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Dienstag, 14.11.2017 13:05 von PR Newswire | Aufrufe: 95

Concordia International Corp. Announces Third Quarter 2017 Results

Eine Tageszeitung (Symbolbild). pixabay.com

PR Newswire

OAKVILLE, ON, Nov. 14, 2017

Reported third quarter revenue of $154.6 million
Reported third quarter adjusted EBITDA¹ of $78.6 million
Generated cash flow from operations of $227.4 million in the first nine months of 2017
Concluded the third quarter with a cash balance of $341.3 million

OAKVILLE, ON, Nov. 14, 2017 /PRNewswire/ - Concordia International Corp. ("Concordia" or the "Company") (NASDAQ: CXRX) (TSX: CXR), an international specialty pharmaceutical company focused on becoming a leader in European specialty, off-patent medicines, today announced its financial and operational results for the three and nine months ended September 30, 2017. All financial references are in U.S. dollars (USD) unless otherwise noted.

"During the quarter, we launched our long-term growth strategy, DELIVER, and we generated financial results that were in line with our forecasts," said Allan Oberman, Chief Executive Officer of Concordia. "Both represent important progress for Concordia as we continue to focus on the realignment of our capital structure."

Consolidated Third Quarter 2017 Financial and Operational Results and Recent Events

Reported revenue of $154.6 million, compared to $185.5 million for the same period in 2016 and $160.8 million for the second quarter of 2017.
Reported third quarter adjusted EBITDA¹ of $78.6 million, compared to $104.4 million for the same period in 2016, and $81.8 million in the second quarter of 2017.
Generated cash flows from operating activities of $227.4 million in the first nine months of 2017, compared to $313.1 million for the same period in 2016.
As of September 30, 2017, the Company's liquidity consisted of $341.3 million of cash and cash equivalents.
Subsequent to quarter end, on October 20, 2017, Concordia announced its intention to realign its capital structure by commencing a court proceeding under the Canada Business Corporations Act (the "CBCA"). The CBCA is a Canadian corporate statute that contains provisions allowing Canadian corporations to restructure certain debt obligations. The CBCA is not a bankruptcy or insolvency statute. Under the CBCA process, Concordia's management continues to lead day-to-day operations and operate its business as usual, while meeting its commitments to employees, suppliers and customers.
The commencement of the CBCA proceedings resulted in an event of default under the Company's credit agreement dated October 21, 2015, the indenture governing the Company's 9.00% senior secured notes, and the Company's currency swaps, which defaults are subject to the stay of proceedings issued by the Ontario Superior Court of Justice.
As contemplated by the CBCA order, the following payments owed to unsecured lenders were not paid as scheduled, and are instead expected to be addressed (or have been settled) as part of the proposed recapitalization transaction under the CBCA proceeding: approximately $26 million of interest due on October 16, 2017 under Concordia's 7.00% unsecured senior notes; approximately $2.5 million of interest under Concordia's unsecured, extended bridge facility due on October 23, 2017; and approximately $34 million of principal and accrued interest due on October 20, 2017 under the Company's unsecured, two-year equity bridge facility. Subsequent to quarter end, the Company agreed to settle the principal amount and accrued interest due on the two-year equity bridge at a significant discount to par.
On October 20, 2017, the counterparty to the Company's currency swaps, which Concordia entered into in August and November of 2016, notified the Company that it would be terminating the currency swaps effective October 23, 2017 due to the commencement of the CBCA proceedings. In addition, as part of the CBCA process, the Company agreed to terminate the revolving commitments under its credit agreement.

Third Quarter 2017 Segment Results

North America segment revenue of $36.9 million for three months ended September 30, 2017 decreased by $11.1 million or 23%, compared to the corresponding period in 2016. The decrease was primarily due to a $6.3 million decrease from Lanoxin® authorized generic, a $1.5 million decrease from Nilandron®, and a $3.0 million decrease from Donnatal®, as a result of additional competitive pressures that have resulted in a loss of market share.

In the third quarter of 2017, Donnatal® continued to face pressure from a non-FDA approved product being distributed by a competitor, and an additional competitive product that was launched in the second quarter of 2017. These decreases were partially offset by a $7.3 million increase in revenue from Plaquenil® authorized generic when compared to the comparative period in 2016, which lower revenue in the comparative period of 2016 was due to the launch of an additional generic competitor late in the second quarter of 2016.

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Third quarter 2017 revenue for the North America segment was 19% lower than second quarter 2017 revenue of $45.5 million, due to declines in revenue from branded and authorized generic products.

International segment revenue of $117.7 million for the three months ended September 30, 2017, decreased by $19.8 million or 14 per cent, compared to the corresponding period in 2016. The primary drivers of the decrease were a $5.9 million decrease from Fusidic Acid; a $4.5 million decrease from Liothyronine Sodium; a $3.6 million decrease from Prednisolone; and a $3.3 million decrease from Levothyroxine Sodium.

These lower product revenues are primarily due to ongoing competitive market pressures, and were partially offset by a $3.5 million increase from Nitrofurantoin, and a $2.9 million increase from Acetylsalicylic Acid.

Third quarter 2017 revenue for the Concordia International segment increased by $2.4 million compared to second quarter 2017 revenue of $115.3 million primarily due to the impact of $2.3 million higher revenue from Nitrofurantoin and $1.9 million higher revenue from Flurbiprofen, partially offset by $2.2 million lower revenue from Fusidic Acid as a result of competitive market pressures.

Pipeline Update

During the third quarter of 2017, the Company launched two new products into markets that have a current IMS-estimated value of $21 million.

Concordia also has 13 products that have already been approved or are awaiting approval. These products, if launched, are expected to compete in markets that have a current IMS-estimated value in excess of $94 million.

In addition, the Company currently has 27 products (compared to 26 products in the second quarter of 20l7) under development that are anticipated to launch in the next three to five years. These products, if launched, are expected to compete in markets that have a current IMS-estimated value in excess of $1.5 billion.

Concordia believes that these products include several first-to-market or early-to-market opportunities for difficult-to-make products.

In addition, the Company has 16 products identified for potential development that, if launched, are expected to compete in markets that have a current IMS-estimated value in excess of $600 million.

In total, Concordia's pipeline is comprised of more than 50 products that, if launched, could compete in markets that have a current IMS-estimated value in excess of $2 billion.

Financial Results


	Three months ended		Nine months ended
(in $000's, except per share data)	Sep 30, 2017	Sep 30, 2016	Sep 30, 2017	Sep 30, 2016
Revenue	154,622	185,504	475,964	645,751
Gross profit	108,610	137,034	335,337	474,493
Gross profit %	70%	74%	70%	73%
Adjusted gross profit ⁽¹⁾	108,610	138,540	335,648	495,511
Operating income (loss) from continuing operations	9,589	42,636	(953,300)	(417,345)
Net loss from continuing operations	(69,485)	(75,147)	(1,158,962)	(650,332)
Loss per share, from continuing operations
Basic	(1.36)	(1.47)	(22.67)	(12.75)
Diluted	(1.36)	(1.47)	(22.67)	(12.75)
EBITDA⁽¹⁾	63,144	30,213	(783,487)	(315,120)
Adjusted EBITDA⁽¹⁾	78,582	104,444	244,632	387,636

Consolidated Results of Operations

Consolidated revenue for the three and nine month periods ended September 30, 2017 decreased by $30.9 million or 17%, and $169.8 million, or 26%, respectively, compared to the corresponding periods in 2016. These decreases are due to lower sales from both the Concordia North America and Concordia International segments, as well as lower foreign exchange rates impacting translated revenues for the first half of 2017 compared to the corresponding period in 2016.

Revenues were lower primarily due to lower volumes, primarily a result of new market entrants on a number of the Company's products. The Concordia North America segment revenue for the three months ended September 30, 2017 decreased by 23% when compared to the corresponding period in 2016, mainly due to lower volumes on key products, including Lanoxin® authorized generic, Nilandron®, and Donnatal®. The Concordia International segment revenue for the three months ended September 30, 2017 decreased by 14% primarily due to volume and price declines on key products, including Fusidic Acid, Levothyroxine Sodium, and Prednisolone.

Gross profit for the three and nine month periods ended September 30, 2017 decreased by $28.4 million, or 21%, and $139.2 million, or 29%, respectively, compared to the corresponding periods in 2016 primarily due to the revenue decreases described above. The decrease in gross profit percentage of 4% for the three month period ended September 30, 2017, is primarily due to a change in the mix of product sales within both the Concordia North America segment and Concordia International segment. The decrease in gross profit percentage of 3% for the nine months ended September 30, 2017 is lower than the 4% for the three month period ended September 30, 2017, as the first quarter of 2016 included a non-cash fair value adjustment to inventory of $18.6 million associated with the acquisition of the Concordia International segment.

Operating expenses for the three and nine month periods ended September 30, 2017 increased by $4.6 million or 5%, and $396.8 million, or 44%, respectively, compared to the corresponding periods in 2016. Operating expenses were higher during the three months ended September 30, 2017 primarily due to $10.0 million higher acquisition related, restructuring and other costs and $8.4 million higher amortization charges on intangible assets, partially offset by $7.1 million lower share based compensation expense.

Operating expenses on a year-to-date basis were $396.8 million higher primarily due to a $417.0 million higher impairment charge. Excluding impairments, operating expenses for the nine months ended September 30, 2017 decreased by $20.2 million, or 6% compared to the corresponding period in 2016. This decrease was primarily due to a combination of the following: $18.9 million lower share-based compensation expense; $14.6 million lower expense for fair value of purchase consideration and $13.5 million lower litigation settlement expenses, partially offset by $33.6 million higher amortization of intangible assets and $10.0 million higher acquisition related, restructuring and other costs.

General and administrative expenses reflect costs related to salaries and benefits, professional and consulting fees, ongoing public company costs, travel, facility leases and other administrative expenditures. General and administrative expenses for the three and nine month periods ended September 30, 2017 decreased by 18% and 9%, respectively, compared to the corresponding periods in 2016. This decrease is a result of the Company's objective to reduce operating costs across the business.

Selling and marketing expenses reflect costs incurred by the Company for the marketing, promotion and sale of the Company's broad portfolio of products across the Company's segments. Selling and marketing costs for the three and nine month periods ended September 30, 2017 decreased by $0.8 million, or 7%, and $9.1 million, or 24%, respectively, compared to the corresponding periods in 2016. These costs have decreased primarily due to the termination of the Donnatal® contract sales force in 2016, which has been replaced by a co-promotion agreement with RedHill. The lower costs during the three month period ended September 30, 2017 as a result of the termination of the Donnatal® contract sales force within the Concordia North America segment was partially offset by $2.0 million higher marketing spend within the Concordia International segment.

Research and development expenses reflect costs for clinical trial activities, product development, professional and consulting fees and services associated with the activities of the medical, clinical and scientific affairs, quality assurance costs, regulatory compliance and drug safety costs (Pharmacovigilence) of the Company. Research and development costs for the three and nine month periods ended September 30, 2017 decreased by $0.7 million, or 8%, and $4.0 million, or 15%, respectively, compared to the corresponding periods in 2016. This decrease is due to fewer ongoing clinical programs in 2017 compared with 2016, including the cancellation of the cholangiocarcinoma trial in December 2016, and the Company moving certain external costs previously incurred within the Concordia North America segment to the Company's internal operations in Mumbai, India.

The current income tax expense recorded for the three and nine month periods ended September 30, 2017 decreased by $5.0 million and $17.2 million, respectively, compared to the corresponding periods in 2016. Income taxes were lower primarily due to the impact of foreign exchange translation of the income tax expense from the Concordia International segment as well as lower taxable income compared to corresponding periods in 2016.

The net loss from continuing operations for the three and nine month periods ended September 30, 2017 was $69.5 million and $1.2 billion, respectively, and earnings per share loss was $1.36 and $22.67, respectively, per share. Significant components comprising the net loss for the nine month period ended September 30, 2017 are an impairment charge of $987.1 million recorded during the second quarter of 2017, fair value losses on derivative contracts of $69.3 million, interest and accretion expense of $282.7 million and amortization of $175.3 million offset by gross profit of $335.3 million.

Adjusted EBITDA for the three and nine month periods ended September 30, 2017 decreased by $25.9 million, or 25%, and $143.0 million or 37%, respectively, compared to the corresponding periods in 2016. The decline is primarily due to lower sales and gross margins from both the Concordia North America and Concordia International segments, as well as lower foreign exchange rates impacting translated results during the first half of 2016.

Adjusted EBITDA by segment for the three and nine month periods ended September 30, 2017 was $23.9 million and $79.5 million, respectively, from Concordia North America, and $59.3 million and $180.6 million, respectively, from Concordia International. In addition, during the three and nine month periods ended September 30, 2017 the Company incurred $4.6 million and $15.4 million, respectively, of Corporate costs related to the Corporate Head Office.

As of September 30, 2017, the Company had cash of $341.3 million, and 51,282,675 common shares issued and outstanding.

Conference Call Notification

The Company will hold a conference call on Tuesday, November 14, 2017, at 8:30 a.m. ET, hosted by senior management.

CONFERENCE CALL DETAILS

DATE:

Tuesday, November 14, 2017

TIME:

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