ADVANZ PHARMA Corp. Limited Announces Fourth Quarter and 2020 Results
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- 2020 revenue of $526 million and fourth quarter 2020 revenue of $135 million
- 2020 net loss of $75 million and fourth quarter net income of $2.4 million
- 2020 Adjusted EBITDA1 of $233 million and fourth quarter 2020 Adjusted EBITDA1 of $51 million
- Generated cash flow from operations of $166 million in 2020 and concluded the year with a cash and cash equivalents balance of $160 million
LONDON, March 17, 2021 /PRNewswire/ - ADVANZ PHARMA Corp. Limited ("ADVANZ PHARMA" or "the Company") (TSX: ADVZ), a global pharmaceutical company with a strategic focus on complex medicines in Europe, today announced its financial and operational results for the three and twelve months ended December 31, 2020. All financial references are in U.S. dollars ("USD") unless otherwise noted.
"The Company reported more than half-a-billion dollars of revenue for the second straight year, and consistent Adjusted EBITDA on a year-over-year basis," said Graeme Duncan, Chief Executive Officer of ADVANZ PHARMA. "We also had a strong year for M&A in 2020, resulting in greater market diversity and penetration, and a growing portfolio of complex medicines that help improve the lives of the patients who we serve."
Consolidated Fourth Quarter and 2020 Financial and Operational Results
- Reported fourth quarter 2020 revenue of $135.0 million, compared to $122.0 million for the fourth quarter of 2019, and $128.7 million for the third quarter of 2020.
- Reported net income for the fourth quarter of 2020 of $2.4 million.
- Reported fourth quarter Adjusted EBITDA1 of $50.5 million, compared to $52.8 million for the fourth quarter of 2019, and $53.5 million for the third quarter of 2020.
- Generated cash flows from operating activities of $166.2 million in 2020, compared to $188.2 million in 2019.
- As of December 31, 2020, the Company had a cash and cash equivalents balance of $160.2 million compared to $261.1 million as at December 31, 2019.
Fourth Quarter 2020 Segment Results
ADVANZ PHARMA International segment revenue of $405.4 million for the year ended December 31, 2020, increased by $26.6 million or 7%, compared to 2019. A $24.5 million increase in revenue was further compounded with a $2.1 million increase in revenue as a result of the GBP strengthening against the USD, when compared to 2019.
The increase in revenue is primarily due to $20.4 million of revenue from the recently acquired portfolio of Alprostadil products sold within the ADVANZ PHARMA International segment, and $18.5 million of revenue from the Correvio acquisition, which were not included in the comparative period.
The remaining net decrease in revenue attributable to key products for 2020, excluding the impact of foreign currency translation, consisted of a $8.2 million decrease from Fusidic Acid; a $4.1 decrease from Thiamine; a $2.0 decrease from Carbimazole; and a $2.0 million decrease from Prochlorperazine Mesilate.
These lower product volumes and revenues are primarily due to ongoing competitive market pressures resulting in market share erosion in the U.K., combined with loss of tenders and phasing of shipments.
These declines to revenue were partially offset by a $4.7 million increase from Cyanocobalamin due to a release of certain provisions; a $2.9 million increase from Codeine Phosphate + Paracetamol; and a $2.7 million increase from Salagen®.
North America Segment
ADVANZ PHARMA North America segment revenue of $120.2 million for the year ended December 31, 2020, decreased by $9.3 million, or 7%, compared to 2019.
The decrease was primarily due to a $11.1 million decrease from Dyrenium® primarily as a result of generic competition that arose during the latter half of 2019; a $5.6 million decrease from Photofrin as a result of COVID-19; and a $3.8 million decrease from Donnatal® due to continued competitive pressures impacting market share.
These declines in revenue were partially offset by $3.9 million of revenue from the recently acquired portfolio of Alprostadil products sold within the ADVANZ PHARMA North America Segment, which was not included in the comparative period; a $3.2 million increase from Plaquenil® driven by higher customer demand due to COVID-19; a $3.2 million increase from Salagen® due to the timing of the acquisition in 2019 and phasing of shipments; and a $1.2 million increase from Dibenzyline® primarily due to lower returns during 2020. The remaining decrease was primarily due to general competitive market pressures across the segment's product portfolio.
The Company continued to make progress with respect to the evaluation and advancement of its pipeline of medicines.
In the fourth quarter of 2020, ADVANZ PHARMA submitted seven for approval and received approval for two medicines.
Going forward, the Company intends to expand its product portfolio in order to deliver mid-term value and long-term growth, through pipeline filling, optimization, licencing and development partnerships. These initiatives will be focussed on niche and differentiated generics, complex specialty and value-added medicines.
Updated Investor Presentation
To support the investment community's understanding of the Company's business, ADVANZ PHARMA will upload its latest investor presentation, and certain additional information about the Company and its business, on the Downloads section of the Investor Relations section of its website, available here:
Consolidated Financial Results
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Represents a non-IFRS measure. For the relevant definitions and reconciliation to reported results, see "Non-IFRS Financial Measures" section of this press release. Management believes non-IFRS measures, including Adjusted EBITDA, provide supplementary information to IFRS measures used in assessing the performance of the business.
Revenue for the fourth quarter of 2020 increased by $13.0 million or 11% compared to the corresponding period in 2019, primarily due to higher sales from the ADVANZ PHARMA International segment combined with higher foreign exchange rates impacting translated revenues from this segment. This increase is further combined with higher sales from the ADVANZ PHARMA North America segment.
Revenue for the year ended December 31, 2020, increased by $17.3 million, or 3%, compared to 2019, primarily due to higher sales from the ADVANZ PHARMA International segment combined with higher foreign exchange rates impacting translated revenues from this segment, partially offset by lower sales from the ADVANZ PHARMA North America segment.
Gross profit for the fourth quarter and year ended December 31, 2020 increased by $0.8 million, or 1%, and decreased by $3.6 million, or 1%, respectively, compared to the corresponding periods in 2019, primarily due to changes in the product mix.
Operating expenses for the fourth quarter and year ended December 31, 2020 decreased by $18.7 million, or 18%, and $138.3 million, or 29%, respectively, compared to the corresponding periods in 2019.
The decrease in operating expenses for the year is primarily due to $124.2 million lower impairment charges, and $12.2 million lower amortization charges on intangible assets primarily due to prior year impairments, partially offset by additional amortization on recently acquired intellectual properties related to Correvio and portfolio of Alprostadil products.
General and administrative expenses reflect costs related to salaries and benefits, professional and consulting fees, public company costs, travel and other administrative expenditures. General and administrative expenses for the fourth quarter and year ended December 31, 2020 decreased by $0.8 million, or 7%, and $4.1 million, or 10%, compared to the corresponding periods in 2019.
The annual decrease is primarily attributable to lower employee costs and costs related to infrastructure within ADVANZ PHARMA North America primarily as a result of closure of the Barbados operations in the third quarter of 2019, partially offset by an increase attributable to the Correvio Acquisition, combined with foreign exchange rate movements negatively impacting translation of general and administrative costs from ADVANZ PHARMA International.
Selling and marketing expenses reflect costs incurred by the Company for the marketing, promotion and sale of its portfolio of products across its segments. Selling and marketing expenses for the fourth quarter and year ended December 31, 2020 increased by $2.3 million, or 27%, and $1.5 million, or 4%, respectively, compared to the corresponding periods in 2019.
The annual increases in selling and marketing expenses are primarily attributable to an increase within ADVANZ PHARMA International largely due to costs associated with sales promotion and advertising activities of the Correvio Acquisition, which was not included in the comparative period of 2019.
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 (Pharmacovigilance) of the Company.
Research and development costs for the fourth quarter and year ended December 31, 2020 increased by $3.2 million, or 46%, and $3.9 million, or 13%, respectively, compared to the corresponding periods in 2019 primarily due to the Correvio Acquisition, combined with foreign exchange rate movements negatively impacting the translation of general and administrative costs from ADVANZ PHARMA International. This is partially offset by lower clinical trial spend, combined with lower costs associated with validation and stability testing activities.
Adjusted EBITDA for the fourth quarter and year ended December 31, 2020 decreased by $2.3 million, or 4%, and $1.0 million, or 0%, respectively, compared to the corresponding periods in 2019.
In addition, during the fourth quarter of 2020 and year ended December 31, 2020, the Company incurred $2.1 million and $9.7 million, respectively, of Corporate costs.
As of December 31, 2020, the Company had cash and cash equivalents of $160.2 million and 48,913,490 limited voting shares issued and outstanding.
About ADVANZ PHARMA
ADVANZ PHARMA is a global pharmaceutical company with a strategic focus on complex medicines in Europe. With an agile and experienced team, including direct sales, marketing and medical capability across many of Europe's major markets, the Company supplies, innovates and enhances the critical medicines patients depend on, ensuring continued patient access and improving health outcomes.
ADVANZ PHARMA has expertise in the anti-Infectives and endocrinology therapy areas, along with strong relationships with hospital decision makers, making it an attractive partner when commercialising complex medicines in Europe.
ADVANZ PHARMA has an operational headquarters in London, an operations centre of excellence in Mumbai, commercial affiliates in North America, Europe, and Australia, and an established global network of commercial partners throughout the rest of the world.
Non-IFRS Financial Measures
This press release makes reference to certain measures that are not recognized measures under International Financial Reporting Standards ("IFRS"). 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 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 to the Company's financial information reported under IFRS. Management uses non-IFRS measures such as Adjusted Gross Profit, EBITDA, Adjusted EBITDA and Working Capital, to provide investors with supplemental information 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 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, to assess its ability to meet future debt service requirements, in making capital expenditures, and to consider the business's working capital requirements. Readers are cautioned that the non-IFRS measures contained herein may not be appropriate for any other purpose.
Adjusted Gross Profit
Adjusted Gross Profit is defined as gross profit adjusted for non-cash fair value increases to the cost of acquired inventory from a business combination. Under IFRS, acquired inventory is required to be recognized at fair value at the date of acquisition. As this inventory is sold, the fair value adjustment represents a non-cash cost of sale amount that has been excluded in adjusted gross profit in order to normalize gross profit for this non-cash component.
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EBITDA is defined as net income (loss) adjusted for interest and accretion expense, interest income, income taxes, depreciation and amortization of intangible assets. Management uses EBITDA to assess the Company's operating performance.
Adjusted EBITDA is defined as EBITDA adjusted for certain charges including costs associated with acquisitions, restructuring initiatives, and other costs (which includes onerous contract costs and direct costs associated with contractual terminations), management retention costs, non-operating gains / losses, integration costs, legal settlements (net of insurance recoveries) and related legal costs, non-cash items such as unrealized gains / losses on derivative instruments, share based compensation expense / recovery, fair value changes including purchase consideration and derivative financial instruments, asset impairments, fair value increases to inventory arising from purchased inventory from a business combination, gains / losses from the sale of assets and unrealized gains / losses related to foreign exchange. Management uses Adjusted EBITDA, among other Non-IFRS financial measures, as the 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.
The table below sets forth the reconciliation of net income (loss) to EBITDA and to Adjusted EBITDA for the three and twelve month periods ended December 31, 2020, and December 31, 2019.
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Notice Regarding Trademarks
This press release includes trademarks that are protected under applicable intellectual property laws and are the property of ADVANZ PHARMA or its affiliates or its licensors. Solely for convenience, the trademarks of ADVANZ PHARMA, its affiliates and/or its licensors referred to in this press release may appear with or without the ® or TM symbol, but such references or the absence thereof are not intended to indicate, in any way, that the Company or its affiliates or licensors will not assert, to the fullest extent under applicable law, their respective rights to these trademarks. Any other trademarks used in this press release are the property of their respective owners.
Notice Regarding Forward-looking Statements and Information:
This news release includes forward-looking statements and forward-looking information within the meaning of Canadian securities laws. Often, but not always, and forward-looking information 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 and information are based on the current expectations of ADVANZ PHARMA's management, and are based on assumptions and subject to risks and uncertainties. Although ADVANZ PHARMA's management believes that the assumptions underlying these statements and information are reasonable, they may prove to be incorrect. The forward–looking events and circumstances discussed in this news release may not occur by certain dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting ADVANZ PHARMA, including risks associated with ADVANZ PHARMA's securities, increased indebtedness and leverage, ADVANZ PHARMA's growth, risks associated with the use of ADVANZ PHARMA's products, the inability to generate cash flows, revenues and/or stable margins, the inability to repay debt and/or satisfy future obligations, risks associated with a delay in releasing ADVANZ PHARMA's financial statements (which could result in a default under ADVANZ PHARMA's debt agreements and a violation of applicable laws), ADVANZ PHARMA's outstanding debt, risks associated with the geographic markets in which ADVANZ PHARMA operates and/or distributes its products, the pharmaceutical industry and the regulation thereof, regulatory investigations and proceedings, the failure to comply with applicable laws, risks associated with distribution agreements, risks associated with general economic factors and market conditions, risks associated with growth and competition, the failure to obtain regulatory approvals, the equity and debt markets generally, general economic and stock market conditions, risks associated with fluctuations in exchange rates (including, without limitation, fluctuations in currencies), political risks (including changes to political conditions), risks associated with the United Kingdom's exit from the European Union (including, without limitation, risks associated with regulatory changes in the pharmaceutical industry, changes in cross-border tariff and cost structures and the loss of access to the European Union global trade markets), risks related to patent infringement actions, the loss of intellectual property rights, risks and uncertainties detailed from time to time in ADVANZ PHARMA's filings with the Canadian Securities Administrators, risks related to the spread of COVID-19 (including, without limitation, risks associated with reliance on third party manufacturers and suppliers, uncertainties relating to its ultimate spread, severity and duration, and related adverse effects on the economies and financial markets of many countries), and many other factors beyond the control of ADVANZ PHARMA. Although ADVANZ PHARMA has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements and information, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement or information can be guaranteed. Except as required by applicable securities laws, forward-looking statements and information speak only as of the date on which they are made and ADVANZ PHARMA undertakes no obligation to publicly update or revise any forward-looking statement or information, whether as a result of new information, future events, or otherwise.
SOURCE ADVANZ PHARMA Corp.
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