– Continued strong portfolio performance with
16% royalty income growth over prior year period –
– Deployment of US$284
million since April 1
showcases Trust's ability to execute –
– Capital inflows of US$339 million from royalty sale, debt repayment
and follow-on equity offering combined with attractive credit
facilities provide significant cash for deployment –
TORONTO, Aug. 14,
2023 /CNW/ - DRI Healthcare Trust (TSX: DHT.UN) (TSX:
DHT.U) ("DRI" or the "Trust") is pleased to announce its financial
results for the quarter ended June 30,
2023. The Trust's second quarter 2023 financial statements
and Management's Discussion & Analysis ("MD&A") have been
filed on SEDAR+ (www.sedarplus.ca). All dollar amounts are
expressed in U.S. dollars unless otherwise indicated.
"Our team has executed exceptionally well which has translated
into strong performance for the Trust. Having purchased four
additional royalties, sold the Tzield royalty for an exceptional
gain for unitholders, and completed our first follow-on-offering,
we are well positioned to continue to deliver on our strategy for
our unit holders," said Behzad
Khosrowshahi, Chief Executive Officer of DRI Healthcare
Trust.
Second Quarter Highlights
- Deployed US$88.7 million to
acquire a royalty on Orserdu from Eisai and an additional royalty
stream on Empaveli/Syfovre;
- Sold Tzield royalty asset and milestone payment obligations for
proceeds of US$210.0 million;
- Receipt of US$54.8 million from
the prepayment of the loan to CTI;
- Total Income of US$28.1
million;
- Normalized Total Cash Receipts of US$28.7 million1;
- Adjusted EBITDA of US$25.1
million1, representing 87% of Total Cash
Receipts;
- Net Earnings and Other Comprehensive Earnings of US$75.0 million;
- Adjusted Cash Earnings per Unit (basic and diluted) of
US$0.401,2;
- Net Earnings per Unit (basic and diluted) of US$2.002;
- Paid a special cash distribution of US$0.5334 per unit and a regular quarterly cash
distribution of US$0.075 per unit to
unitholders on July 20, 2023.
- Recorded performance fees of US$18.6
million payable to the manager, as a result of meeting all
performance fee conditions following the sale of the Tzield royalty
asset
Subsequent to Quarter End
- Declared a quarterly cash distribution of US$0.075 per unit for the third quarter of 2023,
payable on October 20, 2023 to
unitholders of record on September 30,
2023;
- Acquired an additional royalty stream on Vonjo for US$66.0 million and an additional royalty stream
on Orserdu for US$130.0 million;
- Completed a public offering of 9,223,000 units at US$8.03 per unit for gross proceeds of
US$74.1 million;
________________________
|
1Normalized Total Cash Receipts
and Adjusted EBITDA are non-GAAP financial measures. Adjusted Cash
Earnings per Unit is a non-GAAP ratio. These measures are not
standardized measures under IFRS and might not be comparable to
similar financial measures disclosed by other issuers. The
reconciliation of these measures can be found later in this press
release and in the Trust's MD&A.
|
2The weighted average number of
basic and diluted units for the three months ended June 30,
2023 were 37,487,973 units and 37,680,076 units,
respectively.
|
Financial Highlights
|
Three months
ended
|
Six months
ended
|
(thousands of US
dollars, except per unit amounts)
|
June 30,
2023
|
June 30,
2022
|
June 30,
2023
|
June 30,
2022
|
Total
income
|
28,058
|
21,296
|
56,294
|
43,921
|
Management
fees
|
15,560
|
1,718
|
17,236
|
3,155
|
Performance
fees
|
18,616
|
—
|
18,616
|
—
|
Amortization
expenses
|
19,600
|
13,421
|
38,768
|
26,196
|
Other
expenses
|
8,855
|
3,060
|
17,370
|
5,779
|
Net gain from sale of
royalty asset
|
109,606
|
—
|
109,606
|
—
|
Net earnings and other
comprehensive earnings
|
75,033
|
3,097
|
73,910
|
8,791
|
Net earnings per unit
– basic
|
2.00
|
0.08
|
1.96
|
0.23
|
Earnings per unit –
diluted
|
2.00
|
0.08
|
1.96
|
0.23
|
Normalized Total Cash
Receipts1
|
28,688
|
25,286
|
53,679
|
46,238
|
Adjusted
EBITDA1
|
25,071
|
21,443
|
46,505
|
39,254
|
Adjusted EBITDA
Margin1
|
87 %
|
85 %
|
87 %
|
85 %
|
Adjusted Cash Earnings
per Unit – Basic1
|
0.40
|
0.43
|
0.89
|
0.91
|
Adjusted Cash Earnings
per Unit – Diluted1
|
0.40
|
0.43
|
0.88
|
0.91
|
Weighted average
number of Units – Basic
|
37,487,973
|
38,654,707
|
37,623,590
|
38,698,930
|
Weighted average
number of Units – Diluted
|
37,680,076
|
38,666,241
|
37,798,310
|
38,704,877
|
Asset Performance
As at June 30, 2023, the Trust's portfolio included 24
royalty streams on 20 products that address a variety of
therapeutic areas, such as oncology, hemato-oncology ("heme-onc"),
neurology, ophthalmology, endocrinology, hematology, dermatology,
as well as lysosomal storage disorders, autoimmune diseases and
influenza. On June 30, 2023, the royalty asset portfolio had a
book value, net of accumulated amortization, of US$568.2 million, which generated Total Cash
Royalty Receipts1 of US$27.1
million and US$50.4 million
during the three and six months ended June
30, 2023, respectively, and royalty income of US$23.2 million and US$49.5 million during the three and six months
ended June 30, 2023,
respectively.
On May 10, 2023, CTI BioPharma
Corp. ("CTI") announced that it entered into an agreement with
Swedish Orphan Biovitrum AB ("Sobi") to acquire all the outstanding
common shares of CTI. As a result of the transaction, CTI was
required to prepay its outstanding secured loan from the Trust in
full, subject to terms of the loan agreement. On June 26, 2023, the Trust received a total of
US$54.8 million from CTI, which
includes the principal amount of US$50.0
million, exit fees of US$1.0
million, accrued interest of US$1.6
million and prepayment premiums of US$2.2 million. As a result of the prepayment,
the Trust's outstanding loan receivable balance is nil as at
June 30, 2023. In addition, interest and other income
generated from the loan receivable was US$4.8 million and US$6.5
million, respectively, during the three and six months ended
June 30, 2023.
_______________________
|
1Normalized Total Cash Receipts
and Adjusted EBITDA are non-GAAP financial measures. Adjusted
EBITDA Margin and Adjusted Cash Earnings per Unit are non-GAAP
ratios. These measures and ratios are not standardized measures
under IFRS and might not be comparable to similar financial
measures disclosed by other issuers. The reconciliation of these
measures can be found later in this press release and in the
Trust's MD&A.
|
Portfolio
(thousands of US
dollars)
|
|
Cash
Receipts
|
|
|
|
Three months
ended
|
Six months
ended
|
Product
|
Therapeutic
Area
|
Marketer(s)
|
June
30,
2023
|
June 30,
2022
|
June
30,
2023
|
June 30,
2022
|
Empaveli/Syfovre
|
Heme-Onc/Ophthalmology
|
Apellis,
Sobi
|
251
|
—
|
438
|
—
|
Eylea I
|
Ophthalmology
|
Regeneron, Bayer,
Santen
|
1,350
|
1,373
|
2,724
|
2,791
|
Eylea II
|
Ophthalmology
|
Regeneron, Bayer,
Santen
|
292
|
1,502
|
1,416
|
3,030
|
FluMist
|
Influenza
|
AstraZeneca
|
30
|
—
|
1,475
|
2,218
|
Natpara
|
Endocrinology
|
Takeda
|
610
|
649
|
1,221
|
1,322
|
Omidria
|
Ophthalmology
|
Rayner
Surgical
|
3,250
|
—
|
6,500
|
—
|
Oracea
|
Dermatology
|
Galderma
|
1,261
|
1,959
|
3,282
|
3,708
|
Orserdu2
|
Oncology
|
Menarini
|
—
|
—
|
—
|
—
|
Rydapt
|
Oncology
|
Novartis
|
2,047
|
2,335
|
4,850
|
5,298
|
Spinraza
|
Neurology
|
Biogen
|
3,933
|
4,573
|
8,039
|
8,851
|
Stelara,
Simponi
and
Ilaris3
|
Autoimmune
Diseases
|
Johnson & Johnson,
Merck, Novartis
|
349
|
576
|
800
|
2,386
|
Vonjo
|
Heme-Onc
|
Sobi
|
2,315
|
220
|
4,339
|
220
|
Xenpozyme4
|
Lysosomal Storage
Disorder
|
Sanofi
|
—
|
—
|
—
|
—
|
Xolair
|
Respiratory
|
Roche,
Novartis
|
1,538
|
1,458
|
4,076
|
4,099
|
Zejula
|
Oncology
|
GSK
|
740
|
—
|
1,482
|
—
|
Zytiga
|
Oncology
|
Johnson &
Johnson
|
8,543
|
8,958
|
8,543
|
8,958
|
Other
Products5
|
Various
|
Various
|
548
|
419
|
1,230
|
843
|
Total Cash Royalty
Receipts1
|
|
27,057
|
24,022
|
50,415
|
43,724
|
|
|
|
|
|
|
|
Interest receipts from
loan receivable6
|
|
1,631
|
1,264
|
3,264
|
2,514
|
Principal repayment of
loan receivable6
|
|
50,000
|
—
|
50,000
|
—
|
Exit fee received for
loan receivable6
|
|
1,000
|
—
|
1,000
|
—
|
Premiums for
prepayment6
|
|
2,140
|
—
|
2,140
|
—
|
Proceeds from sale of
royalty assets7
|
|
210,000
|
—
|
210,000
|
—
|
Total Cash
Receipts1
|
|
291,828
|
25,286
|
316,819
|
46,238
|
|
|
|
|
|
|
|
Principal repayment of
loan receivable6
|
|
(50,000)
|
—
|
(50,000)
|
—
|
Exit fee received for
loan receivable6
|
|
(1,000)
|
—
|
(1,000)
|
—
|
Premiums for
prepayment6
|
|
(2,140)
|
—
|
(2,140)
|
—
|
Proceeds from sale of
royalty assets7
|
|
(210,000)
|
—
|
(210,000)
|
—
|
Normalized Total
Cash Receipts1
|
|
28,688
|
25,286
|
53,679
|
46,238
|
________________________
|
1Total Cash Receipts, Total Cash
Royalty Receipts and Normalized Total Cash Receipts are non-GAAP
financial measures. These measures are not standardized measures
under IFRS and might not be comparable to similar financial
measures disclosed by other issuers. The reconciliation of these
measures can be found later in this press release and in the
Trust's MD&A.
|
2The Trust completed a
transaction in respect of Orserdu during the second quarter of
2023. In accordance with the terms of the royalty agreements, cash
royalty receipts are collected on a one-quarter lag.
|
3Stelara, Simponi and Ilaris
were previously referred to as the Autoimmune Portfolio. The
royalty assets include two royalty streams on each product, for a
total of six royalty streams.
|
4The Trust completed a
transaction in respect of Xenpozyme during the fourth quarter of
2022. In accordance with the terms of the royalty agreements, cash
royalty receipts are collected on a two-quarter lag from the
respective half-year period.
|
5Other Products includes royalty
income from certain other royalty assets as well as royalty assets
which are fully amortized and, where applicable, the entitlements
to which have generally expired.
|
6Interest receipts from loan
receivable relates to the CTI loan, which was repaid in full on
June 26, 2023. The interest receipt for the three months ended June
30, 2023 is related to the accrued interest from April 1, 2023 to
June 26, 2023. In accordance with the loan agreement, the Trust was
also entitled to receive an exit fee and prepayment premiums upon
prepayment of the loan, which were received in the second quarter
of 2023.
|
7The Trust completed a
transaction in respect of Tzield during the first quarter of 2023.
On April 27, 2023, the Trust sold the Tzield royalty for gross
proceeds of US$210.0 million.
|
8This item represent cash
received by the Trust in the quarter that is not expected to recur
in the normal course of its operations. As such, this item is not
included in Normalized Total Cash Receipts.
|
Liquidity and Capital
On June 30, 2023, the Trust had cash and cash equivalents
of US$121.3 million. The Trust's
credit facility had an outstanding principal balance of
US$163.1 million on June 30,
2023.
The Trust had 37,494,980 units issued and outstanding on
June 30, 2023.
On July 19, 2023, the Trust issued
9,223,000 units pursuant to a follow-on equity offering, for gross
proceeds of US$74.1 million. The
9,223,000 units included units issued pursuant to the exercise by
the underwriters of their over-allotment option. The Trust intends
to use the net proceeds to fund royalty transactions or to repay
indebtedness drawn on its credit facility.
Distributions
On April 27, 2023, in connection
with the sale of Tzield to an affiliate of Sanofi S.A. ("Sanofi"),
the Trust announced a special cash distribution of US$20.0 million, or US$0.5334 per unit, paid on July 20, 2023 to unitholders of record as of
June 30, 2023. On May 11, 2023,
the board of trustees approved a quarterly cash distribution of
US$0.075 per unit to unitholders of
record as of June 30, 2023, which was
also paid to unitholders on July 20,
2022.
The Trust also announced today that its board of trustees has
declared a quarterly cash distribution in the amount of
US$0.075 per unit for the third
quarter of 2023, payable on October 20,
2023, to unitholders of record on September 30, 2023.
Tzield Sale
On April 27, 2023, the Trust sold
its interest and milestone obligations in the worldwide sales of
Tzield to a subsidiary of Sanofi for US$210.0 million. The proceeds were partially
used to fund the special cash distribution to unitholders of record
as of June 30, 2023, and partially
used to pay down the entire amount outstanding under the Trust's
revolving acquisition credit facility and pay management fees to
the Trust's manager. This transaction resulted in performance fees
payable by the Trust to its manager which will be paid in the third
quarter of 2023. The remaining proceeds are available to the Trust
to invest in its pipeline of innovative opportunities.
Performance Fee
Our manager is entitled to performance fees determined on a
portfolio-by-portfolio basis pursuant to the terms of a management
agreement, as described in note 2(n) to the Trust's 2022 annual
consolidated financial statements. As a result of the Trust selling
its royalty interest in Tzield for US$210.0
million, the conditions for performance fee payments to the
manager have been met. The Trust recorded performance fees payable
of US$18,616 during the three and six
months ended June 30, 2023.
Payment of the performance fee will occur in the third quarter of
2023.
Orserdu Transactions
On June 29, 2023, the Trust
purchased royalties on the sales of Orserdu for US$85.0 million from Eisai Co., Ltd. ("Eisai").
The transaction entitles the Trust to a mid-single digit tiered
royalty on the worldwide net sales of Orserdu. The Trust is
entitled to receive quarterly royalty payments on a one-quarter lag
based on sales beginning April 1,
2023, with the first payment expected to be received in Q3
2023. In addition to the running royalties, the Trust is also
entitled to receive milestones based on the achievement of
regulatory approvals and sales performance thresholds.
On August 14, 2023, the Trust
purchased an additional royalty interest on the sales of Orserdu
for US$130.0 million from Radius
Pharmaceuticals, Inc., a wholly owned subsidiary of Radius Health,
Inc. The acquisition entitles the Trust to a net low to high single
digit tiered royalty on the worldwide net sales of the Orserdu. The
Trust is entitled to receive quarterly royalty payments on a
one-quarter lag based on sales beginning July 1, 2023, with its first payment expected in
Q4 2023. In addition to the running royalties, DRI Healthcare is
also entitled to receive milestone payments on the achievement of
sales performance thresholds. Upon the occurrence of pre-specified
events, DRI Healthcare is obligated to pay a $10 million milestone to Radius.
Orserdu is an oral, selective estrogen receptor degrader and it
is patent protected up to January
2038. It is the first and only approved targeted therapy
used in the treatment of postmenopausal women or adult men with
advanced or metastatic breast cancer, who have experienced disease
progression despite prior endocrine therapy. It was approved by the
U.S. Food and Drug Administration ("FDA") in January 2023 and is under review by the European
Medicines Agency for potential approval. Orserdu was discovered by
Eisai and is marketed by the Menarini Group.
Additional Vonjo Royalty Stream
On July 7, 2023, the Trust bought
an additional royalty interest in the worldwide sales of Vonjo for
US$66.0 million from S*Bio Ptd Ltd.
This royalty is in addition to the existing Vonjo royalty which was
announced in August 2021.
Vonjo is an oral, small-molecule JAK2 inhibitor currently
marketed by Sobi, used for the treatment myelofibrosis patients
with severe thrombocytopenia. It was approved by the FDA in
February 2022 and is the only
approved treatment for the indication.
The transaction was funded on July 25,
2023 and entitles the Trust to a tiered royalty on worldwide
net sales of Vonjo. The Trust is entitled to receive quarterly
royalty payments on a one-quarter lag based on sales beginning
April 1, 2023, with the first payment expected to be received
in Q3 2023. Vonjo is patent protected until at least January 2034. The Trust is also entitled to
receive up to US$107.5 million in
milestone payments.
Second Quarter 2023 Conference Call & Webcast
As previously announced, management will hold a conference call
on Tuesday, August 15, 2023, at
8:00 a.m. (ET) to review the Trust's
2023 second quarter results. You can join the call by dialing
1-888-664-6392 or 416-764-8659 approximately 15 minutes prior to
the call to secure a line.
A live webcast of the conference call, including a slide
presentation, will be available at https://bit.ly/3Dj2RNK. Please
connect at least 15 minutes prior to the conference call to ensure
adequate time for any software download that may be required to
join the webcast. The webcast will be archived on the Trust's
website following the call date.
Non-GAAP Financial Measures
The reconciliations of non-GAAP financial measures for the three
and six months ended June 30, 2023
and 2022 to the most directly comparable measures calculated in
accordance with IFRS are presented below, along with the
calculation of non-GAAP ratios.
Total Cash Royalty Receipts, Total Cash Receipts and
Normalized Total Cash Receipts
Total Cash Receipts refers to Total Cash Royalty Receipts plus
cash receipts from all products. Total Cash Receipts includes cash
receipts from interest as well as non-recurring cash receipts such
as the principal payments related to the Trust's loan receivable,
fees and premiums related thereto and proceeds from the sale of
royalty assets which consist of the proceeds from the sale of the
Tzield royalty. Total Cash Royalty Receipts refers to aggregate
cash royalty receipts from the Trust's portfolio of royalty assets
and forms part of Total Cash Receipts. Because of the lag between
when the Trust record royalty income and receive the corresponding
cash payments on its royalties, management believes Total Cash
Receipts and Total Cash Royalty Receipts are useful measures when
evaluating the Trust's operations, as they represent actual cash
generated in respect of all royalty assets held during a period.
Commencing with this quarter, the Trust is also presenting
Normalized Total Cash Receipts, which refers to Total Cash Receipts
adjusted to remove cash receipts that are not expected to recur in
the normal course of its operations. Management believes that
Normalized Total Cash Receipts will assist readers in evaluating
the period over period performance of the Trust's royalty portfolio
since Normalized Total Cash Receipts only includes cash receipts
generated by royalties and other amounts payable pursuant to the
terms of the Trust's royalty assets and interest on the Trust's
loan receivable.
|
Three months
ended
|
Six months
ended
|
(thousands of US
dollars)
|
June 30,
2023
|
June 30,
2022
|
June 30,
2023
|
June 30,
2022
|
Total
income
|
28,058
|
21,296
|
56,294
|
43,921
|
[-] Other interest
income
|
(52)
|
(5)
|
(289)
|
(5)
|
[+] Royalties
receivable, beginning of period
|
30,774
|
31,590
|
27,748
|
30,148
|
[-] Royalties
receivable, end of period
|
(29,110)
|
(27,498)
|
(29,110)
|
(27,498)
|
[+] Acquired royalties
receivable1
|
2,186
|
—
|
2,282
|
—
|
[-] Non-cash royalty
income2
|
—
|
(22)
|
(4)
|
(179)
|
[-] Non-cash interest
and other income on loan receivable3
|
(1,028)
|
(75)
|
(1,102)
|
(149)
|
[+] Principal
repayment of loan receivable
|
50,000
|
—
|
50,000
|
—
|
[+] Exit fee received
for loan receivable3
|
1,000
|
—
|
1,000
|
—
|
[+] Proceeds from sale
of royalty assets
|
210,000
|
—
|
210,000
|
—
|
Total Cash
Receipts
|
291,828
|
25,286
|
316,819
|
46,238
|
[-] Principal
repayment of loan receivable4
|
(50,000)
|
—
|
(50,000)
|
—
|
[-] Exit
fee received for loan
receivable3, 4
|
(1,000)
|
—
|
(1,000)
|
—
|
[-] Premiums for
prepayment of loan receivable4
|
2,140
|
—
|
2,140
|
—
|
[-] Proceeds from sale
of royalty assets
|
(210,000)
|
—
|
(210,000)
|
—
|
Normalized Total
Cash Receipts4
|
32,968
|
25,286
|
53,679
|
46,328
|
[-] Interest and other
income on loan receivable
|
(4,799)
|
(1,339)
|
(6,506)
|
(2,663)
|
[+] Non-cash interest
and other income on loan receivable3
|
1,028
|
75
|
1,102
|
149
|
[+] Premiums for
prepayment of loan receivable4
|
2,140
|
—
|
2,140
|
—
|
Total Cash Royalty
Receipts
|
64,305
|
24,022
|
54,695
|
43,724
|
________________________
|
1Acquired royalties receivable
represent the Trust's royalty entitlements prior to the completion
of the royalty transactions they relate to, as described under the
Transactions Completed section of the MD&A. Acquired royalties
receivable of US$96 previously recognized for the Tzield
transaction were reversed during the three months ended June 30,
2023 as the royalty asset and its associated royalty interest was
sold.
|
2Non-cash royalty income is
related to excess royalty payments received in prior periods in
which the Trust has an obligation to the royalty payers. Royalty
income for the three and six months ended June 30, 2022 of US$177
and US$334, respectively, was used to reduce the obligation for
excess royalty payments received in connection with Ilaris. There
is no remaining obligation as at June 30, 2023
(December 31, 2022 – nil) related to Ilaris. In the second
quarter of 2022, the Trust recorded other current liabilities and a
corresponding deduction to royalty income of US$155 to reflect an
additional obligation for excess royalty payments received related
to other royalty assets. Royalty income of nil and US$4,
respectively, were used to reduce the obligation during the three
and six months ended June 30, 2023 (2022 – nil). Royalty income
earned in future periods related to other royalty assets will be
used to repay the remaining obligation of US$136.
|
3For the three and six months
ended June 30, 2023, non-cash interest and other income on loan
receivable represents the amortization of commitment fees of US$343
and US$368, respectively (2022 – US$25 and US$50, respectively),
and the accretion of exit fees receivable of US$685 and US$734,
respectively (2022 – US$50 and US$99). In accordance with the loan
agreement, the Trust received an exit fee of US$1,000 as the loan
was fully repaid in the second quarter of 2023, as described
previously in this press release.
|
4 This item represents cash
received by the Trust in the quarter that is not expected to recur
in the normal course of its operations. As such, this item is not
included in Normalized Total Cash Receipts.
|
Adjusted EBITDA and Adjusted EBITDA Margin
Management believes Adjusted EBITDA provides meaningful
information about the Trust's operating cash flows as it eliminates
the effects of other non-cash expenses and accruals and
income and expenses that are not expected to recur, that have been
recorded on the statement of net earnings and comprehensive
earnings. The Trust refers to EBITDA when reconciling its net
earnings and other comprehensive earnings to Adjusted EBITDA but
does not use EBITDA as a measure of its performance. Management
believes that Adjusted EBITDA Margin is a useful supplemental
measure to demonstrate the operating efficiency of the Trust's
business on a cash basis.
|
Three months
ended
|
Six months
ended
|
(thousands of US
dollars)
|
June 30,
2023
|
June 30,
2022
|
June 30,
2023
|
June 30,
2022
|
Net earnings and other
comprehensive earnings
|
75,033
|
3,097
|
73,910
|
8,791
|
[+] Amortization or
royalty assets
|
19,600
|
13,421
|
38,768
|
26,196
|
[+] Amortization of
other current assets1
|
97
|
—
|
240
|
—
|
[-] Other interest
income
|
(52)
|
(5)
|
(289)
|
(5)
|
[+] Interest
expense
|
6,284
|
848
|
12,450
|
1,266
|
EBITDA
|
100,962
|
17,361
|
125,079
|
36,248
|
[+] Royalties
receivable, beginning of period
|
30,774
|
31,590
|
27,748
|
30,148
|
[-] Royalties
receivable, end of period
|
(29,110)
|
(27,498)
|
(29,110)
|
(27,498)
|
[+] Acquired royalties
receivable2
|
2,186
|
—
|
2,282
|
—
|
[+] Unit-based
compensation3
|
472
|
24
|
715
|
551
|
[+] Board of trustees
unit-based compensation4
|
295
|
63
|
377
|
133
|
[-] Non-cash royalty
income5
|
—
|
(22)
|
(4)
|
(179)
|
[-] Non-cash interest
and other income on loan receivable6
|
(1,028)
|
(75)
|
(1,102)
|
(149)
|
[-] Premiums for
prepayment of loan receivable7
|
(2,140)
|
—
|
(2,140)
|
—
|
[-] Net gain on sale
of royalty asset8
|
(109,606)
|
—
|
(109,606)
|
—
|
[+] Management fees on
sale of royalty asset9
|
13,650
|
—
|
13,650
|
—
|
[+] Performance fees
on sale of royalty asset9
|
18,616
|
—
|
18,616
|
—
|
Adjusted
EBITDA
|
25,071
|
21,443
|
46,505
|
39,254
|
[÷] Normalized Total
Cash Receipts
|
28,688
|
25,286
|
53,679
|
46,238
|
Adjusted EBITDA
Margin
|
87 %
|
85 %
|
87 %
|
85 %
|
________________________
|
1In connection with the
Empaveli/Syfovre transaction completed in 2022, the Trust acquired
other current assets, as described under the Empaveli Transaction
section of the MD&A. The related amortization expense is
recorded in other operating expenses.
|
2Acquired royalties receivable
represent the Trust's royalty entitlements prior to the completion
of the royalty transactions they relate to, as described under the
Transactions Completed section of the MD&A. Acquired royalties
receivable of US$96 previously recognized for the Tzield
transaction were reversed during the three months ended June 30,
2023 as the royalty asset and its associated royalty interest was
sold.
|
3For the three and six months
ended June 30, 2023, the unit-based compensation expense was US$569
and US$857, respectively, (2022 – US$24 and US$551, respectively)
of which US$97 and US$142, respectively, (2022 – nil) was paid in
cash.
|
4Certain members of the board of
trustees elected to be compensated fully or partially in deferred
units ("DUs") under the Trust's Omnibus Equity Incentive
Plan.
|
5Non-cash royalty income is
related to excess royalty payments received in prior periods in
which the Trust has an obligation to the royalty payers. Royalty
income for the three and six months ended June 30, 2022 of US$177
and US$334, respectively, was used to reduce the obligation for
excess royalty payments received in connection with Ilaris. There
is no remaining obligation as at June 30, 2023
(December 31, 2022 – nil) related to Ilaris. In the second
quarter of 2022, the Trust recorded other current liabilities and a
corresponding deduction to royalty income of US$155 to reflect an
additional obligation for excess royalty payments received related
to other royalty assets. Royalty income of nil and US$4,
respectively, were used to reduce the obligation during the three
and six months ended June 30, 2023 (2022 – nil). Royalty income
earned in future periods related to other royalty assets will be
used to repay the remaining obligation of US$136.
|
6For the three and six months
ended June 30, 2023, non-cash interest and other income on loan
receivable represents the amortization of commitment fees of US$343
and US$368, respectively (2022 – US$25 and US$50, respectively),
and the accretion of exit fees receivable of nil and US$734,
respectively (2022 – US$50 and US$99).
|
7The Trust received a prepayment
premium for prepayment of the loan receivable, as described
previously in this press release.
|
8During the three and six months
ended June 30, 2023, the Trust sold its royalty interest in the
worldwide sales of Tzield, as described previously in this press
release.
|
9During the three and six months
ended June 30, 2023, the Trust paid management fees of US$13,650
and recorded performance fees payable of US$18,616 related to the
sale of the Tzield royalty asset, pursuant to the management
agreement, as described in note 2(n) to the Trust's 2022 annual
consolidated financial statements.
|
Adjusted Cash Earnings per Unit
Management believes that Adjusted Cash Earnings per Unit
provides meaningful information about the Trust's performance as it
provides a measure of the cash generated by the Trust's assets on a
per unit basis, excluding cash earnings that are not expected
to recur.
|
Three months
ended
|
Six months
ended
|
(thousands of US
dollars, except per unit amounts)
|
June 30,
2023
|
June 30,
2022
|
June 30,
2023
|
June 30,
2022
|
Net earnings and other
comprehensive earnings
|
75,033
|
3,097
|
73,910
|
8,791
|
[+] Amortization or
royalty assets
|
19,600
|
13,421
|
38,768
|
26,196
|
[+] Amortization of
other current assets1
|
97
|
—
|
240
|
—
|
[+] Unit-based
compensation2
|
472
|
24
|
715
|
551
|
[+] Board of trustees
unit-based compensation3
|
295
|
63
|
377
|
133
|
[-] Non-cash royalty
income4
|
—
|
(22)
|
(4)
|
(179)
|
[-] Non-cash interest
and other income on loan receivable5
|
(1,028)
|
(75)
|
(1,102)
|
(149)
|
[-] Premiums for
prepayment of loan receivable6
|
(2,140)
|
—
|
(2,140)
|
—
|
[-] Net gain on sale
of royalty assets7
|
(109,606)
|
—
|
(109,606)
|
—
|
[+] Management fee on
sale of royalty asset8
|
13,650
|
—
|
13,650
|
—
|
[+] Performance fee on
sale of royalty asset8
|
18,616
|
—
|
18,616
|
—
|
Adjusted Cash
Earnings
|
14,989
|
16,508
|
33,424
|
35,343
|
Adjusted Cash
Earnings per Basic Unit
|
0.40
|
0.43
|
0.89
|
0.91
|
Adjusted Cash
Earnings per Fully Diluted Unit
|
0.40
|
0.43
|
0.88
|
0.91
|
Weighted average
number of Units – Basic
|
37,487,973
|
38,654,707
|
37,623,590
|
38,698,930
|
Weighted average
number of Units – Diluted
|
37,680,076
|
38,666,241
|
37,798,310
|
38,704,877
|
________________________
|
1In connection with the Empaveli
transaction completed in 2022, the Trust acquired other current
assets, as described under the Empaveli Transaction section of the
MD&A. The related amortization expense is recorded in other
operating expenses.
|
2For the three and six months
ended June 30, 2023, the unit-based compensation expense was US$569
and US$857, respectively, (2022 – US$24 and US$551, respectively)
of which US$97 and US$142, respectively, (2022 – nil) was paid in
cash.
|
3Certain members of the board of
trustees elected to be compensated fully or partially in Dus under
the Trust's Omnibus Equity Incentive Plan.
|
4Non-cash royalty income is
related to excess royalty payments received in prior periods in
which the Trust has an obligation to the royalty payers. Royalty
income for the three and six months ended June 30, 2022 of US$177
and US$334, respectively, was used to reduce the obligation for
excess royalty payments received in connection with Ilaris. There
is no remaining obligation as at June 30, 2023
(December 31, 2022 – nil) related to Ilaris. In the second
quarter of 2022, the Trust recorded other current liabilities and a
corresponding deduction to royalty income of US$155 to reflect an
additional obligation for excess royalty payments received related
to other royalty assets. Royalty income of nil and US$4,
respectively, were used to reduce the obligation during the three
and six months ended June 30, 2023 (2022 – nil). Royalty income
earned in future periods related to other royalty assets will be
used to repay the remaining obligation of US$136.
|
5For the three and six months
ended June 30, 2023, non-cash interest and other income on loan
receivable represents the amortization of commitment fees of US$343
and US$368, respectively (2022 – US$25 and US$50, respectively),
and the accretion of exit fees receivable of US$685 and US$734,
respectively (2022 – US$50 and US$99). In accordance with the loan
agreement, the Trust received an exit fee of US$1,000 as the loan
was fully repaid in the second quarter of 2023, as described
previously in this press release. The accelerated exit fee income
recognized in the three months ended June 30, 2023 is not expected
to recur and is not included in Adjusted Cash
Earnings.
|
6The Trust received a prepayment
premium for prepayment of the loan receivable, as described
previously in this press release. The prepayment premium income is
not expected to recur and is not included in Adjusted Cash
Earnings.
|
7During the three and six months
ended June 30, 2023, the Trust sold its royalty interest in Tzield,
as described previously in this press release. The net gain
recognized on the sale of the Tzield royalty asset is not expected
to recur and is not included in Adjusted Cash
Earnings.
|
8During the three and six months
ended June 30, 2023, the Trust paid management fees of US$13,650
and recorded performance fees payable of US$18,616 related to the
sale of the Tzield royalty asset, pursuant to the management
agreement, as described in note 2(n) to the Trust's 2022 annual
consolidated financial statements. The management and performance
fees resulting from the sale of the Tzield royalty asset are not
expected to recur and are not included in Adjusted Cash
Earnings.
|
About DRI Healthcare Trust
DRI Healthcare Trust is managed by DRI Capital Inc. ("DRI
Capital"), the pioneer in global pharmaceutical royalty
monetization with a more than 30-year history of accelerating
innovation by providing capital to inventors, academic institutions
and biopharma companies. Since its founding in 1989, DRI Capital
has deployed more than US$2.5
billion, acquiring more than 70 royalties on 40-plus drugs,
including Eylea, Spinraza, Zytiga, Remicade, Keytruda and Stelara.
DRI Healthcare Trust's units are listed and traded on the Toronto
Stock Exchange in Canadian dollars under the symbol "DHT.UN" and in
US dollars under the symbol "DHT.U". To learn more, visit
drihealthcare.com or follow us on LinkedIn.
Caution concerning forward-looking statements
This news release may contain forward-looking information within
the meaning of applicable securities legislation. Forward-looking
information generally can be identified by the use of words such as
"expect", "continue", "anticipate", "intend", "aim", "plan",
"believe", "budget", "estimate", "forecast", "foresee", "close to",
"target" or negative versions thereof and similar expressions. Some
of the specific forward-looking information in this news release
may include, among other things, statements regarding the Trust's
ability to execute on its strategy and the value to be provided to
unitholders and timing of royalty payments. Forward-looking
information is based on a number of assumptions and is subject to a
number of risks and uncertainties, many of which are beyond the
Trust's control that could cause actual results to differ
materially from those that are disclosed in or implied by such
forward-looking information. These risks and uncertainties include,
but are not limited to, those that are disclosed in the Trust's
most recent annual information form. The anticipated royalty terms
for products in our portfolio may be shorter than the period of
patent protection for the applicable product, depending on many
factors, including the entry of generic drugs into the marketplace
and competition, all of which are outside our control. No assurance
can be given that these are all the factors that could cause actual
results to vary materially from the forward-looking statements in
this press release. You should not put undue reliance on
forward-looking statements. No assurances can be given that any of
the events anticipated by the forward-looking statements will
transpire or occur, or if any of them do occur, the actual results,
performance or achievements of the Trust could differ materially
from the results expressed in, or implied by, any forward-looking
statements. Certain assumptions underlying the forward-looking
information in this news release include: the Trust's assumptions
regarding demand and growth in pharmaceutical sales, R&D and
opportunities for royalty investing; the competitive environment in
which the Trust operates; the performance of the Trust's manager;
the Trust's ability to implement its growth strategies; the Trust's
ability to obtain financing and maintain its existing financing on
acceptable terms; the Trust's ability to maintain good business
relationships with marketers and other industry partners; timely
receipt of cash royalty receipts; expectations regarding the
duration of royalties; the Trust's ability to keep pace with
changing consumer preferences; the absence of material adverse
changes in the Trust's industry or the global economy; currency
exchange and interest rates; the impact of competition; the changes
and trends in the Trust's industry or the global economy; and
stability in laws, rules, regulations and global standards in the
pharmaceutical industry. All forward-looking information in this
news release speaks as of the date of this news release. The Trust
does not undertake to update any such forward-looking information
whether as a result of new information, future events or otherwise
except as required by law. Additional information about these
assumptions and risks and uncertainties is contained in the Trust's
filings with securities regulators, including its latest annual
information form and Management's Discussion and Analysis. These
filings are also available at the Trust's website at
drihealthcare.com.
SOURCE DRI Healthcare Trust