Akorn, Inc. Reports Preliminary 2014 Third Quarter Results

LAKE FOREST, Ill., Nov. 6, 2014 (GLOBE NEWSWIRE) -- Akorn, Inc. (Nasdaq:AKRX), a niche pharmaceutical company, today reported preliminary financial results for the fiscal third quarter ended September 30, 2014.

Consolidated revenues for the third quarter were $132.7 million and included $39.9 million of costs associated with price increases. Excluding these costs, third quarter adjusted net income per diluted share was $0.27. The Company's prior full year guidance for revenue and adjusted net income per diluted share included an estimated $25 million in costs associated with price increases.

Third Quarter 2014 Key Highlights and Accomplishments

• Received FDA approval on four new products with a combined IMS market size of $228 million. Product approvals included: Zoledronic Acid Injection 5mg/100 mL; Adenosine Injection USP, 3mg/mL 20mL and 30mL; Tobramycin Injection USP, 40mg/mL 2mL and 30mL; and Gatifloxacin Ophthalmic Solution, 0.5%.
• Completed the acquisition of VPI Holdings Corp., the parent company of VersaPharm Incorporated, in early August.
• In early October, completed the acquisition of Xopenex® inhalation solution from Sunovion Pharmaceuticals, which is expected to add $18 million to $20 million in annual revenue and $0.07 to $0.08 adjusted net income per diluted share in 2015.
• In early October, completed the acquisition of five FDA (CVM) approved veterinary injectable brands: AnaSed®, Tolazine®, Yobine®, Butorphic® and VetaKet®, and a pipeline of four injectable drugs from LLOYD, Inc.
• Adjusts fourth quarter 2014 outlook to reflect the full impact of improved pricing. Fourth quarter revenue, excluding the impact of costs associated with price increases are projected between $215 and $225 million. Adjusted net income per diluted share is projected between $0.44 and $0.46.

Raj Rai, Chief Executive Officer commented, "Our strong business momentum continued this quarter, with double digit organic growth and strong performance from the acquisitions that were completed over the last 12 months. Our strategic initiatives to diversify our portfolio of products have allowed us to reinvent the business, which has opened numerous new market opportunities and has positioned Akorn as a much broader provider of specialty generics. Our current portfolio of marketed and pipeline products operate in strong markets with favorable competitive dynamics, which will provide us with sustainable growth opportunities as we move forward. We expect to close 2014 with record sales and earnings, which will set us firmly on the path to achieve over $1 billion in annual sales in the future."

Financial Results for the Quarter Ended September 30, 2014

Consolidated revenue for the third quarter of 2014 was $132.7 million, an increase of 62% over the third quarter 2013 consolidated revenue of $81.9 million. Third quarter 2014 consolidated revenue was reduced by $39.9 million in costs associated with third quarter price increases. The year-over-year increase, excluding the impact of these costs, was largely driven by the Hi-Tech and VersaPharm acquisitions, the addition of several branded ophthalmic products which were acquired in late 2013 and early 2014, as well as strength in Akorn's established base business.

Consolidated gross margin for the third quarter of 2014 was 39% compared with 53% in the third quarter of 2013. In addition to the costs associated with price increases, third quarter 2014 consolidated gross margin included $6.3 million in amortization of the step-up of Hi-Tech and VersaPharm acquired inventories. Excluding the impact of these items, third quarter 2014 gross margin was 57%.

GAAP net loss for the third quarter of 2014 was ($11.7) million, or a loss of ($0.11) per share compared to GAAP net income of $12.2 million, or $0.11 per diluted share in the comparable prior year quarter. Excluding the impact of costs associated with price increases and other non-GAAP adjustments, adjusted net income for the third quarter of 2014 was $32.6 million, or $0.27 per diluted share compared to adjusted net income of $16.7 million, or $0.15 per diluted share in the comparable prior year quarter. Third quarter 2014 adjustments to net income included a number of items described in the GAAP to non-GAAP reconciliation later in this release.

2014 Updated Outlook

The 2014 outlook table below includes the following:

• The prior outlook which was given with the reporting of second quarter 2014 financial results
• The prior outlook revised to exclude the impact of costs associated with price increases
• Updated 2014 outlook which excludes the impact of costs associated with price increases

All guidance figures shown are non-GAAP consistent with the Company's definition of non-GAAP adjustments which are described later in this release.