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Concordia International Corp. Announces Second Quarter 2018 Results

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Concordia International Corp. Announces Second Quarter 2018 Results

PR Newswire

- Also Announces Executive Leadership Transition -

  • Second quarter 2018 revenue of approximately $139 million
     
  • Second quarter 2018 GAAP net loss of $180 million

  • Second quarter 2018 Adjusted EBITDA1 of approximately $67 million

  • Generated cash flow from operations of approximately $84 million in the first six months of 2018 and concluded the second quarter of 2018 with a cash balance of $306 million, which includes $46 million of restricted cash

MISSISSAUGA, ON, Aug. 8, 2018 /PRNewswire/ - Concordia International Corp. ("Concordia" or the "Company") (TSX:CXR), an international specialty pharmaceutical company focused on becoming a leader in European specialty, off-patent medicines, today announced its financial and operational results for the three and six months ended June 30, 2018. All financial references are in U.S. dollars unless otherwise noted.

"Concordia's second quarter results were in line with management's forecasts," said Graeme Duncan, Chief Executive Officer of Concordia. "During the quarter, the Company also made important progress towards the completion of its recapitalization transaction and alignment of its leadership team. I believe with great conviction that a stronger capital structure and aligned leadership team will provide us with the opportunity to become a leader in European specialty, off-patent medicines going forward." 

Concordia also announced today the appointment of Robert Sully as General Counsel effective August 31, 2018. Mr. Sully was previously General Counsel at AMCo and has deep experience in legal M&A as well as 14 years of litigation experience within Europe.

Mr. Sully will replace Francesco Tallarico, current Chief Legal Officer and Secretary of Concordia. Mr. Tallarico will continue in his role as Chief Legal Officer and Secretary, based in Mississauga, Canada, until August 31, 2018. Mr. Tallarico will remain with the Company in a transitory role until September 30, 2018.  

"Francesco will be leaving the Company to pursue the next step in what I am sure will continue to be a very successful career," continued Mr. Duncan. "On behalf of our board, I would like to thank Francesco, who has been a key part of the executive team since the Company's inception and has been instrumental in leading the Company through to what we believe will be the successful closing of our recapitalization transaction. We are also delighted to welcome Rob to the executive team. He brings outstanding legal skillsets to Concordia and we look forward to working closely with him."   

Consolidated Second Quarter 2018 Financial and Operational Results

  • Reported second quarter revenue of $139.5 million, compared to $160.8 million for the second quarter of 2017, and $152.3 million for the first quarter of 2018.

  • GAAP net loss for the second quarter of 2018 of $180.0 million.

  • Reported second quarter Adjusted EBITDA1 of $66.8 million, compared to $81.8 million for the second quarter of 2017, and $72.0 million for the first quarter of 2018.

  • Generated cash flows from operating activities of $83.9 million in the first six months of 2018, compared to $155.6 million during the same period in 2017.
     
  • As of June 30, 2018, the Company had a cash balance of $306 million, which includes $46.5 million of restricted cash; $44 million of the restricted cash represents cash held in escrow in connection with the Recapitalization Transaction (as defined below).

  • On June 26, 2018, Concordia announced that it obtained a final court order from the Ontario Superior Court of Justice (Commercial List) approving the Company's plan of arrangement under the Canada Business Corporations Act (the "CBCA Plan") pursuant to which it will implement its recapitalization transaction (the "Recapitalization Transaction"). The closing of the Recapitalization Transaction is expected to be completed on or about August 14, 2018, subject to the satisfaction or waiver of all other conditions to the CBCA Plan.

Second Quarter 2018 Segment Results

Concordia International segment's revenue for the second quarter of 2018 was $106.7 million compared to $113.0 million in the first quarter of the 2018.

The sequential decline is primarily comprised of $2.1 million of foreign exchange losses arising from the weakening of the Great British Pound ("GBP") against the U.S. dollar; $0.7 million lower revenue from Prednisolone; $0.6 million lower revenue from Propylthiouracil; and $0.6 million lower revenue from Carbimazole, partially offset by $1.1 million higher revenue from Flurbiprofen. The remaining decrease was primarily due to general competitive market pressures across the Concordia International segment's product portfolio.

Revenue for the second quarter of 2018 decreased by $8.7 million or 8%, compared to the corresponding period in 2017.

The year-over-year decrease was primarily attributable to ongoing competitive market pressures in the Company's UK business, partially offset by the impact of the GBP strengthening against the U.S. dollar during the comparative period.

Concordia North America segment's second quarter 2018 revenue of $32.8 million was 17% lower than first quarter 2018 revenue of $39.3 million primarily due to lower authorized generic product sales and lower sales from Photofrin®

Revenue for the second quarter of 2018 decreased by $12.6 million or 28 per cent compared to the corresponding period in 2017. The decrease was primarily driven by continued competitive pressure on certain key products in the U.S. portfolio including Donnatal®, Plaquenil® AG and Lanoxin® AG. 

Pipeline Update

In the second quarter of 2018, Concordia launched two new products into markets that have a current IMS estimated market value in excess of $85 million.

Concordia also has 25 products that have already been approved or are awaiting approval by the regulators. These products, if launched, are expected to compete in markets that have a current IMS estimated market value in excess of $179 million.

In addition, the Company currently has 19 products under development that are anticipated to launch in the next three to five years. These products, if launched, are expected to compete in markets that have a current IMS estimated market value in excess of $1.6 billion.

The Company believes that these products include several second-to-market or early-to-market opportunities for difficult-to-make products.

Additionally, Concordia has 15 products identified for potential development that if launched, are expected to compete in markets that have a current IMS estimated market value in excess of $390 million.

Therefore, in total, Concordia's current pipeline is now comprised of approximately 59 products that could compete in markets that have a current IMS estimated market value of approximately $2.2 billion.

With its recently announced leadership transition, the Company will continue to evaluate the composition of its pipeline of medicines.

Consolidated Financial Results


Three months ended

Six months ended

(in $000's, except per share data)

Jun 30, 2018

Jun 30, 2017

Jun 30, 2018

Jun 30, 2017

Revenue

139,487

160,785

291,751

321,342

Gross profit

95,087

111,312

196,193

226,727

Gross profit %

68%

69%

67%

71%

Adjusted gross profit (1)

95,087

111,312

196,193

227,038

Adjusted gross profit % (1)

68%

69%

67%

71%

Total operating expenses

136,361

1,092,567

248,706

1,189,616

Operating loss for the period

(41,274)

(981,255)

(52,513)

(962,889)






Income tax expense (recovery)

(7,901)

(37,103)

(3,197)

(32,614)

Net loss for the period

(179,954)

(1,010,653)

(235,648)

(1,089,477)






Loss per share





Basic

(3.51)

(19.78)

(4.59)

(21.32)

Diluted

(3.51)

(19.78)

(4.59)

(21.32)






EBITDA (1)

(41,371)

(903,563)

53,132

(846,631)

Adjusted EBITDA (1)

66,781

81,808

138,805

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