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 | ||||||||