Akorn, Inc. (Nasdaq: AKRX), a leading specialty pharmaceutical
company, today announced its financial results for the quarter and
year ended December 31, 2019.
Fourth Quarter 2019 Results and Recent
Developments
- Net revenue was $162 million, an increase of $9 million, or
5.8%, compared to the fourth quarter of 2018.
- Net loss was $81 million compared to a net loss of $215 million
in the fourth quarter of 2018.
- Adjusted EBITDA was $18 million compared to $(20) million in
the fourth quarter of 2018.
- Reached an agreement with our lenders to execute a sale
of Akorn’s business, potentially using Chapter 11
protection, as previously disclosed on the Company’s Form 8-K filed
on February 12, 2020.
Douglas Boothe, Akorn’s President and Chief Executive Officer,
stated, “Our fourth quarter and full year 2019 results reflect the
operational progress achieved throughout the course of the year. As
we move forward through the sale process, we will continue to
fulfill contractual obligations to suppliers and customers and
deliver safe and effective pharmaceutical products for patients
that depend on them.”
Summary Financial Results for the Quarter Ended December
31, 2019:
Akorn reported net revenue of $162.3 million for the three month
period ended December 31, 2019, representing an increase of
$8.9 million, or 5.8%, as compared to net revenue of $153.4 million
for the three month period ended December 31, 2018. The
increase in net revenue in the period was primarily due to
increases of $8.7 million and $4.4 million in organic revenue and
new products, respectively, partially offset by a decline in
discontinued products revenue of $4.2 million. The $8.7
million increase in organic revenue was due to approximately $14.5
million, or 9.8% of favorable price variance primarily due to price
increases on certain exclusive products partially offset by $5.8
million, or 3.9% in volume decline. The volume decline was
principally due to the effect of competition on a number of
products, including Myorisan® and Amicar® Tablets.
Consolidated gross profit for the quarter ended
December 31, 2019 was $59.8 million, or 36.9% of net revenue,
compared to $25.2 million, or 16.5% of net revenue, in the
corresponding prior year quarter. The increase in the gross
profit percentage was principally due to favorable price and
decreased costs associated with FDA compliance related improvement
activities, partially offset by unfavorable product mix.
GAAP net loss for the fourth quarter 2019 was $(80.7) million,
or $(0.64) per diluted share, compared to GAAP net loss of $(215.0)
million, or $(1.71) per diluted share, in the same quarter of
2018. Including a net adjustment of $71.9 million to net
income for non-GAAP items, adjusted diluted earnings per share for
the fourth quarter 2019 were $(0.07), compared to $(0.29) in the
same quarter 2018, after a net adjustment of $179.2 million to net
income for non-GAAP items.
Earnings before interest, taxes, depreciation and amortization
(EBITDA) was $(42.5) million for the fourth quarter 2019, compared
to $(174.1) million for the fourth quarter 2018. Adjusted
EBITDA, which is a non-GAAP measure used by management to evaluate
the operations of the Akorn business, was $17.6 million for the
fourth quarter 2019, compared to $(19.9) million for the fourth
quarter 2018. See “Non-GAAP Financial Measures” below.
Summary Financial Results for the Year Ended December
31, 2019:
Akorn reported net revenue was $682.4 million for the year ended
December 31, 2019, representing a decrease of $11.6 million, or
1.7%, as compared to net revenue of $694.0 million for the year
ended December 31, 2018. The decrease in net revenue in
the period was primarily due to $19.4 million and $4.2 million
decline in discontinued products revenue and organic revenue,
respectively, partially offset by $12.0 million increase in net
revenue from new products. The $19.4 million decline in
discontinued products was primarily due to the product Methylene
Blue. The $4.2 million decline in organic revenue was due to
approximately $81.1 million, or 12.2%, in volume declines mostly
offset by $76.9 million, or 11.6% of favorable price
variance primarily due to price increases on certain exclusive
products. The volume decline was principally due to the
effect of competition on a number of products, including Amicar®
Tablets, Fluticasone Rx, Nembutal and Clobetasol Cream as well as
supply shortfalls from the continued production ramp-up at our
Somerset manufacturing facility.
Consolidated gross profit for the year ended December 31,
2019 was $252.7 million, or 37.0% of revenue, compared to $246.0
million, or 35.4% of revenue, for the year ended December 31,
2018. The increase in the gross profit percentage was
principally due to favorable price partially offset by unfavorable
product mix and increased costs associated with FDA compliance
related improvement activities.
GAAP net loss for 2019 was $(226.8) million, or $(1.80) per
diluted share, compared to net loss of $(401.9) million, or $(3.21)
per diluted share, for 2018. After a net adjustment of $205.2
million to net income for non-GAAP items, adjusted diluted earnings
per share for 2019 were $(0.17), compared to $(0.19) for 2018,
after a net adjustment of $378.2 million to net income for non-GAAP
items.
EBITDA was $(148.1) million for 2019, compared to $(309.5)
million for 2018. Adjusted EBITDA, which is a non-GAAP
measure used by management to evaluate the performance of the Akorn
business, was $78.2 million for 2019, compared to $49.3 million for
2018. See “Non-GAAP Financial Measures” below.
About Akorn:
Akorn, Inc. is a specialty 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 loss, (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 these measures in 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 loss before net interest expense, provision (benefit) for
income taxes and depreciation and amortization.
Adjusted EBITDA, as defined by the Company, is
calculated as follows:
Net loss, (minus) plus:
Interest expense, netProvision
(benefit) for income taxesDepreciation 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, employee retention expense, legal
and financial advisory fees, fixed asset impairment, executive
termination expenses, data integrity investigations &
assessment, gain on disposal of fixed assets, andFresenius
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), as defined by the Company,
is calculated as follows:
Net (loss), (minus) plus:
Amortization expenseNon-cash
expenses, such as impairment of long-lived assets, share-based
compensation expense, and amortization of deferred financing
costsOther adjustments, such as legal settlements, restatement
expenses and various merger and acquisition-related expenses,
employee retention expense, legal and financial advisory fees,
fixed asset impairment, executive termination expenses, data
integrity investigations & assessment, gain on disposal of
fixed assets, andFresenius transaction & litigationLess an
estimated tax (benefit) provision, net of the benefit from
utilizing net operating loss carry-forwards effected for the
adjustments noted above
Adjusted diluted (loss) per share, as defined
by the Company, is equal to adjusted net (loss) divided by the
actual or anticipated diluted share count for the applicable
period. The Company believes that adjusted net (loss) and
adjusted diluted (loss) 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.
Net debt, as defined by the Company, is gross
debt including Akorn’s term loan less cash and cash
equivalents.
Net debt to adjusted EBITDA ratio, as defined
by the Company, is net debt divided by the trailing twelve months
adjusted EBITDA.
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 (loss) 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 contains statements that may constitute
“forward-looking statements”, including statements regarding the
Company’s business plan, financial performance and the path and
milestones for executing a sale of Akorn’s business,
potentially through the filing of Chapter 11 cases under the U.S.
Bankruptcy Code. You can identify forward-looking statements
by terminology such as “may,” “should,” “will,” “expect,”
“continue,” “believe,” “seek,” “anticipate,” “estimate,” “intend,”
“could,” “would,” “potential,” or the negative of such terms or
other similar expressions. 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 the Company 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 of Chancery’s
October 1, 2018 decision against the Company and
the Delaware Supreme Court’s December 7, 2018 order
affirming the Chancery Court’s decision on the Company'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 against the
defendants or related to the Chancery Court’s decision and Delaware
Supreme Court’s affirmation may result in significant costs of
defense, indemnification and/or liability, (iii) the outcome of the
investigation conducted by the Company, with the assistance of
outside consultants, into alleged breaches of FDA data
integrity requirements relating to product development at the
Company and any actions taken by the Company, 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,
(vii) the Company’s increased indebtedness and compliance with
certain covenants and other obligations under the Second Amendment
to Standstill Agreement and Third Amendment to Credit Agreement
(the “Second Amended Standstill Agreement”), which create material
uncertainties and risks to its growth and business
outlook, (viii) the Company’s obligation under the Second
Amended Standstill Agreement to pay certain fees and expenses and
increased interest margin, (ix) the Company’s exploration of
strategic alternatives, including the alternatives of seeking to
restructure its indebtedness and/or implement a strategic
transaction (including a sale of its assets) with the protections
of a filing under Chapter 11 of the U.S. Bankruptcy Code, (x) the
risk that the holders of a significant number of shares have opted
out of and elected not to participate in or be bound by the
settlement agreement with the putative class members in the pending
securities class action (the “Settlement Agreement”), (xi) the risk
that the Settlement Agreement may not obtain the necessary approval
by the court or may be terminated in accordance with its terms,
(xii) the risk that insurance proceeds, common shares or other
consideration contemplated to be exchanged pursuant to the proposed
settlement is not available at the appropriate time and (xiii) such
other risks and uncertainties outlined in the risk factors detailed
in Part I, Item 1A, “Risk Factors,” of the Company's Annual Report
on Form 10-K for the fiscal year ended December 31,
2019 (as filed with the Securities and Exchange
Commission (“SEC”) on February 26, 2020) and other risk
factors identified from time to time in the Company’s filings with
the SEC. Readers should carefully review these risk
factors, and should not place undue reliance on the Company's
forward-looking statements. These forward-looking statements
are based on information, plans and estimates at the date of this
report. The Company 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)(In Thousands,
Except Per Share Data)
| |
Three Months Ended December 31, |
|
Year Ended December 31, |
| |
2019 |
|
2018 |
|
2019 |
|
2018 |
|
REVENUES |
$ |
162,257 |
|
|
$ |
153,386 |
|
|
$ |
682,429 |
|
|
$ |
694,018 |
|
| Cost of sales (exclusive of
amortization of intangibles, included within operating expenses
below) |
102,450 |
|
|
128,139 |
|
|
429,723 |
|
|
448,002 |
|
| GROSS PROFIT |
59,807 |
|
|
25,247 |
|
|
252,706 |
|
|
246,016 |
|
| Selling, general and
administrative expenses |
84,781 |
|
|
69,800 |
|
|
273,871 |
|
|
279,749 |
|
| Research and development
expenses |
9,957 |
|
|
10,867 |
|
|
37,500 |
|
|
47,321 |
|
| Amortization of
intangibles |
9,375 |
|
|
13,487 |
|
|
39,765 |
|
|
53,472 |
|
| Impairment of goodwill |
— |
|
|
— |
|
|
15,955 |
|
|
— |
|
| Impairment of intangible
assets |
18,749 |
|
|
118,088 |
|
|
29,497 |
|
|
231,086 |
|
| Litigation rulings,
settlements and contingencies |
(19,075 |
) |
|
8,870 |
|
|
44,179 |
|
|
22,814 |
|
|
TOTAL OPERATING EXPENSES |
103,787 |
|
|
221,112 |
|
|
440,767 |
|
|
634,442 |
|
|
OPERATING (LOSS) |
(43,980 |
) |
|
(195,865 |
) |
|
(188,061 |
) |
|
(388,426 |
) |
| Amortization of deferred
financing costs |
(16,014 |
) |
|
(1,304 |
) |
|
(31,554 |
) |
|
(5,216 |
) |
| Interest expense, net |
(18,703 |
) |
|
(13,569 |
) |
|
(69,353 |
) |
|
(45,900 |
) |
| Other non-operating income,
net |
384 |
|
|
1,378 |
|
|
1,190 |
|
|
1,360 |
|
| (LOSS) BEFORE INCOME
TAXES |
(78,313 |
) |
|
(209,360 |
) |
|
(287,778 |
) |
|
(438,182 |
) |
| Income tax provision
(benefit) |
2,347 |
|
|
5,678 |
|
|
(61,008 |
) |
|
(36,273 |
) |
|
NET (LOSS) |
$ |
(80,660 |
) |
|
$ |
(215,038 |
) |
|
$ |
(226,770 |
) |
|
$ |
(401,909 |
) |
| NET (LOSS) PER COMMON
SHARE: |
|
|
|
|
|
|
|
|
NET (LOSS), BASIC AND DILUTED |
$ |
(0.64 |
) |
|
$ |
(1.71 |
) |
|
$ |
(1.80 |
) |
|
$ |
(3.21 |
) |
| SHARES USED IN COMPUTING NET
(LOSS) PER COMMON SHARE: |
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE BASIC AND DILUTED |
126,146 |
|
|
125,083 |
|
|
125,977 |
|
|
125,383 |
|
| COMPREHENSIVE (LOSS): |
|
|
|
|
|
|
|
|
Net (loss) |
$ |
(80,660 |
) |
|
$ |
(215,038 |
) |
|
$ |
(226,770 |
) |
|
$ |
(401,909 |
) |
|
Unrealized holding (loss) gain on available-for-sale securities,
net of tax of $1 and $6 for the years ended December 31, 2019
and 2018, respectively. |
(2 |
) |
|
(12 |
) |
|
(5 |
) |
|
(21 |
) |
|
Foreign currency translation (loss) gain for the years ended
December 31, 2019 and 2018, respectively. |
512 |
|
|
3,866 |
|
|
(667 |
) |
|
(8,001 |
) |
|
Pension liability adjustment (loss) gain, net of tax of $787 and
$389 for the year ended December 31, 2019 and 2018,
respectively. |
(3,213 |
) |
|
(1,541 |
) |
|
(3,100 |
) |
|
(1,529 |
) |
| COMPREHENSIVE (LOSS) |
$ |
(83,363 |
) |
|
$ |
(212,725 |
) |
|
$ |
(230,542 |
) |
|
$ |
(411,460 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AKORN, INC.CONSOLIDATED
BALANCE SHEETS(In Thousands, Except Share
Data)
| |
December 31, |
| |
2019 |
|
2018 |
| ASSETS |
|
|
|
| CURRENT ASSETS |
|
|
|
|
Cash and cash equivalents |
$ |
144,804 |
|
|
$ |
224,868 |
|
|
Trade accounts receivable, net |
134,173 |
|
|
153,126 |
|
|
Inventories, net |
170,047 |
|
|
173,645 |
|
|
Prepaid expenses and other current assets |
31,023 |
|
|
32,180 |
|
|
TOTAL CURRENT ASSETS |
480,047 |
|
|
583,819 |
|
| PROPERTY, PLANT AND EQUIPMENT,
NET |
295,533 |
|
|
334,853 |
|
| OTHER LONG-TERM ASSETS |
|
|
|
|
Goodwill |
267,923 |
|
|
283,879 |
|
|
Intangible assets, net |
215,801 |
|
|
284,976 |
|
|
Right-of-use assets, net - Operating leases |
22,445 |
|
|
— |
|
|
Other non-current assets |
6,890 |
|
|
7,730 |
|
|
TOTAL OTHER LONG-TERM ASSETS |
513,059 |
|
|
576,585 |
|
|
TOTAL ASSETS |
$ |
1,288,639 |
|
|
$ |
1,495,257 |
|
| LIABILITIES AND SHAREHOLDERS’
EQUITY |
|
|
|
| CURRENT LIABILITIES |
|
|
|
|
Trade accounts payable |
$ |
44,958 |
|
|
$ |
39,570 |
|
|
Accrued royalties |
5,956 |
|
|
6,786 |
|
|
Accrued compensation |
13,005 |
|
|
19,745 |
|
|
Current portion of long-term debt (net of deferred financing
costs) |
843,328 |
|
|
— |
|
|
Accrued administrative fees |
31,725 |
|
|
36,767 |
|
|
Current portion of accrued legal fees and contingencies |
23,673 |
|
|
52,413 |
|
|
Current portion of lease liability - Operating leases |
2,290 |
|
|
— |
|
|
Accrued expenses and other liabilities |
20,652 |
|
|
15,542 |
|
|
TOTAL CURRENT LIABILITIES |
985,587 |
|
|
170,823 |
|
| LONG-TERM LIABILITIES |
|
|
|
|
Long-term debt (net of non-current deferred financing costs) |
— |
|
|
820,411 |
|
|
Deferred tax liability |
225 |
|
|
566 |
|
|
Uncertain tax liabilities |
2,633 |
|
|
49,990 |
|
|
Long-term lease liability - Operating leases |
22,021 |
|
|
— |
|
|
Long-term portion of accrued legal fees and contingencies |
33,000 |
|
|
— |
|
|
Pension obligations and other liabilities |
10,881 |
|
|
9,601 |
|
|
TOTAL LONG-TERM LIABILITIES |
68,760 |
|
|
880,568 |
|
|
TOTAL LIABILITIES |
1,054,347 |
|
|
1,051,391 |
|
| SHAREHOLDERS’ EQUITY |
|
|
|
|
Preferred stock, $1 par value —5,000,000 shares authorized; no
shares issued or outstanding at December 31, 2019 and 2018 |
— |
|
|
— |
|
|
Common stock, no par value — 150,000,000 shares authorized;
126,145,832 and 125,492,373 shares issued and outstanding at
December 31, 2019 and 2018 |
595,521 |
|
|
574,553 |
|
|
Accumulated deficit |
(333,938 |
) |
|
(107,168 |
) |
|
Accumulated other comprehensive (loss) |
(27,291 |
) |
|
(23,519 |
) |
|
TOTAL SHAREHOLDERS’ EQUITY |
234,292 |
|
|
443,866 |
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ |
1,288,639 |
|
|
$ |
1,495,257 |
|
|
|
|
|
|
|
|
|
|
AKORN, INC.CONSOLIDATED
STATEMENTS OF CASH FLOWS(In
Thousands)
| |
Year ended December 31, |
| |
2019 |
|
2018 |
| OPERATING ACTIVITIES: |
|
|
|
|
Net (loss) |
$ |
(226,770 |
) |
|
$ |
(401,909 |
) |
|
Depreciation and amortization |
70,300 |
|
|
82,805 |
|
|
Impairment of intangible assets |
29,497 |
|
|
231,086 |
|
|
Goodwill impairment |
15,955 |
|
|
— |
|
|
Fixed asset impairment and other |
39,894 |
|
|
6,135 |
|
|
Amortization of debt financing costs |
31,554 |
|
|
5,216 |
|
|
Non-cash stock compensation expense |
21,281 |
|
|
21,503 |
|
|
Non-cash interest expense |
3,626 |
|
|
— |
|
|
Deferred income taxes, net |
(339 |
) |
|
(37,396 |
) |
|
Other |
(32 |
) |
|
421 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
Trade accounts receivable, net |
18,879 |
|
|
(11,627 |
) |
|
Inventories, net |
3,877 |
|
|
9,694 |
|
|
Prepaid expenses and other current assets |
(1,075 |
) |
|
3,847 |
|
|
Other non-current assets |
1,229 |
|
|
(3,120 |
) |
|
Trade accounts payable |
5,490 |
|
|
(5,002 |
) |
|
Accrued legal fees and contingencies |
4,260 |
|
|
24,120 |
|
|
Uncertain tax liabilities |
(47,357 |
) |
|
9,690 |
|
|
Accrued expenses and other liabilities |
(7,188 |
) |
|
(4,357 |
) |
| NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES |
(36,919 |
) |
|
(68,894 |
) |
| INVESTING ACTIVITIES: |
|
|
|
| Proceeds from disposal of
assets |
132 |
|
|
30 |
|
| Payments for intangible
assets |
(87 |
) |
|
(50 |
) |
| Purchases of property, plant
and equipment |
(30,447 |
) |
|
(69,111 |
) |
| NET CASH (USED IN) INVESTING
ACTIVITIES |
(30,402 |
) |
|
(69,131 |
) |
| FINANCING ACTIVITIES: |
|
|
|
| Proceeds from the exercise of
stock options |
— |
|
|
546 |
|
| Stock compensation plan
withholdings for employee taxes |
(313 |
) |
|
(777 |
) |
| Payments of contingent
acquisition liabilities |
— |
|
|
(4,793 |
) |
| Debt financing costs |
(12,263 |
) |
|
— |
|
| Lease Payments |
(352 |
) |
|
(14 |
) |
| NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES |
(12,928 |
) |
|
(5,038 |
) |
| Effect of changes in exchange
rate changes on cash and cash equivalents |
62 |
|
|
(1,032 |
) |
| (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS |
(80,187 |
) |
|
(144,095 |
) |
| CASH, CASH EQUIVALENTS, AND
RESTRICTED CASH AT BEGINNING OF YEAR |
225,794 |
|
|
369,889 |
|
| CASH, CASH EQUIVALENTS, AND
RESTRICTED CASH AT END OF YEAR |
$ |
145,607 |
|
|
$ |
225,794 |
|
| |
|
|
|
|
|
|
|
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, |
| |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
NET (LOSS) |
$ |
(80,660 |
) |
|
$ |
(215,038 |
) |
|
$ |
(226,770 |
) |
|
$ |
(401,909 |
) |
| |
|
|
|
|
|
|
|
|
| ADJUSTMENTS TO
ARRIVE AT EBITDA: |
|
|
|
|
|
|
|
| |
Interest expense, net |
18,703 |
|
|
13,569 |
|
|
69,353 |
|
|
45,900 |
|
| |
Amortization expense |
9,380 |
|
|
13,487 |
|
|
39,825 |
|
|
53,472 |
|
| |
Depreciation expense |
7,683 |
|
|
8,217 |
|
|
30,475 |
|
|
29,333 |
|
| |
Income tax provision
(benefit) |
2,347 |
|
|
5,678 |
|
|
(61,008 |
) |
|
(36,273 |
) |
| EBITDA |
$ |
(42,547 |
) |
|
$ |
(174,087 |
) |
|
$ |
(148,125 |
) |
|
$ |
(309,477 |
) |
| |
|
|
|
|
|
|
|
|
| NON-CASH AND OTHER
NON-RECURRING INCOME AND EXPENSES |
|
|
|
|
|
|
|
| |
Impairment of fixed assets and
other |
29,509 |
|
|
6,081 |
|
|
39,894 |
|
|
6,058 |
|
| |
Amortization of deferred
financing costs |
16,014 |
|
|
1,304 |
|
|
31,554 |
|
|
5,216 |
|
| |
Impairment of intangible
assets |
18,749 |
|
|
118,088 |
|
|
29,497 |
|
|
231,086 |
|
| |
Non-cash stock compensation
expense |
5,246 |
|
|
4,304 |
|
|
21,281 |
|
|
21,503 |
|
| |
Impairment of goodwill |
— |
|
|
— |
|
|
15,955 |
|
|
— |
|
| |
(Gain) on disposal of fixed
assets |
(2 |
) |
|
— |
|
|
(32 |
) |
|
(201 |
) |
| |
Litigation rulings,
settlements and contingencies |
(19,075 |
) |
|
3,870 |
|
|
44,179 |
|
|
17,814 |
|
| |
Legal and financial advisory
fees |
4,877 |
|
|
— |
|
|
16,425 |
|
|
— |
|
| |
Data integrity investigations
& assessment |
1,327 |
|
|
6,021 |
|
|
12,006 |
|
|
28,420 |
|
| |
Fresenius transaction &
Securities Class Action Litigation |
1,817 |
|
|
8,315 |
|
|
7,952 |
|
|
42,939 |
|
| |
Employee retention
expense |
1,264 |
|
|
(12 |
) |
|
6,420 |
|
|
366 |
|
| |
Executive termination
expenses |
401 |
|
|
6,455 |
|
|
1,236 |
|
|
6,455 |
|
| |
Merger and acquisition-related
expenses |
6 |
|
|
22 |
|
|
33 |
|
|
121 |
|
| |
Restatement expenses |
— |
|
|
(272 |
) |
|
(26 |
) |
|
(1,018 |
) |
| ADJUSTED
EBITDA |
$ |
17,586 |
|
|
$ |
(19,911 |
) |
|
$ |
78,249 |
|
|
$ |
49,282 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, |
| |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
FDA compliance related expenses |
$ |
7,738 |
|
|
$ |
12,517 |
|
|
$ |
35,145 |
|
|
$ |
22,251 |
|
| |
Failure to supply penalties
(recorded as a contra-revenue) |
3,113 |
|
|
7,462 |
|
|
12,738 |
|
|
22,453 |
|
| |
India costs |
$ |
1,264 |
|
|
$ |
1,705 |
|
|
$ |
6,409 |
|
|
$ |
7,986 |
|
| |
TheraTears® direct-to-consumer
advertising campaign |
1,536 |
|
|
6,219 |
|
|
5,486 |
|
|
17,393 |
|
AKORN,
INC.Reconciliation of GAAP Net (Loss) to Non-GAAP
Adjusted Net (Loss) andAdjusted Diluted (Loss) Per
Share(In Thousands, Except Per Share
Data)
| |
Three Months Ended |
|
Year Ended |
| |
December 31, |
|
December 31, |
| |
2019 |
|
2018 |
|
2019 |
|
2018 |
| NET (LOSS) |
$ |
(80,660 |
) |
|
$ |
(215,038 |
) |
|
$ |
(226,770 |
) |
|
$ |
(401,909 |
) |
| Income tax provision
(benefit) |
2,347 |
|
|
5,678 |
|
|
(61,008 |
) |
|
(36,273 |
) |
| |
|
|
|
|
|
|
|
|
(LOSS) BEFORE INCOME TAXES |
$ |
(78,313 |
) |
|
$ |
(209,360 |
) |
|
$ |
(287,778 |
) |
|
$ |
(438,182 |
) |
| |
|
|
|
|
|
|
|
| ADJUSTMENTS TO ARRIVE AT
ADJUSTED NET (LOSS): |
|
|
|
|
|
|
|
|
Impairment of fixed assets and other (9) |
29,509 |
|
|
6,081 |
|
|
39,894 |
|
|
6,058 |
|
|
Amortization expense (2, 5) |
9,380 |
|
|
13,487 |
|
|
39,825 |
|
|
53,472 |
|
|
Amortization of deferred financing costs (8) |
16,014 |
|
|
1,304 |
|
|
31,554 |
|
|
5,216 |
|
|
Impairment of intangible assets (7) |
18,749 |
|
|
118,088 |
|
|
29,497 |
|
|
231,086 |
|
|
Non-cash stock compensation expense (2, 3, 4) |
5,246 |
|
|
4,304 |
|
|
21,281 |
|
|
21,503 |
|
|
Impairment of goodwill (7) |
— |
|
|
— |
|
|
15,955 |
|
|
— |
|
|
(Gain) on disposal of fixed assets (2, 6) |
(2 |
) |
|
— |
|
|
(32 |
) |
|
(201 |
) |
|
Litigation rulings, settlements and contingencies (10) |
(19,075 |
) |
|
3,870 |
|
|
44,179 |
|
|
17,814 |
|
|
Legal and financial advisory fees (2) |
4,877 |
|
|
— |
|
|
16,425 |
|
|
— |
|
|
Data Integrity investigations & assessment (2) |
1,327 |
|
|
6,021 |
|
|
12,006 |
|
|
28,420 |
|
|
Fresenius transaction & Securities Class Action Litigation
(2) |
1,817 |
|
|
8,315 |
|
|
7,952 |
|
|
42,939 |
|
|
Employee retention expense (2,3,4) |
1,264 |
|
|
(12 |
) |
|
6,420 |
|
|
366 |
|
|
Executive termination payments (2, 3) |
401 |
|
|
6,455 |
|
|
1,236 |
|
|
6,455 |
|
|
Merger & acquisition-related expenses (1) |
6 |
|
|
22 |
|
|
33 |
|
|
121 |
|
|
Restatement expenses (2) |
— |
|
|
(272 |
) |
|
(26 |
) |
|
(1,018 |
) |
| |
|
|
|
|
|
|
|
| ADJUSTED (LOSS) BEFORE INCOME
TAX |
$ |
(8,800 |
) |
|
$ |
(41,697 |
) |
|
$ |
(21,579 |
) |
|
$ |
(25,951 |
) |
| |
|
|
|
|
|
|
|
| Option exercise and RSU
vesting tax impact (11) |
— |
|
|
(332 |
) |
|
— |
|
|
(2,748 |
) |
| Adjustments to Income Tax
(Benefit) Provision (11) |
— |
|
|
(5,547 |
) |
|
— |
|
|
466 |
|
| TOTAL ADJUSTED INCOME TAX
(BENEFIT) |
$ |
— |
|
|
$ |
(5,879 |
) |
|
$ |
— |
|
|
$ |
(2,282 |
) |
| |
|
|
|
|
|
|
|
| ADJUSTED NET (LOSS) |
$ |
(8,800 |
) |
|
$ |
(35,818 |
) |
|
$ |
(21,579 |
) |
|
$ |
(23,669 |
) |
| |
|
|
|
|
|
|
|
| ADJUSTED DILUTED (LOSS) PER
SHARE (10) |
$ |
(0.07 |
) |
|
$ |
(0.29 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.19 |
) |
| |
|
|
|
|
|
|
|
| (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 goodwill, intangible assets |
|
|
|
|
|
|
|
| (8) - Excluded from
Amortization of deferred financing costs |
|
|
|
|
|
|
|
| (9) - Excluded from Impairment
of fixed assets |
|
|
|
|
|
|
|
| (10) - Excluded from
Litigation rulings, settlements and contingencies |
|
|
|
|
|
|
|
| (11) - 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, 2019 |
|
GAAP Debt |
$ |
843,328 |
|
| Deferred financing costs |
8,629 |
|
| Total term loans
outstanding |
$ |
851,957 |
|
| Cash and cash equivalents |
144,804 |
|
|
Net debt (1) |
$ |
707,153 |
|
| |
|
| Adjusted EBITDA, trailing
twelve months ended |
$ |
78,250 |
|
| |
|
| Net debt to adjusted EBITDA
ratio (2) |
9.0 |
|
| |
|
|
(1) Net debt, as defined by the Company, is
gross debt including Akorn’s term loan balance 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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