Akorn (AKRX) Reports First Quarter 2010 Financial Results
May 3, 2010 (Business Wire) — Akorn, Inc. (NASDAQ: AKRX), a niche generic pharmaceutical company, today reported financial results for the first quarter of 2010.
Consolidated revenue for the first quarter of 2010 was $20.5 million, versus $22.0 million in the first quarter of 2009, representing a decrease of 7%. The decrease is due entirely to the winding down of the vaccine business segment. The Company concluded vaccine sales in the first quarter of 2010 with $5.1 million in sales, down from $10.7 million in the first quarter of 2009. First quarter revenue for the core business, consisting of ophthalmic, hospital drugs & injectables and contract services, totaled $15.4 million in 2010 versus $11.3 million for the same quarter in 2009, an increase of 36%.
Core business gross margin for the first quarter of 2010 was 42% compared to 18% in the prior year period. Gross margin improvement was the result of a number of factors, including: favorable product mix; the launch of new, higher margin products in the second half of 2009; selected price increases; and higher utilization of plant capacities. Td vaccine sales in the quarter generated $2.1 million in gross profit, or a 40% gross margin.
First Quarter Highlights
- Core business revenue growth of 36% over the prior year quarter
- Improved gross margins of 41% due to favorable product mix and higher utilization of plant capacities
- Positive operating income of $1.8 million with adjusted EBITDA of $3.9 million
- Achieved positive cash flow from operations of $2.0 million
- Revitalized new product pipeline through enhanced internal R&D capabilities
- Improved manufacturing efficiencies
- Expanded sales force to cover all major metropolitan cities
- Smoothly exited the Td Vaccine business
Raj Rai, Interim Chief Executive Officer, commented, “We are off to a solid start for the year. Our strategy to focus on the core business and on operating efficiencies has translated into favorable results. In addition, we are experiencing strong demand for Akorn products as well as for our third-party contract manufacturing business.”
Rai further added, “Based on the strength and the continuing momentum in the existing business along with the recently announced new product approvals, we are optimistic about our prospects for 2010 and beyond. As a result we are revising our outlook for 2010.”
Revised 2010 Outlook
- The Company projects 2010 revenue in the range of $76.0 million to $80.0 million. Core business revenue is projected in the range of $71.0 million to $75.0 million in 2010, a 59% to 67% increase over 2009, and up from the prior guidance range of $55.0 million to $60.0 million.
- The 2010 gross margin for the Company’s core business is projected to be between 42% and 45%.
- The Company projects positive adjusted EBITDA in 2010 in the range of $10.0 million to $13.0 million compared with a negative $4.2 million adjusted EBITDA in 2009, and up from the prior guidance range of $2.0 million to $4.0 million.
- In 2010, the Company expects to spend approximately $4.0 million on capital expenditures compared with $1.1 million in 2009.
- The Company is projecting 2010 R&D expenses of approximately $8.0 to $9.0 million versus $4.8 million in 2009.
- The Company’s 2010 outlook includes the partial year impact of all 2010 product approvals through May 4, 2010. It excludes the impact of any subsequent 2010 product approvals.
Akorn’s R&D Pipeline
The Company’s pipeline includes 9 ANDAs filed with the FDA with an annual market size of $1.2 billion. Akorn expects to file an additional 7 ANDAs in 2010 with an annual market size of $1.2 billion and 24 ANDAs in 2011 with an annual market size of $4.5 billion. Additionally, there are 7 ANDAs filed with the FDA through the Akorn-Strides, LLC joint venture.
About Akorn, Inc.
Akorn, Inc. is a niche pharmaceutical company engaged in the development, manufacture and marketing of multisource and branded pharmaceuticals. Akorn has manufacturing facilities located in Decatur, Illinois and Somerset, New Jersey where the Company manufactures ophthalmic and injectable pharmaceuticals. Additional information is available on the Company’s website at www.akorn.com.
Forward Looking Statement
This press release includes statements that may constitute “forward-looking statements”, including projections of certain measures of Akorn’s results of operations, projections of certain charges and expenses, and other statements regarding Akorn’s goals, regulatory approvals and strategy. Akorn cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Because such statements inherently involve risks and uncertainties, actual future results may differ materially from those expressed or implied by such forward-looking statements. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning in connection with a discussion of future operating or financial performance. Factors that could cause or contribute to such differences include, but are not limited to: statements relating to future steps we may take, prospective products, future performance or results of current and anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, and financial results. These cautionary statements should be considered in connection with any subsequent written or oral forward-looking statements that may be made by the company or by persons acting on its behalf and in conjunction with its periodic SEC filings. You are advised, however, to consult any further disclosures we make on related subjects in our reports filed with the SEC. In particular, you should read the discussion in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” in our most recent Annual Report on Form 10-K, as it may be updated in subsequent reports filed with the SEC. That discussion covers certain risks, uncertainties and possibly inaccurate assumptions that could cause our actual results to differ materially from expected and historical results. Other factors besides those listed there could also adversely affect our results.
Non-GAAP Financial Measures
In addition to reporting all financial information required in accordance with generally accepted accounting principles (GAAP), Akorn is also reporting Adjusted EBITDA, which is a non-GAAP financial measure. Since Adjusted EBITDA is not a GAAP financial measure, it should not be used in isolation or as a substitute for consolidated statements of operations and cash flow data prepared in accordance with GAAP. In addition, Akorn’s definition of Adjusted EBITDA may not be comparable to similarly titled non-GAAP financial measures reported by other companies. For a full reconciliation of Adjusted EBITDA to net income (loss), please see the attachments to this earnings release.
Adjusted EBITDA, as defined by the company, is calculated as follows:
Net income/(loss), plus:
- Interest income/(expense), net
- Provision for income taxes
- Depreciation and amortization
- Non-cash expenses, such as share-based compensation expense and changes in the fair value of warrants
- Non-recurring operating expenses, such as supply agreement termination expenses
The Company believes that Adjusted EBITDA is a meaningful indicator, to both Company management and investors, of the past and expected ongoing operating performance of the Company. EBITDA is a commonly used and widely accepted measure of financial performance. Adjusted EBITDA is deemed by the Company to be a useful performance indicator because it includes an add back of non-cash and non-recurring operating expenses which have little to no bearing on cash flows and may be subject to uncontrollable factors not reflective of the Company’s true operational performance (i.e. fair value adjustments to the carrying value of stock warrants liability).
While the Company uses Adjusted EBITDA in managing and analyzing its business and financial condition and believes it to be useful to investors in their evaluating the Company’s performance, Adjusted EBITDA has certain shortcomings. Specifically, Adjusted EBITDA does not take into account the impact of capital expenditures on the liquidity or GAAP 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. Accordingly, the Company’s management utilizes comparable GAAP financial measures to evaluate the business in conjunction with Adjusted EBITDA and encourages investors to do likewise.
AKORN, INC. | |||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||
IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||
(UNAUDITED) | |||||||||
THREE MONTHS ENDED | |||||||||
MARCH 31, | |||||||||
2010 | 2009 | ||||||||
Revenues | $ | 20,520 | $ | 22,040 | |||||
Cost of revenue | 12,092 | 16,678 | |||||||
GROSS PROFIT | 8,428 | 5,362 | |||||||
Selling, general and administrative expenses | 4,757 | 6,997 | |||||||
Supply agreement termination expenses | – | 5,830 | |||||||
Amortization of intangibles | 414 | 575 | |||||||
Research and development expenses | 1,432 | 977 | |||||||
TOTAL OPERATING EXPENSES | 6,603 | 14,379 | |||||||
OPERATING INCOME (LOSS) | 1,825 | (9,017 | ) | ||||||
Write-off and amortization of deferred financing costs | (273 | ) | (1,454 | ) | |||||
Interest expense, net | (290 | ) | (278 | ) | |||||
Equity in earnings of unconsolidated joint venture | 464 | 60 | |||||||
Change in fair value of warrants liability | 1,798 | – | |||||||
INCOME (LOSS) BEFORE INCOME TAXES | 3,524 | (10,689 | ) | ||||||
Income tax provision | 4 | 2 | |||||||
NET INCOME (LOSS) | $ | 3,520 | $ | (10,691 | ) | ||||
NET INCOME (LOSS) PER SHARE: | |||||||||
BASIC | $ | 0.04 | $ | (0.12 | ) | ||||
DILUTED | $ | 0.04 | $ | (0.12 | ) | ||||
SHARES USED IN COMPUTING NET INCOME (LOSS) | |||||||||
PER SHARE: | |||||||||
BASIC | 90,446 | 90,104 | |||||||
DILUTED | 92,817 | 90,104 |
AKORN, INC. | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
IN THOUSANDS, EXCEPT SHARE DATA | |||||||||
MARCH 31, | DECEMBER 31, | ||||||||
2010 | 2009 | ||||||||
(Unaudited) | (Audited) | ||||||||
ASSETS | |||||||||
CURRENT ASSETS | |||||||||
Cash and cash equivalents | $ | 2,691 | $ | 1,617 | |||||
Trade accounts receivable, net | 11,638 | 9,225 | |||||||
Other receivable | 60 | 833 | |||||||
Inventories | 12,266 | 13,167 | |||||||
Prepaid expenses and other current assets | 1,065 | 1,227 | |||||||
TOTAL CURRENT ASSETS | 27,720 | 26,069 | |||||||
PROPERTY, PLANT AND EQUIPMENT, NET | 31,770 | 31,473 | |||||||
OTHER LONG-TERM ASSETS | |||||||||
Intangibles, net | 4,205 | 4,619 | |||||||
Deferred financing costs | 3,527 | 3,800 | |||||||
Other | 2,892 | 2,798 | |||||||
TOTAL OTHER LONG-TERM ASSETS | 10,624 | 11,217 | |||||||
TOTAL ASSETS | $ | 70,114 | $ | 68,759 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||
CURRENT LIABILITIES | |||||||||
Trade accounts payable | $ | 3,263 | $ | 3,286 | |||||
Accrued compensation | 1,132 | 1,091 | |||||||
Accrued expenses and other liabilities | 3,518 | 3,724 | |||||||
Revolving line of credit – related party | – | 3,000 | |||||||
Warrants liability – related party | 7,267 | 9,065 | |||||||
Supply agreement termination costs | 1,500 | 1,500 | |||||||
TOTAL CURRENT LIABILITIES | 16,680 | 21,666 | |||||||
LONG-TERM LIABILITIES | |||||||||
Lease incentive obligations | 1,260 | 1,304 | |||||||
Product warranty liability | 1,299 | 1,299 | |||||||
Subordinated note – related party | 5,853 | 5,853 | |||||||
TOTAL LONG-TERM LIABILITIES | 8,412 | 8,456 | |||||||
TOTAL LIABILITIES | 25,092 | 30,122 | |||||||
SHAREHOLDERS’ EQUITY | |||||||||
Common stock, no par value — 150,000,000 shares authorized, 92,292,130 | |||||||||
and 90,389,597 shares issued and outstanding at March 31, 2010 | |||||||||
and December 31, 2009, respectively | 176,483 | 174,027 | |||||||
Warrants to acquire common stock | 2,230 | 1,821 | |||||||
Accumulated deficit | (133,691 | ) | (137,211 | ) | |||||
TOTAL SHAREHOLDERS’ EQUITY | 45,022 | 38,637 | |||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 70,114 | $ | 68,759 |
AKORN, INC. | ||||||||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||||||
IN THOUSANDS (UNAUDITED) | ||||||||||
THREE MONTHS ENDED | ||||||||||
MARCH 31, | ||||||||||
2010 | 2009 | |||||||||
OPERATING ACTIVITIES | ||||||||||
Net income (loss) | $ | 3,520 | $ | (10,691 | ) | |||||
Adjustments to reconcile net income (loss) to net cash | ||||||||||
provided by (used in) operating activities: | ||||||||||
Depreciation and amortization | 1,302 | 1,545 | ||||||||
Write-off and amortization of deferred financing fees | 273 | 1,454 | ||||||||
Non-cash stock compensation expense | 301 | 955 | ||||||||
Non-cash supply agreement termination expense | – | 1,051 | ||||||||
Non-cash change in fair value of warrants liability | (1,798 | ) | – | |||||||
Equity in earnings of unconsolidated joint venture | (464 | ) | (60 | ) | ||||||
Changes in operating assets and liabilities: | ||||||||||
Trade accounts receivable | (2,413 | ) | (6,148 | ) | ||||||
Inventories | 901 | 497 | ||||||||
Prepaid expenses and other current assets | 575 | 824 | ||||||||
Supply agreement termination liabilities | – | 4,750 | ||||||||
Trade accounts payable | (23 | ) | 3,993 | |||||||
Accrued expenses and other liabilities | (209 | ) | 298 | |||||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | 1,965 | (1,532 | ) | |||||||
INVESTING ACTIVITIES | ||||||||||
Purchases of property, plant and equipment | (1,185 | ) | (301 | ) | ||||||
Distribution from unconsolidated joint venture | 730 | – | ||||||||
NET CASH USED IN INVESTING ACTIVITIES | (455 | ) | (301 | ) | ||||||
FINANCING ACTIVITIES | ||||||||||
Loan origination fees | – | (1,274 | ) | |||||||
Proceeds from (repayments of) line of credit | (3,000 | ) | 5,509 | |||||||
Net proceeds from common stock and warrant offering | 2,469 | – | ||||||||
Proceeds under stock option and stock purchase plans | 95 | 1,216 | ||||||||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | (436 | ) | 5,451 | |||||||
INCREASE IN CASH AND CASH EQUIVALENTS | 1,074 | 3,618 | ||||||||
Cash and cash equivalents at beginning of period | 1,617 | 1,063 | ||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 2,691 | $ | 4,681 | ||||||
Amount paid for interest | $ | 190 | $ | 79 | ||||||
Amount paid for income taxes | $ | 12 | $ | 3 |
AKORN, INC. | |||||||||
RECONCILIATION OF NET INCOME (LOSS) TO NON-GAAP ADJUSTED EBITDA | |||||||||
IN THOUSANDS (UNAUDITED) | |||||||||
THREE MONTHS ENDED | |||||||||
MARCH 31, | |||||||||
2010 | 2009 | ||||||||
NET INCOME (LOSS) | $ | 3,520 | $ | (10,691 | ) | ||||
ADJUSTMENTS TO ARRIVE AT EBITDA: | |||||||||
Depreciation and amortization | 1,302 | 1,545 | |||||||
Interest expense, net | 290 | 278 | |||||||
Income tax provision | 4 | 2 | |||||||
EBITDA | $ | 5,116 | $ | (8,866 | ) | ||||
NON-RECURRING & NON-CASH OPERATING EXPENSES: | |||||||||
Non-cash stock compensation expense | 301 | 955 | |||||||
Change in fair value of warrants liability | (1,798 | ) | – | ||||||
Write-off and amortization of deferred financing costs | 273 | 1,454 | |||||||
Supply agreement termination expense | – | 5,830 | |||||||
ADJUSTED EBITDA | $ | 3,892 | $ | (627 | ) |
TraderPower Featured Companies
Top Small Cap Market News
- $SOBR InvestorNewsBreaks – SOBR Safe Inc. (NASDAQ: SOBR) Closes on $8.2M Private Placement
- $CLNN InvestorNewsBreaks – Clene Inc. (NASDAQ: CLNN) Announces Participation at Two Upcoming Investor Conferences
- $ATBHF Aston Bay Holdings Ltd. (TSX.V: BAY) (OTCQB: ATBHF) Releases Updated Report on Storm Copper Project Drilling Program
- $LGVN InvestorNewsBreaks – Longeveron Inc. (NASDAQ: LGVN) to Present at This Month’s Congenital Heart Surgeons’ Society Annual Meeting
- $LEXX InvestorNewsBreaks – Lexaria Bioscience Corp. (NASDAQ: LEXX) Begins Subject Dosing in Human Pilot Study #3 Evaluating Oral DehydraTECH-Processed Tirzepatide
- $FSTTF InvestorNewsBreaks – First Tellurium Corp. (CSE: FTEL) (OTC: FSTTF) Shares Additional Information on the PyroDelta Thermoelectric Generator, Relationship with Subsidiary
- $TMET.V Gold Stutters as Strong US Jobs Data Dampens Expectations of Large Rate Cuts
- $RFLXF JPMorgan Executive Says US Backlash Against ESG Is Exaggerated
- $SFWJ InvestorNewsBreaks – Software Effective Solutions Corp. (d/b/a MedCana) (SFWJ) Releases Report on Series of Acquisitions, Multiple Cannabis Licenses
- $EAWD IEA Hosts G20 Ministers, Influential Personalities to Discuss Clean and Affordable Energy Transition
Recent Posts
- $EAWD IEA Hosts G20 Ministers, Influential Personalities to Discuss Clean and Affordable Energy Transition
- $SFWJ InvestorNewsBreaks – Software Effective Solutions Corp. (d/b/a MedCana) (SFWJ) Releases Report on Series of Acquisitions, Multiple Cannabis Licenses
- $RFLXF JPMorgan Executive Says US Backlash Against ESG Is Exaggerated
- $TMET.V Gold Stutters as Strong US Jobs Data Dampens Expectations of Large Rate Cuts
- $FSTTF InvestorNewsBreaks – First Tellurium Corp. (CSE: FTEL) (OTC: FSTTF) Shares Additional Information on the PyroDelta Thermoelectric Generator, Relationship with Subsidiary
- $LEXX InvestorNewsBreaks – Lexaria Bioscience Corp. (NASDAQ: LEXX) Begins Subject Dosing in Human Pilot Study #3 Evaluating Oral DehydraTECH-Processed Tirzepatide
- $LGVN InvestorNewsBreaks – Longeveron Inc. (NASDAQ: LGVN) to Present at This Month’s Congenital Heart Surgeons’ Society Annual Meeting
- $ATBHF Aston Bay Holdings Ltd. (TSX.V: BAY) (OTCQB: ATBHF) Releases Updated Report on Storm Copper Project Drilling Program
Recent Comments
Archives
- October 2024
- January 2023
- June 2022
- December 2021
- September 2021
- August 2021
- July 2021
- June 2021
- May 2021
- April 2021
- March 2021
- February 2021
- January 2021
- December 2020
- November 2020
- October 2020
- September 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
- March 2020
- February 2020
- January 2020
- December 2019
- November 2019
- October 2019
- September 2019
- August 2019
- July 2019
- June 2019
- May 2019
- April 2019
- March 2019
- February 2019
- January 2019
- December 2018
- November 2018
- October 2018
- September 2018
- August 2018
- July 2018
- June 2018
- May 2018
- April 2018
- March 2018
- February 2018
- January 2018
- December 2017
- November 2017
- October 2017
- September 2017
- August 2017
- July 2017
- June 2017
- May 2017
- April 2017
- March 2017
- February 2017
- January 2017
- December 2016
- November 2016
- October 2016
- September 2016
- August 2016
- July 2016
- June 2016
- May 2016
- April 2016
- March 2016
- February 2016
- January 2016
- December 2015
- November 2015
- October 2015
- September 2015
- August 2015
- July 2015
- June 2015
- May 2015
- April 2015
- March 2015
- February 2015
- January 2015
- December 2014
- November 2014
- October 2014
- September 2014
- August 2014
- July 2014
- June 2014
- May 2014
- April 2014
- March 2014
- February 2014
- January 2014
- December 2013
- November 2013
- October 2013
- September 2013
- August 2013
- July 2013
- June 2013
- May 2013
- April 2013
- March 2013
- February 2013
- January 2013
- December 2012
- November 2012
- October 2012
- September 2012
- August 2012
- July 2012
- June 2012
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011
- December 2010
- November 2010
- October 2010
- September 2010
- August 2010
- July 2010
- June 2010
- May 2010
- April 2010
- March 2010
- February 2010
- January 2010
- December 2009
- November 2009
- October 2009
- September 2009
- August 2009
- July 2009
- June 2009