218,233
Total stockholders’ equity
250,946
263,612
Total liabilities and stockholders’ equity
$
287,364
$
278,993
Anika Therapeutics, Inc. and Subsidiaries
Supplemental Financial Data Revenue by Product
Line and Product Gross Margin (in thousands, except
percentages) (unaudited)
For the Three Months Ended
June 30, For the Six Months Ended June 30, Product
Line:
2019
%
2018
%
2019
%
2018
%
Orthobiologics
$
26,462
87
%
$
26,192
86
%
$
48,210
88
%
$
45,681
88
%
Surgical
2,101
7
%
1,263
4
%
3,493
6
%
2,509
5
%
Dermal
444
1
%
623
2
%
573
1
%
83
0
%
Other
1,406
5
%
2,464
8
%
2,854
5
%
3,527
7
%
Product Revenue
$
30,413
100
%
$
30,542
100
%
$
55,130
100
%
$
51,800
100
%
Product Gross Profit
$
23,577
$
22,390
$
40,983
$
35,804
Product Gross Margin
78%
73%
74%
69%
Product Revenue by Geographic Region (in
thousands, except percentages) (unaudited)
For the
Three Months Ended June 30, For the Six Months Ended June
30, Geographic Region:
2019
%
2018
%
2019
%
2018
%
United States
$
22,937
76
%
$
24,773
81
%
$
43,026
78
%
$
41,682
81
%
Europe
4,927
16
%
3,498
11
%
7,454
14
%
5,889
11
%
Other
2,549
8
%
2,271
8
%
4,650
8
%
4,229
8
%
Product Revenue
$
30,413
100
%
$
30,542
100
%
$
55,130
100
%
$
51,800
100
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190724005750/en/
Anika Therapeutics, Inc. Joseph Darling, President & CEO
Sylvia Cheung, CFO Tel: 781-457-9000
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