Q2 Business and Financial Highlights:
- Net Sales were $80.9
Million
- Gross Margin was 18%, Adjusted Gross Margin was 19%
- Net Sales, Gross Margin and Adjusted Gross Margin Up Versus
Preceding Two Quarters
- $19 Million Income Tax Refund
Received, Cash Balance of $56 Million
at December 31st
Pipeline Updates:
- Pivotal Biosimilar Insulin Glargine Clinical Trial Top-line
Results Anticipated in Current Quarter; BLA Filing Targeted for
Middle of Calendar 2023
- Positive Results from Study of Biosimilar Insulin Aspart vs
US NovoLog®; Commencement of Pivotal Trial Anticipated
by Fall of Current Year
- Executed Sub-License Agreement Related to Insulin Pen
Delivery Device, Improving Ability to Freely Market Insulin
Products Upon Approval
- Generic FLOVENT® DISKUS®
ANDA Filing Anticipated by Mid Year
TREVOSE,
Pa., Feb. 1, 2023 /PRNewswire/ -- Lannett
Company, Inc. (NYSE: LCI) today reported financial results for its
fiscal 2023 second quarter ended December
31, 2022.
"For the quarter, net sales, gross margin and adjusted gross
margin increased compared with the two preceding quarters," said
Tim Crew, chief executive officer of
Lannett. "This improved performance was in part driven by higher
product sales across our offering, notably, generic Adderall due to
an ongoing market shortage where our partner was able to maintain
their supply; the sale of certain products under a private label
agreement; and less competitive intensity than we anticipated.
During the quarter, we received, as expected, approximately
$19 million of income tax
refunds.
"With regard to our pipeline, we are nearing the launch, subject
to approval, of a few products that have the potential to be
meaningful contributors to our financial results. For our
biosimilar insulin glargine product, initial results from the
pivotal trial are expected shortly; and with regard to our
biosimilar insulin aspart product, positive results from the animal
study indicated that our product was highly comparable to the
reference biologic. Importantly, we previously entered into a
supply agreement for a pen injector delivery device for use with
our biosimilar insulin glargine and biosimilar insulin aspart
products. Recently we acquired a sublicense to the various patents
held by the reference product owner, related to the pen injector
device, thereby removing potential related litigation risk
associated with the insulin glargine product and improving our
ability to freely market our biosimilar insulin products, once
approved.
"Looking ahead, we have raised our full-year guidance for net
sales and adjusted gross margin, which reflects, in part, our
improved performance over the first half of our current fiscal year
and our belief that our and our partners' reliable and high-quality
supply of affordable medicines has contributed to some
stabilization of our current business."
Restructuring, Cost Reduction Initiatives
In December 2022, the company
authorized a restructuring and cost savings plan that, once fully
implemented, is estimated to generate cost savings of approximately
$11 million, annually. The plan
includes operational improvements and cost efficiencies, as well as
a restructuring of the company's research and development (R&D)
function. These actions will result in a workforce reduction of
approximately 60 staffed positions and 40 recently vacant
positions, which will be implemented in phases over the remainder
of the company's current fiscal year. The company also anticipates
exiting two facilities located in Philadelphia, Pennsylvania this year. While
the plan is expected to reduce certain R&D-related costs, the
company plans to maintain its level of investment in product
development.
Second-Quarter Financial Results: Fiscal 2023 vs Fiscal
2022
GAAP basis:
- Net sales were $80.9 million
compared with $86.5 million
- Gross profit was $14.3 million,
or 18% of net sales, compared with $5.7
million, or 7% of net sales
- Asset impairment charges were $6.0
million compared with $49.4
million
- Net loss was $36.3 million, or
$0.88 per share, compared with
$81.1 million, or $2.01 per share
Non-GAAP basis:
- Net sales were $80.9 million
compared with $86.5 million
- Adjusted gross profit was $15.7
million, or 19% of net sales, compared with $9.7 million, or 11% of net sales
- Adjusted interest expense increased to $13.3 million from $12.9
million
- Adjusted net loss was $14.0
million, or $0.34 per share
compared with $15.9 million, or
$0.39 per share
- Adjusted EBITDA was $1.0 million
versus negative adjusted EBITDA of $1.0
million
Guidance for Fiscal 2023
Based on its current outlook, the company raised guidance for
fiscal year 2023, as follows:
|
GAAP
|
Adjusted*
|
|
Net sales
|
$285 million to $305
million, up from $275 million to $300 million
|
$285 million to $305
million, up from $275 million to $300 million
|
|
Gross margin
%
|
Approximately 15% to
17%, up from approximately 13% to 15%
|
Approximately 17% to
19%, up from approximately 15% to 17%
|
|
R&D
expense
|
$21 million to $23
million, down from $23 million to $25 million
|
$21 million to $23
million, down from $23 million to $25 million
|
|
SG&A
expense
|
$66 million to $68
million, up from $64 million to $67 million
|
$61 million to $63
million, up from $56 million to $59 million
|
|
Restructuring
expenses
|
$3 million to $4
million, up from $0 to $1 million
|
--
|
|
Asset impairment
charges
|
$10.7 million, up from
$4.7 million
|
--
|
|
Interest and
other
|
Approximately $67
million, up from approximately $60 million
|
Approximately $53
million, unchanged
|
|
Effective tax
rate
|
Approximately 0% to 1%,
changed from approximately 0% to 4%
|
Approximately 20% to
22%, down from approximately 23.5% to 24.5%
|
|
(Negative) Adjusted
EBITDA
|
N/A
|
($5 million) to $1
million, changed from ($12 million) to $0 million
|
|
Capital
expenditures
|
Approximately $8
million to $10 million, changed from approximately $8 million to
$12 million
|
Approximately $8
million to $10 million, changed from approximately $8 million to
$12 million
|
|
|
*A reconciliation of
Adjusted amounts to most directly comparable GAAP amounts can be
found in the financial tables following this release.
|
Conference Call Information and Forward-Looking
Statements
Later today, the company will host a conference call at
4:30 p.m. ET to review its results of
operations for its fiscal 2023 second quarter ended December 31, 2022. The conference call will be
available to interested parties by dialing 877-407-9716 from the
U.S. or Canada, or
201-493-6779 from international locations. The call will be
broadcast via the Internet at www.lannett.com. Listeners are
encouraged to visit the website at least 10 minutes prior to the
start of the scheduled presentation to register, download and
install any necessary audio software. A playback of the call will
be archived and accessible on the same website for at least three
months.
Discussion during the conference call may include
forward-looking statements regarding such topics as, but not
limited to, the company's financial status and performance,
regulatory and operational developments, and any comments the
company may make about its future plans or prospects in response to
questions from participants on the conference call.
Use of Non-GAAP Financial Measures
This release contains references to non-GAAP financial measures,
including Adjusted EBITDA, which are financial measures that are
not prepared in conformity with United
States generally accepted accounting principles (U.S. GAAP).
Management uses these measures internally for evaluating its
operating performance. The company's management believes that the
presentation of non-GAAP financial measures provides useful
supplementary information regarding operational performance,
because it enhances an investor's overall understanding of the
financial results for the company's core business. Additionally, it
provides a basis for the comparison of the financial results for
the company's core business between current, past and future
periods. The company also believes that including Adjusted EBITDA
and the other non-GAAP financial measures presented in this release
is appropriate to provide additional information to investors.
Non-GAAP financial measures should be considered only as a
supplement to, and not as a substitute for or as a superior measure
to, financial measures prepared in accordance with U.S.
GAAP.
Detailed reconciliations of non-GAAP financial measures to the
most directly comparable GAAP financial measures are included in
the financial tables following this release.
Non-GAAP financial measures exclude, among others, the effects
of (1) amortization of purchased intangibles and other purchase
accounting entries, (2) restructuring expenses, (3) asset
impairment charges, (4) non-cash interest expense, as well as (5)
certain other items considered unusual or non-recurring in
nature.
NovoLog® is a registered trademark of Novo Nordisk
A/S. ADVAIR DISKUS® and Flovent®
Diskus® are registered trademarks of
GlaxoSmithKline. Spiriva® Handihaler® is
a registered trademark of Boehringer Ingelheim.
About Lannett Company, Inc.:
Lannett Company, founded in 1942, develops, manufactures,
packages, markets and distributes generic pharmaceutical products
for a wide range of medical indications – see financial schedule
below for net sales by medical indication. For more information,
visit the company's website at www.lannett.com.
Cautionary Statement Regarding Forward-Looking
Statements
This release contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements are statements that are not
historical facts and can be identified by the words "estimate,"
"expect," "believe," "target," "anticipate" and other similar
expressions. Any such statements, including, but not limited to,
statements regarding the company's competitive environment and
other market conditions; regulatory and operational developments;
the timing related to commencing and successfully completing the
pivotal clinical trials, filing the Biologics License Applications,
and successfully launching any products, including biosimilar
insulin glargine and biosimilar insulin aspart; the potential
material impact of COVID-19 on future financial results; the timing
of the company's restructuring plan and its ability to realize
estimated cost reductions and other benefits therefrom; the
company's financial status and performance; and the company's
ability to achieve the financial metrics stated in the company's
guidance for fiscal 2023, whether expressed or implied, are subject
to risks and uncertainties which can cause actual results to differ
materially from those currently anticipated due to a number of
factors beyond the company's control. Such factors include, but are
not limited to, the difficulty in predicting the timing or outcome
of FDA or other regulatory approvals or actions, the ability to
successfully commercialize products upon approval, including
acquired products, and the company's estimated or anticipated
future financial results, future inventory levels, future
competition or pricing future levels of operating expenses, product
development efforts or performance, and other risk factors
discussed in the company's latest Form 10-K, subsequent Form 8-Ks
and 10-Qs and other documents filed with the Securities and
Exchange Commission from time to time. You should not place undue
reliance upon any such forward-looking statements, which represent
the company's judgment as of the date of this release. To the
fullest extent permitted by law, the company disclaims any intent
or obligation to update any forward-looking statements, whether as
a result of new information, future events or otherwise.
FINANCIAL SCHEDULES FOLLOW
|
LANNETT COMPANY,
INC.
|
|
|
CONSOLIDATED BALANCE
SHEETS
|
|
|
(In thousands, except
share and per share data)
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
December 31,
2022
|
|
June 30,
2022
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
55,850
|
|
$
87,854
|
|
|
Accounts receivable,
net
|
80,344
|
|
56,241
|
|
|
Inventories
|
|
94,776
|
|
95,158
|
|
|
Current income taxes
receivable
|
-
|
|
36,793
|
|
|
Assets held for
sale
|
|
1,300
|
|
-
|
|
|
Other current
assets
|
|
18,257
|
|
14,070
|
|
|
Total current
assets
|
250,527
|
|
290,116
|
|
|
Property, plant and
equipment, net
|
116,473
|
|
133,178
|
|
|
Intangible assets,
net
|
|
29,639
|
|
32,179
|
|
|
Operating lease
right-of-use asset
|
9,274
|
|
9,646
|
|
|
Income taxes
receivable
|
|
17,984
|
|
-
|
|
|
Other
assets
|
|
14,462
|
|
19,316
|
|
|
TOTAL
ASSETS
|
|
$
438,359
|
|
$
484,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
$
33,165
|
|
$
29,737
|
|
|
Accrued
expenses
|
|
25,688
|
|
23,667
|
|
|
Accrued payroll and
payroll-related expenses
|
9,151
|
|
8,342
|
|
|
Rebates
payable
|
|
21,377
|
|
21,568
|
|
|
Royalties
payable
|
|
7,466
|
|
5,677
|
|
|
Restructuring
liability
|
|
410
|
|
490
|
|
|
Current operating lease
liabilities
|
2,074
|
|
2,064
|
|
|
Other current
liabilities
|
12,885
|
|
13,395
|
|
|
Total current
liabilities
|
112,216
|
|
104,940
|
|
|
Long-term debt,
net
|
|
623,855
|
|
614,948
|
|
|
Long-term operating
lease liabilities
|
9,441
|
|
9,994
|
|
|
Other
liabilities
|
|
5,121
|
|
5,616
|
|
|
TOTAL
LIABILITIES
|
|
750,633
|
|
735,498
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
DEFICIT
|
|
|
|
|
|
Common stock ($0.001 par value, 100,000,000 shares authorized;
42,996,851 and 42,269,137 shares issued;
|
|
|
|
|
|
41,247,806 and
40,704,572 shares outstanding at December 31, 2022 and June 30,
2022, respectively)
|
43
|
|
42
|
|
|
Additional paid-in
capital
|
367,134
|
|
363,957
|
|
|
Accumulated
deficit
|
|
(660,713)
|
|
(596,386)
|
|
|
Accumulated other
comprehensive loss
|
(367)
|
|
(411)
|
|
|
Treasury
stock(1,749,045 and 1,564,565 shares at December 31, 2022 and
June 30, 2022, respectively)
|
(18,371)
|
|
(18,265)
|
|
|
Total stockholders'
deficit
|
(312,274)
|
|
(251,063)
|
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
$
438,359
|
|
$
484,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LANNETT COMPANY,
INC.
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)
|
|
(In thousands, except
share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$
80,894
|
|
$
86,508
|
|
$
155,973
|
|
$
188,033
|
|
Cost of
sales
|
|
65,258
|
|
76,990
|
|
126,543
|
|
157,998
|
|
Amortization of
intangibles
|
|
1,358
|
|
3,808
|
|
2,553
|
|
7,804
|
|
Gross
profit
|
|
14,278
|
|
5,710
|
|
26,877
|
|
22,231
|
|
Operating expenses
(income):
|
|
|
|
|
|
|
|
|
|
Research and
development expenses
|
|
4,928
|
|
4,747
|
|
12,107
|
|
10,511
|
|
Selling, general and
administrative expenses
|
|
18,317
|
|
18,791
|
|
35,014
|
|
37,696
|
|
Restructuring
expenses
|
|
335
|
|
891
|
|
481
|
|
891
|
|
Asset impairment
charges
|
|
5,969
|
|
49,361
|
|
10,637
|
|
49,361
|
|
Gain on sale of
intangible assets
|
|
(500)
|
|
-
|
|
(3,563)
|
|
-
|
|
Total operating
expenses
|
|
29,049
|
|
73,790
|
|
54,676
|
|
98,459
|
|
Operating
loss
|
|
(14,771)
|
|
(68,080)
|
|
(27,799)
|
|
(76,228)
|
|
Other income
(expense), net:
|
|
|
|
|
|
|
|
|
|
Investment
income
|
|
399
|
|
46
|
|
491
|
|
80
|
|
Interest
expense
|
|
(15,184)
|
|
(14,430)
|
|
(30,214)
|
|
(28,654)
|
|
Loss on loan
receivable
|
|
(6,826)
|
|
-
|
|
(6,826)
|
|
-
|
|
Other
|
|
106
|
|
11
|
|
87
|
|
(51)
|
|
Total other expense,
net
|
|
(21,505)
|
|
(14,373)
|
|
(36,462)
|
|
(28,625)
|
|
Loss before income
tax
|
|
(36,276)
|
|
(82,453)
|
|
(64,261)
|
|
(104,853)
|
|
Income tax expense
(benefit)
|
|
32
|
|
(1,368)
|
|
66
|
|
(1,426)
|
|
Net
loss
|
|
$
(36,308)
|
|
$
(81,085)
|
|
$
(64,327)
|
|
$
(103,427)
|
|
|
|
|
|
|
|
|
|
|
Loss per common
share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
(0.88)
|
|
$
(2.01)
|
|
$
(1.57)
|
|
$
(2.58)
|
|
Diluted
|
|
$
(0.88)
|
|
$
(2.01)
|
|
$
(1.57)
|
|
$
(2.58)
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
41,170,839
|
|
40,358,137
|
|
41,056,607
|
|
40,142,974
|
|
Diluted
|
|
41,170,839
|
|
40,358,137
|
|
41,056,607
|
|
40,142,974
|
|
LANNETT COMPANY,
INC.
|
|
RECONCILIATION OF
GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
(UNAUDITED)
|
|
(In thousands, except
percentages, share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
December 31, 2022
|
|
Net sales
|
Cost of
sales
|
Amortization
of intangibles
|
Gross
Profit
|
Gross
Margin
%
|
R&D
expenses
|
SG&A
expenses
|
Restructuring
expenses
|
Asset
impairment charges
|
Gain on sale
of intangible assets
|
Operating
loss
|
Other
expense
|
Loss before
income tax
|
Income tax
expense (benefit)
|
Net
loss
|
Diluted loss
per share (k)
|
|
|
|
|
GAAP
Reported
|
$
155,973
|
$
126,543
|
$
2,553
|
$
26,877
|
17 %
|
$
12,107
|
$
35,014
|
$
481
|
$
10,637
|
$
(3,563)
|
$
(27,799)
|
$
(36,462)
|
$
(64,261)
|
$
66
|
$
(64,327)
|
$
(1.57)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles (a)
|
-
|
-
|
(2,553)
|
2,553
|
|
-
|
-
|
-
|
-
|
-
|
2,553
|
-
|
2,553
|
-
|
2,553
|
|
|
Cody API business
(b)
|
-
|
(90)
|
-
|
90
|
|
-
|
(16)
|
-
|
-
|
-
|
106
|
-
|
106
|
-
|
106
|
|
|
Depreciation on
capitalized software costs (c)
|
-
|
-
|
-
|
-
|
|
-
|
(2,102)
|
-
|
-
|
-
|
2,102
|
-
|
2,102
|
-
|
2,102
|
|
|
Restructuring expenses
(d)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
(481)
|
-
|
-
|
481
|
-
|
481
|
-
|
481
|
|
|
Asset impairment
charges (e)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
(10,637)
|
-
|
10,637
|
-
|
10,637
|
-
|
10,637
|
|
|
Gain on sale of
intangible assets (f)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
3,563
|
(3,563)
|
-
|
(3,563)
|
-
|
(3,563)
|
|
|
Non-cash interest
(g)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
3,637
|
3,637
|
-
|
3,637
|
|
|
Loss on loan receivable
(h)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
6,826
|
6,826
|
-
|
6,826
|
|
|
Other (i)
|
-
|
-
|
-
|
-
|
|
-
|
(2,603)
|
-
|
-
|
-
|
2,603
|
(140)
|
2,463
|
-
|
2,463
|
|
|
Tax adjustments
(j)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(7,945)
|
7,945
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjusted
|
$
155,973
|
$
126,453
|
$
-
|
$
29,520
|
19 %
|
$
12,107
|
$
30,293
|
$
-
|
$
-
|
$
-
|
$
(12,880)
|
$
(26,139)
|
$
(39,019)
|
$
(7,879)
|
$
(31,140)
|
$
(0.76)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
To exclude amortization
of purchased intangible assets primarily related to the acquisition
of KUPI
|
|
|
|
|
|
|
|
|
|
|
(b)
|
To exclude the
operating results of the ceased Cody API business
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
To exclude depreciation
on previously capitalized software integration costs associated
with the KUPI acquisition
|
|
|
|
|
|
|
|
|
|
(d)
|
To exclude expenses
primarily associated with the 2022 Restructuring Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
(e)
|
To exclude asset
impairment charges related to the Company's State Road and
Torresdale facilities
|
|
|
|
|
|
|
|
|
|
|
(f)
|
To exclude the gain on
sale of assets related to several ANDAs, primarily purchased by
Chartwell Pharmaceuticals, Inc.
|
|
|
|
|
|
|
|
|
|
(g)
|
To exclude non-cash
interest expense associated with debt issuance costs
|
|
|
|
|
|
|
|
|
|
|
|
|
(h)
|
To exclude the
write-down of a loan receivable to a third party company operating
in the online pharmaceutical business
|
|
|
|
|
|
|
|
|
|
(i)
|
To primarily exclude
costs related to strategic review initiatives and the gain on a
legal settlement
|
|
|
|
|
|
|
|
|
|
|
(j)
|
To exclude the tax
effect of the pre-tax adjustments included above at applicable tax
rates
|
|
|
|
|
|
|
|
|
|
|
|
(k)
|
The weighted average
share number for the six months ended December 31, 2022 is
41,056,607 for GAAP and non-GAAP loss per share
calculations.
|
|
|
|
|
|
|
|
LANNETT COMPANY,
INC.
|
|
RECONCILIATION OF
GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
(UNAUDITED)
|
|
(In thousands, except
percentages, share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
December 31, 2021
|
|
Net sales
|
Cost of
sales
|
Amortization
of intangibles
|
Gross
Profit
|
Gross
Margin
%
|
R&D
expenses
|
SG&A
expenses
|
Restructuring
expenses
|
Asset
impairment charges
|
Operating
loss
|
Other
expense
|
Loss before
income tax
|
Income tax
benefit
|
Net
loss
|
Diluted loss
per share (j)
|
|
|
|
|
GAAP
Reported
|
$
188,033
|
$
157,998
|
$
7,804
|
$
22,231
|
12 %
|
$
10,511
|
$
37,696
|
$
891
|
$
49,361
|
$
(76,228)
|
$
(28,625)
|
$
(104,853)
|
$
(1,426)
|
$
(103,427)
|
$
(2.58)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles (a)
|
-
|
-
|
(7,804)
|
7,804
|
|
-
|
-
|
-
|
-
|
7,804
|
-
|
7,804
|
-
|
7,804
|
|
|
Cody API business
(b)
|
-
|
(50)
|
-
|
50
|
|
(6)
|
(270)
|
-
|
-
|
326
|
-
|
326
|
-
|
326
|
|
|
Depreciation on
capitalized software costs (c)
|
-
|
-
|
-
|
-
|
|
-
|
(2,102)
|
-
|
-
|
2,102
|
-
|
2,102
|
-
|
2,102
|
|
|
Restructuring expenses
(d)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
(891)
|
-
|
891
|
-
|
891
|
-
|
891
|
|
|
Distribution agreement
renewal costs (e)
|
-
|
-
|
-
|
-
|
|
-
|
(219)
|
-
|
-
|
219
|
-
|
219
|
-
|
219
|
|
|
Asset impairment
charges (f)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
(49,361)
|
49,361
|
-
|
49,361
|
-
|
49,361
|
|
|
Non-cash interest
(g)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
2,959
|
2,959
|
-
|
2,959
|
|
|
Other (h)
|
-
|
(177)
|
-
|
177
|
|
(1)
|
(5,944)
|
-
|
-
|
6,122
|
-
|
6,122
|
-
|
6,122
|
|
|
Tax adjustments
(i)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(7,162)
|
7,162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjusted
|
$
188,033
|
$
157,771
|
$
-
|
$
30,262
|
16 %
|
$
10,504
|
$
29,161
|
$
-
|
$
-
|
$
(9,403)
|
$
(25,666)
|
$
(35,069)
|
$
(8,588)
|
$
(26,481)
|
$
(0.66)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
To exclude amortization
of purchased intangible assets primarily related to the acquisition
of KUPI
|
|
|
|
|
|
|
|
|
|
(b)
|
To exclude the
operating results of the ceased Cody API business
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
To exclude depreciation
on previously capitalized software integration costs associated
with the KUPI acquisition
|
|
|
|
|
|
|
|
|
(d)
|
To exclude expenses
associated with the 2021 Restructuring Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
(e)
|
To exclude the
consideration recorded to renew the Company's distribution
agreement with Recro Gainesville LLC
|
|
|
|
|
|
|
|
|
(f)
|
To exclude asset
impairment charges primarily related to the KUPI product rights
intangible assets and the facility and certain equipment at Silarx
in Carmel, NY
|
|
|
|
|
|
|
(g)
|
To exclude non-cash
interest expense associated with debt issuance costs
|
|
|
|
|
|
|
|
|
|
|
|
(h)
|
To primarily exclude
the reimbursement of legal costs associated with a distribution
agreement, one-time employee retention awards and separation costs
related to the Company's former Chief Information
Officer
|
|
|
(i)
|
To exclude the tax
effect of the pre-tax adjustments included above at applicable tax
rates
|
|
|
|
|
|
|
|
|
|
|
(j)
|
The weighted average
share number for the six months ended December 31, 2021 is
40,142,974 for GAAP and non-GAAP loss per share
calculations.
|
|
|
|
|
|
|
LANNETT COMPANY,
INC.
|
|
RECONCILIATION OF
GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
(UNAUDITED)
|
|
(In thousands, except
percentages, share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31, 2022
|
|
Net sales
|
Cost of
sales
|
Amortization
of intangibles
|
Gross
Profit
|
Gross
Margin
%
|
R&D
expenses
|
SG&A
expenses
|
Restructuring
expenses
|
Asset
impairment charges
|
Gain on sale
of intangible assets
|
Operating
loss
|
Other
expense
|
Loss before
income tax
|
Income tax
expense (benefit)
|
Net
loss
|
Diluted loss
per share (k)
|
|
|
|
|
GAAP
Reported
|
$
80,894
|
$
65,258
|
$
1,358
|
$
14,278
|
18 %
|
$
4,928
|
$
18,317
|
$
335
|
$
5,969
|
$
(500)
|
$
(14,771)
|
$
(21,505)
|
$
(36,276)
|
$
32
|
$
(36,308)
|
$
(0.88)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles (a)
|
-
|
-
|
(1,358)
|
1,358
|
|
-
|
-
|
-
|
-
|
-
|
1,358
|
-
|
1,358
|
-
|
1,358
|
|
|
Cody API business
(b)
|
-
|
(40)
|
-
|
40
|
|
-
|
(7)
|
-
|
-
|
-
|
47
|
-
|
47
|
-
|
47
|
|
|
Depreciation on
capitalized software costs (c)
|
-
|
-
|
-
|
-
|
|
-
|
(1,051)
|
-
|
-
|
-
|
1,051
|
-
|
1,051
|
-
|
1,051
|
|
|
Restructuring expenses
(d)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
(335)
|
-
|
-
|
335
|
-
|
335
|
-
|
335
|
|
|
Asset impairment
charges (e)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
(5,969)
|
-
|
5,969
|
-
|
5,969
|
-
|
5,969
|
|
|
Gain on sale of
intangible assets (f)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
500
|
(500)
|
-
|
(500)
|
-
|
(500)
|
|
|
Non-cash interest
(g)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
1,860
|
1,860
|
-
|
1,860
|
|
|
Loss on loan receivable
(h)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
6,826
|
6,826
|
-
|
6,826
|
|
|
Other (i)
|
-
|
-
|
-
|
-
|
|
-
|
(1,500)
|
-
|
-
|
-
|
1,500
|
(140)
|
1,360
|
-
|
1,360
|
|
|
Tax adjustments
(j)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(3,954)
|
3,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjusted
|
$
80,894
|
$
65,218
|
$
-
|
$
15,676
|
19 %
|
$
4,928
|
$
15,759
|
$
-
|
$
-
|
$
-
|
$
(5,011)
|
$
(12,959)
|
$
(17,970)
|
$
(3,922)
|
$
(14,048)
|
$
(0.34)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
To exclude amortization
of purchased intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
To exclude the
operating results of the ceased Cody API business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
To exclude depreciation
on previously capitalized software integration costs associated
with the KUPI acquisition
|
|
|
|
|
|
|
|
|
|
|
(d)
|
To exclude expenses
primarily associated with the 2022 Restructuring Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
(e)
|
To exclude asset
impairment charges related to the Company's Torresdale
facility
|
|
|
|
|
|
|
|
|
|
|
|
|
(f)
|
To exclude the gain on
sale of one of the Company's ANDAs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(g)
|
To exclude non-cash
interest expense associated with debt issuance costs
|
|
|
|
|
|
|
|
|
|
|
|
|
(h)
|
To exclude the
write-down of a loan receivable to a third party company operating
in the online pharmaceutical business
|
|
|
|
|
|
|
|
|
|
(i)
|
To primarily exclude
costs related to strategic review initiatives and the gain on a
legal settlement
|
|
|
|
|
|
|
|
|
|
|
|
(j)
|
To exclude the tax
effect of the pre-tax adjustments included above at applicable tax
rates
|
|
|
|
|
|
|
|
|
|
|
|
(k)
|
The weighted average
share number for the three months ended December 31, 2022 is
41,170,839 for GAAP and non-GAAP loss per share
calculations.
|
|
|
|
|
|
|
|
|
LANNETT COMPANY,
INC.
|
|
RECONCILIATION OF
GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
(UNAUDITED)
|
|
(In thousands, except
percentages, share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31, 2021
|
|
Net sales
|
Cost of
sales
|
Amortization
of intangibles
|
Gross
Profit
|
Gross
Margin
%
|
R&D
expenses
|
SG&A
expenses
|
Restructuring
expenses
|
Asset
impairment charges
|
Operating
loss
|
Other
expense
|
Loss before
income tax
|
Income
tax benefit
|
Net
loss
|
Diluted loss
per share (i)
|
|
|
|
|
GAAP
Reported
|
$
86,508
|
$
76,990
|
$
3,808
|
$
5,710
|
7 %
|
$
4,747
|
$
18,791
|
$
891
|
$
49,361
|
$
(68,080)
|
$
(14,373)
|
$
(82,453)
|
$
(1,368)
|
$
(81,085)
|
$
(2.01)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles (a)
|
-
|
-
|
(3,808)
|
3,808
|
|
-
|
-
|
-
|
-
|
3,808
|
-
|
3,808
|
-
|
3,808
|
|
|
Cody API business
(b)
|
-
|
(17)
|
-
|
17
|
|
-
|
(257)
|
-
|
-
|
274
|
-
|
274
|
-
|
274
|
|
|
Depreciation on
capitalized software costs (c)
|
-
|
-
|
-
|
-
|
|
-
|
(1,051)
|
-
|
-
|
1,051
|
-
|
1,051
|
-
|
1,051
|
|
|
Restructuring expenses
(d)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
(891)
|
-
|
891
|
-
|
891
|
-
|
891
|
|
|
Asset impairment
charges (e)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
(49,361)
|
49,361
|
-
|
49,361
|
-
|
49,361
|
|
|
Non-cash interest
(f)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
1,520
|
1,520
|
-
|
1,520
|
|
|
Other (g)
|
-
|
(177)
|
-
|
177
|
|
(1)
|
(3,525)
|
-
|
-
|
3,703
|
-
|
3,703
|
-
|
3,703
|
|
|
Tax adjustments
(h)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(4,588)
|
4,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjusted
|
$
86,508
|
$
76,796
|
$
-
|
$
9,712
|
11 %
|
$
4,746
|
$
13,958
|
$
-
|
$
-
|
$
(8,992)
|
$
(12,853)
|
$
(21,845)
|
$
(5,956)
|
$
(15,889)
|
$
(0.39)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
To exclude amortization
of purchased intangible assets primarily related to the acquisition
of KUPI
|
|
|
|
|
|
|
|
|
|
|
(b)
|
To exclude the
operating results of the ceased Cody API business
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
To exclude depreciation
on previously capitalized software integration costs associated
with the KUPI acquisition
|
|
|
|
|
|
|
|
|
|
(d)
|
To exclude expenses
associated with the 2021 Restructuring Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
(e)
|
To exclude asset
impairment charges primarily related to the KUPI product rights
intangible assets and the facility and certain equipment at Silarx
in Carmel, NY
|
|
|
|
|
|
|
(f)
|
To exclude non-cash
interest expense associated with debt issuance costs
|
|
|
|
|
|
|
|
|
|
|
|
(g)
|
To primarily exclude
the reimbursement of legal costs associated with a distribution
agreement, one-time employee retention awards and separation costs
related to the Company's former Chief Information
Officer
|
|
|
|
(h)
|
To exclude the tax
effect of the pre-tax adjustments included above at applicable tax
rates
|
|
|
|
|
|
|
|
|
|
|
LANNETT COMPANY,
INC.
|
|
|
|
|
|
RECONCILIATION OF
NET LOSS TO ADJUSTED EBITDA (UNAUDITED)
|
|
|
|
|
|
($ in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
|
|
|
|
|
December 31,
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
(36,308)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
15,184
|
|
|
|
|
|
Depreciation and
amortization
|
|
6,287
|
|
|
|
|
|
Income tax
expense
|
|
32
|
|
|
|
|
|
EBITDA
|
|
(14,805)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
|
1,532
|
|
|
|
|
|
Inventory
write-down
|
|
592
|
|
|
|
|
|
Asset impairment
charges (a)
|
|
5,969
|
|
|
|
|
|
Loss on loan receivable
(b)
|
|
6,826
|
|
|
|
|
|
Investment
income
|
|
(399)
|
|
|
|
|
|
Gain on sale of
intangible assets (c)
|
|
(500)
|
|
|
|
|
|
Other non-operating
expense
|
|
(106)
|
|
|
|
|
|
Restructuring
expenses
|
|
335
|
|
|
|
|
|
Other
(d)
|
|
1,548
|
|
|
|
|
|
Adjusted EBITDA
(Non-GAAP)
|
|
$
992
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
To exclude asset
impairment charges related to the Company's Torresdale
facility
|
|
|
|
|
|
(b)
|
To exclude the
write-down of a loan receivable to a third party company operating
in the online pharmaceutical business
|
|
|
(c)
|
To exclude the gain on
sale of one of the Company's ANDAs
|
|
|
|
|
|
(d)
|
To primarily exclude
costs related to strategic review initiatives
|
|
|
|
|
|
LANNETT COMPANY,
INC.
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED)
|
|
|
|
|
|
|
($ in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2023
Guidance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
Adjustments
|
|
Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$285 -
$305
|
|
-
|
|
$285 -
$305
|
|
|
|
|
|
|
|
|
Gross margin
percentage
|
|
approx. 15% to
17%
|
|
2 %
|
(a)
|
approx. 17% to
19%
|
|
|
|
|
|
|
|
|
R&D
expense
|
|
$21 -
$23
|
|
-
|
|
$21 -
$23
|
|
|
|
|
|
|
|
|
SG&A
expense
|
|
$66 -
$68
|
|
($5)
|
(b)
|
$61 -
$63
|
|
|
|
|
|
|
|
|
Restructuring
expenses
|
|
$3 - $4
|
|
($3 - $4)
|
(c)
|
-
|
|
|
|
|
|
|
|
|
Asset impairment
charges
|
|
$10.7
|
|
($10.7)
|
(d)
|
-
|
|
|
|
|
|
|
|
|
Interest and
other
|
|
approx.
$67
|
|
($14)
|
(e)
|
approx.
$53
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
approx. 0% to
1%
|
|
-
|
|
approx. 20% to
22%
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
N/A
|
|
N/A
|
|
$(5) -
$1
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
$8 -
$10
|
|
-
|
|
$8 -
$10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) The adjustment
primarily reflects amortization of purchased intangible
assets
|
|
|
|
|
|
|
|
|
|
|
(b) The adjustment
primarily excludes costs related to strategic review initiatives as
well as depreciation on previously capitalized software integration
costs associated with the KUPI acquisition
|
|
(c) To exclude expenses
associated primarily with the 2022 Restructuring Plan
|
|
|
|
|
|
|
|
|
|
|
(d) To exclude asset
impairment charges related to the Company's State Road and
Torresdale facilities
|
|
|
|
|
|
|
|
|
(e) To primarily
exclude non-cash interest expense associated with debt issuance
costs and the write-down of a loan receivable to a third party
company operating in the online pharmaceutical business
|
|
LANNETT COMPANY,
INC.
|
|
|
|
|
|
RECONCILIATION OF
NET LOSS TO ADJUSTED EBITDA (UNAUDITED)
|
|
|
|
|
|
($ in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2023
Guidance
|
|
|
|
|
|
Low
|
|
High
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
$
(122.2)
|
|
$
(118.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
60.0
|
|
60.0
|
|
|
|
|
|
Depreciation and
amortization
|
24.0
|
|
24.0
|
|
|
|
|
|
Income taxes
|
-
|
|
(1.0)
|
|
|
|
|
|
EBITDA
|
(38.2)
|
|
(35.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
6.0
|
|
6.4
|
|
|
|
|
|
Inventory
write-down
|
6.3
|
|
7.2
|
|
|
|
|
|
Asset impairment
charges (a)
|
10.7
|
|
10.7
|
|
|
|
|
|
Restructuring expenses
(b)
|
3.0
|
|
4.0
|
|
|
|
|
|
Gain on sale of assets
(c)
|
(3.6)
|
|
(3.6)
|
|
|
|
|
|
Loss on loan receivable
(d)
|
6.8
|
|
6.8
|
|
|
|
|
|
Other (e)
|
4.0
|
|
5.0
|
|
|
|
|
|
Adjusted EBITDA
(Non-GAAP)
|
$
(5.0)
|
|
$
1.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) To exclude asset
impairment charges related to the Company's State Road and
Torresdale facilities
|
|
|
(b) To exclude expenses
associated primarily with the 2022 Restructuring Plan
|
|
|
|
|
|
(c) To exclude the gain
on sale of assets related to several ANDAs, primarily purchased by
Chartwell Pharmaceuticals, Inc.
|
|
(d) To exclude the
write-down of a loan receivable to a third party company operating
in the online pharmaceutical business
|
|
(e) To primarily
exclude costs related to strategic review
initiatives
|
|
|
|
|
|
LANNETT COMPANY,
INC.
|
|
NET SALES BY MEDICAL
INDICATION
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
($ in
thousands)
|
December
31,
|
|
December
31,
|
|
Medical
Indication
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Analgesic
|
$
2,592
|
|
$
3,919
|
|
$
6,016
|
|
$
9,233
|
|
Anti-Psychosis
|
2,575
|
|
2,095
|
|
5,195
|
|
5,810
|
|
Cardiovascular
|
13,089
|
|
9,753
|
|
23,971
|
|
23,853
|
|
Central Nervous
System
|
21,782
|
|
22,340
|
|
42,576
|
|
45,125
|
|
Endocrinology
|
5,831
|
|
8,297
|
|
13,143
|
|
16,142
|
|
Gastrointestinal
|
8,716
|
|
14,023
|
|
16,658
|
|
29,263
|
|
Infectious
Disease
|
4,989
|
|
6,520
|
|
10,058
|
|
19,035
|
|
Migraine
|
3,574
|
|
4,446
|
|
6,898
|
|
9,131
|
|
Respiratory/Allergy/Cough/Cold
|
1,468
|
|
1,868
|
|
2,670
|
|
4,982
|
|
Other
|
10,955
|
|
10,275
|
|
19,714
|
|
20,627
|
|
Contract Manufacturing
revenue
|
5,323
|
|
2,972
|
|
9,074
|
|
4,832
|
|
Net
Sales
|
$
80,894
|
|
$
86,508
|
|
$
155,973
|
|
$
188,033
|
|
Contact:
|
Robert Jaffe
|
|
Robert Jaffe Co.,
LLC
|
|
(424)
288-4098
|
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SOURCE Lannett Company, Inc.
