SWK Holdings Corporation Announces Financial Results for First Quarter 2020

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DALLAS, May 14, 2020 /PRNewswire/ --

Corporate Highlights

• Core specialty finance segment generated an 11.3% adjusted ROIC, and yielding assets increased to $179.2 million, a 15.7% increase in comparison to the quarter ended March 31, 2019
• Rajiv Khosla, Ph.D. appointed as Chief Executive Officer of Enteris BioPharma
• SWK Holdings common stock uplisted to Nasdaq Capital Market
• Board of Directors authorized $2.0 million stock repurchase program

First Quarter 2020 Financial Highlights

• Total revenue for the quarter ended March 31, 2020 was $7.3 million, a 22% decrease from $9.4 million for the quarter ended March 31, 2019
• Quarterly GAAP net loss of $4.7 million, or $(0.36) per diluted share, and non-GAAP adjusted net income of $2.8 million, or $0.21 per diluted share
• Non-GAAP specialty finance net income per share of $4.8 million, or $0.37 per diluted share for the quarter ended March 31, 2020, as compared to $7.4 million, or $0.57 per diluted share, for the quarter ended March 31, 2019, which included $3.5 million, or $0.27 per diluted share, income related to exit and prepayment fees received from a loan payoff during the quarter ended March 31, 2019
• Tangible financing book value per share of $14.75 as of March 31, 2020, which excludes the deferred tax asset, intangible assets, goodwill, property and equipment and contingent consideration payable
• Deployed $5.5 million to two existing borrowers during the quarter and an additional, $0.6 million to one existing borrower after the close of the quarter
• As of March 31, 2020, SWK had approximately $24.3 million in cash and an additional $5.7 million availability remaining on a revolving credit facility

SWK Holdings Corporation (Nasdaq: SWKH), a life sciences focused specialty finance company catering to small and mid-sized commercial-stage companies, today provided a business update and announced its financial and operating results for the first quarter ended March 31, 2020.

“SWK’s focus on investing in differentiated, intellectual property-protected life science products and companies continued to demonstrate its strength during the first quarter as our business produced solid returns despite the ongoing macro challenges resulting from the COVID-19 outbreak,” stated Winston Black, Chairman and CEO of SWK. “As the healthcare system begins to normalize, with essential procedures now being performed, and elective procedures beginning to resume at some hospitals, we believe that SWK is well positioned to address future demand from life science companies for the range of financial services that we provide.”

Mr. Black continued, “Our work with Enteris BioPharma also continues apace, and we are very pleased to report that the company has appointed a new CEO, Rajiv Khosla, Ph.D. Dr. Khosla brings to Enteris a wealth of experience and expertise from a distinguished career as an industry executive and a consultant advising small biopharmaceutical companies, specifically regarding optimizing the monetization of intellectual property. His business development experience and proven track record, including direct experience with oral drug delivery technologies, will be critical to Enteris as the company seeks to capture more value-creating opportunities and maximize the potential of its Peptelligence® platform.”

COVID-19 Considerations

Mr. Black commented, “As we reported previously, SWK continues to operate with minimal interruption resulting from the COVID-19 outbreak, and we remain well capitalized with approximately $30.0 million of cash and revolver availability to execute our recently re-authorized stock repurchase program and capitalize on new potential investment opportunities. Additionally, we believe our portfolio is well positioned given our focus on secured lending to small and mid-sized commercial-stage companies with differentiated technology and intellectual property. However, we are continuously monitoring the potential impact of COVID-19 on the liquidity of our business partners and remain in regular contact with the individual management teams. While the depth and duration of the COVID-19 impact is uncertain, we are enthused by the work of two of our portfolio companies, DxTerity Diagnostics and Biolase, which are actively contributing to our nation’s fight against COVID-19 through innovative products and diagnostics.”

Mr. Black concluded, “Regarding Enteris, the majority of the company continues to abide by work-from-home directives as dictated by the State of New Jersey. However, the laboratory and manufacturing facilities are open and operational, with employee hours being staggered to ensure proper social distancing. While there has been an expected reduction in productivity and business development efforts, as well as delays in receiving some needed supplies due to the COVID-19 situation, we expect Enteris to generate positive cash flow above its expenses from proceeds received under its license agreements and customer relationships. In this regard, we were pleased to see that in its first quarter 2020 update Cara Therapeutics, which previously entered into a licensing agreement with Enteris, re-affirmed key milestones for its three Oral Korsuva™ programs. Notably, Cara remains on track to conduct an End of Phase 2 Meeting with the FDA to enable initiation of a Phase 3 program in the second half of 2020 for Oral Korsuva as a treatment for pruritus in patients with stage III-V (moderate-to-severe) chronic kidney disease. Additionally, Cara expects to report top-line results in 2020 from its two Phase 2 clinical trials of Oral Korsuva in atopic dermatitis and pruritus in patients with hepatic impairment due to primary biliary cholangitis.”

First Quarter 2020 Financial Results

For the first quarter 2020, SWK reported total revenue of $7.3 million compared to $9.4 million for the first quarter 2019. Revenue primarily consisted of interest and fees earned on our finance receivables as well as pharmaceutical development revenue generated by Enteris. The decrease in revenue was primarily due to a $3.5 million decrease in interest and fees earned on a finance receivable that was paid off during the first quarter of 2019, partially offset by approximately $1.2 million increase in interest and fees earned on new investments and increased funding to portfolio partners.

Income (loss) before taxes for the first quarter 2020 totaled $(3.4) million compared to $7.7 million for the same period of the previous year. The decline is driven by a $3.5 million expense for Enteris intangibles amortization and property and equipment depreciation, a $2.8 million expense as a result of fair market value declines of our equity-related positions, and a $2.0 million operating loss for Enteris (excluding amortization and depreciation expense).

The GAAP net (loss) income for the first quarter ended March 31, 2020 totaled $(4.7) million, or $(0.36) per diluted share, compared to $6.6 million, or $0.51 per diluted share for the first quarter 2019. For the first quarter 2020, adjusted net income was $2.8 million, or $0.21 per diluted share, compared to $7.4 million, or $0.57 per diluted share, for the first quarter 2019.

Income producing assets (defined as finance receivables and corporate debt securities) totaled $178.3 million as of March 31, 2020. This is an increase compared with income producing assets of $154.9 million as of March 31, 2019.

Book value per share was $17.96 as of March 31, 2020, which includes $0.26 per share negative impact from the amortization of Enteris intangibles and $0.21 per share impact from mark-to-market changes on warrant and equity securities, compared to $18.31 as of December 31, 2019 and $16.98 as of March 31, 2019. Tangible financing book value per share, which excludes the deferred tax asset, intangible assets, goodwill, property and equipment and contingent consideration payable, totaled $14.75 as of March 31, 2020. Management views tangible financing book value per share as a relevant metric to value the company’s core specialty finance business.

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SOURCE SWK Holdings Corporation

Company Codes: NASDAQ-NMS:SWKH