Akorn, Inc. (Nasdaq: AKRX), a leading specialty pharmaceutical
company, today announced its financial results for the first
quarter of 2020.
First Quarter 2020 Results and Recent
Developments
- Net revenue was $205 million, up $39 million, 23% from the
prior year quarter
- Net loss was $257 million, compared to $82 million loss in the
prior year quarter
- Adjusted EBITDA was $59 million, compared to $23 million in the
prior year quarter
- Discussions with lenders regarding the sale process and Chapter
11 filing are on-going
- Received Establishment Inspection Report (EIR) and Voluntary
Action Indicated (VAI) status for February 2020 inspection of
Akorn’s Hettlingen, Switzerland manufacturing facility
Summary Financial Results for the Quarter Ended March
31, 2020
Akorn's reported net revenue was $204.7 million for the three
month period ended March 31, 2020, representing an increase of
$38.8 million, or 23.4%, as compared to net revenue of $165.9
million for the three month period ended March 31, 2019. The
increase in net revenue in the period was primarily due to
increases of $23.0 million, $9.0 million, and $6.8 million in
discontinued products revenue, organic revenue and new products,
respectively. The $23.0 million increase in discontinued
products revenue was primarily driven by an unapproved product that
has since been discontinued. The $9.0 million increase in
organic revenue was due to approximately $21.6 million, or 14.2% of
favorable price variance primarily due to 2019 price increases on
certain exclusive products partially offset by $12.5 million, or
8.2% in volume decline principally due to lower sales of
Myorisan®.
Consolidated gross profit for the quarter ended March 31,
2020, was $94.5 million, or 46.2% of net revenue, compared to $53.5
million, or 32.3% of net revenue, in the corresponding prior year
quarter. The increase in the gross profit percentage was
principally due to decreased costs associated with FDA compliance
related improvement activities, favorable price and product mix,
including the sale of an unapproved product that has since been
discontinued.
GAAP net (loss) for the first quarter of 2020, was $(256.7)
million, or $(2.01) per diluted share, compared to GAAP net (loss)
of $(82.2) million, or $(0.65) per diluted share, for the same
quarter of 2019. After a net adjustment of $302 million to
net income for non-GAAP items, adjusted diluted earnings per share
for the first quarter of 2020 was $0.36, compared to $0.01 in the
same quarter of 2019, after a net adjustment of $84 million to net
income for non-GAAP items. See "Non-GAAP Financial Measures"
below.
Earnings before interest, taxes, depreciation and amortization
(EBITDA) was $(241.9) million for the first quarter of 2020,
compared to $(47.7) million for the first quarter of 2019.
Adjusted EBITDA, which is a non-GAAP measure used by
management to evaluate the performance of the Akorn business, was
$58.6 million for the first quarter of 2020, compared to $23.4
million for the first quarter of 2019. 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 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 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, (benefit) provision for
income taxes and depreciation and amortization.
Adjusted EBITDA, as defined by the Company, is
calculated as follows:
Net (loss), (minus) plus:
Interest (expense), net(Benefit)
provision for income taxesDepreciation and amortizationNon-cash
expenses, such as impairment of goodwill, impairment of intangible
assets, impairment of fixed assets and other, gain on disposal of
fixed assets, share-based compensation expense, and amortization of
deferred financing costsOther adjustments, such as legal
settlements and various merger and acquisition-related expenses,
employee retention and other compensation, legal and financial
advisory fees, data integrity investigations & assessment,
India costs (excluding depreciation and interest), FDA compliance
related expenses, other settlements and fees and Fresenius
transaction & Securities Class Action 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 income, as defined by the Company,
is calculated as follows:
Net (loss), (minus) plus:
Amortization expenseNon-cash
expenses, such as impairment of goodwill, impairment of intangible
assets, impairment of fixed assets and other, gain on disposal of
fixed assets, share-based compensation expense, and amortization of
deferred financing costsOther adjustments, such as merger and
acquisition-related expenses, employee retention and other
compensation, legal and financial advisory fees, data integrity
investigations & assessment, India costs (excluding
depreciation and interest), FDA compliance related expenses, other
settlements and fees and Fresenius transaction & Securities
Class Action 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 earnings per share, as defined
by the Company, is equal to adjusted net income (loss) 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.
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 income (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 includes 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, through the
filing of Chapter 11 cases under the U.S. Bankruptcy Code, the
Company’s continued engagement in discussions with certain of its
lenders regarding the process for such potential sale of the
Company’s business. 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, and achieve milestones for executing a sale of
Akorn’s business, through the filing of Chapter 11 cases under the
U.S. Bankruptcy Code, (x) potential adverse impacts on the
Company’s business and any cases commenced under Chapter 11 due to
the effects of COVID-19; and (xi) 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),
Part II, Item 1A, “Risk Factors,” of the Company’s Quarterly Report
on Form 10-Q for the fiscal quarter ended March 31, 2020 (as filed
with the SEC on May 11, 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.CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)
(In Thousands, Except Per Share
Data)(Unaudited)
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
Revenues, net |
$ |
204,693 |
|
|
|
$ |
165,871 |
|
|
Cost of sales (exclusive of
amortization of intangibles, included within operating expenses
below) |
110,149 |
|
|
|
112,358 |
|
|
GROSS PROFIT |
94,544 |
|
|
|
53,513 |
|
|
|
|
|
|
Selling, general and
administrative expenses |
65,056 |
|
|
|
72,498 |
|
|
Research and development
expenses |
9,811 |
|
|
|
8,714 |
|
|
Amortization of
intangibles |
6,142 |
|
|
|
11,065 |
|
|
Impairment of goodwill |
267,923 |
|
|
|
15,955 |
|
|
Impairment of intangible
assets |
— |
|
|
|
10,354 |
|
|
Litigation rulings,
settlements and contingencies |
(7,470 |
) |
|
|
410 |
|
|
TOTAL OPERATING EXPENSES |
341,462 |
|
|
|
118,996 |
|
|
OPERATING (LOSS) |
(246,918 |
) |
|
|
(65,483 |
) |
|
Amortization of deferred
financing costs |
(8,629 |
) |
|
|
(1,304 |
) |
|
Interest expense, net |
(24,364 |
) |
|
|
(14,327 |
) |
|
Other non-operating (expense)
income, net |
(261 |
) |
|
|
353 |
|
|
|
|
|
|
(LOSS) BEFORE INCOME
TAXES |
(280,172 |
) |
|
|
(80,761 |
) |
|
Income tax
(benefit)/provision |
(23,445 |
) |
|
|
1,420 |
|
|
NET (LOSS) |
$ |
(256,727 |
) |
|
|
$ |
(82,181 |
) |
|
NET (LOSS) PER COMMON
SHARE: |
|
|
|
Net (Loss) per Common Share,
basic and diluted |
$ |
(2.01 |
) |
|
|
$ |
(0.65 |
) |
|
SHARES USED IN COMPUTING NET
(LOSS) PER COMMON SHARE: |
|
|
|
WEIGHTED AVERAGE BASIC AND
DILUTED |
127,648 |
|
|
|
125,566 |
|
|
COMPREHENSIVE (LOSS): |
|
|
|
Net (loss) |
$ |
(256,727 |
) |
|
|
$ |
(82,181 |
) |
|
Unrealized holding (loss) on
available-for-sale securities, net of tax of $0 and $0 for the
three month periods ended March 31, 2020 and 2019,
respectively. |
(1 |
) |
|
|
— |
|
|
Foreign currency translation
(loss) |
(524 |
) |
|
|
(424 |
) |
|
Pension liability adjustment
gain/(loss), net of tax of ($29) and $30 for the three month
periods ended March 31, 2020 and 2019, respectively. |
114 |
|
|
|
(116 |
) |
|
COMPREHENSIVE (LOSS) |
$ |
(257,138 |
) |
|
|
$ |
(82,721 |
) |
|
|
AKORN, INC.CONDENSED
CONSOLIDATED BALANCE SHEETS(In Thousands, Except
Share Data)
|
March 31, 2020 (Unaudited) |
|
December 31, 2019 |
ASSETS |
|
|
|
CURRENT ASSETS |
|
|
|
Cash and cash equivalents |
$ |
72,181 |
|
|
|
$ |
144,804 |
|
|
Trade accounts receivable, net |
187,218 |
|
|
|
134,173 |
|
|
Inventories, net |
172,597 |
|
|
|
170,047 |
|
|
Prepaid expenses and other current assets |
58,868 |
|
|
|
31,023 |
|
|
TOTAL CURRENT ASSETS |
490,864 |
|
|
|
480,047 |
|
|
PROPERTY, PLANT AND EQUIPMENT,
NET |
294,499 |
|
|
|
295,533 |
|
|
OTHER LONG-TERM ASSETS |
|
|
|
Goodwill |
— |
|
|
|
267,923 |
|
|
Intangible assets, net |
209,659 |
|
|
|
215,801 |
|
|
Right-of-use assets, net - Operating leases |
21,982 |
|
|
|
22,445 |
|
|
Other non-current assets |
15,271 |
|
|
|
6,890 |
|
|
TOTAL OTHER LONG-TERM ASSETS |
246,912 |
|
|
|
513,059 |
|
|
TOTAL ASSETS |
$ |
1,032,275 |
|
|
|
$ |
1,288,639 |
|
|
LIABILITIES AND SHAREHOLDERS’
EQUITY |
|
|
|
CURRENT LIABILITIES |
|
|
|
Trade accounts payable |
$ |
31,118 |
|
|
|
$ |
44,958 |
|
|
Income taxes payable |
181 |
|
|
|
— |
|
|
Accrued royalties |
8,953 |
|
|
|
5,956 |
|
|
Accrued compensation |
24,563 |
|
|
|
13,005 |
|
|
Current portion of long-term debt (net of deferred financing
costs) |
853,627 |
|
|
|
843,328 |
|
|
Accrued administrative fees |
30,537 |
|
|
|
31,725 |
|
|
Current portion of accrued legal fees and contingencies |
14,873 |
|
|
|
23,673 |
|
|
Current portion of lease liability - Operating leases |
2,401 |
|
|
|
2,290 |
|
|
Accrued expenses and other liabilities |
19,350 |
|
|
|
20,652 |
|
|
TOTAL CURRENT LIABILITIES |
985,603 |
|
|
|
985,587 |
|
|
LONG-TERM LIABILITIES |
|
|
|
Deferred tax liability |
— |
|
|
|
225 |
|
|
Uncertain tax liabilities |
2,684 |
|
|
|
2,633 |
|
|
Long-term lease liability - Operating leases |
21,427 |
|
|
|
22,021 |
|
|
Long-term portion of accrued legal fees and contingencies |
31,160 |
|
|
|
33,000 |
|
|
Pension obligations and other liabilities |
10,895 |
|
|
|
10,881 |
|
|
TOTAL LONG-TERM LIABILITIES |
66,166 |
|
|
|
68,760 |
|
|
TOTAL LIABILITIES |
1,051,769 |
|
|
|
1,054,347 |
|
|
SHAREHOLDERS’ EQUITY |
|
|
|
Preferred stock, $1 par value - 5,000,000 shares authorized; no
shares issued or outstanding at March 31, 2020 and December 31,
2019. |
— |
|
|
|
— |
|
|
Common stock, no par value – 150,000,000 shares authorized;
126,276,438 and 126,145,832 shares issued and outstanding at March
31, 2020 and December 31, 2019, respectively. |
598,873 |
|
|
|
595,521 |
|
|
Accumulated deficit |
(590,665 |
) |
|
|
(333,938 |
) |
|
Accumulated other comprehensive (loss) |
(27,702 |
) |
|
|
(27,291 |
) |
|
TOTAL SHAREHOLDERS’ EQUITY |
(19,494 |
) |
|
|
234,292 |
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ |
1,032,275 |
|
|
|
$ |
1,288,639 |
|
|
|
|
|
|
AKORN, INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(In
Thousands)(Unaudited)
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
OPERATING ACTIVITIES: |
|
|
|
Net (loss) |
$ |
(256,727 |
) |
|
|
$ |
(82,181 |
) |
|
Adjustments to reconcile consolidated net (loss) to net cash
(used in) operating activities: |
|
|
|
Depreciation and amortization |
13,874 |
|
|
|
18,750 |
|
|
Amortization of debt financing costs |
8,629 |
|
|
|
1,304 |
|
|
Impairment of intangible assets |
— |
|
|
|
10,354 |
|
|
Goodwill impairment |
267,923 |
|
|
|
15,955 |
|
|
Fixed asset impairment and other |
— |
|
|
|
10,089 |
|
|
Non-cash stock compensation expense |
3,431 |
|
|
|
4,720 |
|
|
Non-cash interest expense |
1,670 |
|
|
|
— |
|
|
Deferred income taxes, net |
(225 |
) |
|
|
(28 |
) |
|
Other |
(83 |
) |
|
|
(31 |
) |
|
Changes in operating assets and liabilities: |
|
|
|
Other non-current assets |
(8,565 |
) |
|
|
584 |
|
|
Trade accounts receivable |
(53,009 |
) |
|
|
(21,283 |
) |
|
Inventories, net |
(2,486 |
) |
|
|
10,819 |
|
|
Prepaid expenses and other current assets |
(27,895 |
) |
|
|
1,079 |
|
|
Trade accounts payable |
(10,057 |
) |
|
|
722 |
|
|
Accrued legal fees and contingencies |
(10,640 |
) |
|
|
(2,703 |
) |
|
Uncertain tax liabilities |
51 |
|
|
|
1,420 |
|
|
Accrued expenses and other liabilities |
12,680 |
|
|
|
(33 |
) |
|
NET CASH (USED IN) OPERATING
ACTIVITIES |
$ |
(61,429 |
) |
|
|
$ |
(30,463 |
) |
|
INVESTING ACTIVITIES: |
|
|
|
Proceeds from disposal of
assets |
386 |
|
|
|
— |
|
|
Purchases of property, plant
and equipment |
(11,531 |
) |
|
|
(10,059 |
) |
|
NET CASH (USED IN) INVESTING
ACTIVITIES |
$ |
(11,145 |
) |
|
|
$ |
(10,059 |
) |
|
FINANCING ACTIVITIES: |
|
|
|
Stock compensation plan
withholdings for employee taxes |
(79 |
) |
|
|
— |
|
|
Payment of contingent
acquisition liabilities |
— |
|
|
|
(116 |
) |
|
Lease payments |
(6 |
) |
|
|
(335 |
) |
|
NET CASH (USED IN) FINANCING
ACTIVITIES |
$ |
(85 |
) |
|
|
$ |
(451 |
) |
|
Effect of exchange rate
changes on cash and cash equivalents |
(37 |
) |
|
|
54 |
|
|
(DECREASE) IN CASH AND CASH
EQUIVALENTS |
$ |
(72,696 |
) |
|
|
$ |
(40,919 |
) |
|
Cash, cash equivalents, and
restricted cash at beginning of period |
145,607 |
|
|
|
225,794 |
|
|
CASH, CASH EQUIVALENTS, AND
RESTRICTED CASH AT END OF PERIOD |
$ |
72,911 |
|
|
|
$ |
184,875 |
|
|
SUPPLEMENTAL DISCLOSURES: |
|
|
|
Amount paid for interest |
$ |
23,803 |
|
|
|
$ |
16,314 |
|
|
Amount (received) for income
taxes, net |
$ |
(56 |
) |
|
|
$ |
(14,526 |
) |
|
Additional capital
expenditures included in accounts payable |
$ |
2,514 |
|
|
|
$ |
4,641 |
|
|
Standstill Agreement related
non-cash interest |
$ |
1,670 |
|
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Net (Loss) to
Non-GAAP EBITDA and Adjusted EBITDA (In
Thousands)(Unaudited)
|
Three Months Ended |
|
|
March 31, |
|
|
2020 |
|
2019 |
NET (LOSS) |
$ |
(256,727 |
) |
|
|
$ |
(82,181 |
) |
|
|
|
|
|
|
ADJUSTMENTS TO
ARRIVE AT EBITDA: |
|
|
|
|
Interest expense, net |
24,364 |
|
|
|
14,327 |
|
|
|
Depreciation expense |
7,727 |
|
|
|
7,639 |
|
|
|
Amortization expense |
6,147 |
|
|
|
11,111 |
|
|
|
Income tax
(benefit)/provision |
(23,445 |
) |
|
|
1,420 |
|
|
EBITDA |
(241,934 |
) |
|
|
(47,684 |
) |
|
|
|
|
|
|
NON-CASH AND OTHER
NON-RECURRING INCOME AND EXPENSES |
|
|
|
|
Impairment of goodwill |
267,923 |
|
|
|
15,955 |
|
|
|
Amortization of deferred
financing costs |
8,629 |
|
|
|
1,304 |
|
|
|
Non-cash stock compensation
expense |
3,431 |
|
|
|
4,720 |
|
|
|
Impairment of fixed assets and
other |
— |
|
|
|
10,089 |
|
|
|
Impairment of intangible
assets |
— |
|
|
|
10,354 |
|
|
|
(Gain) on disposal of fixed
assets |
(83 |
) |
|
|
(32 |
) |
|
|
Employee retention and other
compensation(A) |
9,972 |
|
|
|
2,893 |
|
|
|
Legal and financial advisory
fees |
9,656 |
|
|
|
5,748 |
|
|
|
FDA compliance related
expenses(A) |
4,669 |
|
|
|
10,991 |
|
|
|
Other settlements and
fees |
1,142 |
|
|
|
— |
|
|
|
Fresenius transaction &
Securities Class Action Litigation |
1,275 |
|
|
|
1,706 |
|
|
|
India costs (excluding
depreciation and interest)(A) |
1,047 |
|
|
|
2,267 |
|
|
|
Data integrity investigations
& assessment |
354 |
|
|
|
4,640 |
|
|
|
Merger and acquisition-related
expenses |
32 |
|
|
|
(3 |
) |
|
|
Litigation rulings,
settlements and contingencies |
(7,470 |
) |
|
|
410 |
|
|
ADJUSTED
EBITDA |
$ |
58,643 |
|
|
|
$ |
23,358 |
|
|
(A) Certain 2019 information has been recast to conform
with 2020 presentation. See the related tables below.
Reconciliation of GAAP Net (Loss) to
non-GAAP Adjusted Net Income and Adjusted Diluted Earnings Per
Share(In Thousands, Except Per Share
Data)(Unaudited)
|
Three Months Ended |
|
March 31, |
|
2020 |
|
2019 |
Net (Loss) |
$ |
(256,727 |
) |
|
|
$ |
(82,181 |
) |
|
|
|
|
|
Income tax
(benefit)/provision |
(23,445 |
) |
|
|
1,420 |
|
|
|
|
|
|
(LOSS) BEFORE INCOME
TAXES |
$ |
(280,172 |
) |
|
|
$ |
(80,761 |
) |
|
|
|
|
|
ADJUSTMENTS TO ARRIVE AT
ADJUSTED NET INCOME: |
|
|
|
Impairment of goodwill
(5) |
267,923 |
|
|
|
15,955 |
|
|
Amortization of deferred
financing costs (6) |
8,629 |
|
|
|
1,304 |
|
|
Amortization expense (4) |
6,147 |
|
|
|
11,111 |
|
|
Non-cash stock compensation
expense (1, 2, 3) |
3,431 |
|
|
|
4,720 |
|
|
Impairment of fixed assets
(7) |
— |
|
|
|
10,089 |
|
|
Impairment of intangible
assets (5) |
— |
|
|
|
10,354 |
|
|
(Gain) on disposal of fixed
assets (1) |
(83 |
) |
|
|
(32 |
) |
|
Employee retention and other
compensation(A) (1, 2, 3) |
9,972 |
|
|
|
2,893 |
|
|
Legal and financial advisory
fees (1) |
9,656 |
|
|
|
5,748 |
|
|
FDA compliance related
expenses(A) (2,3) |
4,669 |
|
|
|
10,991 |
|
|
Other settlements and fees
(1,3) |
1,142 |
|
|
|
— |
|
|
Fresenius transaction &
Securities Class Action Litigation (1) |
1,275 |
|
|
|
1,706 |
|
|
India costs (excluding
depreciation and interest)(A) (1,3) |
1,047 |
|
|
|
2,267 |
|
|
Data integrity investigations
& assessment (1) |
354 |
|
|
|
4,640 |
|
|
Merger &
acquisition-related expenses (1) |
32 |
|
|
|
(3 |
) |
|
Litigation rulings,
settlements and contingencies (8) |
(7,470 |
) |
|
|
410 |
|
|
ADJUSTED INCOME BEFORE INCOME
TAX |
$ |
26,552 |
|
|
|
$ |
1,392 |
|
|
ADJUSTMENTS TO INCOME TAX
PROVISION (BENEFIT) |
(18,925 |
) |
|
|
— |
|
|
TOTAL ADJUSTED INCOME TAX
PROVISION (BENEFIT) |
$ |
(18,925 |
) |
|
|
$ |
— |
|
|
|
|
|
|
ADJUSTED NET INCOME |
$ |
45,477 |
|
|
|
$ |
1,392 |
|
|
|
|
|
|
ADJUSTED DILUTED EARNINGS PER
SHARE |
$ |
0.36 |
|
|
|
$ |
0.01 |
|
|
|
|
|
|
(A) Certain 2019
information has been recast to conform with 2020 presentation. |
|
|
|
|
|
|
|
(1) - Excluded from SG&A
expenses |
|
|
|
(2) - Excluded from R&D
expenses |
|
|
|
(3) - Excluded from Cost of
sales |
|
|
|
(4) - Excluded from
Amortization of intangibles |
|
|
|
(5) - Excluded from Impairment
of goodwill, intangible assets |
|
|
|
(6) - Excluded from
Amortization of deferred financing costs |
|
|
|
(7) - Excluded from Impairment
of fixed assets |
|
|
|
(8) - Excluded from Litigation
rulings, settlements and contingencies |
|
|
|
|
|
|
|
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)
|
March 31, 2020 |
GAAP Debt |
$ |
853,627 |
|
Cash and cash equivalents |
72,181 |
|
Net debt |
$ |
781,446 |
|
|
|
Adjusted EBITDA, trailing
twelve months ended |
$ |
158,973 |
|
|
|
Net debt to adjusted EBITDA
ratio |
4.9 |
|
|
Reconciliation 2019 of GAAP Net (Loss)
Income to Non-GAAP EBITDA and Recast Adjusted
EBITDA(In
Thousands)(Unaudited)
|
Three Months Ended |
|
Year Ended |
|
|
March 31, 2019 |
|
June 30, 2019 |
|
September 30, 2019 |
|
December 31, 2019 |
|
2019 |
NET (LOSS) |
$ |
(82,181 |
) |
|
|
$ |
(111,599 |
) |
|
|
$ |
47,670 |
|
|
|
$ |
(80,660 |
) |
|
|
$ |
(226,770 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTMENTS TO
ARRIVE AT EBITDA: |
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
14,327 |
|
|
|
17,341 |
|
|
|
18,982 |
|
|
|
18,703 |
|
|
|
69,353 |
|
|
|
Depreciation expense |
7,639 |
|
|
|
7,419 |
|
|
|
7,734 |
|
|
|
7,683 |
|
|
|
30,475 |
|
|
|
Amortization expense |
11,111 |
|
|
|
9,954 |
|
|
|
9,380 |
|
|
|
9,380 |
|
|
|
39,825 |
|
|
|
Income tax
(benefit)/provision |
1,420 |
|
|
|
1,482 |
|
|
|
(66,257 |
) |
|
|
2,347 |
|
|
|
(61,008 |
) |
|
EBITDA |
(47,684 |
) |
|
|
(75,403 |
) |
|
|
17,509 |
|
|
|
(42,547 |
) |
|
|
(148,125 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
NON-CASH AND OTHER
NON-RECURRING INCOME AND EXPENSES |
|
|
|
|
|
|
|
|
|
|
Impairment of goodwill |
15,955 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
15,955 |
|
|
|
Amortization of deferred
financing costs |
1,304 |
|
|
|
5,654 |
|
|
|
8,581 |
|
|
|
16,014 |
|
|
|
31,554 |
|
|
|
Non-cash stock compensation
expense |
4,720 |
|
|
|
5,589 |
|
|
|
5,726 |
|
|
|
5,246 |
|
|
|
21,281 |
|
|
|
Impairment of fixed assets and
other |
10,089 |
|
|
|
138 |
|
|
|
158 |
|
|
|
29,509 |
|
|
|
39,894 |
|
|
|
Impairment of intangible
assets |
10,354 |
|
|
|
393 |
|
|
|
— |
|
|
|
18,750 |
|
|
|
29,498 |
|
|
|
(Gain) on disposal of fixed
assets |
(32 |
) |
|
|
2 |
|
|
|
— |
|
|
|
(2 |
) |
|
|
(32 |
) |
|
|
Employee retention and other
compensation |
2,893 |
|
|
|
2,545 |
|
|
|
3,411 |
|
|
|
2,665 |
|
|
|
11,515 |
|
|
|
Legal and financial advisory
fees |
5,748 |
|
|
|
4,290 |
|
|
|
1,511 |
|
|
|
4,877 |
|
|
|
16,425 |
|
|
|
FDA compliance related
expenses |
10,991 |
|
|
|
11,851 |
|
|
|
4,566 |
|
|
|
7,738 |
|
|
|
35,145 |
|
|
|
Fresenius transaction &
Securities Class Action Litigation |
1,706 |
|
|
|
1,740 |
|
|
|
2,689 |
|
|
|
1,817 |
|
|
|
7,952 |
|
|
|
India costs (excluding
depreciation and interest) |
2,267 |
|
|
|
1,446 |
|
|
|
1,431 |
|
|
|
1,264 |
|
|
|
6,408 |
|
|
|
Data integrity investigations
& assessment |
4,640 |
|
|
|
3,380 |
|
|
|
2,660 |
|
|
|
1,327 |
|
|
|
12,006 |
|
|
|
Merger and acquisition-related
expenses |
(3 |
) |
|
|
9 |
|
|
|
21 |
|
|
|
6 |
|
|
|
33 |
|
|
|
Litigation rulings,
settlements and contingencies |
410 |
|
|
|
74,469 |
|
|
|
(11,625 |
) |
|
|
(19,075 |
) |
|
|
44,179 |
|
|
ADJUSTED
EBITDA |
$ |
23,358 |
|
|
|
$ |
36,103 |
|
|
|
$ |
36,638 |
|
|
|
$ |
27,589 |
|
|
|
$ |
123,688 |
|
|
Note: FDA compliance related expenses and
India costs (excluding depreciation and interest) are now included
as adjustments to EBITDA to conform to current year
presentation. In addition, expense related to the 2019 Cash
LTIP program has also been included as adjustments to EBITDA to
conform to current year presentation and are included within
Employee retention and other compensation.
Reconciliation of 2019 GAAP Net (Loss)
Income to non-GAAP Recast Adjusted Net Income and Recast Adjusted
Diluted Earnings Per Share(In Thousands, Except
Per Share Data)(Unaudited)
|
Three Months Ended |
|
Year Ended |
|
March 31, 2019 |
|
June 30, 2019 |
|
September 30, 2019 |
|
December 31, 2019 |
|
2019 |
Net (Loss) |
$ |
(82,181 |
) |
|
|
$ |
(111,599 |
) |
|
|
$ |
47,670 |
|
|
|
$ |
(80,660 |
) |
|
|
$ |
(226,770 |
) |
|
|
|
|
|
|
|
|
|
|
|
Income tax
(benefit)/provision |
1,420 |
|
|
|
1,482 |
|
|
|
(66,257 |
) |
|
|
2,347 |
|
|
|
(61,008 |
) |
|
|
|
|
|
|
|
|
|
|
|
(LOSS) BEFORE INCOME
TAXES |
$ |
(80,761 |
) |
|
|
$ |
(110,117 |
) |
|
|
$ |
(18,587 |
) |
|
|
$ |
(78,313 |
) |
|
|
$ |
(287,778 |
) |
|
|
|
|
|
|
|
|
|
|
|
ADJUSTMENTS TO ARRIVE AT
ADJUSTED NET INCOME: |
|
|
|
|
|
|
|
|
|
Impairment of goodwill
(5) |
15,955 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
15,955 |
|
|
Amortization of deferred
financing costs (6) |
1,304 |
|
|
|
5,654 |
|
|
|
8,581 |
|
|
|
16,014 |
|
|
|
31,554 |
|
|
Amortization expense (4) |
11,111 |
|
|
|
9,954 |
|
|
|
9,380 |
|
|
|
9,380 |
|
|
|
39,825 |
|
|
Non-cash stock compensation
expense (1, 2, 3) |
4,720 |
|
|
|
5,589 |
|
|
|
5,726 |
|
|
|
5,246 |
|
|
|
21,281 |
|
|
Impairment of fixed assets
(7) |
10,089 |
|
|
|
138 |
|
|
|
158 |
|
|
|
29,509 |
|
|
|
39,894 |
|
|
Impairment of intangible
assets (5) |
10,354 |
|
|
|
393 |
|
|
|
— |
|
|
|
18,750 |
|
|
|
29,498 |
|
|
(Gain) on disposal of fixed
assets (1) |
(32 |
) |
|
|
2 |
|
|
|
— |
|
|
|
(2 |
) |
|
|
(32 |
) |
|
Employee retention and other
compensation (1, 2, 3) |
2,893 |
|
|
|
2,545 |
|
|
|
3,411 |
|
|
|
2,665 |
|
|
|
11,515 |
|
|
Legal and financial advisory
fees (1) |
5,748 |
|
|
|
4,290 |
|
|
|
1,511 |
|
|
|
4,877 |
|
|
|
16,425 |
|
|
FDA compliance related
expenses (2,3) |
10,991 |
|
|
|
11,851 |
|
|
|
4,566 |
|
|
|
7,738 |
|
|
|
35,145 |
|
|
Fresenius transaction &
Securities Class Action Litigation (1) |
1,706 |
|
|
|
1,740 |
|
|
|
2,689 |
|
|
|
1,817 |
|
|
|
7,952 |
|
|
India costs (excluding
depreciation and interest) (1,3) |
2,267 |
|
|
|
1,446 |
|
|
|
1,431 |
|
|
|
1,264 |
|
|
|
6,408 |
|
|
Data integrity investigations
& assessment (1) |
4,640 |
|
|
|
3,380 |
|
|
|
2,660 |
|
|
|
1,327 |
|
|
|
12,006 |
|
|
Merger &
acquisition-related expenses (1) |
(3 |
) |
|
|
9 |
|
|
|
21 |
|
|
|
6 |
|
|
|
33 |
|
|
Litigation rulings and
settlements (8) |
410 |
|
|
|
74,469 |
|
|
|
(11,625 |
) |
|
|
(19,075 |
) |
|
|
44,179 |
|
|
ADJUSTED INCOME BEFORE INCOME
TAX |
$ |
1,392 |
|
|
|
$ |
11,343 |
|
|
|
$ |
9,922 |
|
|
|
$ |
1,203 |
|
|
|
$ |
23,860 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET INCOME |
$ |
1,392 |
|
|
|
$ |
11,343 |
|
|
|
$ |
9,922 |
|
|
|
$ |
1,203 |
|
|
|
$ |
23,860 |
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED DILUTED EARNINGS PER
SHARE |
$ |
0.01 |
|
|
|
$ |
0.09 |
|
|
|
$ |
0.08 |
|
|
|
$ |
0.01 |
|
|
|
$ |
0.19 |
|
|
|
|
|
|
|
|
|
|
|
|
Note: FDA compliance related expenses and
India costs (excluding depreciation and interest) are now included
as adjustments to EBITDA to conform to current year
presentation. In addition, expense related to the 2019 Cash
LTIP program has also been included as adjustments to EBITDA to
conform to current year presentation and are included within
Employee retention and other compensation. |
|
|
|
|
|
|
|
|
|
|
(1) - Excluded from SG&A
expenses |
|
|
|
|
|
|
|
|
|
(2) - Excluded from R&D
expenses |
|
|
|
|
|
|
|
|
|
(3) - Excluded from Cost of
sales |
|
|
|
|
|
|
|
|
|
(4) - Excluded from
Amortization of intangibles |
|
|
|
|
|
|
|
|
|
(5) - Excluded from Impairment
of goodwill, intangible assets |
|
|
|
|
|
|
|
|
|
(6) - Excluded from
Amortization of deferred financing costs |
|
|
|
|
|
|
|
|
|
(7) - Excluded from Impairment
of fixed assets |
|
|
|
|
|
|
|
|
|
(8) - Excluded from Litigation
rulings, settlements and contingencies |
|
|
|
|
|
|
|
|
|
Investors/Media:(847)
279-6162Investor.relations@akorn.com
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