EX-99.1 2 tm2125826d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

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

 

LANNETT ANNOUNCES FISCAL 2021 FOURTH-QUARTER,

FULL-YEAR FINANCIAL RESULTS

 

·Q4 Business and Financial Highlights:
  
·Net Sales Were $106 Million
   
·Cash Increased to Over $93 Million at June 30
   
·ANDA for Generic ADVAIR DISKUS® Submitted, Accepted for Priority Review
   
·Completed Re-financing Transaction, Debt Maturity Extended to 2026
   
·Post Quarter End:
  
·Added Generic Spiriva® Handihaler® to Pipeline, Third Drug/Device Respiratory Asset, Fifth Large, Durable Product Opportunity

 

Philadelphia, PA – August 25, 2021 – Lannett Company, Inc. (NYSE: LCI) today reported financial results for its fiscal 2021 fourth quarter and full year ended June 30, 2021.

 

“With the recently signed agreement to be the exclusive U.S. distributor of a generic Spiriva® Handihaler®, we now have disclosed at least five large, durable assets in our pipeline,” said Tim Crew, chief executive officer of Lannett. “Each of these products has the potential to both be a significant contributor to our financial performance and to do so for an extended period of time. Combined, these products have the potential to transform our company. Currently, we believe all five products could be approved, or tentatively approved, by 2025, with the product closest to commercialization, generic ADVAIR DISKUS®, potentially launching next calendar year, followed by generic Flovent Diskus® in 2023, biosimilar Insulin Glargine in 2024 and biosimilar Insulin Aspart in 2025.

 

“Regarding our financial performance, throughout the fiscal 2021 full year several of our key products faced a highly competitive pricing environment. Despite these pressures, net sales of $479 million were just below our expectations of approximately $480 million, while adjusted gross margin of 26% was at the top end of our expectations. Importantly, our cash position increased to over $93 million at June 30, 2021, up from approximately $81 million at March 31, 2021.

 

“As earlier noted, in April, we successfully completed a refinancing transaction, which extended the maturity of our debt to 2026, upsized our credit facility and significantly freed up cash flow during the term of the debt, primarily through the elimination of mandatory debt payments until maturity. We thus have more financial flexibility to progress our portfolio and more resources to further invest in our growth initiatives.

 

 

 

 

“For the upcoming year our goals include: successfully commercializing recently and soon-to-be approved drug product candidates; advancing the development of our large, durable assets; further expanding our existing strategic relationships and forming new ones to add complementary products to our portfolio; and all the while, maintaining prudent expense discipline.”

 

For the fiscal 2021 fourth quarter on a GAAP basis, net sales were $106.0 million compared with $137.9 million for the fourth quarter of fiscal 2020. Gross profit was $22.7 million, or 21% of net sales, compared with $39.6 million, or 29% of net sales. Income tax expense was $129.2 million, primarily attributable to the impact of the full valuation allowance recorded against the Company’s deferred tax assets, compared to income tax benefit of $10.1 million for the prior year fourth quarter. Net loss was $177.9 million, or $4.50 per share, compared with $9.7 million, or $0.25 per share, for the fourth quarter of fiscal 2020.

 

For the fiscal 2021 fourth quarter reported on a Non-GAAP basis, net sales were $106.0 million compared with $137.9 million for the fourth quarter of fiscal 2020. Adjusted gross profit was $26.4 million, or 25% of net sales, compared with $48.9 million, or 35% of net sales. Adjusted operating income was $4.9 million compared with $26.7 million. Adjusted interest expense increased to $12.1 million from $11.3 million for the fourth quarter of fiscal 2020. Adjusted net loss was $7.4 million, or $0.19 per share, versus adjusted net income of $13.4 million, or $0.31 per diluted share, for the fiscal 2020 fourth quarter. Adjusted EBITDA for the fiscal 2021 fourth quarter was $12.1 million.

 

For the fiscal 2021 full year, on a GAAP basis, net sales were $478.8 million compared with $545.7 million for the fiscal 2020 full year. Gross profit was $75.6 million, or 16% of total net sales, compared with $165.2 million, or 30% of total net sales. During fiscal 2021, the company recorded non-cash asset impairment charges of $216.6 million, primarily related to the write down of intangible assets associated with the acquisition of Kremers Urban Pharmaceuticals product rights and the write-down of the value of a product license agreement. Income tax expense was $60.6 million, primarily attributable to the impact of the full valuation allowance recorded against the Company’s deferred tax assets, compared to income tax benefit of $15.3 million for the prior year. Net loss was $363.5 million, or $9.23 per share, compared with $33.4 million, or $0.86 per share, for fiscal 2020.

 

For the fiscal 2021 full year reported on a Non-GAAP basis, net sales were $478.8 million compared with $545.7 million for the fiscal 2020 full year. Adjusted gross profit was $122.3 million, or 26% of adjusted net sales, compared with $204.0 million, or 37% of adjusted net sales, for the prior year. Adjusted operating income was $43.4 million compared with $107.4 million. Adjusted interest expense declined to $43.7 million from $52.5 million for fiscal 2020. Adjusted net loss was $1.0 million, or $0.03 per share, versus adjusted net income of $45.6 million, or $1.07 per diluted share, for the fiscal 2020 full year.

 

 

 

 

Guidance for Fiscal 2022

 

Based on its current outlook, the company provided guidance for fiscal year 2022 as follows:

 

  GAAP Adjusted*
Net sales $400 million to $440 million $400 million to $440 million
Gross margin % Approximately 19 to 21% Approximately 23% to 25%
R&D expense $26 million to $29 million $26 million to $29 million
SG&A expense $64 million to $68 million $58 million to $61 million
Interest and other Approximately $58 million Approximately $52 million
Effective tax rate Approximately 0% to 5% Approximately 21% to 22%
Adjusted EBITDA N/A $40 million to $55 million
Capital expenditures $12 million to $18 million $12 million to $18 million

 

*A reconciliation of Adjusted amounts to most directly comparable GAAP amounts can be found in the attached financial tables.

 

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 2021 fourth quarter and full year ended June 30, 2021. The conference call will be available to interested parties by dialing 888-771-4371 from the U.S. or Canada, or 847-585-4405 from international locations, passcode 50215666. 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 news 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 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 with 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.

 

ADVAIR DISKUS® and Flovent® Diskus® are registered trademarks of GlaxoSmithKline. Spiriva® Handihaler® are registered trademarks of Boehringer Ingelheim.

 

About Lannett Company, Inc.:

 

Lannett Company, founded in 1942, develops, manufactures, packages, markets and distributes generic pharmaceutical products for a wide range of medical indications – see financial schedule below for net sales by medical indication. For more information, visit the company’s website at www.lannett.com.

 

This news release contains certain statements of a forward-looking nature relating to future events or future business performance. Any such statements, including, but not limited to, successfully commercializing recently introduced products and launching and successfully commercializing additional products in fiscal 2022, the potential material impact of COVID-19 on future financial results, and achieving the financial metrics stated in the company’s 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 which 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 Lannett’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 Form 10-K and other documents filed with the Securities and Exchange Commission from time to time. These forward-looking statements represent the company's judgment as of the date of this news release. The company disclaims any intent or obligation to update these forward-looking statements.

 

# # #

 

FINANCIAL SCHEDULES FOLLOW

 

 

 

 

LANNETT COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

 

   (Unaudited)     
   June 30, 2021   June 30, 2020 
ASSETS          
Current assets:           
Cash and cash equivalents  $93,286   $144,329 
Accounts receivable, net   98,834    125,688 
Inventories    109,545    142,867 
Income taxes receivable   35,050    14,419 
Assets held for sale    2,678    2,678 
Other current assets    14,170    13,227 
Total current assets   353,563    443,208 
Property, plant and equipment, net   166,674    179,518 
Intangible assets, net    137,835    374,735 
Operating lease right-of-use asset   10,559    9,343 
Deferred tax assets    -    117,890 
Other assets    15,106    11,861 
TOTAL ASSETS   $683,737   $1,136,555 
           
           
LIABILITIES           
Current liabilities:           
Accounts payable  $29,585   $32,535 
Accrued expenses    13,077    14,962 
Accrued payroll and payroll-related expenses   10,680    16,304 
Rebates payable    19,025    38,175 
Royalties payable    13,779    20,863 
Restructuring liability   8    27 
Current operating lease liabilities   2,045    1,097 
Short-term borrowings and current portion of long-term debt   -    88,189 
Other current liabilities   2,270    2,713 
Total current liabilities   90,469    214,865 
Long-term debt, net   590,683    592,940 
Long-term operating lease liabilities   11,047    9,844 
Other liabilities   19,009    16,010 
TOTAL LIABILITIES   711,208    833,659 
           
STOCKHOLDERS' EQUITY (DEFICIT)          
Common stock ($0.001 par value, 100,000,000 shares authorized; 40,913,148 and 39,963,127 shares issued;          
39,576,606 and 38,798,787 shares outstanding at June 30, 2021 and June 30, 2020, respectively)   41    40 
Additional paid-in capital   355,239    321,164 
Accumulated deficit   (364,766)   (1,291)
Accumulated other comprehensive loss   (548)   (627)
Treasury stock (1,336,542 and 1,164,340 shares at June 30, 2021 and June 30, 2020, respectively)   (17,437)   (16,390)
Total stockholders' equity (deficit)   (27,471)   302,896 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)  $683,737   $1,136,555 

 

 

 

 

LANNETT COMPANY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands, except share and per share data)

 

   Three months ended   Twelve months ended 
   June 30,   June 30, 
   2021   2020   2021   2020 
Net sales  $106,009   $137,920   $478,778   $545,744 
Cost of sales   79,597    89,809    378,335    348,508 
Amortization of intangibles   3,753    8,519    24,850    32,016 
Gross profit   22,659    39,592    75,593    165,220 
Operating expenses:                    
Research and development expenses   6,017    6,691    24,173    29,978 
Selling, general and administrative expenses   21,576    18,591    68,078    79,467 
Restructuring expenses   -    -    4,043    1,771 
Asset impairment charges   18,550    18,841    216,550    34,448 
Total operating expenses   46,143    44,123    312,844    145,664 
Operating income (loss)   (23,484)   (4,531)   (237,251)   19,556 
Other income (loss):                    
Loss on extinguishment of debt   (10,341)   -    (10,341)   (2,145)
Investment income   68    94    236    1,646 
Interest expense   (13,217)   (14,682)   (53,830)   (66,845)
Other   (1,687)   (659)   (1,664)   (840)
Total other loss   (25,177)   (15,247)   (65,599)   (68,184)
Loss before income tax   (48,661)   (19,778)   (302,850)   (48,628)
Income tax expense (benefit)   129,225    (10,077)   60,625    (15,262)
Net loss  $(177,886)  $(9,701)  $(363,475)  $(33,366)
                     
Loss per common share (1):                    
Basic  $(4.50)  $(0.25)  $(9.23)  $(0.86)
Diluted  $(4.50)  $(0.25)  $(9.23)  $(0.86)
                     
Weighted average common shares outstanding (1):                    
Basic   39,544,909    38,752,080    39,391,589    38,592,618 
Diluted   39,544,909    38,752,080    39,391,589    38,592,618 

 

(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)

 

   Three months ended June 30, 2021 
   Net sales   Cost of sales   Amortization of
intangibles		   Gross Profit   Gross
Margin
%		   R&D expenses   SG&A expenses   Asset
impairment
charges		   Operating
income (loss)		   Other loss   Loss before
income tax		   Income tax
expense		   Net loss   Diluted loss per
share (k)		 
GAAP Reported  $106,009   $79,597   $3,753   $22,659    21%  $6,017   $21,576   $18,550   $(23,484)  $(25,177)  $(48,661)  $129,225   $(177,886)  $(4.50)
Adjustments:                                                                      
Amortization of intangibles (a)   -    -    (3,753)   3,753         -    -    -    3,753    -    3,753    -    3,753      
Cody API business (b)   -    (21)   -    21         -    (13)   -    34    -    34    -    34      
Depreciation on capitalized software costs (c)   -    -    -    -         -    (1,051)   -    1,051    -    1,051    -    1,051      
Branded prescription drug fee (d)   -    -    -    -         -    (831)   -    831    -    831    -    831      
Asset impairment charges (e)   -    -    -    -         -    -    (18,550)   18,550    -    18,550    -    18,550      
Loss on extinguishment of debt (f)   -    -    -    -         -    -    -    -    10,341    10,341    -    10,341      
Debt refinancing costs (g)   -    -    -    -         -    (2,262)   -    2,262    -    2,262    -    2,262      
Non-cash interest (h)   -    -    -    -         -    -    -    -    1,073    1,073    -    1,073      
Other (i)   -    -    -    -         -    (1,915)   -    1,915    1,500    3,415    -    3,415      
Tax adjustments (j)   -    -    -    -         -    -    -    -    -    -    (129,139)   129,139      
                                                                       
Non-GAAP Adjusted  $106,009   $79,576   $-   $26,433    25%  $6,017   $15,504   $-   $4,912   $(12,263)  $(7,351)  $86   $(7,437)  $(0.19)

 

(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 the federally mandated branded prescription drug fee related to Levothyroxine sold under the JSP agreement, which has not been sold since fiscal year ended June 30, 2019
(e)   To exclude asset impairment charges primarily related to its intangible asset for a distribution and supply agreement with Cediprof, Inc. for the Levothyroxine tablets product
(f)   To exclude the loss on extinguishment of debt related to the retirement of the Term Loan B in April 2021
(g)   To exclude legal and financial advisory costs related to the debt refinancing in April 2021
(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 and costs associated with a legal settlement
(j)   To exclude the impact of the full valuation allowance booked against the Company's deferred tax assets as well as the tax effect of the pre-tax adjustments included above at applicable tax rates
(k)   The weighted average share number for the three months ended June 30, 2021 is 39,544,909 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 June 30, 2020 
   Net sales   Cost of sales   Amortization of
intangibles		   Gross Profit   Gross
Margin
%		   R&D expenses   SG&A
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 (i)		 
GAAP Reported  $137,920   $89,809   $8,519   $39,592    29%  $6,691   $18,591   $18,841   $(4,531)  $(15,247)  $(19,778)  $(10,077)  $(9,701)  $(0.25)
Adjustments:                                                                      
Amortization of intangibles (a)   -    -    (8,519)   8,519         -    -    -    8,519    -    8,519    -    8,519      
Cody API business (b)   -    158    -    (158)        (66)   (95)   -    3    -    3    -    3      
Depreciation on capitalized software costs (c)   -    -    -    -         -    (1,058)   -    1,058    -    1,058    -    1,058      
Decommissioning of Philadelphia sites (d)   -    (419)   -    419         -    -    -    419    -    419    -    419      
Asset impairment charges (e)   -    -    -    -         -    -    (18,841)   18,841    -    18,841    -    18,841      
Non-cash interest (f)   -    -    -    -         -    -    -    -    3,335    3,335    -    3,335      
Other (g)   -    (508)   -    508         (64)   (1,817)   -    2,389    -    2,389    -    2,389      
Tax adjustments (h)   -    -    -    -         -    -    -    -    -    -    11,436    (11,436)     
                                                                       
Non-GAAP Adjusted  $137,920   $89,040   $-   $48,880    35%  $6,561   $15,621   $-   $26,698   $(11,912)  $14,786   $1,359   $13,427   $0.31 

 

(a)   To exclude amortization of purchased intangible assets primarily related to the acquisitions of KUPI and Silarx Pharmaceuticals, Inc.
(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 the costs associated with the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites
(e)   To exclude asset impairment charges primarily related to the abandonment of several pipeline products within the KUPI IPR&D and Silarx IPR&D asset portfolios
(f)   To exclude non-cash interest expense associated with debt issuance costs
(g)   To exclude costs primarily related to separation costs related to the Company’s cost reduction plan, COVID-19 special recognition payments, as well as costs previously incurred as part of the Company's refinancing efforts
(h)   To exclude the tax effect of the pre-tax adjustments included above at applicable tax rates
(i)   The weighted average share number for the three months ended June 30, 2020 is 38,752,080 for GAAP and 46,111,366 for 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)

 

   Twelve months ended June 30, 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   Loss before
income tax		   Income tax
expense		   Net loss   Diluted loss
per share (n)		 
GAAP Reported  $478,778   $378,335   $24,850   $75,593    16%  $24,173   $68,078   $4,043   $216,550   $(237,251)  $(65,599)  $(302,850)  $60,625   $(363,475)  $(9.23)
Adjustments:                                                                           
Amortization of intangibles (a)   -    -    (24,850)   24,850         -    -    -    -    24,850    -    24,850    -    24,850      
Cody API business (b)   -    (270)   -    270         (5)   (486)   -    -    761    -    761    -    761      
Depreciation on capitalized software costs (c)   -    -    -    -         -    (4,204)   -    -    4,204    -    4,204    -    4,204      
Branded prescription drug fee (d)   -    -    -    -         -    (831)   -    -    831    -    831    -    831      
Restructuring expenses (e)   -    -    -    -         -    -    (4,043)   -    4,043    -    4,043    -    4,043      
Asset impairment charges (f)   -    -    -    -         -    -    -    (216,550)   216,550    -    216,550    -    216,550      
Write-downs for excess and obsolete inventory (g)   -    (16,623)   -    16,623         -    -    -    -    16,623    -    16,623    -    16,623      
 Distribution agreement renewal costs (h)   -    (4,966)   -    4,966         -    -    -    -    4,966    -    4,966    -    4,966      
Loss on extinguishment of debt (i)   -    -    -    -         -    -    -    -    -    10,341    10,341    -    10,341      
Debt refinancing costs (j)   -    -    -    -         -    (2,262)   -    -    2,262    -    2,262    -    2,262      
Non-cash interest (k)   -    -    -    -         -    -    -    -    -    10,146    10,146    -    10,146      
Other (l)   -    -    -    -         -    (5,610)   -    -    5,610    1,500    7,110    -    7,110      
Tax adjustments (m)   -    -    -    -         -    -    -    -    -    -    -    (59,763)   59,763      
                                                                            
Non-GAAP Adjusted  $478,778   $356,476   $-   $122,302    26%  $24,168   $54,685   $-   $-   $43,449   $(43,612)  $(163)  $862   $(1,025)  $(0.03)

 

(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 the federally mandated branded prescription drug fee related to Levothyroxine sold under the JSP agreement, which has not been sold since fiscal year ended June 30, 2019
(e)  To exclude expenses associated with the 2020 Restructuring Plan
(f)  To exclude asset impairment charges primarily related to the KUPI product rights intangible assets and the intangible asset for a distribution and supply agreement with Cediprof, Inc. for the Levothyroxine tablets product
(g)  To exclude write-downs for excess and obsolete inventory related to the discontinuance of certain product lines
(h)  To exclude the consideration recorded to renew the Company's distribution agreement with Recro Gainesville LLC
(i)  To exclude the loss on extinguishment of debt related to the retirement of the Term Loan B in April 2021
(j)  To exclude legal and financial advisory costs related to the debt refinancing in April 2021
(k)  To exclude non-cash interest expense associated with debt issuance costs
(l)  To primarily exclude the reimbursement of legal costs associated with a distribution agreement and costs associated with a legal settlement
(m)  To exclude the impact of the full valuation allowance booked against the Company's deferred tax assets as well as the tax effect of the pre-tax adjustments included above at applicable tax rates
(n)  The weighted average share number for the twelve months ended June 30, 2021 is 39,391,589 for GAAP and the 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)

 

   Twelve months ended June 30, 2020 
   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		   Other loss   Income (loss)
before income
tax		   Income tax
expense
(benefit)		   Net income
(loss)		   Diluted
earnings (loss)
per share (l)		 
GAAP Reported  $545,744   $348,508   $32,016   $165,220    30%  $29,978   $79,467   $1,771   $34,448   $19,556   $(68,184)  $(48,628)  $(15,262)  $(33,366)  $(0.86)
Adjustments:                                                                           
Amortization of intangibles (a)   -    -    (32,016)   32,016         -    -    -    -    32,016    -    32,016    -    32,016      
Cody API business (b)   -    (2,752)   -    2,752         (617)   (528)   -    -    3,897    -    3,897    -    3,897      
Depreciation on capitalized software costs (c)   -    -    -    -         -    (4,233)   -    -    4,233    -    4,233    -    4,233      
Decommissioning of Philadelphia sites (d)   -    (1,903)   -    1,903         -         -    -    1,903    -    1,903    -    1,903      
Branded prescription drug fee (e)   -    -    -    -         -    (2,957)   -    -    2,957    -    2,957    -    2,957      
Restructuring expenses (f)   -    -    -    -         -    -    (1,771)   -    1,771    -    1,771    -    1,771      
Asset impairment charges (g)   -    -    -    -         -    -    -    (34,448)   34,448    -    34,448    -    34,448      
Non-cash interest (h)   -    -    -    -         -    -    -    -    -    14,336    14,336    -    14,336      
Loss on extinguishment of debt (i)   -    -    -    -         -    -    -    -    -    2,145    2,145    -    2,145      
Other (j)   -    (2,094)   -    2,094         (94)   (4,395)   -    -    6,583    21    6,604    -    6,604      
Tax adjustments (k)   -    -    -    -         -    -    -    -    -    -    -    25,378    (25,378)     
                                                                            
Non-GAAP Adjusted  $545,744   $341,759   $-   $203,985    37%  $29,267   $67,354   $-   $-   $107,364   $(51,682)  $55,682   $10,116   $45,566   $1.07 

 

(a)  To exclude amortization of purchased intangible assets primarily related to the acquisitions of KUPI and Silarx Pharmaceuticals, Inc.
(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 the costs associated with the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites
(e)  To exclude the federally mandated branded prescription drug fee related to Levothyroxine sold under the JSP agreement, which has not been sold since fiscal year ended June 30, 2019
(f)  To exclude expenses associated with the Cody API Restructuring Plan
(g)  To exclude asset impairment charges primarily associated with an agreement to distribute Methylphenidate AB and related to the abandonment of several pipeline products within the KUPI IPR&D and Silarx IPR&D asset portfolios
(h)  To exclude non-cash interest expense associated with debt issuance costs
(i)  To exclude the loss on extinguishment of debt primarily related to the partial repayment of the outstanding Term Loan A balance
(j)  To primarily exclude accrued separation costs related to the Company's former Chief Financial Officer and the Company’s cost reduction plan, as well as COVID-19 special recognition payments, legal settlements and costs previously incurred as part of the Company's refinancing efforts, partially offset by gains on sales of assets previously held for sale
(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 twelve months ended June 30, 2020 is 38,592,618 for GAAP and 44,677,463 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 
   June 30, 2021 
Net loss  $(177,886)
      
Interest expense   13,217 
Depreciation and amortization   9,479 
Income tax expense   129,225 
EBITDA   (25,965)
      
Share-based compensation   1,841 
Inventory write-down   715 
Asset impairment charges (a)   18,550 
Investment income   (68)
Loss on extinguishment of debt (b)   10,341 
Other non-operating loss   187 
Debt refinancing costs (c)   2,262 
Legal settlement (d)   1,500 
Other (e)   2,781 
Adjusted EBITDA (Non-GAAP)  $12,144 

 

(a) To exclude asset impairment charges primarily related to its intangible asset for a distribution and supply agreement with Cediprof, Inc. for the Levothyroxine tablets product
(b) To exclude the loss on extinguishment of debt related to the retirement of the Term Loan B in April 2021
(c) To exclude legal and financial advisory costs related to the debt refinancing in April 2021
(d) To exclude costs associated with a legal settlement
(e) To primarily exclude the reimbursement of legal costs associated with a distribution agreement as well as the federally mandated branded prescription drug fee related to Levothyroxine sold under the JSP agreement, which has not been sold since fiscal year ended June 30, 2019

 

 

 

 

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  $400 - $440  -  $400 - $440
Gross margin percentage  approx. 19% to 21%  4%(a) approx. 23% to 25%
R&D expense  $26 - $29  -  $26 - $29
SG&A expense  $64 - $68  ($6 - $7)(b) $58 - $61
Interest and other  approx. $58  ($6)(c) approx. $52
Effective tax rate   approx. 0% to 5%  -  approx. 21% to 22%
Adjusted EBITDA  N/A  N/A  $40 - $55
Capital expenditures  $12 - $18  -  $12 - $18

 

(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)  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  $(72.0)  $(60.0)
           
Interest expense   58.0    58.0 
Depreciation and amortization   38.0    41.0 
Income taxes   -    (3.0)
EBITDA   24.0    36.0 
           
Share-based compensation   9.0    9.0 
Inventory write-down   7.0    8.0 
Other (a)   -    2.0 
Adjusted EBITDA (Non-GAAP)  $40.0   $55.0 

 

(a) Relates to the reimbursement of legal costs associated with a distribution agreement

 

 

 

 

LANNETT COMPANY, INC.

NET SALES BY MEDICAL INDICATION

 

   Three months ended   Twelve months ended 
($ in thousands)  June 30,   June 30, 
Medical Indication  2021   2020   2021   2020 
Analgesic  $4,156   $1,874   $14,684   $8,680 
Anti-Psychosis   5,697    26,346    43,720    104,934 
Cardiovascular   13,364    21,251    65,987    88,576 
Central Nervous System   23,467    20,102    95,115    77,256 
Endocrinology   7,519    -    27,070    - 
Gastrointestinal   15,048    17,457    67,540    73,477 
Infectious Disease   12,175    21,515    67,761    73,237 
Migraine   4,612    11,359    25,554    44,266 
Respiratory/Allergy/Cough/Cold   3,017    2,829    9,258    11,576 
Urinary   1,401    1,408    5,786    4,225 
Other   10,651    7,166    35,312    35,013 
Contract Manufacturing revenue   4,902    6,613    20,991    24,504 
Net Sales  $106,009   $137,920   $478,778   $545,744