- Third quarter 2020 net revenues of $53.0
million; net income of $0.4 million and diluted eps of $0.04 -
- Third quarter adjusted non-GAAP EBITDA of
$17.0 million and adjusted non-GAAP diluted eps of $0.97 -
- Cortrophin® Gel sNDA re-filing on track;
commercialization and operational launch readiness plan underway
-
- New CEO and Board members add breadth of
experience and strengthen capabilities to drive business growth
-
ANI Pharmaceuticals, Inc. (“ANI” or the “Company”)
(NASDAQ: ANIP) today announced business highlights and financial
results for the three and nine months ended September 30, 2020.
Business and Recent Highlights:
- Company’s supplemental New Drug Application (“sNDA”) for lead
product, Cortrophin Gel, re-filing on track; driving commercial and
operational readiness for a successful launch;
- Welcomed Nikhil Lalwani as President and CEO, on September 8,
2020; and
- Broadened Board of Directors’ scope of experience with addition
of two pharmaceutical industry leaders, Jeanne Thoma and Tony
Pera.
Third Quarter 2020 Financial Highlights:
- Net revenues for Q3 2020 were $53.0 million compared to $51.3
million in Q3 2019 and $48.5 million in Q2 2020.
- GAAP net income for Q3 2020 was $0.4 million, and diluted GAAP
earnings per share was $0.04.
- Adjusted non-GAAP EBITDA for Q3 2020 was $17.0 million.
- Adjusted non-GAAP diluted earnings per share for Q3 2020 was
$0.97.
- Cash and cash equivalents were $17.9 million, net accounts
receivable was $83.7 million, and debt was $187.9 million as of
September 30, 2020.
“My initial two months as CEO of ANI Pharmaceuticals have been
rewarding, as I have set forth to evaluate the state of the
business and begun to build plans for the next phase of ANI’s
growth. I have completed tours of our manufacturing facilities,
conducted dozens of one-on-ones and small group discussions with
our team, commercial customers, CDMO clients, key suppliers and
external stakeholders. All of these interactions have contributed
to understanding our challenges, and importantly, our opportunities
and what we need to do to realize their full potential. These
include the significant opportunity with Cortrophin Gel, a strong
North American manufacturing footprint that can be leveraged
further and a robust portfolio of ANDAs, several of which have
limited competition. In addition, the target-rich acquisition
environment will enable us to build on our strong track record of
pursuing accretive in-organic opportunities to enhance scale and
capabilities in our company. I am excited to lead ANI at this
important time in the company’s journey,” stated Nikhil Lalwani,
President and CEO.
Third Quarter 2020 Financial Results
Net Revenues
(in thousands)
Three Months Ended
September 30
2020
2019
Generic pharmaceutical products
$
37,712
$
31,753
Branded pharmaceutical products
12,411
16,605
Contract manufacturing
2,152
2,376
Royalty and other income
704
603
Total net revenues
$
52,979
$
51,337
Net revenues for generic pharmaceutical products were $37.7
million during the three months ended September 30, 2020, an
increase of 18.8% compared to $31.8 million for the same period in
2019, primarily due to the January 2020 launch of Miglustat,
Penicillamine, and Paliperidone, all products acquired from
Amerigen. The increases were tempered by declines in revenues of
Ezetimibe Simvastatin, Vancomycin Capsules, and Methazolamide.
Net revenues for branded pharmaceutical products were $12.4
million during the three months ended September 30, 2020, a
decrease of 25.3% compared to $16.6 million for the same period in
2019, primarily due to lower unit sales of Inderal XL and Innopran
XL and a decline in revenues of Atacand.
Contract manufacturing revenues were $2.2 million during the
three months ended September 30, 2020, a decrease of 9.4% compared
to $2.4 million for the same period in 2019, due to a decreased
volume of orders from contract manufacturing customers in the
period.
Royalty and other revenues were $0.7 million during the three
months ended September 30, 2020, an increase of $0.1 million from
$0.6 million for the same period in 2019, primarily due to an
increase in product development revenues earned by ANI Canada and
an increase in royalty revenues.
Operating expenses increased to $50.2 million for the three
months ended September 30, 2020, from $44.0 million in the prior
year period.
Cost of sales, excluding depreciation and amortization,
increased by $5.1 million to $20.1 million in the third quarter of
2020, primarily as a result of increased volumes related to a shift
in product mix toward generic products and increased sales of
products subject to profit-sharing arrangements.
Research and development expense decreased by $2.1 million in
the third quarter of 2020 to $2.9 million compared with $5.0
million in the third quarter of 2019, primarily due to a decrease
in expense related to the Cortrophin re-commercialization project.
The Company currently anticipates that Cortrophin-related expenses
in the fourth quarter of 2020 will be moderately higher than those
of the third quarter, as we continue to focus on our sNDA
resubmission efforts.
Selling, general and administrative expenses rose by $1.3
million in the third quarter of 2020 to $15.7 million compared to
$14.4 million in the comparable quarter in 2019. The increase
primarily reflects increased pharmacovigilance compliance costs in
continued support of the expansion of our commercial portfolio, and
increased legal, insurance and other professional fees.
Depreciation and amortization increased by $1.9 million in the
third quarter of 2020 to $11.4 million compared to $9.5 million in
the comparable quarter in 2019 due to amortization of the
Abbreviated New Drug Applications (“ANDAs”), and marketing and
distribution rights acquired in January 2020 from Amerigen and the
ANDA acquired in July 2020.
Net income for the third quarter of 2020 was $0.4 million as
compared to net income of $3.9 million in the prior year period.
Diluted earnings per share for the three months ended September 30,
2020 was $0.04, compared to diluted earnings per share of $0.32 in
the prior year period.
Adjusted non-GAAP diluted earnings per share was $0.97 in the
third quarter of 2020 compared to adjusted non-GAAP diluted
earnings per share of $1.23 in the prior year period.
For reconciliations of adjusted non-GAAP EBITDA and adjusted
non-GAAP diluted earnings per share to the most directly comparable
GAAP financial measure, please see Table 3 and Table 4,
respectively.
Liquidity
As of September 30, 2020, the Company had $17.9 million in
unrestricted cash and cash equivalents plus $83.7 million in net
accounts receivable. The Company had $187.9 million in outstanding
debt as of September 30, 2020.
Conference Call
As previously announced, ANI Pharmaceuticals management will
host its third quarter 2020 conference call as follows:
Date
Thursday, November 5, 2020
Time
10:30 a.m. ET
Toll free (U.S.)
(866) 776-8875
Webcast (live and replay)
www.anipharmaceuticals.com, under the “Investors” section
A replay of the conference call will be available within two
hours of the call’s completion and will remain accessible for one
week by dialing (800) 585-8367 and entering access code
7454258.
Non-GAAP Financial Measures
Adjusted non-GAAP EBITDA
ANI’s management considers adjusted non-GAAP EBITDA to be an
important financial indicator of ANI’s operating performance,
providing investors and analysts with a useful measure of operating
results unaffected by non-cash stock-based compensation and
differences in capital structures, tax structures, capital
investment cycles, ages of related assets, and compensation
structures among otherwise comparable companies. Management uses
adjusted non-GAAP EBITDA when analyzing Company performance.
Adjusted non-GAAP EBITDA is defined as net income, excluding tax
expense or benefit, interest expense, (net), other expense, (net),
depreciation, amortization, the excess of fair value over cost of
acquired inventory, non-cash stock-based compensation expense, CEO
transition expenses, expense from acquired in-process research and
development, transaction and integration expenses, Cortrophin
pre-launch charges, and certain other items that vary in frequency
and impact on ANI’s results of operations. Adjusted non-GAAP EBITDA
should be considered in addition to, but not in lieu of, net income
or loss reported under GAAP. A reconciliation of adjusted non-GAAP
EBITDA to the most directly comparable GAAP financial measure is
provided below.
Adjusted non-GAAP Net Income
ANI’s management considers adjusted non-GAAP net income to be an
important financial indicator of ANI’s operating performance,
providing investors and analysts with a useful measure of operating
results unaffected by the excess of fair value over cost of
acquired inventory sold, non-cash stock-based compensation, CEO
transition expenses, non-cash interest expense, depreciation and
amortization, Cortrophin pre-launch charges, acquired in-process
research and development (“IPR&D”) expense, transaction and
integration expenses and certain other items that vary in frequency
and impact on ANI’s results of operations. Management uses adjusted
non-GAAP net income when analyzing Company performance.
Adjusted non-GAAP net income is defined as net income, plus the
excess of fair value over cost of acquired inventory sold, non-cash
stock-based compensation expense, CEO transition expenses,
transaction and integration expenses, non-cash interest expense,
depreciation and amortization expense, expense from acquired
in-process research and development, Cortrophin pre-launch charges
and certain other items that vary in frequency and impact on ANI’s
results of operations, less the tax impact of these adjustments
calculated using an estimated statutory tax rate, and tax benefit
related to the ANI Canada transfer pricing agreement. Management
will continually analyze this metric and may include additional
adjustments in the calculation in order to provide further
understanding of ANI’s results. Adjusted non-GAAP net income should
be considered in addition to, but not in lieu of, net income
reported under GAAP. A reconciliation of adjusted non-GAAP net
income to the most directly comparable GAAP financial measure is
provided below.
Adjusted non-GAAP Diluted Earnings per Share
ANI’s management considers adjusted non-GAAP diluted earnings
per share to be an important financial indicator of ANI’s operating
performance, providing investors and analysts with a useful measure
of operating results unaffected by the excess of fair value over
cost of acquired inventory sold, non-cash stock-based compensation,
CEO transition expenses, non-cash interest expense, depreciation
and amortization, Cortrophin pre-launch charges, acquired IPR&D
expense, transaction and integration expenses and certain other
items that vary in frequency and impact on ANI’s results of
operations. Management uses adjusted non-GAAP diluted earnings per
share when analyzing Company performance.
Adjusted non-GAAP diluted earnings per share is defined as
adjusted non-GAAP net income, as defined above, divided by the
diluted weighted average shares outstanding during the period, as
adjusted for the dilutive effect of the convertible debt notes (in
2019), when applicable. Management will continually analyze this
metric and may include additional adjustments in the calculation in
order to provide further understanding of ANI’s results. Adjusted
non-GAAP diluted earnings per share should be considered in
addition to, but not in lieu of, diluted earnings or loss per share
reported under GAAP. A reconciliation of adjusted non-GAAP diluted
earnings per share to the most directly comparable GAAP financial
measure is provided below.
About ANI
ANI Pharmaceuticals, Inc. is an integrated specialty
pharmaceutical company developing, manufacturing, and marketing
branded and generic prescription pharmaceuticals. The Company's
targeted areas of product development currently include narcotics,
oncolytics (anti-cancers), hormones and steroids, and complex
formulations involving extended release and combination products.
For more information, please visit our website
www.anipharmaceuticals.com.
Forward-Looking Statements
To the extent any statements made in this release relate to
information that is not historical, these are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Such statements include, but are not limited
to, statements about the Company’s future operations, products,
financial position, operating results and prospects, including
plans for growth, the Company’s pipeline or potential markets
therefor, plans for existing ANDAs, timing for submission of a sNDA
for Cortrophin Gel and commercialization plans, and other
statements that are not historical in nature, particularly those
that utilize terminology such as “anticipates,” “will,” “expects,”
“plans,” “potential,” “future,” “believes,” “intends,” “continue,”
other words of similar meaning, derivations of such words and the
use of future dates.
Uncertainties and risks may cause the Company’s actual results
to be materially different than those expressed in or implied by
such forward-looking statements. Uncertainties and risks include,
but are not limited to, the risk that the Company may face with
respect to importing raw materials; the use of single source
suppliers and the time it may take to validate and qualify another
supplier, if necessary; increased competition and strategies
employed by competitors; the ability to realize benefits
anticipated from acquisitions; costs and regulatory requirements
relating to contract manufacturing arrangements; delays or failure
in obtaining product approvals from the U.S. Food and Drug
Administration; general business and economic conditions, including
the ongoing impact of the COVID-19 pandemic; market trends for our
products; regulatory environment and changes; and regulatory and
other approvals relating to product development and
manufacturing.
More detailed information on these and additional factors that
could affect the Company’s actual results are described in the
Company’s filings with the Securities and Exchange Commission,
including its most recent Annual Report on Form 10-K and quarterly
reports on Form 10-Q. All forward-looking statements in this news
release speak only as of the date of this news release and are
based on the Company’s current beliefs, assumptions, and
expectations. Except as required by law, the Company undertakes no
obligation to update or revise any forward-looking statement,
whether as a result of new information, future events or
otherwise.
Financial Tables Follow
ANI Pharmaceuticals, Inc. and
Subsidiaries
Table 1: US GAAP Statement of
Operations
(unaudited, in thousands, except
per share amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2020
2019
2020
2019
Net Revenues
$
52,979
$
51,337
$
151,223
$
158,581
Operating Expenses Cost of sales (excl. depreciation and
amortization)
20,118
15,002
62,617
45,359
Research and development
2,939
4,982
12,318
15,128
Selling, general, and administrative
15,725
14,357
50,621
41,829
Depreciation and amortization
11,358
9,473
33,739
35,048
Cortrophin pre-launch charges
37
195
8,275
195
Total Operating Expenses
50,177
44,009
167,570
137,559
Operating Income/(Loss)
2,802
7,328
(16,347
)
21,022
Other Expense, Net Interest expense, net
(2,510
)
(3,336
)
(6,898
)
(10,096
)
Other expense, net
(229
)
(33
)
(335
)
(117
)
Income/(Loss) Before Benefit/(Provision) for Income Taxes
63
3,959
(23,580
)
10,809
Benefit/(provision) for income taxes
371
(64
)
4,667
120
Net Income/(Loss)
$
434
$
3,895
$
(18,913
)
$
10,929
Basic and Diluted Earnings/(Loss) Per Share: Basic
Earnings/(Loss) Per Share
$
0.04
$
0.32
$
(1.58
)
$
0.91
Diluted Earnings/(Loss) Per Share
$
0.04
$
0.32
$
(1.58
)
$
0.89
Basic Weighted-Average Shares Outstanding
11,991
11,879
11,953
11,826
Diluted Weighted-Average Shares Outstanding
12,003
12,085
11,953
12,060
ANI Pharmaceuticals, Inc. and
Subsidiaries
Table 2: US GAAP Balance
Sheets
(unaudited, in thousands)
September 30, 2020
December 31, 2019
Current Assets Cash and cash equivalents
$
17,900
$
62,332
Accounts receivable, net
83,745
72,129
Inventories, net
59,195
48,163
Prepaid income taxes
1,621
1,076
Prepaid expenses and other current assets
3,358
3,995
Total Current Assets
165,819
187,695
Property and equipment, net
40,444
40,551
Restricted cash
5,003
5,029
Deferred tax assets, net of deferred tax liabilities and valuation
allowance
48,130
38,326
Intangible assets, net
198,620
180,388
Goodwill
3,580
3,580
Other non-current assets
985
1,220
Total Assets
$
462,581
$
456,789
Current Liabilities Current debt, net of deferred financing
costs
$
12,785
$
9,941
Accounts payable
13,460
14,606
Accrued expenses and other
2,534
2,362
Accrued royalties
6,088
5,084
Accrued compensation and related expenses
5,993
3,736
Accrued government rebates
11,678
8,901
Returned goods reserve
23,250
16,595
Deferred revenue
112
451
Total Current Liabilities
75,900
61,676
Non-current debt, net of deferred financing costs and
current component
175,161
175,808
Derivatives and other non-current liabilities
16,420
6,514
Total Liabilities
267,481
243,998
Stockholders' Equity Common stock
1
1
Treasury stock
(2,246
)
(723
)
Additional paid-in capital
211,792
200,800
(Accumulated deficit)/retained earnings
(1,337
)
17,584
Accumulated other comprehensive loss, net of tax
(13,110
)
(4,871
)
Total Stockholders' Equity
195,100
212,791
Total Liabilities and Stockholders' Equity
$
462,581
$
456,789
ANI Pharmaceuticals, Inc. and Subsidiaries Table
3: Adjusted non-GAAP EBITDA Calculation and US GAAP to Non-GAAP
Reconciliation (unaudited, in thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2020
2019
2020
2019
Net Income/(Loss)
$
434
$
3,895
$
(18,913
)
$
10,929
Add/(Subtract): Interest expense, net
2,510
3,336
6,898
10,096
Other expense, net
229
33
335
117
Benefit/(provision) for income taxes
(371
)
64
(4,667
)
(120
)
Depreciation and amortization
11,358
9,473
33,739
35,048
Cortrophin pre-launch charges
37
195
8,275
195
Expensed FDA approval milestone payment
-
329
-
329
Stock-based compensation(1)
2,383
2,470
7,078
6,773
CEO transition items(2)
204
-
7,349
-
Cortrophin team restructuring
-
-
401
-
Acquired IPR&D expense
-
-
3,784
2,324
Excess of fair value over cost of acquired inventory
111
-
4,183
-
Asset impairments(3)
92
-
884
-
Charges related to market exits
-
-
567
-
Transaction and integration expenses
-
-
-
84
Adjusted non-GAAP EBITDA
$
16,987
$
19,795
$
49,913
$
65,775
(1) For the nine months ended September 30, 2020,
Stock-based compensation excludes $3.4 million of stock-based
compensation expense associated with the departure of our former
President and CEO. This amount is included in this table as part of
CEO transition items. (2) CEO transition items for the nine
months ended September 30, 2020 is comprised of $3.4 million of
stock-based compensation expense and $3.1 million of expense for
salary continuation, bonus and other fringe benefits associated
with the departure of our former President and CEO, as well as
certain legal and recruiting costs related to the search for a
permanent replacement. (3) For the nine months ended
September 30, 2020, Asset impairments is comprised of finished
goods inventory reserves for Bretylium and accounts receivable
reserves due to customer bankruptcy, tempered by a modest recovery
of previously reserved inventory related to market exits.
ANI Pharmaceuticals, Inc. and
Subsidiaries
Table 4: Adjusted non-GAAP Net
Income and Adjusted non-GAAP Diluted Earnings per Share
Reconciliation
(unaudited, in thousands, except
per share amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2020
2019
2020
2019
Net Income/(Loss)
$
434
$
3,895
$
(18,913
)
$
10,929
Add/(Subtract): Non-cash interest expense
565
1,871
1,222
5,525
Depreciation and amortization expense
11,358
9,473
33,739
35,048
Cortrophin pre-launch charges
37
195
8,275
195
Expensed FDA approval milestone payment
-
329
-
329
Acquired IPR&D expense
-
-
3,784
2,324
Stock-based compensation(1)
2,383
2,470
7,078
6,773
CEO transition items(2)
204
-
7,349
-
Cortrophin team restructuring
-
-
401
-
Asset impairments(3)
92
-
884
-
Excess of fair value over cost of acquired inventory
111
-
4,183
-
Charges related to market exits
-
-
567
-
Transaction and integration expenses
-
-
-
84
Less: Tax impact of adjustments
(3,540
)
(3,441
)
(16,196
)
(12,067
)
Discrete tax benefit related to ANI Canada transfer pricing
agreement
-
-
-
(1,653
)
Adjusted Non-GAAP Net Income
$
11,644
$
14,792
$
32,373
$
47,487
Diluted Weighted-Average Shares Outstanding
12,003
12,085
11,953
12,060
Less: Dilutive Effect of Notes
-
(78
)
-
(128
)
Adjusted Diluted Weighted-Average Shares Outstanding
12,003
12,007
11,977
11,932
Adjusted Non-GAAP Diluted Earnings per Share
$
0.97
$
1.23
$
2.70
$
3.98
(1) For the nine months ended September 30, 2020,
Stock-based compensation excludes $3.4 million of stock-based
compensation expense associated with the departure of our former
President and CEO. This amount is included in this table as part of
CEO transition items. (2) CEO transition items for the nine
months ended September 30, 2020 is comprised of $3.4 million of
stock-based compensation expense and $3.1 million of expense for
salary continuation, bonus and other fringe benefits associated
with the departure of our former President and CEO, as well as
certain legal and recruiting costs related to the search for a
permanent replacement. (3) For the nine months ended
September 30, 2020, Asset impairments is comprised of finished
goods inventory reserves for Bretylium and accounts receivable
reserves due to customer bankruptcy, tempered by a modest recovery
of previously reserved inventory related to market exits.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201105005273/en/
Investor Relations: Lisa M. Wilson, In-Site Communications, Inc.
T: 212-452-2793 E: lwilson@insitecony.com
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