SWK Holdings Corporation Announces Financial Results for Fourth Quarter and Full-Year 2021
SWK Holdings Corporation (Nasdaq: SWKH) reported its fourth-quarter 2021 financial results, highlighting a total revenue of $15.0 million, representing a 38% increase from the prior year. The company closed four transactions between December 2021 and March 2022, deploying $38.5 million. Notably, Enteris received a $5.0 million milestone payment from Cara Therapeutics. Despite a 10.7% decrease in total investment assets to $189.7 million, non-GAAP adjusted net income rose to $9.5 million, a increase from $7.5 million year-over-year.
- Total revenue increased by 38% to $15.0 million.
- Non-GAAP adjusted net income rose to $9.5 million, up from $7.5 million.
- Finance Receivables segment revenue increased by $1.4 million year-over-year.
- Total investment assets decreased by 10.7% to $189.7 million.
- Income-producing assets decreased by 11.3% to $181.7 million.
Conference Call and Live Audio Webcast Scheduled for Monday, March 28, 2022, at 10:00 a.m. ET
Corporate Highlights
- Reconstituted Board and appointed Wendy DiCicco, Robert K. Hatcher, and Laurie Dotter as independent directors
- Completed four transactions from December 2021 through March 2022, deploying
$38.5 million - Received a
$10.7 million cash payment from B&D Dental to successfully resolve long-running non-accrual position. Loan carried at$8.3 million - In December 2021, subsidiary Enteris received a
$5.0 million milestone payment from Cara Therapeutics with SWK retaining$3.0 million - Enteris currently advancing six partner feasibility studies
Finance Receivables Segment Update
- As of December 31, 2021, non-GAAP tangible finance book value per share was
$18.00 , a13.5% increase from December 31, 2020 - Fourth quarter 2021 finance portfolio effective yield was
13.8% , flat year-over-year - Fourth quarter 2021 finance portfolio realized yield was
20.0% , a 340-bps year-over-year increase - Fourth quarter 2021 core finance receivables business adjusted non-GAAP net income was
$6.9 million , which includes$0.6 million of extraordinary expenses - As of December 31, 2021, total investment assets were
$189.7 million , a10.7% decrease from December 31, 2020 - For 2021 SWK's core finance receivables segment generated a
14.4% adjusted return on tangible book value
DALLAS, March 28, 2022 /PRNewswire/ -- SWK Holdings Corporation (Nasdaq: SWKH) ("SWK" or the "Company"), a life science focused specialty finance company catering to small- and mid-sized commercial-stage companies, today provided a business update and announced its financial and operating results for the fourth quarter ended December 31, 2021.
"The fourth quarter concluded a strong 2021 for SWK's core specialty finance business as well as our Enteris subsidiary. Our specialty finance portfolio delivered a
Mr. Black concluded, "We are also pleased with the continued progress with our subsidiary, Enteris BioPharma, as it continues to pursue business development opportunities for its Peptelligence® and ProPerma® oral drug formulation technologies. Enteris is currently advancing six feasibility programs targeting therapeutic indications that include cancer, women's health, and disorders of the central nervous system. If the studies are successful and depending on our partner's R&D priorities, these feasibility agreements could advance to licensing agreements over the medium term, potentially providing new revenue streams for Enteris and SWK. Additionally, Enteris' contract manufacturing business is pursuing pharmaceutical customers to fill its expanded manufacturing facility."
Fourth Quarter 2021 Financial Results
For the fourth quarter 2021, SWK reported total revenue of
Income before taxes for the quarter was
For the fourth quarter 2021, non-GAAP adjusted net income was
GAAP net income for the quarter ended December 31, 2021, totaled
Income-producing assets (defined as finance receivables and corporate debt securities) totaled
Tangible financing book value per share totaled
Tables detailing SWK's financial performance for the fourth quarter 2021 are below.
Portfolio Status
At the end of the fourth quarter 2021, the weighted average projected effective yield of
For the fourth quarter 2021, the realized yield of the finance receivables portfolio was
During the quarter SWK deployed
Total portfolio investment activity for the three months ended December 31, 2021, and 2020 was as follows (in thousands):
Three Months Ended December 31, | ||||
2021 | 2020 | |||
Beginning portfolio | $ 206,247 | $ 187,039 | ||
Early payoff | (30,448) | (3,686) | ||
Interest paid-in-kind | 252 | (229) | ||
Investment in finance receivables and marketable investments | 20,235 | 30,401 | ||
Loan discount and fee accretion | (1,062) | 385 | ||
Net unrealized gain (loss) on investments and warrant assets | (124) | 639 | ||
Principal payments received on investments | (4,653) | (1,276) | ||
Royalty (paydowns) accretion | (1,006) | (868) | ||
Warrant investments, net of cancellations | 175 | — | ||
Ending portfolio | $ 189,616 | $ 212,405 | ||
Portfolio Updates Post Year-End
After the close of 2021, the Company closed three additional loans and advanced an additional
$6.5 million senior secured loan with Acer Therapeutics Inc. (NASDAQ: ACER)$12.0 million in senior secured debt to Advanced Oxygen Therapy
Adjusted Non-GAAP Net Income
The following table provides a reconciliation of SWK's reported (GAAP) consolidated net income to SWK's adjusted consolidated net income (Non-GAAP) for the three-month period ended December 31, 2021, and December 31, 2020. The table eliminates provisions for income taxes, non-cash mark-to-market changes on warrant assets and equity securities, amortization of Enteris intangible assets and any non-cash impact on the remeasurement of contingent consideration.
Three Months Ended December 31, | ||||
2021 | 2020 | |||
Consolidated GAAP net income | $ 6,327 | $ 4,644 | ||
Add (subtract): income tax expense (benefit) | 2,102 | (1,338) | ||
Add: Enteris amortization expense | 543 | 2,384 | ||
Add (subtract): unrealized (gain) loss on warrants | 406 | (565) | ||
Add (subtract): unrealized gain on equity securities | (282) | (75) | ||
Add: strategic review committee expenses | 588 | — | ||
Add (subtract): (gain) loss on change in fair value of contingent consideration | (140) | 2,436 | ||
Adjusted income before income tax expense (benefit) | $ 9,544 | $ 7,486 | ||
Adjusted income tax expense (benefit) | — | — | ||
Non-GAAP consolidated net income | $ 9,544 | $ 7,486 | ||
In the table above, management has deducted the following non-cash items: (i) change in the fair-market value of equities and warrants, as mark-to-market changes are non-cash, (ii) income taxes, as the Company has substantial net operating losses to offset against future income, (iii) amortization expense associated with Enteris intangible assets, and (iv) (gain) loss on remeasurement of contingent consideration. Management has also deducted legal and board expenses associated with the Company's strategic review; management believes these expenses are not reflective of operational execution.
Finance Receivables Adjusted Non-GAAP Net Income
The following table provides a reconciliation of SWK's consolidated adjusted income before provision for income taxes, listed in the table above, to the non-GAAP adjusted net income for the Finance Receivable segment for the three-month period ended December 31, 2021, and December 31, 2020. The table eliminates Enteris operating (income) and loss. The adjusted income before income taxes is derived in the table above and eliminates income tax expense, non-cash mark-to-market changes on warrant assets and equity securities.
Three Months Ended December 31, | ||||
2021 | 2020 | |||
Adjusted income before income tax expense (benefit) | $ 9,544 | $ 7,486 | ||
Add (subtract): Enteris operating (income) loss, excluding amortization expense | (2,625) | 1,086 | ||
Adjusted Finance Receivables income before income tax expense (benefit) | $ 6,919 | 6,400 | ||
Adjusted income tax expense (benefit) | — | — | ||
Non-GAAP Finance Receivables net income | $ 6,919 | $ 6,400 | ||
Conference Call Information
SWK Holdings will host a conference call and live audio webcast on Monday, March 28, 2022, at 10:00 a.m. ET, to discuss its corporate and financial results for the fourth quarter 2021. Interested participants and investors may access the conference call by dialing either:
(844) 378-6488 (U.S.)
(412) 317-1079 (International)
An audio webcast will be accessible via the Investors Events & Presentations section of the SWK Holdings' website: https://swkhold.investorroom.com/events. An archive of the webcast will remain available for 90 days beginning at approximately 11:30 a.m. ET, on March 28, 2022.
Non-GAAP Financial Measures
This release includes non-GAAP adjusted net income and non-GAAP finance receivable segment net income, which are metrics that are not compliant with generally accepted accounting principles in the United States (GAAP).
Non-GAAP adjusted net income is adjusted for certain items (including (i) changes in the fair-market value of public equity-related assets and SWK's warrant assets as mark-to-market changes are non-cash, (ii) income taxes as the Company has substantial net operating losses to offset against future income, (iii) changes in the fair-market value of contingent consideration associated with the Enteris acquisition as these changes are non-cash, and (iv) depreciation and amortization expenses, primarily associated with the Enteris acquisition).
In addition to the adjustments noted above, non-GAAP finance receivable segment net income also excludes Enteris operating losses.
Tangible financing book value per share excludes the deferred tax asset, intangible assets, goodwill, Enteris PP&E, and contingent consideration associated with the Enteris transaction. Adjusted return on tangible financing book value is calculated by dividing finance receivables segment adjusted non-GAAP net income by Tangible financing book value.
These non-GAAP measures may not be directly comparable to similar measures used by other companies in our industry, as other companies may define such measures differently. Management believes that these measures are useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends and provides useful additional information relating to our operations and financial condition. These metrics should be considered in addition to, and not as a replacement for, the most comparable GAAP measure.
About SWK Holdings Corporation
SWK Holdings Corporation is a specialized finance company with a focus on the global healthcare sector. SWK partners with ethical product marketers and royalty holders to provide flexible financing solutions at an attractive cost of capital to create long-term value for both SWK's business partners and its investors. SWK believes its financing structures achieve an optimal partnership for companies, institutions and inventors seeking capital for expansion or capital and estate planning by allowing its partners to monetize future cash flow with minimal dilution to their equity stakes. SWK also owns Enteris BioPharma, whose Peptelligence® and ProPerma™ drug delivery technologies create oral formulations of peptide-based and BCS class II, III, and IV small molecules. With Enteris, SWK has the opportunity to grow its finance business by actively building a wholly-owned portfolio of milestones and royalties through licensing activities. Additional information on the life science finance market is available on the Company's website at www.swkhold.com.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements including words such as "believes," "expects," "anticipates," "intends," "estimates," "plan," "will," "may," "look forward," "intend," "guidance," "future" or similar expressions are forward-looking statements. Because these statements reflect SWK's current views, expectations and beliefs concerning future events, these forward-looking statements involve risks and uncertainties. Investors should note that many factors, as more fully described under the caption "Risk Factors" and elsewhere in SWK's Form 10-K, Form 10-Q and Form 8-K filings with the Securities and Exchange Commission and as otherwise enumerated herein, could affect the Company's future financial results and could cause actual results to differ materially from those expressed in such forward-looking statements. The forward-looking statements in this press release are qualified by these risk factors. These are factors that, individually or in the aggregate, could cause the Company's actual results to differ materially from expected and historical results. You should not place undue reliance on any forward-looking statements, which speak only as of the date they are made. We assume no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.
SWK HOLDINGS CORPORATION | |||
CONSOLIDATED BALANCE SHEETS | |||
(In thousands, except share data) | |||
December 31, | |||
2021 | 2020 | ||
Assets | |||
Current assets: | |||
Cash and cash equivalents | $ 42,863 | $ 3,008 | |
Interest and accounts receivable, net | 1,803 | 1,911 | |
Marketable investments | 1,034 | 1,210 | |
Other current assets | 1,727 | 542 | |
Total current assets | 47,427 | 6,671 | |
Finance receivables, net | 181,553 | 204,491 | |
Marketable investments | 119 | 241 | |
Cost method investment | 3,491 | 3,491 | |
Deferred tax assets, net | 20,539 | 27,491 | |
Warrant assets | 3,419 | 2,972 | |
Intangible assets, net | 9,964 | 13,453 | |
Goodwill | 8,404 | 8,404 | |
Property and equipment, net | 5,779 | 5,211 | |
Other non-current assets | 1,970 | 1,476 | |
Total assets | $ 282,665 | $ 273,901 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities: | |||
Accounts payable and accrued liabilities | $ 5,087 | $ 3,652 | |
Revolving credit facility | 8 | $ 11,758 | |
Total current liabilities | 5,095 | 15,410 | |
Contingent consideration payable | 8,530 | 16,900 | |
Other non-current liabilities | 1,804 | 1,079 | |
Total liabilities | 15,429 | 33,389 | |
Stockholders' equity: | |||
Preferred Stock, | — | — | |
Common stock, | 13 | 13 | |
Additional paid-in capital | 4,431,719 | 4,430,924 | |
Accumulated deficit | (4,164,496) | (4,190,425) | |
Total stockholders' equity | 267,236 | 240,512 | |
Total liabilities and stockholders' equity | $ 282,665 | $ 273,901 | |
SWK HOLDINGS CORPORATION | |||
CONSOLIDATED STATEMENTS OF INCOME | |||
(In thousands, except per share data) | |||
Year Ended December 31, | |||
2021 | 2020 | ||
Revenues | |||
Finance receivable interest income, including fees | $ 39,310 | $ 30,800 | |
Pharmaceutical development | 16,122 | 5,903 | |
Other | 723 | 9 | |
Total revenues | 56,155 | 36,712 | |
Costs and expenses: | |||
Impairment expense | — | 163 | |
Pharmaceutical manufacturing, research and development expense | 7,347 | 4,268 | |
General and administrative | 13,620 | 10,546 | |
Depreciation and amortization expense | 4,061 | 12,091 | |
Change in fair value of acquisition-related contingent consideration | (287) | 4,400 | |
Interest expense | 374 | 455 | |
Total costs and expenses | 25,115 | 31,923 | |
Other income (expense), net | |||
Unrealized net gain (loss) on warrants | 272 | (586) | |
Unrealized net gain (loss) on equity securities | 1,839 | (591) | |
Realized (loss) gain on sale of investments | (140) | 53 | |
Income before income tax expense (benefit) | 33,011 | 3,665 | |
Income tax expense (benefit) | 7,082 | (1,537) | |
Consolidated net income | $ 25,929 | $ 5,202 | |
Net income per share | |||
Basic | $ 2.03 | $ 0.40 | |
Diluted | $ 2.02 | $ 0.40 | |
Weighted Average Shares | |||
Basic | 12,796 | 12,852 | |
Diluted | 12,834 | 12,862 | |
SWK HOLDINGS CORPORATION | |||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
(In thousands) | |||
Year Ended December 31, | |||
2021 | 2020 | ||
Cash flows from operating activities: | |||
Consolidated net income | $ 25,929 | $ 5,202 | |
Adjustments to reconcile net income to net cash provided by operating activities | |||
Impairment expense | — | 163 | |
Amortization of debt issuance costs | 49 | 188 | |
Deferred income taxes | 6,952 | (1,711) | |
Change in fair value of warrants | (272) | 586 | |
Change in fair value of equity securities | (1,839) | 591 | |
Loss (gain) on sale of investments | 140 | (53) | |
Change in fair value of acquisition-related contingent consideration | (287) | 4,400 | |
Loan discount and fee accretion | (1,130) | (1,983) | |
Interest paid-in-kind | (950) | (2,145) | |
Stock-based compensation | 1,163 | 728 | |
Depreciation and amortization | 4,061 | 12,091 | |
Changes in operating assets and liabilities: | |||
Interest and accounts receivable | 108 | 643 | |
Other assets | (1,788) | (959) | |
Accounts payable and other liabilities | 2,159 | 1,527 | |
Net cash provided by operating activities | 34,295 | 19,268 | |
Cash flows from investing activities: | |||
Cash received from settlement of warrants and equity securities | 1,875 | 53 | |
Investment in finance receivables | (42,350) | (42,859) | |
Repayment of finance receivables | 67,192 | 11,752 | |
Corporate debt securities principal payments | 122 | 62 | |
Purchases of property and equipment | (1,078) | (3,937) | |
Other | — | (237) | |
Net cash provided by (used in) investing activities | 25,761 | (35,166) | |
Cash flows from financing activities: | |||
Net settlement for employee taxes on restricted stock and options | (368) | — | |
Repurchases of common stock, including fees and expenses | — | (2,010) | |
Net (payments on) proceeds from credit facility | (11,750) | 11,758 | |
Payment of acquisition-related contingent consideration | (8,083) | (2,000) | |
Net cash (used in) provided by financing activities | (20,201) | 7,748 | |
Net increase (decrease) in cash and cash equivalents | 39,855 | (8,150) | |
Cash and cash equivalents at beginning of period | 3,008 | 11,158 | |
Cash and cash equivalents at end of period | $ 42,863 | $ 3,008 | |
Supplemental noncash flow activity: | |||
Warrants received in connection with finance receivables | $ 175 | $ 79 | |
Fair value of common stock issued in lieu of employee cash bonuses | $ — | $ 60 | |
Cash paid for interest | $ 110 | $ 137 | |
Fair value of common stock received in connection with payoff of term loan | $ 887 | $ — | |
View original content:https://www.prnewswire.com/news-releases/swk-holdings-corporation-announces-financial-results-for-fourth-quarter-and-full-year-2021-301511512.html
SOURCE SWK Holdings Corporation
FAQ
What were SWK Holdings' fourth quarter 2021 financial results?
What is the adjusted net income for SWK Holdings in Q4 2021?
How did SWK Holdings perform in the finance receivables segment for Q4 2021?
What was the change in total investment assets for SWK Holdings as of December 31, 2021?
When is the conference call for SWK Holdings scheduled?
