Concordia Healthcare Announces Fourth Quarter And Fiscal 2015 Results And Board Appointment

• Achieves global scale, providing patients with products in 100+ counties
• Year-over-year revenue growth of $289 million or an increase of 276 per cent
• Year-over-year adjusted EBITDA¹ growth of $206 million or an increase of 347 per cent
• Reaffirms guidance² of $1,020 million to $1,060 million in revenue and adjusted EBITDA¹ of $610 million to $640 million

OAKVILLE, ON, March 23, 2016 /CNW/ - Concordia Healthcare Corp. (“Concordia” or the “Company”) (NASDAQ: CXRX) (TSX: CXR), an international pharmaceutical company focused on legacy pharmaceutical products and orphan drugs, today announced its financial and operational results for the three and 12 months ended December 31, 2015. All financial references are in U.S. dollars unless otherwise noted.

“Concordia’s accomplishments in 2015 have created a global infrastructure that diversifies the Company across product lines, geographies and sales channels,” said Mark Thompson, Founder, Chairman and Chief Executive Officer of Concordia. “Our infrastructure uniquely positions the Company to provide safe and effective medicines to patients in more than 100 countries, which we believe will allow us to evaluate growth opportunities on a global scale going forward. In addition, our achievements in 2015, in particular the acquisition of the portfolio of products from Covis, the purchase of AMCo and the organic growth we have generated from key products such as Donnatal®, have resulted in substantial year-over-year revenue and adjusted EBITDA growth.”

Fourth Quarter 2015 Highlights

• On October 21, completed the acquisition of U.K.-based speciality pharmaceutical company Amdipharm Mercury Limited (“AMCo”). The acquisition provides the Company with greater product diversification through the addition of more than 190 products and a global platform for continued expansion.
• On November 23, announced the launch of Nefopam in the U.K. Nefopam, a generic version of Accupan, is a non-narcotic painkiller. The launch is the first of approximately 60 anticipated product launches Concordia intends to initiate over the next three years.
• On December 15, announced that the Company was selected by NASDAQ for addition to the NASDAQ Biotechnology Index® (NASDAQ: NBI). Concordia began trading as part of the NBI on December 21, 2015.
• On December 22, made a total of $45 million debt principal payments by repaying $11.25 million of its $45 million two year senior unsecured bridge loan, and $33.75 million of its $135 million extended senior unsecured bridge loan.
• On March 22, 2016, Concordia’s board of directors approved a $0.075 dividend per common share. A record date of April 15, 2016 was declared by the board of directors with a distribution of proceeds expected to occur on April 29, 2016. Declarations and payments will be made in U.S. dollars. All future quarterly dividends will be subject to quarterly financial review and board approval

Fiscal 2015 Highlights

• On April 21, completed the acquisition of substantially all the assets of Covis Pharma S.à.r.l and Covis Injectables S.à.r.l. (collectively, “Covis”) for $1.2 billion. These assets added products such as Plaquenil®, Nilandron® and Lanoxin® to Concordia’s portfolio of branded products.
• On October 21, completed the acquisition of AMCo. The acquisition provides the Company with product diversification through the addition of more than 190 products, including an international pipeline and a global platform for continued expansion.
• Advanced the Company’s rare disease product candidate Photofrin® through a Phase 3 clinical trial to evaluate the product’s safety and efficacy as a potential treatment for cholangiocarcinoma. Cholangiocarcinoma, or bile duct cancer, is a rare disease affecting approximately 2,000-3,000 patients annually in the United States. Concordia already markets Photofrin® as a treatment for non-small cell lung cancer, Barrett’s esophagus and esophageal cancer.

Board Appointment

The Company is also pleased to announce today that Mr. Patrick Vink is expected to join the board of directors of Concordia effective March 24, 2016. In addition, it is expected that Mr. Vink will be appointed to the Audit Committee and Human Resources and Compensation Committee of the board of directors effective March 24, 2016, to replace Doug Deeth on the Audit Committee and Rochelle Fuhrmann on the Human Resources and Compensation Committee, who were appointed to such committees on an interim basis.

Mr. Vink is currently the Chairman of the board of directors of Micreos NV, the Chairman of the board of directors of Acacia Pharma and a director of Spero Therapeutics. Previously, Mr. Vink spent over three years at Cubist Pharmaceuticals Inc., which he joined in 2012 as Senior Vice-President and Head of International Business Operations, and where afterwards he served as Executive Vice President and Chief Operating Officer. Prior to joining Cubist Pharmaceuticals Inc., Mr. Vink served as Senior Vice-President, Head of Global Institutional and Biologics Business at Mylan Inc., which he joined in 2008, helping to establish the company’s operations in Switzerland. Mr. Vink has held several leadership positions across the pharmaceutical industry, including head of global business franchise biopharmaceuticals for Novartis Sandoz; vice president for international business for Biogen Inc.; and head of worldwide marketing, cardiovascular and thrombosis for Sanofi-Synthelabo. Mr. Vink served as a member of the executive committee of the European Federation of Pharmaceutical Industries and Associations (EFPIA) between 2013 and 2015.

“On behalf of the Nominating and Corporate Governance Committee and the board of directors as a whole, I am very pleased to announce the intended appointment of Patrick to the board of directors. This appointment is an important part of several recent and ongoing corporate governance enhancement initiatives that have been undertaken by the board,” stated Mark Thompson. “Given Concordia’s recent global expansion with the acquisition of AMCo, Patrick’s global pharmaceutical experience will be invaluable to the board.”

Financial Results

Consolidated Operating Results

The Company’s consolidated operating results are generated by three operating segments (two of which are newly defined): Concordia’s North America Division, International Division and Orphan Drugs Division. These operating segments better reflect Concordia’s global structure.

For 2015, consolidated revenues of $394.2 million increased by $289.2 million compared to 2014 primarily due to $115.7 million of revenues from the Concordia International segment acquired October 21, 2015 and $127.4 million from the expansion of the Concordia North America Division through the Covis product portfolio acquisition on April 21, 2015.

For the fourth quarter of 2015, revenues increased $152.4 million to $191.9 million mainly due to revenue generated from Concordia International’s products, and organic growth from Donnatal®, the Company’s adjunctive therapy for irritable bowel syndrome.

Adjusted gross profit of $333.9 million for 2015 increased by $243.6 million. Adjusted gross profit for the fourth quarter was $149.7 million up 326 per cent from $35.1 million in the fourth quarter of 2014.

Net loss from continuing operations for 2015 was $29.4 million compared to net income of $8.9 million in 2014. Net loss from continuing operations for the quarter and 12 months were impacted by acquisition-related costs, as well as accelerated accretion and amortization of deferred financing charges related to the early repayment of certain debt as part of the Covis and AMCo acquisitions and increased amortization of intangible assets.

For 2015, adjusted EBITDA was $265.7 million, which was $206.2 million higher than in 2014. Fourth quarter, 2015 adjusted EBITDA was $120.1 million compared to fourth quarter, 2014 adjusted EBITDA of $25.2 million.

As at December 31, 2015, the Company had cash of $155.4 million and had up to $200 million available, subject to compliance with certain debt covenants, from an undrawn, secured revolving credit facility.

As at December 31, 2015 and March 23, 2016, the Company had, respectively, 51.0 million and 51.1 common shares issued and outstanding on a non-diluted basis.

Concordia North America

Formerly the Legacy Pharmaceuticals Division, the Concordia North America Division has a diversified product portfolio of brand products that focusses primarily on the United States pharmaceutical market.

Concordia North America revenues for the three months and year ended December 31, 2015 were $74.2 million and $268.3 million respectively. Concordia North America revenues for the three months and year ended December 31, 2014 were $36.2 million and $94.3 million respectively. Revenues were higher for both the quarter and year due to a larger and more diverse product portfolio consisting of products such as Lanoxin®, Plaquenil® and Nilandron®, which the Company did not own in 2014.

Adjusted gross profit for the Concordia North America Division for the three and 12 months ended December 31, 2015 was $66.5 million and $244.6 million respectively, compared to $32.6 million and $81.5 million for the same periods in 2014.

Adjusted gross profit margin percentage for the three and twelve months ended December 31, 2015 was 90 per cent and 91 per cent, respectively, compared to 90 per cent and 86 per cent for the same periods in 2014.

The increases in adjusted gross profit, and adjusted gross profit margin percentage for the three and 12 months versus the same periods during the prior year were primarily due to a more favourable product mix driven by new additions to Concordia’s legacy portfolio, such as Lanoxin®, Plaquenil® and Nilandron®. The adjusted gross margin was also positively impacted by a full year of Donnatal® results in 2015 compared to 2014 and offset negatively by minor portfolio gross margin decreases including the impact of generic competition primarily related to Dibenzyline®.

Cost of sales for the three and 12 months ended December 31, 2015 was $7.1 million and $23.7 million respectively, up from $3.6 million and $12.8 million the previous year. The increase reflects greater sales volumes and the corresponding costs of active pharmaceutical ingredients, excipients, packaging, freight costs and royalties.

Concordia International

Concordia International consists of the AMCo business acquired on October 21, 2015. This division includes a diversified portfolio of more than 190 branded and generic products which are sold to wholesalers, hospitals and pharmacies in more than 100 countries. Concordia International focuses on the development, acquisition and licensing of off-patent prescription medicines, which may be niche, hard-to-make products.

Concordia International revenues for the three months ended December 31, 2015 of $115.7 million represent sales for the 72-day period from the acquisition of AMCo on October 21, 2015 to December 31, 2015.

Adjusted gross profit for Concordia International for the 72-day period ended December 31, 2015 was $81.0 million. Adjusted gross profit margin percentage was 70 per cent.

Cost of sales of $34.7 million for the 72-day period reflect product manufacturing costs, packaging, freight costs and other distribution expenses.

There was no comparative period in the prior year for revenues, adjusted gross profit, adjusted gross profit margin percentage or cost of sales.

Orphan Drugs

Concordia’s Orphan Drug segment primarily consists of Photofrin®, which Concordia sells as a treatment for non-small cell lung cancer, Barrett’s esophagus and esophageal cancer in the U.S. and additional indications globally. The Company is also advancing Photofrin® through a Phase 3 clinical trial to evaluate the product’s safety and efficacy as a potential treatment for cholangiocarcinoma. Cholangiocarcinoma, or bile duct cancer, is a rare disease affecting approximately 2,000-3,000 patients annually in the United States.

Orphan Drugs Division revenues for the three months ended December 31, 2015 were $2.0 million compared to $3.3 for the same period in 2014. Revenues for the year ended December 31, 2015 were $10.2 million, which were mainly consistent compared to 2014 revenues of $10.7 million.

Adjusted gross profit in 2015 was $8.3 million, compared to adjusted gross profit of $8.8 million in 2014.

Guidance for 2016²

For fiscal 2016, Concordia reaffirms guidance, on a constant currency basis², as follows:

• Revenues of $1,020 to $1,060 million. Greater than 60 per cent of revenues to be generated outside the United States.
• Adjusted EBITDA¹ of $610 million to $640 million.
• Adjusted net income¹ of $330 million to $355 million; adjusted EPS^1,3 of $6.29 to $6.77.
• Cash interest expense rate at approximately 6.95 per cent (excluding original issue discount).
• Cash tax rate of approximately 10 per cent.
• Year-end Net Debt/EBITDA¹ of approximately 5.5x.

As previously announced, 2016 guidance assumes that the gross profit targets for the £144 million (approximately $220 million as at time of announcement; approximately $207.5 million as at time of closing) earn-out payment (“earn-out”) to the sellers of AMCo have been fully met.

Conference Call Notification

The Company intends to hold a conference call on Thursday, March 24, 2016, at 8:30 a.m. ET hosted by Mr. Mark Thompson, Chairman and Chief Executive Officer and other senior management. A question-and-answer session will follow the corporate update.

This call is being webcast and can be accessed by going to:

http://event.on24.com/r.htm?e=1129950&s=1&k=70B0188252009FDAA8FA8AFA0D5ED9E1

An archived replay of the webcast will be available after the live event by clicking the link above.

Annual Information Form

The Company’s annual information form for the year ended December 31, 2015 has been filed with applicable securities commissions and will be made available online at Concordia’s website at www.concordiarx.com. The annual information form has also been filed on SEDAR (www.sedar.com) and EDGAR (www.sec.com). Shareholders may request hard copies free of charge upon request to investorrelations@concordiarx.com.

About Concordia

Concordia is a diverse, international pharmaceutical company focused on legacy pharmaceutical products and orphan drugs. The Company has an international footprint with sales in more than 100 countries, and has a diversified portfolio of more than 200 established off-patent molecules. Concordia also markets orphan drugs through its Orphan Drug Division, currently consisting of Photofrin® for the treatment of certain rare forms of cancer, which is currently undergoing testing for potential new indications.

Concordia operates out of facilities in Oakville, Ontario and, through its subsidiaries, operates out of facilities in Bridgetown, Barbados; London, England and Mumbai, India.

Non-IFRS Measures

This press release makes reference to certain measures that are not recognized measures under International Financial Reporting Standards (“IFRS”). These non-IFRS measures do not have a standardized meaning prescribed by IFRS, and are therefore unlikely to be comparable to similar measures presented by other companies. When used, these measures are defined in such terms as to allow the reconciliation to the closest IFRS measure. These measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analyses of the Company’s financial information reported under IFRS.

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