- Fourth quarter 2014 revenue increase of 157 per cent compared to the fourth quarter of 2013
- Fourth quarter 2014 Adjusted EBITDA up 273 per cent versus the same period in 2013
TORONTO, March 19, 2015 /CNW/ - Concordia Healthcare Corp. ("Concordia" or the "Company") (TSX: CXR) (OTCQX: CHEHF), a diverse healthcare company focused on legacy pharmaceutical products and orphan drugs, today announced its financial and operational results for the three and 12 months ended December 31, 2014.
All financial references are in U.S. dollars unless otherwise noted.
|(in US$)||Three Months|
Ended Dec. 31,
Ended Dec. 31,
| *Twelve Months |
Ended Dec. 31,
| Twelve Months |
Ended Dec. 31,
|Net income (loss)||($7,083,000)||$3,718,000||$2,431,000||$11,590,000|
|Earnings (loss) per share basic||($1.12)||$0.13||$0.38||$0.45|
|Earnings (loss) per share diluted||($1.12)||$0.12||$0.38||$0.43|
|Adjusted earnings per share1||$0.40||$0.74||$2.23||$1.88|
|Cash and cash equivalents||$42,899,000||$42,770,000||$42,899,000||$42,770,000|
*The Company's 2013 results consist of three quarters of operating history from May 5, 2013 to December 31, 2013.
Fourth Quarter 2014 Highlights
- Fourth quarter 2014 revenue increase of 157 per cent compared to the fourth quarter of 2013;
- Fourth quarter 2014 Adjusted EBITDA up 273 per cent versus the same period in 2013;
- On November 28, 2014, Concordia announced that Thomas Jefferson University in Philadelphia, PA enrolled the first patient in the OPUS clinical trial. OPUS is an Open-label, multicenter, randomized Phase 3 Study that will evaluate the efficacy and safety of Photodynamic therapy (PDT) with PHOTOFRIN® (porfimer sodium) for injection as treatment for Unresectable, advanced perihilar cholangiocarcinoma (CCA) Bismuth type III/IV.
- On November 28, 2014, the Company announced that its subsidiary, Concordia Laboratories Inc., entered into an exclusive trademark license and product distribution agreement for PHOTOFRIN® with Union Med. Limited ("Union"). Under the distribution agreement, Union will import, clinically develop (if necessary), gain regulatory approval for, distribute, market and sell PHOTOFRIN® throughout the People's Republic of China, Hong Kong, Macau and Taiwan.
- Concordia's board of directors approved a $0.075 dividend per common share. A record date of April 15, 2015 was declared by the board of directors with a distribution of proceeds expected to occur on April 30, 2015. Declarations and payments will be made in U.S. dollars. All future quarterly dividends will be subject to quarterly financial review and board approval.
Highlights Subsequent to Quarter End
- On March 9, 2015, the Company announced it entered into a definitive asset purchase agreement to acquire substantially all of the commercial assets of privately held Covis Pharma S.à.r.l and Covis Injectables, S.à.r.l (together "Covis") for U.S.$1.2 billion in cash (the "Acquisition"). The Covis drug portfolio being acquired (the "Portfolio") consists of 18 branded and authorized generic products with stable revenue, strong margins and free cash flow. The distinctive product portfolio includes branded pharmaceuticals, injectables and authorized generics that address life threatening and other serious medical conditions in various therapeutic areas including cardiovascular, central nervous system, oncology and acute care markets. Key products are Nilandron®, for the treatment of metastatic prostate cancer; Dibenzyline®, for the treatment of pheochromocytoma; Lanoxin®, for the treatment of mild-to-moderate heart failure and atrial fibrillation; and, Plaquenil®, for the treatment of lupus and rheumatoid arthritis.
- In its fourth quarter of 2014, Covis expects to have revenue between US$47 and US$52 million related to the Portfolio. Overall for 2014, Covis expects to have revenue between US$140 and US$145 million with a gross profit margin of approximately 90 per cent.
- The Acquisition is structured as an all-cash transaction with a purchase price of U.S.$1.2 billion. The Company plans to pay for the Acquisition through a mix of term loans, bonds and equity (including the Offering as described below). The Acquisition, which is expected to close in the second quarter of 2015, is subject to satisfaction of customary closing conditions (including receipt of required regulatory approvals). The board of directors of all parties to the transaction have approved the Acquisition.
- On March 13, 2015, S&P Dow Jones Indices announced Concordia would be included in the S&P TSX Composite Index, effective after the close on Friday, March 20, 2015. Inclusion in the index should result in increased exposure for Concordia to a broader range of potential investors.
- On March 17, 2015, Concordia announced that it entered into an agreement with a syndicate of underwriters led by RBC Capital Markets, as sole bookrunner and co-lead manager and including GMP Securities L.P. as co-lead manager (collectively, the "Underwriters"), pursuant to which the Underwriters agreed to purchase, on a bought deal basis, 3,764,720 subscription receipts of the Company, at a price of C$85.00 per subscription receipt (the "Offering Price") for aggregate gross proceeds to Concordia of C$320,001,200 (the "Offering"). The Company also granted the Underwriters an option to purchase from the Company up to an additional 564,708 subscription receipts (equal to 15% of the initial subscription receipts being offered) at the Offering Price to cover over-allotments, if any (the "Over-Allotment Option"). The Over-Allotment Option is exercisable, in whole or in part, at any time up to the earlier of: (i) the 30th day after and including the date of the closing of the Offering and (ii) the occurrence of certain termination events. If the Over-Allotment Option is exercised in full, an additional C$48,000,180 will be raised pursuant to the Offering and the aggregate gross proceeds of the Offering will be C$368,001,380. The net proceeds of the Offering are expected to be used to fund, in part, the purchase price for the Acquisition and the fees and expenses incurred in connection with the Acquisition.
"Concordia achieved rapid growth in 2014 and so far in 2015 through a disciplined approach to acquisitions, coupled with an ability to effectively integrate complementary assets into our operating platform," said Mark Thompson, Chief Executive Officer of Concordia. "Looking forward, we believe our growth can accelerate as we continue to diversify our high-margin portfolio of legacy pharmaceuticals."
Fourth Quarter 2014 Financial Results
The Company's net revenue was $42,896,000 and $122,191,000 for the three and 12 months ended December 31, 2014, respectively, while gross profit for the same periods was $37,811,000 and $104,202,000.
Net revenue and gross profit are derived from Concordia's Legacy Pharmaceuticals Division, its Orphan Drugs Division, and its Specialty Healthcare Distribution.
Legacy Pharmaceuticals Division
Legacy Pharmaceuticals Division revenue in 2014 was $94.3 million, compared to $36.9 million in 2013. The additions of Donnatal® and Zonegran® in the second and third quarters of 2014, respectively, accounted for the majority of the increase in revenue over the prior year. In addition revenue in 2014 reflects a full year of revenue from the legacy pharmaceutical assets acquired from Shionogi, compared to less than three quarters of revenue in 2013. The impact of the additions of Donnatal® and Zonegran® was partially offset by the expected decline in revenue from Kapvay® due to the loss of exclusivity on the product in the fourth quarter of 2013.
Gross Profit for the Legacy Pharmaceuticals Division in 2014 was $81.5 million compared to $29.5 million in the prior year. The increase of $52.0 million was primarily due to sales growth in the division, with the acquisition of Donnatal® and Zonegran® accounting for the majority of the increase.
Cost of sales for 2014 and 2013 were $12.8 million and $7.4 million, respectively, and reflect the costs of active pharmaceutical ingredients, excipients, packaging, freight costs and royalties. Legacy Pharmaceuticals Division gross margin in 2014 was 86.4% compared with 80.0% in 2013. The increase in gross margin is primarily driven by Donnatal® and Kapvay®.
Orphan Drugs Division
Net revenues for the Orphan Drugs Division were $10.7 million and $0.01 million for the year ended December 31, 2014 and December 31, 2013, respectively. Revenue in 2014 reflects a full four quarters of operations compared to less than 10 days of results in 2013. Orphan Drugs revenue represents the sales of Photofrin®, Ethyol®, lasers and fibers. Orphan Drugs revenue for 2014 was impacted in the second quarter of 2014 by a reduction in end user inventory of Photofrin® as hospitals continued to optimize inventory holdings and by a product expiry issue which required the Company to replace certain channel inventory at no cost.
Cost of sales for 2014 was $1.9 million, which includes a reversal of a take or pay provision of $0.6 million in the second quarter of 2014. During the second quarter the Company, in consultation with external advisors, determined that it did not have an obligation to pay its manufacturer for the provision.
Gross profits were $8.8 million for the year ended December 31, 2014 compared to a loss of $0.024 million for the year ended December 31, 2013.
Specialty Healthcare Distribution Division
Net revenues for the Specialty Healthcare Distribution Division were $17.3 million and $3.6 million for the year ended December 31, 2014 and December 31, 2013, respectively, and related primarily to sales and distribution of diabetes testing supplies and orthotics for diabetic patients. Revenue in 2014 reflects a full four quarters of operations compared to two months of operations in 2013.
Costs of sales for 2014 were $3.3 million and $0.9 million for 2013 and related to the cost of products, warehousing and freight.
Gross profits were $13.9 million and $2.6 million for years ended December 31, 2014 and December 31, 2013, respectively.
Overall for the Company, operating income was $23,335,000 and $45,873,000 for the three and 12 months ended December 31, 2014.
Operating expenses were $14,476,000 and $58,329,000 respectively for the three months and 12 months ended December 31, 2014.
Net cash provided by operating activities was $22,717,000 for the three months ended December 31, 2014 and $13,458,000 for 12 months ended December 31, 2014.
As at December 31, 2014 and March 19, 2015, the Company had 28,861,239 and 28,873,739 common shares issued and outstanding. As at December 31, 2014 and March 19, 2015, there were 2,002,280 and 2,039,780 options outstanding that entitle the holders thereof to purchase one common share per option of the Company.
Conference Call Notification
Management will host a conference call to discuss the fourth quarter, 2014 results on Friday, March 20, 2015 at 8:30 am ET. Following management's presentation, there will be a question-and-answer session. To participate in the conference call, please dial (888) 231-8191 or (647) 427-7450.
A digital conference call replay will be available until midnight on April 3, 2015 (ET) by calling (416) 849-0833 or (855) 859-2056. Please enter the password 5256621 when instructed. A webcast will be available by accessing a link through the Events section at visit www.concordiarx.com, or by using the following link: http://www.newswire.ca/en/webcast/detail/1499535/1670573.
Concordia is a diverse healthcare company focused on legacy pharmaceutical products and orphan drugs. Concordia's legacy pharmaceutical division, Concordia Pharmaceuticals Inc., consists of the following products: ADHD-treatment Kapvay® (clonidine extended release tablets), head lice treatment Ulesfia® (benzyl alcohol) Lotion, asthma-related medication Orapred ODT® (prednisolone sodium phosphate orally disintegrating tablets), irritable bowel syndrome treatment Donnatal® (belladonna alkaloids, phenobarbital) and Zonegran® (zonisamide) for treatment of partial seizures in adults with epilepsy. Concordia's specialty healthcare distribution (SHD) division, Complete Medical Homecare, distributes medical supplies targeting diabetes and related conditions. Concordia's orphan drugs division, Concordia Laboratories Inc., manufactures PHOTOFRIN®. PHOTOFRIN® is marketed by Pinnacle Biologics, Inc. in the United States.
Concordia operates out of facilities in Oakville, Ontario; Bridgetown, Barbados; Kansas City, Missouri; Chicago, Illinois and Charlottesville, Virginia.
1As used herein, adjusted earnings per share is defined as adjusted net income divided by the weighted average number of fully diluted shares outstanding. Adjusted net income is defined as net income (loss) adjusted for one-time charges including costs associated with acquisitions and the Company's listing on the TSX, non-recurring gains, non-cash items such as unrealized gains / losses on derivative instruments, share based compensation, change in fair value of contingent consideration, realized / unrealized gains / losses related to foreign exchange revaluation, depreciation, amortization, the tax impact of the above items and one-time tax expenses associated with one-time gains.
2As used herein, EBITDA is defined as net income adjusted for net interest expense, income tax expense, depreciation and amortization. Management uses EBITDA to assess the Company's operating performance.
3As used herein, Adjusted EBITDA is defined as EBITDA adjusted for one-time charges including acquisitions costs and costs associated with the Company's listing on the TSX, non-recurring gains, non-cash items such as unrealized gains / losses on derivative instruments, change in fair value of contingent consideration, other income expenses, share-based compensation and realized / unrealized gains/losses related to foreign exchange revaluation. Management uses Adjusted EBITDA as a key metric in assessing business performance when comparing actual results to budgets and forecasts. Management believes Adjusted EBITDA is an important measure of operating performance and cash flow, and provides useful information to investors because it highlights trends in the underlying business that may not otherwise be apparent when relying solely on IFRS measures.
This press release makes reference to certain measures that are not recognized measures under International Financial Reporting Standards ("IFRS"). These non-IFRS measures do not have a standardized meaning prescribed by IFRS, and are therefore unlikely to be comparable to similar measures presented by other companies. When used, these measures are defined in such terms as to allow the reconciliation to the closest IFRS measure. These measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company's or Covis' results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analyses of the Company's financial information reported under IFRS. Management uses non-IFRS measures such as EBITDA, Adjusted EBITDA and adjusted earnings per share to provide a supplemental measure of operating performance and thus highlight trends in the core business that may not otherwise be apparent when relying solely on IFRS financial measures. Management also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets, and to assess its ability to meet future debt service, capital expenditure, and working capital requirements. Readers are cautioned that the non-IFRS measures contained herein may not be appropriate for any other purpose.
Notice regarding future-oriented financial information:
To the extent any forward-looking statements in this press release constitutes future-oriented financial information or financial outlooks within the meaning of securities laws, such information is being provided to demonstrate the potential benefits of the Acquisition and any financing undertaken in connection therewith and readers are cautioned that this information may not be appropriate for any other purpose and that they should not place undue reliance on such future-oriented financial information and financial outlooks. Future-oriented financial information and financial outlooks, as with forward-looking information generally, are, without limitation, based on the assumptions and subject to the risks set out below under "Notice regarding forward-looking statements".
Notice regarding forward-looking statements:
This press release includes forward-looking statements and forward-looking information (collectively, "forward-looking statements") regarding Concordia and its business, which may include, but are not limited to, the impact of the acquisition of pharmaceutical products on Concordia's financial performance, the revenue-generating capabilities and/or potential of Concordia's assets, Concordia's financial strength, the ability of Concordia's products and/or business divisions to generate a stable revenue stream for the development of products and/or acquisition opportunities, the continued and/or expected profitability of Concordia's products and/or services, the payment of dividends in respect of Concordia's common shares, increased exposure for Concordia to a broader range of potential investors, Concordia's growth, the expansion into new indications for Concordia's existing and/or future products, the acquisition of additional products and/or assets (including orphan drugs and legacy products), in-licencing additional products, the distribution of additional products, the ability to obtain necessary approvals, the approval and development of PDT with PHOTOFRIN® as a new treatment for certain forms of cancer, the ability of PDT with PHOTOFRIN® to combat certain forms of cancer, enrollment of patients into clinical trials, the outcomes and success of clinical trials, the ability to expand existing sales of Concordia's products in certain markets, the adoption of PDT with PHOTOFRIN® in certain geographic regions, the receipt of approval to market and distribute Concordia's products in certain markets, the outcomes and success of distribution arrangements, market opportunities for Concordia's products, the Acquisition and the completion and timing thereof, the completion of the financing in connection with the Acquisition (including the Offering) and the timing thereof, the use of proceeds in respect of any financing (including the Offering), the entering into of documentation with respect such financing and the Offering, the impact of the Acquisition on Concordia's financial performance (including with respect to its revenues, margins, adjusted earnings per share and EBITDA), financial results and performance of Covis for fiscal 2014 and the fourth quarter of 2014 and other factors. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "is expected", "expects", "scheduled", "intends", "contemplates", "anticipates", "believes", "proposes" or variations (including negative and grammatical variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Such statements are based on the current expectations of Concordia's management, and are based on assumptions and subject to risks and uncertainties. Although Concordia's management believes that the assumptions underlying these statements are reasonable, they may prove to be incorrect. The forward-looking events and circumstances discussed in this press release may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting Concordia, including risks regarding clinical trials and/or patient enrollment into clinical trials, risks relating to the use of Concordia's products to treat certain diseases, the pharmaceutical industry, regulatory investigations, the failure to comply with applicable laws, risks relating to distribution arrangements, risks relating to the markets in which Concordia operates and/or distributes its products, possible failure to realize the anticipated benefits of the Acquisition, risks associated with the integration of the Portfolio into Concordia's business, risks associated with the Acquisition and the financing of such acquisition (including the Offering), increased indebtedness, the fact that historical and pro forma combined financial information may not be representative of Concordia'sresults post acquisition, the reliance on information provided by Covis, the failure to obtain regulatory approvals including those related to the Acquisition, economic factors, market conditions, acquisition opportunities, risks associated with the acquisition of pharmaceutical products including the Acquisition, the inability to complete acquisitions including the Acquisition, the equity markets generally, risks associated with growth and competition, general economic and stock market conditions and many other factors beyond the control of Concordia. Although Concordia has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Concordia undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
SOURCE Concordia Healthcare Corp.