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Akorn, Inc. (AKN) Reports Preliminary 2014 Second Quarter Results



8/5/2014 7:53:24 AM

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LAKE FOREST, Ill., Aug. 5, 2014 (GLOBE NEWSWIRE) -- Akorn, Inc. (Nasdaq:AKRX), a niche generic pharmaceutical company, today reported preliminary financial results for the second quarter ended June 30, 2014.

Second Quarter 2014 Key Highlights and Accomplishments

* Achieved record second quarter consolidated revenue of $150.7 million, an increase of 96% over last year's second quarter and record adjusted net income per diluted share of $0.25, an increase of 79% over last year's second quarter.
* Raises 2014 outlook to a revenue range of $580 to $600 million and an adjusted net income per diluted share range of $1.00 to $1.05.
* Announced acquisition of VersaPharm which is expected to add $90 to $100 million in annual revenue and $0.10 to $0.12 adjusted net income per diluted share. The acquisition is projected to close mid-August.
* Successfully completed syndication of $445 million term loan to finance the VersaPharm acquisition.
* Received FDA approval on five new products with a combined IMS market size of $560 million. Product approvals included: Atropine Sulfate Ophthalmic Solution, USP 1%; Dronabinol Capsules USP, 2.5mg, 5mg, 10mg; Tobramycin Inhalation Solution USP, 300mg/5mL; Zoledronic Acid Injection, 4mg/5mL; and Famotidine for Oral Suspension, USP 40mg/5mL.
* Filed an additional twelve ANDAs within the quarter. The Company now has 78 ANDAs filed with the FDA with a combined annual IMS market size of approximately $8.0 billion.
* Divested ECR Pharmaceuticals, a non-core asset which was acquired through the Hi-Tech Pharmacal acquisition, for $41 million in cash and assumption of certain liabilities.

Raj Rai, Chief Executive Officer commented, "We've had another great quarter and with the acquisition of Hi-Tech, we are seeing more opportunities for growth for the remainder of 2014 and beyond. Additionally, we received five new product approvals in the second quarter, which positions Akorn for stronger organic growth in 2015. As a result, we are raising our 2014 guidance."

Financial Results for the Quarter Ended June 30, 2014

Consolidated revenue for the second quarter of 2014 was $150.7 million, an increase of 96% over the second quarter 2013 consolidated revenue of $77.0 million. The increase in consolidated revenue was largely driven by the Hi-Tech acquisition, which contributed $51.5 million in revenue for the partial quarter, as well as by the addition of several branded ophthalmic products which were acquired in late 2013 and early 2014.

Consolidated gross margin for the second quarter of 2014 was 50.9% compared to 54.7% in the comparable prior year period. Second quarter 2014 gross margin included $3.6 million in amortization of the step-up of Hi-Tech's acquired inventory. Excluding this impact, second quarter 2014 gross margin was 53.2%.

Net income for the second quarter of 2014 was $8.5 million, or $0.07 per diluted share compared to net income of $12.6 million, or $0.11 per diluted share in the comparable prior year quarter. Second quarter 2014 net income included a number of items related to the Hi-Tech and VersaPharm acquisitions, including acquisition and disposition-related expenses, $3.6 million of amortization of inventory step-up, a gain from product divestitures, financing-related fees on the Hi-Tech and VersaPharm term loan commitments, and a loss from discontinued operations for the ECR Pharmaceuticals divestiture. Non-GAAP adjusted net income for the second quarter of 2014, excluding the impact of these items, was $29.3 million, or $0.25 per diluted share, compared to non-GAAP adjusted net income of $15.3 million, or $0.14 per diluted share in the comparable prior year quarter.

2014 Updated Outlook

The 2014 outlook has been updated to account for several developments, including the divestiture of the ECR Pharmaceuticals business, a projected mid-August close for the VersaPharm acquisition, new product approvals, and anticipated changes in price and demand on the remainder of the business.

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