Strong Bottom Line Performance with $0.54
Diluted EPS for Fourth Quarter of 2018
MONOVISC and CINGAL Global Revenue Increased
14% for Full Year of 2018
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 fourth quarter
and full year ended December 31, 2018, and provided an update on
its business progress in the periods.
“Anika continued to deliver strong earnings and cash flow in the
fourth quarter, entering 2019 well-positioned to further build on
the foundation that will drive the Company’s next phase of growth,”
said Joseph Darling, President and Chief Executive Officer of Anika
Therapeutics. “During the quarter, MONOVISC and CINGAL end user
demand remained strong. We also successfully expanded the reach of
our orthobiologics business in Europe, Asia, Africa and South
America with the addition of eight new international distributors
during the year. We were pleased to resume global production and
distribution of HYALOFAST, HYALOGRAFT-C and HYALOMATRIX, and look
forward to benefitting from our full complement of products in
2019. We believe 2019 will be a transformational year for Anika and
we will continue to take advantage of the multiple levers available
to advance our long-term goal of returning to annual double-digit
revenue growth. We are focused on solid execution and increasing
efficiency and productivity, as we address our challenges and
continue to expand our commercial reach, advance our pipeline and
drive value for our shareholders.”
Fourth Quarter and Full Year Financial Results
- Total revenue for the fourth quarter of
2018 was $27.0 million, compared to $29.4 million for the fourth
quarter of 2017. Total revenue for the full year of 2018 was $105.6
million, compared to $113.4 million for the full year of 2017. The
decrease in revenue for the quarter and full year of 2018 was due
primarily to the impact from the voluntary recall and lower U.S.
viscosupplement pricing. 2017 results also included the achievement
of $5.0 million of milestone revenue as a result of MONOVISC
reaching $100 million in U.S. end-user sales within a consecutive
12-month period.
- Global Viscosupplement revenue
increased slightly for the full year of 2018. Global MONOVISC and
CINGAL revenue increased 14% for the full year of 2018, providing
evidence of strong favor toward the Company’s innovative
treatments.
- Total operating expenses for the fourth
quarter of 2018 were $17.2 million, compared to $19.7 million for
the fourth quarter of 2017. The year-over-year decrease in total
operating expenses for the fourth quarter of 2018 was due primarily
to lower cost of product revenue. Total operating expenses for the
full year of 2018 were $83.8 million, compared to $67.7 million for
the full year of 2017. The increase in total operating expenses for
the full year of 2018 was due primarily to a one-time charge of
$8.4 million in the first quarter, which consisted mainly of
non-cash stock-based compensation expense associated with the
retirement of Anika’s former Chief Executive Officer, approximately
$2.0 million of non-recurring CINGAL U.S. pre-launch market
research activities in the first half of 2018, and increased
personnel and professional service costs.
- Net income for the fourth quarter of
2018 was $7.7 million, or $0.54 per diluted share, compared to $8.1
million, or $0.53 per diluted share, for the fourth quarter of
2017. Net income for the full year of 2018 was $18.7 million, or
$1.27 per diluted share, compared to $31.8 million, or $2.11 per
diluted share, for the full year of 2017. The decline in net income
for the full year of 2018 was due primarily to the decrease in
total revenue and increase in operating expenses previously
discussed.
- Cash, cash equivalents and investments
were $159.0 million as of December 31, 2018, compared to $149.0
million as of September 30, 2018. Cash provided by operating
activities was $10.0 million for the fourth quarter of 2018 and
approximately $35.0 million for the full year of 2018.
Recent Business Highlights
- Resumed global distribution of
HYALOFAST, HYALOGRAFT-C and HYALOMATRIX in the fourth quarter after
a voluntary, non-safety related recall in the second quarter of
2018.
- Expanded the international commercial
reach of the orthobiologics business in Europe, Asia, Africa and
South America with the addition of eight new international
distributors.
- Completed a product prototype of the
Company’s Rotator Cuff repair therapy as planned.
- On-track to complete a 5-year strategic
plan in the first half of 2019.
- Continued evaluation of potential
partnership opportunities for the Company’s product pipeline, which
is an important element of its 5-year strategic plan.
CINGAL FDA UpdateAnika recently met with the U.S. Food
and Drug Administration (FDA) to discuss the totality of available
CINGAL data, including information from the 17-02 extension study
and real world evidence from physicians in Canada and Europe, to
gain additional guidance on the pathway for CINGAL approval in the
U.S. Based on that meeting, it has become clear that Anika will
need to conduct another Phase III clinical trial before it can
obtain approval for CINGAL in the U.S. The Company plans to
continue to work with the FDA and pursue the most expeditious path
to FDA approval for CINGAL. The Company will provide updates on its
progress on this initiative at appropriate intervals moving
forward.
Full Year 2019 Corporate OutlookFor the full year of
2019, the Company expects total revenue to be approximately 3% to
6% below the prior year level due primarily to continued pricing
pressures on its U.S. viscosupplement business. Licensing,
milestone and contract revenue is expected to be flat for the year.
Total operating expenses are anticipated to be in the high $70
million to $80 million range. Adjusted EBITDA is expected to be in
the low $30 million range, which is based on anticipated U.S. GAAP
net income in the mid-teen to around $20 million range. Capital
expenditures are expected to be between $5 million and $8 million.
In 2019, the Company plans to continue advancing key ongoing
initiatives, including:
- Complete and begin implementation of
Anika’s 5-year strategic plan.
- Transform from a pure distributor model
business by establishing a hybrid commercial model in the U.S.,
with the goal to launch the Company’s first HA-based,
surgically-delivered regenerative therapy for bone repair
procedures in the second half of 2019.
- International expansion of Orthopedics
and Dermal product portfolios.
- Develop and finalize a regulatory
strategy for CINGAL in the U.S.
- Pursue strategic acquisitions and
partnerships to augment organic growth.
Non-GAAP OutlookThe Company is stating its expectations
regarding, and will report, its 2019 financial results with respect
to Adjusted EBITDA, which is a non-GAAP financial measure and
should not be considered an alternative to net income or other
measurements under generally accepted accounting principles (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 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 share-based compensation expense. The
Company is not providing a quantitative reconciliation of projected
Adjusted EBITDA to the corresponding GAAP information because the
GAAP measures that the Company excludes from its projected Adjusted
EBITDA are not available without unreasonable effort on a
forward-looking basis due to their unpredictability, high
variability, complexity, and low visibility. These excluded GAAP
measures include interest and other income, income taxes, and other
charges. Because these charges may vary materially, they will have
an unpredictable, and potentially significant, impact on our future
GAAP results.
Conference Call InformationAnika’s management will hold a
conference call and webcast to discuss its financial results and
business highlights today, Thursday, February 21 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®, 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 StatementsThe statements made in the
fifth and sixth sentences of the second paragraph, the fourth
bullet point in the section captioned “Recent Business Highlights,”
the third sentence in the section captioned “CINGAL FDA Update,”
and those made in the section captioned “Full Year 2019 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 long-term strategies and growth plans, the status and
completion of the Company’s 5-year strategic plan, the Company’s
expectations with respect to its 2019 financial performance, the
Company’s U.S. and international commercial efforts, the Company’s
plans related to, and the development and finalization of a
regulatory pathway for, CINGAL, and the Company’s pursuit of
strategic acquisitions and partnerships. 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 December 31,
For the Twelve Months Ended December 31, 2018
2017 2018 2017 Product revenue $ 26,950 $
28,884 $ 105,531 $ 107,783 Licensing, milestone and contract
revenue 6 504 24 5,637
Total revenue 26,956 29,388 105,555 113,420 Operating
expenses: Cost of product revenue 7,001 8,716 31,280
27,364
Research & development 4,064 4,266 18,190
18,787
Selling, general & administrative 6,129
6,678 34,336 21,540 Total operating expenses
17,194 19,660 83,806
67,691 Income from operations 9,762 9,728 21,749 45,729 Interest
and other income, net 551 138
1,458 473 Income before income taxes 10,313 9,866 23,207
46,202 Provision for income taxes 2,596 1,799
4,485 14,386 Net income $ 7,717 $ 8,067
$ 18,722 $ 31,816 Basic net income per share: Net
income $ 0.54 $ 0.55 $ 1.30 $ 2.18 Basic weighted average common
shares outstanding 14,168 14,596 14,442 14,575 Diluted net income
per share: Net income $ 0.54 $ 0.53 $ 1.27 $ 2.11 Diluted weighted
average common shares outstanding 14,299 15,141 14,689 15,068
Anika Therapeutics, Inc. and Subsidiaries
Consolidated Balance Sheets (in thousands, except per
share data) (unaudited)
December 31, December
31, ASSETS 2018 2017 Current assets: Cash,
cash equivalents and investments $ 159,014 $ 157,256 Accounts
receivable, net 20,775 23,825 Inventories, net 21,300 22,035
Prepaid expenses and other current assets 1,854
3,211 Total current assets 202,943 206,327 Property
and equipment, net 54,111 56,183 Other long-term assets 4,897 1,254
Intangible assets, net 9,191 10,635 Goodwill 7,851
8,218 Total assets $ 278,993 $ 282,617
LIABILITIES AND STOCKHOLDERS’ EQUITY Current
liabilities: Accounts payable $ 3,143 $ 6,747 Accrued expenses and
other current liabilities 8,146 6,326
Total current liabilities 11,289 13,073
Other long-term liabilities 550 660 Deferred tax liability 3,542
5,393 Commitments and contingencies Stockholders’ equity: Preferred
stock, $0.01 par value - - Common stock, $0.01 par value 142 147
Additional paid-in-capital 50,763 68,617 Accumulated other
comprehensive loss (5,526 ) (4,784 ) Retained earnings
218,233 199,511 Total stockholders’ equity
263,612 263,491 Total liabilities and
stockholders’ equity $ 278,993 $ 282,617
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 December 31, For the Twelve Months
Ended December 31, Product Line: 2018
% 2017 % 2018
% 2017 %
Orthobiologics $ 23,778 88 % $ 25,131 87 % $ 93,556 89 % $ 93,816
87 % Surgical 1,814 7 % 867 3 % 5,514 5 % 5,262 5 % Dermal 233 1 %
1,519 5 % 396 0 % 2,755 3 % Other 1,125 4 %
1,367 5 % 6,065 6 %
5,950 5 % Product Revenue $ 26,950
100 % $ 28,884 100 % $ 105,531
100 % $ 107,783 100 % Product Gross Profit $
19,949 $ 20,168 $ 74,251 $ 80,419 Product Gross Margin
74%
70% 70% 75%
Product Revenue by Geographic
Region (in thousands, except percentages) (unaudited)
For the Three Months Ended December 31, For the
Twelve Months Ended December 31, Geographic Region:
2018 % 2017
% 2018 % 2017
% United States $ 21,974 82 % $ 23,783 82 % $ 85,351
81 % $ 87,290 81 % Europe 2,709 10 % 2,692 9 % 11,730 11 % 12,435
12 % Other 2,267 8 % 2,409
9 % 8,450 8 % 8,058
7 % Product Revenue $ 26,950 100 % $ 28,884
100 % $ 105,531 100 % $ 107,783
100 %
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Anika Therapeutics, Inc.Joseph Darling, President &
CEOSylvia Cheung, CFOTel: 781-457-9000
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