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Lannett Announces Fiscal 2021 Third-Quarter Financial Results

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PHILADELPHIA, May 5, 2021 /PRNewswire/ -- Lannett Company, Inc. (NYSE:LCI) today reported financial results for its fiscal 2021 third quarter ended March 31, 2021. 

"In recent months, we have significantly advanced a number of strategic initiatives," said Tim Crew, chief executive officer of Lannett. "In April, we successfully completed a transaction to refinance our debt, using the proceeds to retire the outstanding Term Loan B balance of approximately $540 million that was set to mature in November of next year. As a result, we have extended the maturity of our debt to 2026 from 2022, which is after several high-value pipeline assets are expected to be commercialized. Moreover, we improved our free cash flow, by approximately $50 million in the first year alone, which we plan to use, in part, to support our growth initiatives.

"We were pleased with our fiscal 2021 third quarter financial results. While net sales were slightly lower than our expectations, adjusted gross margin, adjusted EBITDA and adjusted earnings per share were higher than we anticipated. Selling, general and administrative expenses were lower compared with the same quarter last year. Moreover, we ended the quarter with more than $80 million in cash, up from approximately $34 million at December 31, 2020.

"Looking ahead, we expect to launch a number of products in the coming months, and we continue to advance our durable, large market opportunity assets. Last month we announced the submission of an Abbreviated New Drug Application (ANDA) for generic ADVAIR DISKUS®, an inhalation drug device combination product. Also, the pivotal clinical trial has been initiated for generic Flovent Diskus®, another key respiratory product in our pipeline. And, last but not least, in the third quarter we added to our pipeline another potentially large and durable biosimilar asset, fast acting insulin aspart."

For the fiscal 2021 third quarter on a GAAP basis, net sales were $112.4 million compared with $144.4 million for the third quarter of fiscal 2020. Gross profit was $26.5 million, or 24% of net sales, compared with $41.7 million, or 29% of net sales. During last year's third quarter, the company recorded non-cash, asset impairment charges of $14.0 million, related to the write-down of the value of a product license agreement. Net loss was $7.1 million, or $0.18 per share, compared with $16.6 million, or $0.43 per share, for the third quarter of fiscal 2020.

For the fiscal 2021 third quarter reported on a Non-GAAP basis, net sales were $112.4 million compared with $144.4 million for the third quarter of fiscal 2020. Adjusted gross profit was $30.4 million, or 27% of net sales, compared with $52.3 million, or 36% of net sales, for the prior-year third quarter. Adjusted interest expense decreased to $9.8 million compared with $12.7 million for the second quarter of fiscal 2020. Adjusted net income was $1.0 million, or $0.02 per diluted share, compared with $11.7 million, or $0.27 per diluted share, for the fiscal 2020 third quarter. Adjusted EBITDA for the fiscal 2021 third quarter was $17.0 million.

Guidance for Fiscal 2021

Based on its current outlook and recent financing, the company revised guidance for fiscal year 2021, with the primary change related to interest expense, and is as follows:


GAAP

Adjusted*

Net sales

$480 million to $500 million, unchanged

$480 million to $500 million, unchanged

Gross margin %

Approximately 14% to 16%, unchanged

Approximately 24% to 26%, unchanged

R&D expense

$26 million to $28 million, unchanged

$26 million to $28 million, unchanged

SG&A expense

$62 million to $64 million, up from $58 million to $60 million

$52 million to $54 million, unchanged

Restructuring expense

$4 million, unchanged

$--

Asset impairment charges

$198 million, unchanged

$--

Interest and other

Approximately $71 million, up from $53 million to $54 million

Approximately $44 million, up from $41 million to $42 million

Effective tax rate

Approximately 27% to 28%

N/A

Income tax expense/(benefit)

N/A

$1 million to ($1 million)

Adjusted EBITDA

N/A

$75 million to $85 million, unchanged

Capital expenditures

$10 million to $15 million, unchanged

$10 million to $15 million, unchanged

*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 third quarter ended March 31, 2021. The conference call will be available to interested parties by dialing 888-895-5479 from the U.S. or Canada, or 847-619-6250 from international locations, passcode 50156994. 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) non-cash interest expense, as well as (4) certain other items considered unusual or non-recurring in nature.

ADVAIR DISKUS® and Flovent® Diskus® are registered trademarks of GlaxoSmithKline.

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 2021, achieving cost savings from the recently announced restructuring and cost savings plan, the potential material impact of COVID-19 on future financial results, and achieving the financial metrics stated in the company's revised guidance for fiscal 2021, 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)







March 31, 2021


June 30, 2020








ASSETS






Current assets:





Cash and cash equivalents

$                                  81,290


$                  144,329

Accounts receivable, net

114,691


125,688

Inventories


113,074


142,867

Income taxes receivable

40,043


14,419

Assets held for sale


2,678


2,678

Other current assets


18,135


13,227

Total current assets

369,911


443,208

Property, plant and equipment, net

168,844


179,518

Intangible assets, net


160,138


374,735

Operating lease right-of-use asset 

10,762


9,343

Deferred tax assets


138,019


117,890

Other assets


14,696


11,861

TOTAL ASSETS


$                               862,370


$               1,136,555















LIABILITIES





Current liabilities:





Accounts payable


$                                  32,605


$                    32,535

Accrued expenses


4,025


14,962

Accrued payroll and payroll-related expenses

9,758


16,304

Rebates payable


31,848


38,175

Royalties payable


14,541


20,863

Restructuring liability

42


27

Current operating lease liabilities

2,040


1,097

Short-term borrowings and current portion of long-term debt

-


88,189

Other current liabilities

2,270


2,713

Total current liabilities

97,129


214,865

Long-term debt, net


610,698


592,940

Long-term operating lease liabilities

11,306


9,844

Other liabilities


19,187


16,010

TOTAL LIABILITIES


738,320


833,659








STOCKHOLDERS' EQUITY




Common stock ($0.001 par value, 100,000,000 shares authorized; 40,872,485 and 39,963,127 shares issued; 39,539,798 and 38,798,787 shares outstanding at March 31, 2021 and June 30, 2020, respectively)

41


40

Additional paid-in capital

328,911


321,164

Accumulated deficit


(186,880)


(1,291)

Accumulated other comprehensive loss

(603)


(627)

Treasury stock (1,332,687 and 1,164,340 shares at March 31, 2021 and June 30, 2020, respectively)

(17,419)


(16,390)

Total stockholders' equity

124,050


302,896

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 

$                               862,370


$               1,136,555

 

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,



2021


2020


2021


2020










Net sales


$             112,370


$         144,372


$             372,769


$         407,824

Cost of sales 


82,063


94,380


298,738


258,699

Amortization of intangibles


3,851


8,316


21,097


23,497

Gross profit


26,456


41,676


52,934


125,628

Operating expenses:









Research and development expenses


5,973


7,441


18,156


23,287

Selling, general and administrative expenses


17,636


22,147


46,502


60,876

Restructuring expenses


-


191


4,043


1,771

Asset impairment charges


-


13,989


198,000


15,607

Total operating expenses


23,609


43,768


266,701


101,541

Operating income (loss)


2,847


(2,092)


(213,767)


24,087

Other income (loss):









Loss on extinguishment of debt


-


-


-


(2,145)

Investment income


80


393


168


1,552

Interest expense


(12,631)


(16,177)


(40,613)


(52,163)

Other


18


(380)


23


(181)

Total other loss


(12,533)


(16,164)


(40,422)


(52,937)

Loss before income tax


(9,686)


(18,256)


(254,189)


(28,850)

Income tax benefit


(2,544)


(1,664)


(68,600)


(5,185)

Net loss


$                (7,142)


$         (16,592)


$           (185,589)


$          (23,665)










Loss per common share:









     Basic


$                  (0.18)


$             (0.43)


$                  (4.72)


$              (0.61)

     Diluted (1) 


$                  (0.18)


$             (0.43)


$                  (4.72)


$              (0.61)










Weighted average common shares outstanding:









     Basic


39,511,296


38,707,049


39,340,670


38,539,850

     Diluted (1) 


39,511,296


38,707,049


39,340,670


38,539,850










(1) Effective with the 4.5% Senior Convertible Note issued on September 27, 2019, the diluted earnings per share was calculated based on the "if-converted" 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 March 31, 2021


Net sales

Cost of sales

Amortization of intangibles

Gross Profit

Gross Margin %

R&D expenses

SG&A expenses

Operating income 

Other loss

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 GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED)

(In thousands, except percentages, share and per share data)

















Three months ended March 31, 2020


Net sales

Cost of sales

Amortization of intangibles

Gross Profit

Gross Margin %

R&D expense

SG&A expense

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 (j)




GAAP Reported

$      144,372

$        94,380

$               8,316

$   41,676

29%

$       7,441

$    22,147

$               191

13,989

$          (2,092)

$      (16,164)

$        (18,256)

$         (1,664)

$    (16,592)

$                   (0.43)

Adjustments:
















Amortization of intangibles (a)

-

-

(8,316)

8,316


-

-

-

-

8,316

-

8,316

-

8,316


Cody API business (b)

-

(983)

-

983


(47)

(58)

-

-

1,088

-

1,088

-

1,088


Depreciation on capitalized software costs (c)

-

-

-

-


-

(1,058)

-

-

1,058

-

1,058

-

1,058


Decommissioning of Philadelphia sites (d)

-

(192)

-

192


-

-

-

-

192

-

192

-

192


Branded prescription drug fee (e)

-

-

-

-


-

(2,957)

-

-

2,957

-

2,957

-

2,957


Restructuring expenses (f)

-

-

-

-


-

-

(191)

-

191

-

191

-

191


Asset impairment charge (g)

-

-

-

-


-

-

-

(13,989)

13,989

-

13,989

-

13,989


Non-cash interest (h)

-

-

-

-


-

-

-

-

-

3,430

3,430

-

3,430


Other (i)

-

(1,168)

-

1,168


(29)

(354)

-

-

1,551

357

1,908

-

1,908


Tax adjustments (j)

-

-

-

-


-

-

-

-

-

-

-

4,832

(4,832)


















Non-GAAP Adjusted

$        144,372

$          92,037

$                       -

$     52,335

36%

$        7,365

$      17,720

$                   -

$                       -

$           27,250

$        (12,377)

$            14,873

$             3,168

$       11,705

$                      0.27

















(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 related to the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites, including costs to transfer products to other locations




(e)

To exclude the federally mandated branded prescription drug fee related to Levothyroxine, a product the Company no longer sells







(f)

To exclude expenses associated with the Cody API Restructuring Plan











(g)

To exclude an impairment charge associated with an agreement to distribute Methylphenidate AB









(h)

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










(i)

To exclude costs primarily related to the write-down of property, plant and equipment as well as COVID-19 special recognition payments






(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 three months ended March 31, 2020 is 38,707,049 for GAAP and 46,132,471 for the non-GAAP earnings (loss) per share calculations. Effective with the 4.5% Senior Convertible Note issued on September 27, 2019, the diluted earnings per share was calculated based on the "if-converted" 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, 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

(In thousands, except percentages, share and per share data)

















Nine months ended March 31, 2020


Net sales

Cost of sales

Amortization of intangibles

Gross Profit

Gross Margin %

R&D expense

SG&A expense

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

$      407,824

$      258,699

$          23,497

$     125,628

31%

$      23,287

$      60,876

$           1,771

$       15,607

$       24,087

$     (52,937)

$          (28,850)

$        (5,185)

$     (23,665)

$                    (0.61)

Adjustments:
















Amortization of intangibles (a)

-

-

(23,497)

23,497


-

-

-

-

23,497

-

23,497

-

23,497


Cody API business (b)

-

(2,911)

-

2,911


(552)

(433)

-

-

3,896

-

3,896

-

3,896


Depreciation on capitalized software costs (c)

-

-

-

-


-

(3,175)

-

-

3,175

-

3,175

-

3,175


Decommissioning of Philadelphia sites (d)

-

(1,484)

-

1,484


-

-

-

-

1,484

-

1,484

-

1,484


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)

-

-

-

-


-

-

-

(15,607)

15,607

-

15,607

-

15,607


Non-cash interest (h)

-

-

-

-


-

-

-

-

-

11,001

11,001

-

11,001


Loss on extinguishment of debt (i)

-

-

-

-


-

-

-

-

-

2,145

2,145

-

2,145


Other (j)

-

(1,585)

-

1,585


(29)

(2,578)

-

-

4,192

21

4,213

-

4,213


Tax adjustments (k)

-

-

-

-


-

-

-

-

-

-

-

13,942

(13,942)


















Non-GAAP Adjusted

$        407,824

$        252,719

$                    -

$       155,105

38%

$        22,706

$        51,733

$                  -

$                 -

$         80,666

$       (39,770)

$             40,896

$            8,757

$         32,139

$                       0.76

















(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 related to the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites, including costs to transfer products to other locations



(e)

To exclude the federally mandated branded prescription drug fee related to Levothyroxine, a product the Company no longer sells







(f)

To exclude expenses associated with the Cody API Restructuring Plan











(g)

To exclude impairment charges primarily associated with an agreement to distribute Methylphenidate AB








(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, COVID-19 special recognition payments, as well as legal settlements, 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 nine months ended March 31, 2020 is 38,539,850 for GAAP and 44,248,722 for the non-GAAP earnings (loss) per share calculations. Effective with the 4.5% Senior Convertible Note issued on September 27, 2019, the diluted earnings per share was calculated based on the "if-converted" method.


 


LANNETT COMPANY, INC.






RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (UNAUDITED)






($ in thousands)
















Three months ended 








March 31, 2021














Net loss


$                                  (7,142)














Interest expense


12,631






Depreciation and amortization


9,628






Income tax benefit


(2,544)






EBITDA


12,573














Share-based compensation


1,863






Inventory write-down


399






Investment income


(80)






Other non-operating loss


(18)






Other(a)


2,300






Adjusted EBITDA (Non-GAAP)


$                                 17,037













(a)

To primarily exclude the reimbursement of legal costs associated with a distribution agreement, as well as the operating results of the ceased Cody API business



 

LANNETT COMPANY, INC.

RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED)

($ in millions)








Fiscal Year 2021 Guidance









Non-GAAP





GAAP


Adjustments


Adjusted












Net sales


 $480 - $500 


-


 $480 - $500 



Gross margin percentage


approx. 14% to 16%


10%

 (a) 

approx. 24% to 26%



R&D expense


 $26 - $28 


-


 $26 - $28 



SG&A expense


 $62 - $64 


($10)

 (b) 

 $52 - $54 



Restructuring expense


$4


($4)

 (c) 

-



Asset impairment charges


$198


($198)

 (d) 

-



Interest and other


 approx. $71 


($27)

 (e) 

 approx. $44  



Effective tax rate


 approx. 27% to 28% 


-


 N/A 



Income tax expense (benefit)


 N/A 


-


 $1 - $(1) 

 (f) 


Adjusted EBITDA


 N/A 


 N/A 


 $75 - $85 



Capital expenditures


 $10 - $15 


-


 $10 - $15 





















(a) The adjustment primarily reflects amortization of purchased intangible assets related to the acquisition of Kremers Urban Pharmaceuticals, Inc. ("KUPI"), write-downs for excess and obsolete inventory related to the discontinuance of certain product lines, and consideration recorded to renew the Company's distribution agreement with Recro Gainesville LLC 

(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 2020 Restructuring Plan

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

(e) The adjustment primarily reflects non-cash interest expense associated with debt issuance costs and the anticipated loss on extinguishment of debt related to the refinancing of the Term Loan B in April 2021.

(f) The non-GAAP adjusted effective income tax rate was replaced with the dollar amount of income tax expense (benefit) to provide additional clarity around the anticipated expense (benefit) for Fiscal 2021. The non-GAAP adjusted income tax expense (benefit) reflects the impact of tax credits and deductions related to expected annual pre-tax income (loss) as well as the impact of the CARES Act, which allows the Company to carryback the expected taxable loss into a prior fiscal year, where the statutory tax rate was 35%.

 

LANNETT COMPANY, INC.

RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (UNAUDITED)

($ in millions)






Fiscal Year 2021 Guidance


Low


High





Net loss

$               (214.7)


$               (205.2)





Interest expense

71.0


71.0

Depreciation and amortization

55.0


55.0

Income taxes

(79.3)


(79.8)

EBITDA

(168.0)


(159.0)





Share-based compensation

9.0


9.0

Inventory write-down

27.0


28.0

Asset impairment charges

198.0


198.0

Restructuring expenses

4.0


4.0

Distribution agreement renewal costs

5.0


5.0

Adjusted EBITDA (Non-GAAP)

$                   75.0


$                   85.0

 

LANNETT COMPANY, INC.

NET SALES BY MEDICAL INDICATION










Three months ended


Nine months ended

($ in thousands)

March 31,


March 31,

Medical Indication

2021


2020


2021


2020

Analgesic

$             3,836


$             2,811


$            10,528


$             6,806

Anti-Psychosis

11,678


27,858


38,023


78,588

Cardiovascular

16,573


21,746


52,623


67,325

Central Nervous System

24,509


18,566


71,648


57,154

Endocrinology

6,822


-


19,551


-

Gastrointestinal

16,817


20,745


52,492


56,020

Infectious Disease

10,610


21,749


55,586


51,722

Migraine

5,169


12,886


20,942


32,907

Respiratory/Allergy/Cough/Cold

2,548


2,966


6,241


8,747

Urinary

1,566


1,149


4,385


2,817

Other

8,617


8,051


24,661


27,847

Contract Manufacturing revenue

3,625


5,845


16,089


17,891

   Net Sales

$          112,370


$          144,372


$          372,769


$          407,824

 

Contact:

Robert Jaffe


Robert Jaffe Co., LLC


(424) 288-4098

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/lannett-announces-fiscal-2021-third-quarter-financial-results-301284942.html

SOURCE Lannett Company, Inc.

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