May 6 2014
Akorn, Inc. (NASDAQ: AKRX), a niche generic pharmaceutical company, today reported financial results for the first quarter ended March 31, 2014.
First Quarter 2014 Key Highlights and Accomplishments
- Achieved record first quarter consolidated revenue of $90.6 million, an increase of 23% over last year's first quarter.
- Generated record operating cash flow of $23.4 million.
- Completed the acquisition of Hi-Tech Pharmacal Co., Inc. (Hi-Tech) on April 17. The acquisition adds scale, breadth of products and dosage forms, and further diversification of the Company's product portfolio.
- Acquired the rights to two branded ophthalmic products, Betimol® and Zioptan®, in January and April respectively.
Raj Rai, Chief Executive Officer commented, "We are excited with the great start that we've seen for 2014. Our team continues to execute on multiple growth initiatives. In addition to completing the transformative acquisition of Hi-Tech a few weeks ago, we also acquired two more branded ophthalmic products, bringing to five the branded ophthalmic products acquired over the last few months. The acquisition of Hi-Tech further diversifies our niche branded and generic product base and brings with it capabilities that will help us continue to grow and diversify our pipeline and revenue base into the future."
Financial Results for the Quarter Ended March 31, 2014
Consolidated revenue for the first quarter of 2014 was $90.6 million, an increase of 23% over the first quarter 2013 consolidated revenue of $73.9 million. The increase in consolidated revenue was largely driven by the newly acquired branded ophthalmic products - Azasite®, Cosopt®, CosoptPF®, and Betimol®. Consolidated gross margin for the first quarter of 2014 was 54.8% compared to 53.0% in the comparable prior year period. The increase in the Company's consolidated gross margin was also due to the newly acquired branded ophthalmic products which generate gross margins higher than the Company's historical average.
Net income for the first quarter of 2014 was $9.8 million, or $0.08 per diluted share, compared to net income of $10.8 million, or $0.10 per diluted share, in the prior year quarter. First quarter 2014 net income included $6.4 million of acquisition-related expenses, the largest component of which was fees incurred pre-close on the Hi-Tech term loan commitments. Non-GAAP adjusted net income for the first quarter of 2014 was $18.4 million, or $0.16 per diluted share, compared to non-GAAP adjusted net income of $14.4 million, or $0.13 per diluted share, in the prior year quarter.
2014 Updated Outlook
The Company's previous guidance assumed that Akorn would acquire Hi-Tech effective April 1, 2014. However, the acquisition was not completed until April 17, 2014. The updated outlook adjusts for the later Hi-Tech acquisition date as well as the addition of the branded ophthalmic product, Zioptan®, which the Company acquired in April. While Akorn and Hi-Tech currently have over 73 ANDAs on file with the FDA, this guidance does not include the impact of any future new product approvals given the timing uncertainty of the regulatory approval process.
2014 Outlook Assumptions
- Assumes no generic is launched for Nembutal.
- Cost synergies that result from the Hi-Tech acquisition are expected to be realized throughout the year and will accelerate as the year progresses. The Company anticipates ending the year at a $20 million annual run-rate for synergies.
- The Company anticipates that it will incur approximately $20-22 million in one-time acquisition-related expenses to close the Hi-Tech transaction and realize synergies. These expenses are reflected as add-backs to adjusted net income per diluted share in the GAAP to non-GAAP reconciliation later in this release.
- Fully diluted share count is based on most recent share price.
First quarter 2014 Conference Call
The Company will host a conference call at 10:00 a.m. Eastern Time on Tuesday, May 6, 2014, to discuss first quarter 2014 results followed by a Q&A session. The domestic call-in number is 800-768-6570 and the international call-in number is 785-830-1942. The confirmation code for all callers is 5699967. The URL for the webcast is