LAKE FOREST - Akorn, Inc. (The OTC Pink Market: AKRXQ), a leading specialty pharmaceutical company, today announced its financial results for the second quarter of 2020.
Second Quarter 2020 Results and Recent Developments
Net revenue was $120 million, down $58 million, 32% from the prior year quarter
Net loss was $69 million, compared to $112 million loss in the prior year quarter
Adjusted EBITDA was $(2) million, compared to $36 million in the prior year quarter
Filed for Chapter 11 bankruptcy protection on May 20, 2020, and executed a Restructuring Support Agreement with lenders serving as the 'stalking horse' bidder in the Company's sale process
Summary Financial Results for the Quarter Ended June 30, 2020
Akorn's reported net revenue was $120.3 million for the three month period ended June 30, 2020, representing a decrease of $57.8 million, or 32.4%, as compared to net revenue of $178.1 million for the three month period ended June 30, 2019. The decrease in net revenue resulted from a $54.9 million decline in organic revenue, and a $5.6 million, decline in revenue from discontinued products, partially offset by a $2.8 million increase in net revenue from new products. The $54.9 million decline in organic revenue was due an unfavorable volume impact of approximately $52.3 million, or 30.7% and an unfavorable price variance of approximately $2.6 million, or 1.5%. The $52.3 million volume decline was principally a result of lower demand due to the COVID-19 pandemic, which caused significant disruption to healthcare practices limiting patient access to treatments, particularly in the areas of ophthalmology and acute care.
Gross profit for the quarter ended June 30, 2020, was $31.1 million, or 25.8% of net revenue, compared to $68.0 million, or 38.2% of net revenue, in the corresponding prior year quarter. The decrease in the gross profit percentage was principally due to the impacts of the COVID-19 pandemic, which included unfavorable volume and product mix, unfavorable manufacturing variances, along with increased employee retention costs.
GAAP net (loss) for the second quarter of 2020, was $(68.7) million, or $(0.51) per diluted share, compared to GAAP net (loss) of $(111.6) million, or $(0.89) per diluted share, for the same quarter of 2019. After a net adjustment of $41 million to net income for non-GAAP items, adjusted diluted earnings per share for the second quarter of 2020 was $(0.21), compared to $0.09 in the same quarter of 2019, after a net adjustment of $123 million to net income for non-GAAP items.
Earnings before interest, taxes, depreciation and amortization (EBITDA), which is a non-GAAP measure, was $(48.1) million for the second quarter of 2020, compared to $(75.4) million for the second quarter of 2019. Adjusted EBITDA, which is also a non-GAAP measure used by management to evaluate the performance of the Akorn business, was $(1.9) million for the second quarter of 2020, compared to $36.1 million for the second quarter of 2019.
About Akorn
Akorn, Inc. is a specialty pharmaceutical company engaged in the development, manufacture and marketing of multisource and branded pharmaceuticals. Akorn has manufacturing facilities located in Decatur, Illinois; Somerset, New Jersey; Amityville, New York; Hettlingen, Switzerland and Paonta Sahib, India that manufacture ophthalmic, injectable and specialty sterile and non-sterile pharmaceuticals.
Cautionary Note Regarding Forward-Looking Statements
This press release includes statements that may constitute 'forward-looking statements,' including those regarding the effects of COVID-19, as well as the Company's long-term business plan and outlook, financial performance, the voluntary cases under chapter 11 ('Chapter 11') of title 11 of the United States Code (the 'Bankruptcy Code') of Akorn, Inc. and its U.S. direct and indirect subsidiaries, the Company's ability to continue operating in the ordinary course while the Chapter 11 cases are pending, and the Company's ability to complete the sale of some or all of its assets pursuant to Section 363 of the Bankruptcy Code (the 'Sale'). When used in this release, the words 'will,' 'expect,' 'continue,' 'believe,' 'seek,' 'anticipate,' 'estimate,' 'intend,' 'could,' 'would,' 'strives' and similar expressions are generally intended to identify forward-looking statements. These statements are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the 'Exchange Act'). A number of important factors could cause actual results of the Company and its subsidiaries to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to: (i) the Company's ability to consummate the Sale; (ii) potential adverse effects of the Chapter 11 cases on the Company's liquidity and results of operations; (iii) the Company's ability to obtain timely approval by the Court with respect to the motions filed in the Chapter 11 cases; (iv) objections that could protract the Chapter 11 Cases; (v) employee attrition and the Company's ability to retain senior management and other key personnel due to the distractions and uncertainties; (vi) the Company's ability to comply with the restrictions imposed by the terms and conditions of the DIP Facility and other financing arrangements; (vii) the Company's ability to maintain relationships with suppliers, customers, employees and other third parties and regulatory authorities as a result of the Chapter 11 cases; (viii) the effects of the Chapter 11 cases on the Company and on the interests of various constituents, including holders of the Company's common stock; (ix) the Court's rulings on the outcome of the Chapter 11 cases generally; (x) the length of time that the Company will operate under Chapter 11 protection and the continued availability of operating capital during the pendency of the Chapter 11 cases; (xi) risks associated with third party motions in the Chapter 11 cases, which may interfere with the Company's ability to consummate the Sale or an alternative transaction; (xii) increased administrative and legal costs related to the Chapter 11 process; potential delays in the Chapter 11 process due to the effects of the COVID-19 virus; (xiii) other litigation and inherent risks involved in a bankruptcy process and (xiv) such other risks and uncertainties outlined in the risk factors detailed in Part I, Item 1A, 'Risk Factors,' of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (as filed with the SEC on February 26, 2020), Part II, Item 1A, 'Risk Factors,' of the Company's Quarterly Reports on Form 10-Q for the fiscal quarter ended March 31, 2020 (as filed with the SEC on May 11, 2020) and June 30, 2020 (as filed with the SEC on August 7, 2020) and other risk factors identified from time to time in the Company's filings with the SEC. Readers should carefully review these risk factors, and should not place undue reliance on the Company's forward-looking statements. These forward-looking statements are based on information, plans and estimates at the date of this release. The Company undertakes no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.
Contact:
Tel: (847) 279-6162
Email: Investor.relations@akorn.com
AKORN, INC. 