Paladin Reports Record 2012 Results
MONTREAL, CANADA--(Marketwire - Feb 28, 2013) - Paladin Labs Inc. (PLB.TO), a leading Canadian specialty pharmaceutical company, today reported its financial results for the fourth quarter and year ended December 31, 2012. The Company has achieved its 17th consecutive year of record revenues and its 10th consecutive year of record EBITDA(1).
2012 Highlights
Financial
Adjusted(2) revenues for 2012 totalled a record $179.0 million an increase of 27% over 2011
Adjusted(2) EBITDA(1) for 2012 increased 17% to a record $79.0 million compared to $67.7 million in 2011
Sales of promoted products including: Tridural®, Trelstar®, Testim®, Metadol®, Abstral®, Digifab®, Plan B®, Glucagen®, Urocit®-K and and Oralair® grew 13% in 2012 compared to 2011
Product Development
Filed a New Drug Submission (NDS) and obtained approval for Silenor®
Received regulatory approval from Health Canada and subsequently launched Oralair®
Filed a Non-Traditional Product License Application for Travelan®
Entered into a licensing agreement with QRxPharma Limited (ASX:QRX and OTCQX:QRXPY), for MOXDUO®
Entered into a licensing and distribution agreement with Dynamiclear Australia, for Dynamiclear Rapid™
Entered into an exclusive distribution agreement with Moberg Derma for Emtrix™
Entered into agreement to loan Nuvo Research Inc. (NRI.TO) $8.0 million in two equal tranches, of which $4.0 million was advanced on closing
Corporate Development
Announced closing of the 44.54% acquisition of Litha Healthcare Group ("Litha" - JSE:LHG) effective July 2, 2012
Initiated launch of commercial operations in Latin America with acquisition of a controlling stake of 50.01% in Ativa Pharma S.A. ("Ativa") effective January 1, 2013
Appointed Jonathan Ross Goodman as Chairman of the Board of Directors of Paladin
Subsequent to year end
Entered into a Canadian distribution agreement with Allergy Therapeutics plc (AGY.L) for Pollinex®-R with an option to add Sub-Saharan Africa
Entered into an exclusive licensing agreement with Apeiron Biologics AG for APN311, in Canada and Sub-Saharan Africa
"The year 2012 further demonstrated our ability to leverage our expertise into opportunity and growth through the expansion of our footprint in Africa and the initiation of our expansion into Latin America. Our ability to capitalize on opportunities and to continue to deliver on growth both locally and internationally is demonstrated through our record 2012 results and record cash position of $258.0 million" said Mark Beaudet, interim President and CEO of Paladin Labs.
Financial Results
Adjusted(2) revenues increased $37.5 million or 27% to a record $179.0 million in 2012 from $141.5 million in 2011. For the quarter ended December 31, 2012, Paladin recorded adjusted(2) revenues of $52.6 million compared to $37.1 million in the fourth quarter of 2011, a 42% year over year increase. The increase is mostly attributable to the proportionate consolidation of Litha''s revenues of $12.1 million for the quarter and $25.1 million for the second half of the year. In addition, revenues further increased as a result of incremental revenues from products acquired and/or launched by Paladin including corporate acquisitions since 2011, which contributed $10.2 million for the year. In addition, the sales growth of certain significant promoted products, including Tridural®, Trelstar®, Testim®, Metadol®, Abstral®, Digifab®, Plan B®, Glucagen®, Urocit®-K and Oralair®, combined increased by 13% for the quarter and year.
Consolidated revenues for the fourth quarter and year ended December 31, 2012 were $67.6 million and $210.2 million, an increase of 82% and 49% over the same periods last year. The increase is mostly attributable to the consolidation of Litha''s revenues of $27.1 million for the quarter and $56.3 million for the second half of the year.
Adjusted(2) EBITDA(1) for the year increased 17% to a record $79.0 million compared to $67.7 million in 2011. Adjusted(2) EBITDA(1) for the fourth quarter of 2012 increased 63% to $22.8 million compared to EBITDA of $14.0 million in the fourth quarter 2011. The increase in adjusted(2) EBITDA(1) for Paladin was driven by the strong sales performance of our promoted products, partially offset by increased costs associated with the launch of new products, including Abstral® and Oralair®. Litha contributed adjusted(2) EBITDA(1) of $1.0 million for the quarter and $2.5 million for the second half of the year. Litha''s adjusted(2) EBITDA(1) includes certain integration and acquisition costs related to Pharmaplan as well as the impact of the decline in the South African Rand. In addition, adjusted(2) EBITDA(1) from Litha was negatively impacted by fair value adjustments from the Paladin/Pharmaplan acquisition.
Consolidated EBITDA(1) for 2012 increased 21% to a record $82.0 million compared to $67.7 million in 2011. Consolidated EBITDA(1) for the fourth quarter of 2012 increased 71% to $24.0 million compared to EBITDA of $14.0 million in the fourth quarter 2011. The consolidation of Litha contributed $2.2 million for the quarter and $5.5 million for the second half of the year in consolidated EBITDA(1).
Net income attributable to shareholders of the company for the fourth quarter decreased 19% to $12.8 million or $0.61 per fully diluted share compared to net income of $15.8 million or $0.76 per fully diluted share for the same period in 2011. Net income attributable to shareholders for the year ended December 31, 2012 increased $9.7 million or 19% to $59.9 million from $50.2 million.
Consolidated selling, general and administrative expense for 2012 increased to $49 million compared to $32.0 million in 2011. Selling, general and administrative expense, as a percentage of revenues, remained steady at 23% for 2012. Selling, general and administrative expense for the fourth quarter of 2012 increased to $15.5 million compared to $9.0 million in the fourth quarter of 2011. Selling general and administrative expense, as percentage of revenues, decreased to 23% compared to 24% for the same quarter last year. The increase in selling, general and administrative expenses is attributable to Litha which contributed $8.7 million for the quarter and $18.3 million for the second half of the year.
Amortization expense for 2012 decreased to $16.1 million from $22.0 million in 2011. Amortization expense for the fourth quarter 2012 decreased to $5.6 million from $6.2 million in the corresponding period a year ago. The decrease in amortization expense is the result of certain pharmaceutical product licenses and rights having reached full amortization during the year, partly offset by amortization related to the acquisition of intangible assets, mostly for acquisitions of Litha and Labopharm.
As at December 31 2012, Paladin''s cash, cash equivalents and investments in marketable securities net of bank overdraft totalled a record $258.0 million. From this strong cash position, Paladin continues to pursue acquisition opportunities.
Product Developments
During 2012, Paladin advanced its product pipeline with the in-licensing and launch of new products. Oralair®, a sublingual grass pollen immunotherapy tablet for the treatment of symptoms of moderate to severe seasonal grass pollen allergic rhinitis with or without conjunctivitis, obtained regulatory approval and was subsequently launched during the fourth quarter. Furthermore, Paladin obtained approval for Silenor® (doxepin) for the treatment and symptomatic relief of insomnia. Paladin expects to launch Silenor® in the first half of 2013. In addition, Paladin in-licensed MOXDUO®, a novel, patented, immediate release, fixed dose formulation of morphine and oxycodone for the treatment of acute pain. Paladin expects to submit MOXDUO® for regulatory approval in the first half of 2013.
During 2012, Paladin enhanced its OTC portfolio with the regulatory approval and in-licensing of new products. Paladin in-licensed and obtained approval for AmnioSense ™, a novel diagnostic test for the detection of amniotic fluid leakage during pregnancy, and VagiSense™, which is used to detect bacterial vaginosis or trichomonas infections. Both products are expected to launch in the first half of 2013. In addition, Paladin in-licensed two new OTC products for Canada: Dynamiclear Rapid™, for the symptomatic treatment of cold sores, and Emtrix™, for the treatment of fingernail and toenail fungal infections. Emtrix™ is approved for sale in Canada and Dynamiclear Rapid™ is expected to be submitted for regulatory approval in the first half of 2013.
Corporate Developments
On February 21, 2012, the Company entered into a strategic partnership whereby it agreed to accelerate the purchase of the remaining 55.01% interest in Pharmaplan it did not own at that date and to merge the Pharmaplan business with the pharma division of Litha. On July 2, 2012, the Company closed these transactions effectively owning a 44.54% interest in Litha.
In November 2012, Paladin initiated the launch of commercial operations in Latin America with the acquisition of a controlling stake of 50.01% in Ativa Pharma S.A., a Mexico City based start up specialty pharma company. The investment in Ativa provides Paladin with the management team, infrastructure and the necessary regulatory permits to import, distribute and promote pharmaceuticals in the Mexican market. Ativa is currently focusing its activities on the registration of various products for regulatory approvals and it is expected that the Ativa''s first commercial launches will occur in 2014.
Financial Outlook
For fiscal 2013, Paladin expects to generate at least $255 million and $190 million in consolidated revenue and adjusted2 revenue respectively of which $115 million and $50 million is attributable to the consolidation of Litha. This forecast excludes the impact of acquisitions and of product launches resulting from new regulatory approvals that may be made by the Company between now and the end of 2013.
(1) EBITDA - Non-IFRS Financial Measures
The term EBITDA (earnings before interest, taxes, depreciation and amortization) does not have any standardized meaning under International Financial Reporting Standards ("IFRS") and therefore may not be comparable to similar measures presented by other companies. The Company defines EBITDA as earnings before interest expense, other expense (income), taxes, depreciation and amortization, foreign exchange gains (losses), share of net income (loss) in associates and joint venture and unusual items; such as write-downs and gains (losses) on intellectual property and investments. EBITDA is calculated and presented consistently from period to period and agrees, on a consolidated basis, with the amount disclosed as "Earnings before under-noted items" on the consolidated statements of income. The Company believes EBITDA to be an important measurement that allows it to assess the operating performance of its ongoing business on a consistent basis without the impact of amortization expenses. The Company excludes amortization expenses because their level depends substantially on non-operating factors such as the historical cost of intangible assets. The Company''s method for calculating EBITDA may differ from that used by other issuers and, accordingly, this measure may not be comparable to EBITDA used by other issuers.
(2) Adjusted
The term "adjusted" refers to the proportional consolidation of Litha''s results. Given that Litha is being accounted for on a consolidated basis, the consolidated results include amounts attributable to minority shareholders. Consequently, adjusted results have been provided to highlight Paladin''s 44.54% economic interest in Litha''s results.
Conference Call Notice
Paladin will host a conference call to discuss its fourth quarter results today at 10:00 a.m. EST. The dial-in number for the conference call is 1-800-736-4594 or 416-981-9000. The call will be audio-cast live and archived for 30 days at www.paladinlabs.com.
About Paladin Labs Inc.
Paladin Labs Inc., headquartered in Montreal, Canada, is a specialty pharmaceutical company focused on acquiring or in-licensing innovative pharmaceutical products for the Canadian and world markets. With this strategy, a focused national sales team and proven marketing expertise, Paladin has evolved into one of Canada''s leading specialty pharmaceutical companies. Paladin''s shares trade on the Toronto Stock Exchange under the symbol PLB. For more information, please visit the Company''s web site at www.paladinlabs.com.
This press release may contain forward-looking statements and predictions. These forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. The Company considers the assumptions on which these forward-looking statements are based to be reasonable at the time they were prepared, but cautions that these assumptions regarding the future events, many of which are beyond the control of the Company and its subsidiaries, may ultimately prove to be incorrect. Factors and risks, which could cause actual results to differ materially from current expectations, are discussed in the annual report as well as in the Company''s Annual Information Form for the year ended December 31, 2011. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information or future events and except as required by law. For additional information on risks and uncertainties relating to these forward-looking statements, investors should consult the Company''s ongoing quarterly filings, annual report and Annual Information Form and other fillings found on SEDAR at www.sedar.com.
CONSOLIDATED BALANCE SHEETS | |||
(In thousands of Canadian dollars) | |||
As at | December 31, 2012 | December 31, 2011 | |
$ | $ | ||
ASSETS | (unaudited) | (audited3) | |
Current | |||
Cash and cash equivalents | 118,744 | 72,115 | |
Marketable securities | 146,258 | 166,894 | |
Trade and other receivables | 38,587 | 20,208 | |
Inventories | 37,441 | 13,327 | |
Income tax receivable | 5,479 | 718 | |
Other current assets | 1,661 | 1,476 | |
Total current assets | 348,170 | 274,738 | |
Investment in associates | 626 | 20,850 | |
Interest in a joint venture | 30,476 | - | |
Loans receivable from a joint venture | 11,661 | - | |
Financial assets | 4,561 | 9,311 | |
Investment tax credits recoverable | 24,840 | 24,674 | |
Deferred income tax assets | 25,402 | 40,613 | |
Property, plant and equipment | 9,754 | 162 | |
Intangible assets | 112,851 | 27,565 | |
Goodwill | 36,176 | - | |
Total assets | 604,517 | 397,913 | |
LIABILITIES AND EQUITY | |||
Current | |||
Bank overdraft | 7,044 | - | |
Payables, accruals and provisions | 50,165 | 38,849 | |
Finance lease liability | 796 | 984 | |
Deferred revenue | 2,734 | 2,999 | |
Income tax payable | 24,140 | 22,205 | |
Other balances payable | 2,000 | 2,306 | |
Long-term liabilities | 5,804 | - | |
Total current liabilities | 92,683 | 67,343 | |
Finance lease liability | 6,843 | 5,745 | |
Deferred revenue | 1,734 | 2,099 | |
Deferred tax liability | 24,415 | - | |
Long-term liabilities | 28,327 | - | |
Total liabilities | 154,002 | 75,187 | |
Equity | |||
Share capital | 172,282 | 166,681 | |
Other paid-in capital | 7,039 | 5,144 | |
Other capital reserves | (4,076 | ) | 553 |
Retained earnings | 208,461 | 150,348 | |
Attributable to shareholders of the Company | 383,706 | 322,726 | |
Non-controlling interests | 66,809 | - | |
Total equity | 450,515 | 322,726 | |
Total liabilities and equity | 604,517 | 397,913 | |
CONSOLIDATED INCOME STATEMENTS | |||||||||
(In thousands of Canadian dollars except for share and per share amounts) | |||||||||
Three months ended December 31 | Twelve months ended December 31 | ||||||||
2012 | 2011 | 2012 | 2011 | ||||||
$ | $ | $ | $ | ||||||
(unaudited) | (unaudited) | (unaudited) | (audited3) | ||||||
Revenues | 67,608 | 37,083 | 210,200 | 141,466 | |||||
Cost of sales | 28,388 | 11,543 | 76,810 | 39,294 | |||||
Gross income | 39,220 | 25,540 | 133,390 | 102,172 | |||||
Expenses (income) | |||||||||
Selling, general and administrative | 15,508 | 9,049 | 49,013 | 31,983 | |||||
Research and development | 1,813 | 3,628 | 7,794 | 9,773 | |||||
Interest income | (2,123 | ) | (1,089 | ) | (5,460 | ) | (7,296 | ) | |
Earnings before under-noted items | 24,022 | 13,952 | 82,043 | 67,712 | |||||
Amortization of intangible assets | 5,565 | 6,168 | 16,132 | 22,028 | |||||
Depreciation of property, plant and equipment | 445 | 19 | 703 | 136 | |||||
Other finance expense (income) | 314 | (70 | ) | 1,164 | (8,687 | ) | |||
Other income | 71 | - | (3,035 | ) | (97 | ) | |||
Foreign exchange loss | 1,089 | 284 | 1,211 | 80 | |||||
Interest expense | 1,225 | 18 | 2,181 | 18 | |||||
Share of net loss from a joint venture | (46 | ) | - | 725 | - | ||||
Share of net income from associates | (19 | ) | (660 | ) | (999 | ) | (1,756 | ) | |
Income before income tax and under-noted items | 15,378 | 8,193 | 63,961 | 55,990 | |||||
Purchase gain on business combination | - | (17,070 | ) | - | (17,070 | ) | |||
Gain on revaluation of equity investment | - | - | (12,294 | ) | - | ||||
Restructuring, shutdown and other costs | - | 8,795 | - | 8,795 | |||||
Income before income tax | 15,378 | 16,468 | 76,255 | 64,265 | |||||
Provision for income taxes | 3,958 | 696 | 17,900 | 14,114 | |||||
Net income for the year | 11,420 | 15,772 | 58,355 | 50,151 | |||||
Attributable to: | |||||||||
Shareholders of the Company | 12,834 | 15,772 | 59,906 | 50,151 | |||||
Non-controlling interests | (1,414 | ) | - | (1,551 | ) | - | |||
Attributable to shareholders | |||||||||
Basic earnings per share | 0.63 | 0.78 | 2.94 | 2.51 | |||||
Diluted earnings per share | 0.61 | 0.76 | 2.86 | 2.43 | |||||
Weighted average number of shares outstanding | |||||||||
Basic | 20,402,565 | 20,232,947 | 20,347,805 | 19,970,658 | |||||
Diluted | 20,963,327 | 20,849,408 | 20,946,178 | 20,659,276 | |||||
| |||||||||
Periods ended December 31 | Three months ended December 31, 2012 | Twelve months ended December 31, 2012 | |||||||
(In thousands of Canadian dollars) | 2012 | 2011 | 2012 | 2011 | |||||
$ | $ | $ | $ | ||||||
(unaudited) | (unaudited) | (unaudited) | (audited3) | ||||||
Operating activities | |||||||||
Net income for the year | 11,420 | 15,772 | 58,355 | 50,151 | |||||
Adjustments reconciling net income to operating cash flows | |||||||||
Amortization of intangible assets | 5,565 | 6,168 | 16,132 | 22,028 | |||||
Deferred tax | 4,276 | (1,144 | ) | 15,845 | 2,577 | ||||
Share-based compensation expense | 966 | 438 | 3,216 | 1,946 | |||||
Other finance expense (income) | 318 | (69 | ) | 1,164 | (8,687 | ) | |||
Unrealized foreign exchange loss (gain) | 1,467 | 825 | 1,143 | (7 | ) | ||||
Gain on revaluation of equity investment | - | - | (12,294 | ) | - | ||||
Other income | (3 | ) | - | (2,838 | ) | - | |||
Depreciation of property, plant and equipment | 460 | 22 | 726 | 187 | |||||
Share of net income from associates | (19 | ) | (660 | ) | (999 | ) | (1,756 | ) | |
Share of net loss from a joint venture | (46 | ) | - | 725 | - | ||||
Purchase gain on business combination | - | (17,070 | ) | - | (17,070 | ) | |||
Restructuring, shutdown and other costs | - | 3,946 | - | 3,946 | |||||
24,404 | 8,228 | 81,175 | 53,315 | ||||||
Net change in non-cash balances relating to operations | (1,407 | ) | 3,913 | (11,572 | ) | 14,798 | |||
Cash inflow from operating activities | 22,997 | 12,141 | 69,603 | 68,113 | |||||
Investing activities | |||||||||
Disposals and maturities of marketable securities | 47,474 | 27,020 | 187,575 | 78,373 | |||||
Dividends from an associate | - | 1,980 | 3,319 | 2,871 | |||||
Proceeds from disposal of financial assets | 5,785 | 13,109 | 6,620 | 102,119 | |||||
Proceeds from disposal of intangible assets | 749 | - | 1,466 | - | |||||
Proceeds from disposal of property, plant and equipment | 180 | - | 220 | - | |||||
Acquisition of subsidiaries, net of cash acquired | (2 | ) | (1,109 | ) | (42,358 | ) | (1,109 | ) | |
Purchases of marketable securities | (46,636 | ) | (50,561 | ) | (167,615 | ) | (201,618 | ) | |
Purchases of financial assets | - | (1,000 | ) | (4,000 | ) | (89,873 | ) | ||
Payment of other balances payable | - | - | (995 | ) | (250 | ) | |||
Purchases of property, plant and equipment | (926 | ) | (9 | ) | (1,453 | ) | (78 | ) | |
Additions to intangible assets | (1,004 | ) | - | (1,111 | ) | (7,617 | ) | ||
Investment in an associate | - | - | - | (2,936 | ) | ||||
Net cash inflow (outflow) from investing activities | 5,620 | (10,570 | ) | (18,332 | ) | (120,118 | ) | ||
Financing activities | |||||||||
Common shares issued for cash, net of issue costs of $nil (2011: $1,643) | 127 | 880 | 1,478 | 41,918 | |||||
Increase in bank overdraft | 634 | - | 1,353 | - | |||||
Repurchase of shares | - | (259 | ) | (2,278 | ) | (580 | ) | ||
Settlement of finance lease liability | - | - | (3,366 | ) | - | ||||
Repayment of long-term liabilities | (1,230 | ) | (13,241 | ) | (1,766 | ) | (13,241 | ) | |
Payment of obligation under finance lease | - | (167 | ) | (500 | ) | (167 | ) | ||
Net cash (outflow) inflow from financing activities | (469 | ) | (12,787 | ) | (5,079 | ) | 27,930 | ||
Foreign exchange gain (loss) on cash and cash equivalents | 12 | - | 437 | (105 | ) | ||||
Increase (decrease) in cash and cash equivalents during the period | 28,160 | (11,216 | ) | 46,629 | (24,180 | ) | |||
Cash and cash equivalents, beginning of period | 90,584 | 83,331 | 72,115 | 96,295 | |||||
Cash, cash equivalents, end of period | 118,744 | 72,115 | 118,744 | 72,115 | |||||
Paladin cash and cash equivalents | 113,229 | 72,115 | |||||||
Paladin marketable securities | 146,258 | 166,894 | |||||||
Paladin cash, cash equivalents and marketable securities | 259,487 | 239,009 | |||||||
Litha cash and cash equivalents | 5,515 | - | |||||||
Litha bank overdraft | (7,044 | ) | - | ||||||
Litha cash and cash equivalents and bank overdraft | (1,529 | ) | - | ||||||
Cash, cash equivalents and marketable securities net of bank overdraft | 257,958 | 239,009 |
Reconciliation of the adjusted2 consolidated results from operations | |||||||
Three months ended December 31, 2012 | Paladin | Litha 100% | Consolidated | Litha 44.54% | Adjusted2 | ||
$ | $ | $ | $ | $ | |||
Revenues | 40,509 | 27,099 | 67,608 | 12,070 | 52,579 | ||
Cost of sales | 12,023 | 16,365 | 28,388 | 7,289 | 19,312 | ||
Gross Income | 28,486 | 10,734 | 39,220 | 4,781 | 33,267 | ||
EBITDA1 | 21,833 | 2,189 | 24,022 | 975 | 22,808 | ||
Net income (loss) before income taxes | 18,742 | (3,364 | ) | 15,378 | (1,498 | ) | 17,244 |
Net Income (loss) | 13,973 | (2,553 | ) | 11,420 | (1,137 | ) | 12,836 |
Net Income (loss) attributable to shareholders |
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Twelve months ended December 31, 2012 | Paladin | Litha 100 | % | Consolidated | Litha 44.54 | % | Adjusted2 |
$ | $ | $ | $ | $ | |||
Revenues | 153,873 | 56,327 | 210,200 | 25,088 | 178,961 | ||
Cost of sales | 44,112 | 32,698 | 76,810 | 14,564 | 58,676 | ||
Gross Income | 109,761 | 23,629 | 133,390 | 10,524 | 120,285 | ||
EBITDA1 | 76,521 | 5,522 | 82,043 | 2,459 | 78,980 | ||
Net income (loss) before income taxes | 79,479 | (3,224 | ) | 76,255 | (1,436 | ) | 78,043 |
Net Income (loss) | 61,065 | (2,710 | ) | 58,355 | (1,207 | ) | 59,858 |
Net Income (loss) attributable to shareholders |
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3 Derived from the audited annual financial statements filed on SEDAR at http://www.sedar.com/