ADVANZ PHARMA Corp. Limited Announces First Quarter 2021 Results
ADVANZ PHARMA Corp. reported first-quarter 2021 revenue of $136 million, marking a 5% increase from 2020, but faced a net loss of $15 million. Adjusted EBITDA decreased by 12% to $56 million. Cash flow from operations was $13 million, with cash and cash equivalents totaling $135 million. The company acquired global rights to Cyclophosphamide, enhancing its portfolio and submitted three medicines for approval, including Mytolac, a generic formulation of Lanreotide, which received European approval.
- First-quarter 2021 revenue increased by 5% year-over-year.
- Acquisition of global rights to Cyclophosphamide for approximately $6.5 million.
- Submission of three medicines for approval and received European DCP approval for Mytolac.
- Net loss of $15 million in Q1 2021 compared to a smaller loss in Q1 2020.
- Adjusted EBITDA decreased by 12% compared to Q1 2020.
- Operating expenses increased by 17% due to higher impairment charges and acquisition-related costs.
- First quarter 2021 revenue of
$136 million - First quarter 2021 net loss of
$15 million - First quarter 2021 Adjusted EBITDA1 of
$56 million - Generated cash flow from operations of
$13 million and concluded the quarter with a cash and cash equivalents balance of$135 million
LONDON, May 14, 2021 /PRNewswire/ - ADVANZ PHARMA Corp. Limited ("ADVANZ PHARMA" or "the Company") (TSX: ADVZ), a global pharmaceutical company with a strategic focus on complex medicines in Europe, today announced its financial and operational results for the three months ended March 31, 2021. All financial references are in U.S. dollars ("USD") unless otherwise noted.
"Our first quarter results mark the third consecutive quarter of topline growth for the Company," said Graeme Duncan, Chief Executive Officer of ADVANZ PHARMA. "With respect to M&A, we continued to diversify our business during the reporting period with the acquisition of the global rights to Cyclophosphamide. We also strengthened our pipeline with the submission of three medicines for approval, and are pleased to have received the European DCP approval for Mytolac, our generic formulation of Lanreotide."
Consolidated First Quarter 2021 Financial and Operational Results
- Reported first quarter 2021 revenue of
$136.1 million , compared to$130.0 million for the first quarter of 2020, and$135.0 million for the fourth quarter of 2020. - Reported a net loss for the first quarter of 2021 of
$15.2 million . - Reported first quarter 2021 Adjusted EBITDA1 of
$55.6 million , compared to$63.5 million for the first quarter of 2020, and$50.5 million for the fourth quarter of 2020. - Generated cash flows from operating activities of
$13.1 million in the first quarter of 2021 compared to$46.2 million in the first quarter of 2020. - On January 29, 2021, the Company, through a wholly owned subsidiary, acquired the global rights to Cyclophosphamide 50mg tablets from Zenex Pharmaceuticals Pty Ltd for approximately
$6.5 million . - As of March 31, 2021, the Company had a cash and cash equivalents balance of
$135.1 million , compared to$160.2 million as of December 31, 2020. The decrease in cash is primarily attributable to debt amortization and interest payments of$29.7 million , plus an upfront payment of approximately$5.0 million for the acquisition of global rights to Cyclophosphomide 50mg tablets. This decrease is partially offset by cash flows generated from operating activities of$13.1 million .
First Quarter 2021 Segment Results
International Segment
ADVANZ PHARMA International segment revenue for the quarter ended March 31, 2021, of
The increase in revenue was partially offset, excluding the impact of foreign currency translation, by a
These lower product volumes and revenues are primarily due to ongoing competitive market pressures resulting in market share erosion in the U.K., combined with phasing of shipments
North America Segment
ADVANZ PHARMA North America segment revenue of
These declines in revenue were partially offset by a
Pipeline Update
The Company continued to make progress with respect to the evaluation and advancement of its pipeline of medicines.
In the first quarter of 2021, ADVANZ PHARMA submitted three medicines for approval. In addition, the Company received European decentralised procedure approval for Mytolac, its generic formulation of Lanreotide. The Company anticipates it will launch Mytolac in a number of European markets later this year.
Going forward, the Company intends to expand its product portfolio in order to deliver mid-term value and long-term growth, through pipeline filling, optimization, licencing and development partnerships. These initiatives will be focussed on niche and differentiated generics, complex specialty and value-added medicines.
Consolidated Financial Results
Three months ended | ||||
(in | Mar 31, 2021 | Mar 31, 2020 | ||
Revenue | 136,109 | 129,992 | ||
Gross profit | 83,450 | 86,642 | ||
Gross profit % | 61 | % | 67 | % |
Adjusted gross profit (1) | 84,907 | 86,642 | ||
Adjusted gross profit % (1) | 62 | % | 67 | % |
Total operating expenses | 89,000 | 76,038 | ||
Operating (loss) income for the period | (5,550) | 10,604 | ||
Income tax (recovery) expense | (3,221) | 4,103 | ||
Net loss for the period | (15,243) | (8,686) | ||
Loss per share | ||||
Basic | (0.31) | (0.18) | ||
Diluted | (0.31) | (0.18) | ||
EBITDA (1) | 47,940 | 70,360 | ||
Adjusted EBITDA (1) | 55,575 | 63,489 | ||
Notes: | |
(1) | Represents a non-IFRS measure. For the relevant definitions and reconciliation to reported results, see "Non-IFRS Financial Measures" section of this press release. |
Consolidated Results of Operations
Revenue
Revenue for the first quarter of 2021 increased by
Gross profit for the first quarter of 2021 decreased by
Gross profit percentage for the first quarter of 2021 decreased by
Operating expenses of
Operating expenses increases are partially offset by
General and administrative expenses reflect costs related to salaries and benefits, professional and consulting fees, public company costs, travel and other administrative expenditures. General and administrative expenses for the first quarter of 2021 increased by
Selling and marketing expenses reflect costs incurred by the Company for the marketing, promotion and sale of its portfolio of products across its segments. Selling and marketing costs for the first quarter of 2021 increased by
Research and development expenses reflect costs for clinical trial activities, product development, professional and consulting fees and services associated with the activities of the medical, clinical and scientific affairs, quality assurance costs, regulatory compliance and drug safety costs (pharmacovigilance) of the Company.
Research and development costs for the first quarter of 2021 increased by
First quarter 2021 Adjusted EBITDA of
In addition, during the first quarter of 2021, the Company incurred
As of March 31, 2021, the Company had cash and cash equivalents of
About ADVANZ PHARMA
ADVANZ PHARMA is a specialty pharmaceutical company with a strategic focus on complex medicines in Europe. With an agile and experienced team, including direct sales, marketing and medical capability across many of Europe's major markets, the Company supplies, innovates and enhances the critical medicines patients depend on, ensuring continued patient access and improving health outcomes.
ADVANZ PHARMA has expertise in the anti-Infectives and endocrinology therapy areas, along with strong relationships with hospital decision makers, making it an attractive partner when commercialising complex medicines in Europe.
ADVANZ PHARMA has an operational headquarters in London, an operations centre of excellence in Mumbai, commercial affiliates in North America, Europe, and Australia, and an established global network of commercial partners throughout the rest of the world.
Non-IFRS Financial Measures
This press release makes reference to certain measures that are not recognized measures under International Financial Reporting Standards ("IFRS"). These non-IFRS measures are not recognized measures under IFRS and 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 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 results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute to the Company's financial information reported under IFRS. Management uses non-IFRS measures such as Adjusted Gross Profit, EBITDA, Adjusted EBITDA and Working Capital, to provide investors with supplemental information of the Company's operating performance and thus highlight trends in the Company's core business that may not otherwise be apparent when relying solely on IFRS financial measures. Management 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, to assess its ability to meet future debt service requirements, in making capital expenditures, and to consider the business's working capital requirements. Readers are cautioned that the non-IFRS measures contained herein may not be appropriate for any other purpose.
Adjusted Gross Profit
Adjusted Gross Profit is defined as gross profit adjusted for non-cash fair value increases to the cost of acquired inventory from a business combination. Under IFRS, acquired inventory is required to be recognized at fair value at the date of acquisition. As this inventory is sold, the fair value adjustment represents a non-cash cost of sale amount that has been excluded in adjusted gross profit in order to normalize gross profit for this non-cash component.
Three months ended | ||||
(in | Mar 31, 2021 | Mar 31, 2020 | ||
Gross profit per financial statements | 83,450 | 86,642 | ||
Add back: Fair value adjustment to acquired inventory | 1,457 | — | ||
Adjusted Gross Profit | 84,907 | 86,642 | ||
EBITDA
EBITDA is defined as net income (loss) adjusted for interest and accretion expense, interest income, income taxes, depreciation and amortization of intangible assets. Management uses EBITDA to assess the Company's operating performance.
Adjusted EBITDA
Adjusted EBITDA is defined as EBITDA adjusted for certain charges including costs associated with acquisitions, restructuring initiatives, and other costs (which includes onerous contract costs and direct costs associated with contractual terminations), management retention costs, non-operating gains / losses, integration costs, legal settlements (net of insurance recoveries) and related legal costs, non-cash items such as unrealized gains / losses on derivative instruments, share based compensation expense / recovery, fair value changes including purchase consideration and derivative financial instruments, asset impairments, fair value increases to inventory arising from purchased inventory from a business combination, gains / losses from the sale of assets, change in assumed contingent obligation and unrealized gains / losses related to foreign exchange. Management uses Adjusted EBITDA, among other Non-IFRS financial measures, as the 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.
The table below sets forth the reconciliation of net income (loss) to EBITDA and to Adjusted EBITDA for the three month periods ended March 31, 2021, and March 31, 2020.
Three months ended | ||||
(in | Mar 31, 2021 | Mar 31, 2020 | ||
Net loss for the period | (15,243) | (8,686) | ||
Interest and accretion expense | 24,953 | 27,552 | ||
Interest income | (443) | (504) | ||
Income taxes | (3,221) | 4,103 | ||
Depreciation | 748 | 724 | ||
Amortization of intangible assets | 41,146 | 47,171 | ||
EBITDA | 47,940 | 70,360 | ||
Impairments | 7,100 | — | ||
Fair value adjustment to acquired inventory | 1,457 | — | ||
Acquisition related, restructuring and other | 9,579 | 4,266 | ||
Share-based compensation expense | 1,095 | 724 | ||
Foreign exchange loss | 1,191 | 245 | ||
Unrealized foreign exchange gain | (8,349) | (12,106) | ||
Change in assumed contingent obligation | (4,438) | — | ||
Adjusted EBITDA | 55,575 | 63,489 | ||
Notice Regarding Trademarks
This press release includes trademarks that are protected under applicable intellectual property laws and are the property of ADVANZ PHARMA or its affiliates or its licensors. Solely for convenience, the trademarks of ADVANZ PHARMA, its affiliates and/or its licensors referred to in this press release may appear with or without the ® or TM symbol, but such references or the absence thereof are not intended to indicate, in any way, that the Company or its affiliates or licensors will not assert, to the fullest extent under applicable law, their respective rights to these trademarks. Any other trademarks used in this press release are the property of their respective owners.
Notice Regarding Forward-looking Statements and Information:
This news release includes forward-looking statements and forward-looking information within the meaning of Canadian securities laws. Often, but not always, and forward-looking information 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 and information are based on the current expectations of ADVANZ PHARMA's management, and are based on assumptions and subject to risks and uncertainties. Although ADVANZ PHARMA's management believes that the assumptions underlying these statements and information are reasonable, they may prove to be incorrect. The forward–looking events and circumstances discussed in this news release may not occur by certain dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting ADVANZ PHARMA, including risks associated with ADVANZ PHARMA's securities, increased indebtedness and leverage, ADVANZ PHARMA's growth, risks associated with the use of ADVANZ PHARMA's products, the inability to generate cash flows, revenues and/or stable margins, the inability to repay debt and/or satisfy future obligations, risks associated with a delay in releasing ADVANZ PHARMA's financial statements (which could result in a default under ADVANZ PHARMA's debt agreements and a violation of applicable laws), ADVANZ PHARMA's outstanding debt, risks associated with the geographic markets in which ADVANZ PHARMA operates and/or distributes its products, the pharmaceutical industry and the regulation thereof, regulatory investigations and proceedings, the failure to comply with applicable laws, risks associated with distribution agreements, risks associated with general economic factors and market conditions, risks associated with growth and competition, the failure to obtain regulatory approvals, the equity and debt markets generally, general economic and stock market conditions, risks associated with fluctuations in exchange rates (including, without limitation, fluctuations in currencies), political risks (including changes to political conditions), risks associated with the United Kingdom's exit from the European Union (including, without limitation, risks associated with regulatory changes in the pharmaceutical industry, changes in cross-border tariff and cost structures and the loss of access to the European Union global trade markets), risks related to patent infringement actions, the loss of intellectual property rights, risks and uncertainties detailed from time to time in ADVANZ PHARMA's filings with the Canadian Securities Administrators, risks related to the spread of COVID-19 (including, without limitation, risks associated with reliance on third party manufacturers and suppliers, uncertainties relating to its ultimate spread, severity and duration, and related adverse effects on the economies and financial markets of many countries), and many other factors beyond the control of ADVANZ PHARMA. Although ADVANZ PHARMA has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements and information, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement or information can be guaranteed. Except as required by applicable securities laws, forward-looking statements and information speak only as of the date on which they are made and ADVANZ PHARMA undertakes no obligation to publicly update or revise any forward-looking statement or information, whether as a result of new information, future events, or otherwise.
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SOURCE ADVANZ PHARMA Corp.
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