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Form 8-K LANNETT CO INC For: May 04

May 5, 2022 6:14 AM EDT

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Exhibit 99.1

 

 

 

  Contact: Robert Jaffe
    Robert Jaffe Co., LLC
    (424) 288-4098

 

LANNETT REPORTS FISCAL 2022 THIRD-QUARTER FINANCIAL RESULTS

 

Q3 Business and Financial Highlights:

·Net Sales were $78.4 Million
·Cash in Excess of $106 Million at March 31
·Completed Sale of Liquid Manufacturing Plant for $10.5 Million; Major Elements of November 2021 Restructuring Plan Expected to be Completed by June 30
·Pivotal Biosimilar Insulin Glargine Clinical Trial Progressing

 

Trevose, PA May 4, 2022 – Lannett Company, Inc. (NYSE: LCI) today reported financial results for its fiscal 2022 third quarter ended March 31, 2022.

 

“For the quarter, ongoing competitive pressures and unusually high product returns for a few key products impacted our topline and gross profit,” said Tim Crew, chief executive officer of Lannett. “Even so, our adjusted gross margin percentage rose from the previous quarter and our bottom line was modestly better than our internal estimates. Our cash position strengthened to more than $106 million at March 31, 2022, in part due to the sale of our liquid manufacturing plant during the quarter.

 

“In late March, we initiated the pivotal clinical trial for our biosimilar insulin glargine, by far the biggest and most important opportunity currently in our pipeline. The trial is progressing with approximately 25% of our subject enrollment goal achieved. We expect top line results for the study will be available toward the end of this calendar year. If successful, we anticipate filing the Biologics License Application (BLA) for a biosimilar and interchangeable insulin glargine to Sanofi's Lantus® Solostar and, if approved, potentially launching the product in the first half of 2024. We also are advancing our biosimilar insulin aspart product, which continues to track to a potential launch in 2025, if approved.

 

“Looking ahead to the second half of the current calendar year, we anticipate the existing competitive environment to continue, which we expect to be partially offset by savings from our recent restructuring efforts. We also anticipate launching several products next year with potentially more meaningful financial contributions than our recent historical average.”

 

 

 

 

Restructuring, Cost Reduction Initiatives - Update

 

In November 2021, the company announced a restructuring plan to further optimize its operations, improve efficiencies and reduce costs to improve competitiveness. On March 31, 2022, the company finalized the sale of its liquid drug manufacturing plant in Carmel, New York for total consideration of $10.5 million, having previously completed the restructuring of its R&D function and targeted headcount reductions. The transfer of certain products from the Carmel plant to the company’s main plant is in process and expected to continue into next calendar year. The major elements of the company’s restructuring plan are expected to be completed by June 30, 2022 and the plan is expected to generate approximately $20 million of annual cost savings.

 

Third Quarter Financial Results: Fiscal 2022 vs Fiscal 2021

 

GAAP basis:

·Net sales were $78.4 million compared with $112.4 million
·Gross profit was $3.1 million, or 4% of net sales, compared with $26.5 million, or 24% of net sales
·Restructuring expenses were $1.8 million
·Net loss was $34.9 million, or $0.86 per share, compared with $7.1 million, or $0.18 per share

 

Non-GAAP basis:

 

·Net sales were $78.4 million compared with $112.4 million
·Adjusted gross profit was $9.3 million, or 12% of net sales, compared with $30.4 million, or 27% of net sales
·Adjusted interest expense increased to $12.9 million from $9.8 million
·Adjusted net loss was $16.7 million, or $0.41 per share, versus adjusted net income of $1.0 million, or $0.02 per diluted share
·Adjusted EBITDA was $98 thousand compared with $17.0 million

 

 

 

 

Guidance for Fiscal 2022

 

Based on its current outlook, the company updated and/or tightened certain elements of its guidance for fiscal year 2022, as follows:

 

  GAAP Adjusted*
Net sales $335 million to $350 million, from $335 million to $360 million $335 million to $350 million, from $335 million to $360 million
Gross margin % Approximately 8.5% to 9.5%, from approximately 10% to 11% Approximately 13.5% to 14.5%, from approximately 14% to 15%
R&D expense $22 million to $24 million, from $23 million to $26 million $22 million to $24 million, from $23 million to $26 million
SG&A expense $71 million to $73 million, from $66.5 million to $69.5 million $55 million to $57 million, from $55 million to $58 million
Restructuring expense $3 million to $4 million $--
Asset impairment $49.4 million $--
Interest and other Approximately $58 million, unchanged Approximately $52 million, unchanged
Effective tax rate Approximately 0% to 3%, from approximately 0% to 5% Approximately 23.5% to 24.5%, from 23% to 24%
Adjusted EBITDA N/A $0 to $8 million, unchanged
Capital expenditures Approximately $12 million, from $10 million to $14 million Approximately $12 million, from $10 million to $14 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 2022 third quarter ended March 31, 2022. The conference call will be available to interested parties by dialing 877-344-8082 from the U.S. or Canada, or 213-992-4618 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.

 

Lantus® is a registered trademark of Sanofi S.A.

 

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 updated guidance for fiscal 2022, 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)     
   March 31, 2022   June 30, 2021 
ASSETS          
Current assets:          
Cash and cash equivalents  $106,108   $93,286 
Accounts receivable, net   63,974    98,834 
Inventories   95,434    109,545 
Income taxes receivable   37,236    35,050 
Assets held for sale   -    2,678 
Other current assets   15,953    14,170 
Total current assets   318,705    353,563 
Property, plant and equipment, net   140,120    166,674 
Intangible assets, net   88,351    137,835 
Operating lease right-of-use asset   10,028    10,559 
Other assets   15,103    15,106 
TOTAL ASSETS  $572,307   $683,737 
           
           
LIABILITIES          
Current liabilities:          
Accounts payable  $28,571   $29,585 
Accrued expenses   15,872    13,077 
Accrued payroll and payroll-related expenses   10,817    10,680 
Rebates payable   24,332    19,025 
Royalties payable   6,145    13,779 
Restructuring liability   899    8 
Current operating lease liabilities   2,059    2,045 
Other current liabilities   5,660    2,270 
Total current liabilities   94,355    90,469 
Long-term debt, net   610,080    590,683 
Long-term operating lease liabilities   10,285    11,047 
Other liabilities   16,895    19,009 
TOTAL LIABILITIES   731,615    711,208 
           
STOCKHOLDERS' DEFICIT          

Common stock ($0.001 par value, 100,000,000 shares authorized; 42,180,724 and 40,913,148 shares issued;

40,616,948 and 39,576,606 shares outstanding at March 31, 2022 and June 30, 2021, respectively)

   42    41 
Additional paid-in capital   362,531    355,239 
Accumulated deficit   (503,091)   (364,766)
Accumulated other comprehensive loss   (526)   (548)
Treasury stock (1,563,776 and 1,336,542 shares at March 31, 2022 and June 30, 2021, respectively)   (18,264)   (17,437)
Total stockholders' deficit   (159,308)   (27,471)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT  $572,307   $683,737 

 

 

 

 

LANNETT COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except share and per share data)
                 
   Three months ended   Nine months ended 
   March 31,   March 31, 
   2022   2021   2022   2021 
Net sales  $78,357   $112,370   $266,390   $372,769 
Cost of sales   72,658    82,063    230,656    298,738 
Amortization of intangibles   2,621    3,851    10,425    21,097 
Gross profit   3,078    26,456    25,309    52,934 
Operating expenses:                    
Research and development expenses   5,807    5,973    16,318    18,156 
Selling, general and administrative expenses   17,572    17,636    55,268    46,502 
Restructuring expenses   1,782    -    2,673    4,043 
Asset impairment charges   -    -    49,361    198,000 
Total operating expenses   25,161    23,609    123,620    266,701 
Operating income (loss)   (22,083)   2,847    (98,311)   (213,767)
Other income (expense):                    
Investment income   34    80    114    168 
Interest expense   (14,517)   (12,631)   (43,171)   (40,613)
Other   303    18    252    23 
Total other expense   (14,180)   (12,533)   (42,805)   (40,422)
Loss before income tax   (36,263)   (9,686)   (141,116)   (254,189)
Income tax benefit   (1,365)   (2,544)   (2,791)   (68,600)
Net loss  $(34,898)  $(7,142)  $(138,325)  $(185,589)
                     
Loss per common share (1):                    
Basic  $(0.86)  $(0.18)  $(3.44)  $(4.72)
Diluted  $(0.86)  $(0.18)  $(3.44)  $(4.72)
                     
Weighted average common shares outstanding (1):                    
Basic   40,503,301    39,511,296    40,261,330    39,340,670 
Diluted   40,503,301    39,511,296    40,261,330    39,340,670 

 

(1) Effective with the Warrants issued on April 22, 2021, the basic and diluted earnings per share was calculated based on the two-class method.

 

 

 

 

LANNETT COMPANY, INC.
RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED)
(In thousands, except percentages, share and per share data)
                                                             
Nine months ended March 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
   Operating loss   Other expense   Loss before
income tax
   Income tax
benefit
   Net loss  

Diluted loss per

share (l)

 
GAAP Reported  $266,390   $230,656   $10,425   $25,309    10%  $16,318   $55,268   $2,673   $49,361   $(98,311)  $(42,805)  $(141,116)  $(2,791)  $(138,325)  $(3.44)
Adjustments:                                                                           
Amortization of intangibles (a)   -    -    (10,425)   10,425         -    -    -    -    10,425    -    10,425    -    10,425      
Cody API business (b)   -    (109)   -    109         (6)   (289)   -    -    404    -    404    -    404      
Depreciation on capitalized software costs (c)   -    -    -    -         -    (3,153)   -    -    3,153    -    3,153    -    3,153      
Restructuring expenses (d)   -    -    -    -         -    -    (2,673)   -    2,673    -    2,673    -    2,673      
 Distribution agreement renewal costs (e)   -    -    -    -         -    (219)   -    -    219    -    219    -    219      
Asset impairment charges (f)   -    -    -    -         -    -    -    (49,361)   49,361    -    49,361    -    49,361      
Write-downs for excess and obsolete inventory (g)   -    (3,244)   -    3,244         -    -    -    -    3,244    -    3,244    -    3,244      
Reimbursement of legal costs (h)   -    -    -    -         -    (8,215)   -    -    8,215    -    8,215    -    8,215      
Non-cash interest (i)   -    -    -    -         -    -    -    -    -    4,553    4,553    -    4,553      
Other (j)   -    (487)   -    487         (3)   (879)   -    -    1,369    124    1,493    -    1,493      
Tax adjustments (k)   -    -    -    -         -    -    -    -    -    -    -    (11,358)   11,358      
                                                                            
Non-GAAP Adjusted  $266,390   $226,816   $-   $39,574    15%  $16,309   $42,513   $-   $-   $(19,248)  $(38,128)  $(57,376)  $(14,149)  $(43,227)  $(1.07)

 

(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 write-downs for excess and obsolete inventory related to certain product lines discontinued as a result of the sale of the Silarx facility

(h) To exclude the reimbursement of legal costs associated with a distribution agreement

(i) To exclude non-cash interest expense associated with debt issuance costs

(j) To primarily exclude one-time employee retention awards and separation costs related to the Company's former Chief Information Officer

(k) To exclude the tax effect of the pre-tax adjustments included above at applicable tax rates

(l) The weighted average share number for the nine months ended March 31, 2022 is 40,261,330 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)
                                                             
Nine months ended March 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
income
(loss)
   Other loss   Income (loss)
before income
tax
   Income tax
expense (benefit)
   Net income (loss)   Diluted earnings
(loss) per share
(k)
 
GAAP Reported  $372,769   $298,738   $21,097   $52,934    14%  $18,156   $46,502   $4,043   $198,000   $(213,767)  $(40,422)  $(254,189)  $(68,600)  $(185,589)  $(4.72)
Adjustments:                                                                           
Amortization of intangibles (a)   -    -    (21,097)   21,097         -    -    -    -    21,097    -    21,097    -    21,097      
Cody API business (b)   -    (249)   -    249         (5)   (473)   -    -    727    -    727    -    727      
Depreciation on capitalized software costs (c)   -    -    -    -         -    (3,153)   -    -    3,153    -    3,153    -    3,153      
Restructuring expenses (d)   -    -    -    -         -    -    (4,043)   -    4,043    -    4,043    -    4,043      
Asset impairment charges (e)   -    -    -    -         -    -    -    (198,000)   198,000    -    198,000    -    198,000      
Write-downs for excess and obsolete inventory (f)   -    (16,623)   -    16,623         -    -    -    -    16,623    -    16,623    -    16,623      
 Distribution agreement renewal costs (g)   -    (4,966)   -    4,966         -    -    -    -    4,966    -    4,966    -    4,966      
Non-cash interest (h)   -    -    -    -         -    -    -    -    -    9,073    9,073    -    9,073      
Other (i)   -    -    -    -         -    (3,695)   -    -    3,695    -    3,695    -    3,695      
Tax adjustments (j)   -    -    -    -         -    -    -    -    -    -    -    69,376    (69,376)     
                                                                            
Non-GAAP Adjusted  $372,769   $276,900   $-   $95,869    26%  $18,151   $39,181   $-   $-   $38,537   $(31,349)  $7,188   $776   $6,412   $0.16 

 

(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 2020 Restructuring Plan

(e) To exclude asset impairment charges primarily related to the KUPI product rights intangible assets

(f) To exclude write-downs for excess and obsolete inventory related to the discontinuance of certain product lines

(g) To exclude the consideration recorded to renew the Company's distribution agreement with Recro Gainesville LLC

(h) To exclude non-cash interest expense associated with debt issuance costs

(i) To primarily exclude the reimbursement of legal costs associated with a distribution agreement

(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 nine months ended March 31, 2021 is 39,340,670 for GAAP and 40,933,946 for the non-GAAP earnings (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 March 31, 2022 
   Net sales   Cost of sales  

Amortization of

intangibles

   Gross Profit   Gross Margin %   R&D expenses   SG&A expenses   Restructuring
expenses
   Operating loss   Other expense   Loss before
income tax
   Income tax
benefit
   Net loss   Diluted loss per
share (j)
 
GAAP Reported  $78,357   $72,658   $2,621   $3,078    4%  $5,807   $17,572   $1,782   $(22,083)  $(14,180)  $(36,263)  $(1,365)  $(34,898)  $(0.86)
Adjustments:                                                                      
Amortization of intangibles (a)   -    -    (2,621)   2,621         -    -    -    2,621    -    2,621    -    2,621      
Cody API business (b)   -    (59)   -    59         -    (19)   -    78    -    78    -    78      
Depreciation on capitalized software costs (c)   -    -    -    -         -    (1,051)   -    1,051    -    1,051    -    1,051      
Restructuring expenses (d)   -    -    -    -         -    -    (1,782)   1,782    -    1,782    -    1,782      
Write-downs for excess and obsolete inventory (e)   -    (3,244)   -    3,244         -    -    -    3,244    -    3,244    -    3,244      
Reimbursement of legal costs (f)   -    -    -    -         -    (3,048)   -    3,048    -    3,048    -    3,048      
Non-cash interest (g)   -    -    -    -         -    -    -    -    1,594    1,594    -    1,594      
Other (h)   -    (310)   -    310         (2)   (102)   -    414    124    538    -    538      
Tax adjustments (i)   -    -    -    -         -    -    -    -    -    -    (4,196)   4,196      
                                                                       
Non-GAAP Adjusted  $78,357   $69,045   $-   $9,312    12%  $5,805   $13,352   $-   $(9,845)  $(12,462)  $(22,307)  $(5,561)  $(16,746)  $(0.41)

 

(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 write-downs for excess and obsolete inventory related to certain product lines discontinued as a result of the sale of the Silarx facility

(f) To exclude the reimbursement of legal costs associated with a distribution agreement

(g) To exclude non-cash interest expense associated with debt issuance costs

(h) To primarily exclude one-time employee retention awards

(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 three months ended March 31, 2022 is 40,503,301 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 March 31, 2021 
   Net sales   Cost of sales   Amortization of
intangibles
   Gross Profit   Gross Margin
%
   R&D expenses   SG&A expenses   Operating
income
   Other expense   Income (loss)
before income
tax
   Income tax
benefit
   Net income
(loss)
   Diluted
earnings (loss)
per share (g)
 
GAAP Reported  $112,370   $82,063   $3,851   $26,456    24%  $5,973   $17,636   $2,847   $(12,533)  $(9,686)  $(2,544)  $(7,142)  $(0.18)
Adjustments:                                                                 
Amortization of intangibles (a)   -    -    (3,851)   3,851         -    -    3,851    -    3,851    -    3,851      
Cody API business (b)   -    (91)   -    91         -    (18)   109    -    109    -    109      
Depreciation on capitalized software costs (c)   -    -    -    -         -    (1,051)   1,051    -    1,051    -    1,051      
Non-cash interest (d)   -    -    -    -         -    -    -    2,823    2,823    -    2,823      
Other (e)   -    -    -    -         -    (2,191)   2,191    -    2,191    -    2,191      
Tax adjustments (f)   -    -    -    -         -    -    -    -    -    1,923    (1,923)     
                                                                  
Non-GAAP Adjusted  $112,370   $81,972   $-   $30,398    27%  $5,973   $14,376   $10,049   $(9,710)  $339   $(621)  $960   $0.02 

  

(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 non-cash interest expense associated with debt issuance costs

(e) To primarily exclude the reimbursement of legal costs associated with a distribution agreement

(f) To exclude the tax effect of the pre-tax adjustments included above at applicable tax rates

(g) The weighted average share number for the three months ended March 31, 2021 is 39,511,296 for GAAP and 41,051,998 for the non-GAAP earnings (loss) per share calculations 

 

 

 

 

LANNETT COMPANY, INC.
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (UNAUDITED)
($ in thousands)
     
    Three months ended  
    March 31, 2022 
Net loss  $(34,898)
      
Interest expense   14,517 
Depreciation and amortization   7,788 
Income tax benefit   (1,365)
EBITDA   (13,958)
      
Share-based compensation   1,699 
Inventory write-down   7,373 
Investment income   (34)
Other non-operating income   (303)
Restructuring expenses   1,782 
Reimbursement of legal costs (a)   3,048 
Other (b)   491 
Adjusted EBITDA (Non-GAAP)  $98 

 

(a) To exclude the reimbursement of legal costs associated with a distribution agreement

(b) To primarily exclude one-time employee retention awards        

 

 

 

 

LANNETT COMPANY, INC.
RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED)
($ in millions)
     

  Fiscal Year 2022 Guidance  
        Non-GAAP  
  GAAP Adjustments   Adjusted  
Net sales $ 335 - $350 -   $ 335 - $350  
Gross margin percentage approx. 8.5% to 9.5% 5 % (a) approx. 13.5% to 14.5 %  
R&D expense $ 22 - $24 -   $ 22 - $24  
SG&A expense $ 71 - $73 ($16 ) (b) $ 55 - $57  
Restructuring expense $ 3 - $4 ($3 - $4) (c) -  
Asset impairment charges $ 49.4 ($49.4 ) (d) -  
Interest and other approx. $58 ($6 ) (e) approx. $52  
Effective tax rate approx. 0% to 3% -   approx. 23.5% to 24.5  %  
Adjusted EBITDA N/A N/A   $ 0 - $8  
Capital expenditures approx. $12 -   approx. $12  

 

 

 

 

 

(a) The adjustment primarily reflects amortization of purchased intangible assets related to the acquisition of Kremers Urban Pharmaceuticals, Inc. ("KUPI")

(b) The adjustment primarily excludes depreciation on previously capitalized software integration costs associated with the KUPI acquisition and the reimbursement of legal costs associated with a distribution agreement

(c) To exclude expenses associated with the 2021 Restructuring Plan

(d) To exclude asset impairment charges primarily related to the KUPI product rights intangible assets and the Company's former facility in Carmel, NY

(e) The adjustment primarily reflects non-cash interest expense associated with debt issuance costs

 

 

 

 

LANNETT COMPANY, INC.
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (UNAUDITED)
($ in millions)
         
   Fiscal Year 2022 Guidance 
   Low   High 
Net loss  $(177.0)  $(170.0)
           
Interest expense   58.0    58.0 
Depreciation and amortization   34.0    34.0 
Income taxes   -    (5.2)
EBITDA   (85.0)   (83.2)
           
Share-based compensation   9.0    9.0 
Inventory write-down   12.0    15.0 
Asset impairment charges (a)   49.4    49.4 
Restructuring expenses (b)   3.0    4.0 
Reimbursement of legal costs (c)   10.0    12.0 
Other (d)   1.6    1.8 
Adjusted EBITDA (Non-GAAP)  $-   $8.0 

 

(a) To exclude asset impairment charges primarily related to the KUPI product rights intangible assets and the Company's former facility in Carmel, NY

(b) To exclude expenses associated with the 2021 Restructuring Plan

(c) To exclude the reimbursement of legal costs associated with a distribution agreement

(d) To primarily exclude one-time employee retention awards and separation costs related to the Company's former Chief Information Officer

 

 

 

 

LANNETT COMPANY, INC.
NET SALES BY MEDICAL INDICATION
                 
   Three months ended   Nine months ended 
($ in thousands)  March 31,   March 31, 
Medical Indication  2022   2021   2022   2021 
Analgesic  $3,292   $3,836   $12,525   $10,528 
Anti-Psychosis   3,346    11,678    9,156    38,023 
Cardiovascular   9,468    16,573    33,321    52,623 
Central Nervous System   15,177    24,509    60,302    71,648 
Endocrinology   6,792    6,822    22,934    19,551 
Gastrointestinal   11,709    16,817    40,972    52,492 
Infectious Disease   5,438    10,610    24,473    55,586 
Migraine   3,507    5,169    12,638    20,942 
Respiratory/Allergy/Cough/Cold   2,309    2,548    7,291    6,241 
Urinary   827    1,566    3,167    4,385 
Other   13,873    8,617    32,160    24,661 
Contract Manufacturing revenue   2,619    3,625    7,451    16,089 
   Net Sales  $78,357   $112,370   $266,390   $372,769 

 

 

 



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