Concordia Healthcare Announces Financial and Operational Results for its First Quarter, Ended March 31, 2014

CNW Group

TORONTO , May 15, 2014 /CNW/ - Concordia Healthcare Corp. ("Concordia" or the "Company") (CXR.TO) (CHEHF), a diverse healthcare company focused on legacy pharmaceutical products, orphan drugs, and medical devices for the diabetic population, today announced its financial and operational results for its first quarter, ended March 31, 2014 .

The Company went public in December 2013 so there is no comparative period for the prior year. All financial references are in U.S. dollars unless otherwise noted.

First Quarter 2014 Financial Highlights 

            

(in US$) 3 Months Ended March 31, 2014
Revenue $16,810,000
Gross profit $12,956,000
Operating income $4,939,000
Net loss ($1,836,000)
Earnings per share basic ($0.09)
Earnings per share diluted ($0.09)
EBITDA1 $3,546,000
Adjusted EBITDA2 $5,903,000
Cash and cash equivalents $77,973,000
Senior and subordinate debt $0



First Quarter 2014 Operational Highlights

  • On January 6, 2014 , signed a five-year exclusive distribution agreement with Lachlan Pharma Holdings for the distribution of Ulesfia® Lotion in the United States ;
  • On March 11, 2014 , completed a short-form prospectus offering, on a bought deal basis of 5,750,000 common shares of Concordia, which included the exercise by the underwriters of an over-allotment option of 15 percent, for net proceeds to the Company, after the deduction of underwriters' fees, of Cdn$63,508,750 ;
  • On March 20, 2014 , the Company announced it had entered into a definitive agreement to acquire Donnatal®, an adjunctive therapy in the treatment of irritable bowel syndrome and acute enterocolitis, from a privately held specialty pharmaceutical company carrying on business as Revive Pharmaceuticals. The Company has agreed to acquire Donnatal® for $200,000,000 in cash and an aggregate of 4,605,833 common shares of Concordia. Closing of this transaction is subject to customary closing conditions and is anticipated to close shortly. In the 2013 calendar year, Donnatal generated approximately $49,800,000 in revenues.
  • On March 20, 2014 , the Company announced it had entered into a commitment letter with GE Capital, Healthcare Financial Services and its affiliated entities ("GE") whereby GE agreed to provide a secured credit facility having a principal amount of up to US$195,000,000 , consisting of a US$170,000,000 term loan and a US$25,000,000 operating line (the "GE Financing"), with such credit facility being subject to a number of customary conditions, including entering into definitive documentation.  The GE Financing is anticipated to close shortly.
  • On March 28, 2014 , the Company paid in full its senior and subordinate debt as at December 31, 2013 , of $14,966,000 .
  • On March 30, 2014 , due to management's and the board of directors' continued confidence in the Company's financial strength, Concordia's board of directors approved a $0.30 per common share annualized 'eligible' dividend with $0.075 per common share being paid to shareholders on a quarterly basis. With respect to the second quarter of 2014, a record date of April 15, 2014 was declared with distribution of proceeds on April 30, 2014.   Declarations and payments are made in U.S. dollars.
  • Subsequent to March 31, 2014 , Concordia's board of directors approved a $0.075 dividend per common share.  A record date of July 15, 2014 is expected to be declared with a distribution of proceeds expected to occur on July 31, 2014.   Declarations and payments will be made in U.S. dollars.  All future quarterly dividends will be subject to quarterly financial review and board approval.

Going forward, the Company plans to grow its businesses by:

  • supplementing its existing portfolio by acquiring or in-licensing additional legacy products;
  • expanding its Specialty Healthcare Distribution Division by distributing additional products;
  • developing Photofrin for new indications including cholangiocarcinoma; and
  • acquiring additional orphan drugs.

"During the first 90 days of 2014, we signed a key license agreement, fortified our cash position, set the stage for the proposed acquisition of Donnatal, retired our senior and subordinate debt, and announced a dividend," said Mark Thompson , Chief Executive Officer of Concordia . "The momentum we created in the first quarter is expected to continue in the second quarter due to the expected closing of each of the Donnatal transaction and GE debt transaction. Looking ahead, we intend to keep aggressively building Concordia Healthcare." 

First Quarter 2014 Financial Results

The Company's net revenue for the reporting period was $16,810,000 while gross profit for the reporting period was $12,956,000 .

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

Net revenues for the Legacy Pharmaceuticals Division were $9,309,000 for the period ended March 31, 2014 and related to the sales of Kapvay, Orapred ODT, Orapred OS and Ulesfia after subtracting deductions from Gross Sales such as chargebacks, returns and allowances, rebates and other deductions that are customary in the industry.

Cost of sales for the period ended March 31, 2014 were $2,210,000 and reflect the costs of active pharmaceutical ingredients, excipients, packaging and freight costs and royalties.

Gross Profit for the period ended March 31, 2014 was $7,099,000 .

Orphan Drugs Division

The operations of Concordia's Orphan Drugs Division commenced on December 20, 2013 with the acquisition of Pinnacle Biologics Inc. The Orphan Drugs Division is intended to provide growth opportunities through the expansion into new indications for existing products or the acquisition of approved orphan drugs and further expansion within their identified markets and new indications.

Net revenues for the Orphan Drugs Division were $3,570,000 for the period ended March 31, 2014 and related primarily to sales of Photodynamic therapy (PDT) with PHOTOFRIN®. Photodynamic therapy (PDT) with PHOTOFRIN® is Concordia's commercial oncology drug for the treatment of certain forms of cancer.

Cost of sales for the period ended March 31, 2014 were $700,000 and reflect the cost of manufactured products sold, quality assurance and distribution.

Gross Profit for the period ended March 31, 2014 was $2,870,000 .

Specialty Healthcare Distribution Division

Net revenues for the Specialty Healthcare Distribution division were $3,931,000 for the period ended March 31, 2014 and related primarily to sales and distribution of diabetes testing supplies and orthotics for diabetic patients.

Costs of sales for the period ended March 31, 2014 were $944,000 and reflect the cost of products, warehousing and freight.

Gross profit for the period ended March 31, 2014 was $2,987,000 .

Overall for the Company, operating income for the period ending March 31, 2014 , was $4,939,000 .

Operating expenses for the period ended March 31, 2014 were $8,017,000 , including general and administrative expenses, which were $4,691,000 , selling expenses of $944,000 , acquisition-related costs of $174,000 , share-based compensation of $756,000 , and research and development costs of $1,418,000 .

Net cash used in operating activities was $3,042,000 for the year ended March 31, 2014 and was primarily related to the payment of accounts payable and deposits on inventory purchases.

As at March 31, 2014 the Company had 23,861,246 common shares issued and outstanding, and 26,100,000 on a fully diluted basis

Conference Call Notification 

Management will host a conference call to discuss the first quarter, 2014 results on Thursday, May 15, 2014 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 May 29, 2014 (ET ) by calling (855) 859-2056 or (416) 849-0833. Please enter the password 42708932 when instructed. A webcast replay will be available for 365 days by accessing a link through the Events section at visit www.concordiarx.com

About Concordia

Concordia is a diverse healthcare company focused on legacy pharmaceutical products, orphan drugs, and medical devices for the diabetic population. The company's legacy pharmaceutical business consists of an ADHD-treatment drug, Kapvay® (clonidine extended release tablets), Ulesfia® (benzyl alcohol) Lotion a Head Lice Treatment, and an Asthma-related medication, Orapred ODT® (prednisolone sodium phosphate orally disintegrating tablets). Concordia's Specialty Healthcare Distribution (SHD) division (Complete Medical Homecare) distributes medical supplies targeting diabetes and related conditions. Concordia's orphan division, Pinnacle, markets Photofrin® in the United States .

Concordia operates out of facilities in Oakville, Ontario , Lenexa, Kansas (near Kansas City, Missouri ), Bannockburn , (near Chicago ), Illinois and Bridgetown, Barbados .

1As 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. A reconciliation of net income to EBITDA is provided below.

2As used herein, adjusted EBITDA is defined as EBITDA adjusted for one-time charges associated with acquisitions, one-time charges associated with the Company's listing on the TSX, non-cash items such as unrealized gains / losses on derivative instruments, 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.

Non-IFRS Measures

This press release makes reference to certain non-IFRS measures. 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 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 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 and Adjusted EBITDA to provide investors with a supplemental measure 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 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.

Notice regarding forward-looking statements:

This release includes forward-looking statements regarding Concordia and its business, which may include, but is not limited to, statements with respect to the acquisition of Donnatal®, the impact of the acquisition of Donnatal® on Concordia's financial performance, the closing of the GE Financing, Concordia's financial strength, the payment of dividends in respect of Concordia's common shares, Concordia's growth, the expansion into new indications for Concordia's existing products, the acquisition of additional products (including orphan drugs and legacy products), in-licencing additional products, the distribution of additional products 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 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 the pharmaceutical industry, the failure to obtain regulatory approvals, the failure to close the acquisition of Donnatal® and/or the GE Financing, risks associated with the acquisition of Donnatal® and other products, economic factors, market conditions, the equity markets generally, risks associated with growth and competition 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.

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Contact:

please visit www.concordiarx.com or contact:

Kristen Van Vogt
TMX Equicom
416-815-0700 x 244
kvanvogt@tmxequicom.com

Adam Peeler
TMX Equicom
416-815-0700 x 225
apeeler@tmxequicom.com

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