Concordia Healthcare Announces Second Quarter 2015 Results

-          Newly acquired Covis assets drive top line and EBITDA² in the second quarter    -

Second Quarter 2015 Highlights

• The Company completed its acquisition of substantially all of the commercial assets of privately held Covis Pharma S.à.r.l and Covis Injectables, S.à.r.l (together "Covis") for $1.2 billion. The acquired Covis portfolio consists of 12 branded products, 5 authorized generic products and a product distributed by a third party in Australia. The Company paid for the assets through a mix of term loans, bonds and equity as disclosed in prior press releases.
• Revenue increase of 198% to $77.5 million compared to the second quarter of 2014.
• Adjusted EBITDA³ of $55.5 million, up 346% versus the same period in 2014.
• Strong cash position of $140 million.
• Concordia's common shares began trading on the NASDAQ Global Select Market® ("NASDAQ") under the symbol CXRX on June 29.
• Concordia's Board of Directors approve a $0.075 quarterly dividend per common share.

First Six Months 2015 Highlights

• Revenue increase of 166% to $114 million compared to the same period in 2014.
• Adjusted EBITDA³ of $75.1 million, up 309% versus the same period in 2014.

TORONTO, Aug. 13, 2015 /CNW/ - Concordia Healthcare Corp. ("Concordia" or the "Company") (NASDAQ: CXRX) (TSX: CXR) today announced its financial and operational results for the three and six months ended June 30, 2015. All financial references are in U.S. dollars unless otherwise noted. 

"We are on track to achieving our targets, and have already exceeded our 2014 EBITDA levels within the first six months of this year. Our newly acquired Covis assets delivered impressive results this quarter, contributing almost $40 million to our top line with approximately ten weeks of consolidated sales," said Mark Thompson, Chairman and Chief Executive Officer of Concordia. "We believe these high-margin, branded pharmaceuticals and authorized generics, which address life threatening and other serious medical conditions, have room for continued growth. We are also encouraged by Donnatal®'s performance in the second quarter, which demonstrates the effectiveness of our field force."    

Financial Results Overview

Consolidated Financial Results

The Company's revenue was $77.5 million for the three months ended June 30, 2015, while gross profit for the same period was $70.7 million. This represented a respective increase of 198% and 229% over the second quarter in 2014. Revenue and gross profit for the six-month period amounted to $113.9 million and $102.8 million, respectively, up 165.8% and 198.4% over the previous year. 

On a consolidated basis, the Company recorded a gross margin of 91.2% for the quarter versus 82.5% the previous year, primarily driven by the strong performance of its Legacy Pharmaceuticals Division during the period. Gross margin for the six-month period was 90.2%, compared to 80.4% in 2014.

Overall, operating income was $25.5 million for the quarter and $36.5 million for the first six months of 2015, a significant increase over 2014 where operating income was $2.2 million and $6.5 million respectively.

Operating expenses were $45.2 million for the three months ended June 30, 2015 and $66.3 million for the six months ended June 30, 2015. This compared to $19.3 million and $27.9 million for the three- and six-month periods in 2014, respectively. The main drivers of the increase in operating expenses included investments in infrastructure to support commercial growth, sales and marketing costs related to the acquired Legacy portfolios, and related acquisition and restructuring costs.

The second quarter recorded a net loss of $0.6 million versus a loss of $0.8 million in 2014, negatively impacted by a one-time tax charge of $3.6 million. Net Income for the first six months was $5.1 million, up from a net loss of $2.7 million the prior year.

Adjusted EBITDA³, management's key metric in assessing the Company's underlying operating performance and cash flow, was $55.5 million for the second quarter, an increase of 346% over 2014.

Net cash provided/(used) by operating activities was $25.2 million for the six months ended June 30, 2015 and ($9.4) million for the same period in 2014. As at June 30, 2015, the Company held cash of $140.2 million and had an additional $125.0 million available from its revolving facility.

Divisional Financial Results

Concordia is an integrated healthcare company with three operating segments: Concordia's Legacy Pharmaceuticals Division, its Orphan Drugs Division, and its Specialty Healthcare Distribution Division (SHD Division).

Legacy Pharmaceuticals Division

Legacy Pharmaceuticals Division revenue for the three months ended June 30, 2015 was $72.4 million, compared to $19.5 million in the same quarter of 2014, an increase of 270%. The addition of the portfolio acquired from Covis on April 21, 2015 drove an increase in revenue of approximately $38.7 million. The remainder of the increase over the prior year was driven by the addition of Donnatal® and Zonegran®, partially offset by declines in Kapvay®, Orapred® and Ulesfia®. The second quarter of 2014 included a half quarter of Donnatal® revenue. Zonegran® was acquired at the end of the third quarter of 2014. 

Legacy Pharmaceuticals Division revenue for the six months ended June 30, 2015 was $103.5 million, compared to $28.9 million during the same period in the prior year, an increase of 259%. As detailed above, the additions of the Covis portfolio, Donnatal®, and Zonegran® drove the increase in revenue over the corresponding period in the prior year.  The increase was partially offset by revenue declines in Kapvay®, Orapred® and Ulesfia®.

Gross profit for the Legacy Pharmaceuticals Division for the three and six months ended June 30, 2015 was $66.7 million and $94.4 million, respectively, compared to $15.5 million and $22.6 million for the same periods in 2014. The increases over the prior year were primarily due to sales growth in the division, with the acquisition of the Covis portfolio accounting for the majority of the increase. 

Cost of sales for the three and six months ended June 30, 2015 were $5.7 million and $9.0 million, respectively, and reflect the costs of active pharmaceutical ingredients, excipients, packaging, freight costs and royalties. 

Legacy Pharmaceuticals Division gross margin for the quarter was 92.2% compared with 79.5% in the same quarter of 2014. 

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