QUESTCOR PHARMACEUTICALS INC 
By ANAHEIM, Calif., Feb. 25, 2014 /PRNewswire/ -- Questcor Pharmaceuticals, Inc. (NASDAQ: QCOR) today reported financial results for the fourth quarter and full year ended December 31, 2013.
Three Months Ended 12/31/13 Three Months Ended 12/31/12 Percentage Change
------------------------------ ------------------------------ -----------------
Net Sales $242.9 Million $160.5 Million 51%
--------- -------------- -------------- ---
GAAP Diluted
EPS $1.44 $1.03 40%
------------ ----- ----- ---
Non-GAAP
Diluted EPS $1.67 $1.09 53%
------------ ----- ----- ---
Year Ended 12/31/13 Year Ended 12/31/12 Percentage Change
------------------- ------------------- -----------------
GAAP Net
Sales $798.9 Million $509.3 Million 57%
-------- -------------- -------------- ---
Non-GAAP Net
Sales $810.4 Million $509.3 Million 59%
------------ -------------- -------------- ---
GAAP Diluted
EPS $4.76 $3.14 52%
------------ ----- ----- ---
Non-GAAP
Diluted EPS $5.48 $3.33 65%
------------ ----- ----- ---
Net sales for the fourth quarter ended December 31, 2013 were $242.9 million, up 51 percent from $160.5 million in the fourth quarter of 2012. The increase was driven by the expanded usage of H.P. Acthar(®) Gel (repository corticotropin injection) in multiple therapeutic areas. The most significant increase in net sales was driven by rheumatologists prescribing Acthar for patients suffering from dermatomyositis, polymyositis, rheumatoid arthritis, and systemic lupus erythematosus. The increase in net sales was also driven by the increased prescribing of Acthar by nephrologists in the treatment of proteinuria associated with nephrotic syndrome (NS) and by neurologists in the treatment of multiple sclerosis (MS) relapses and infantile spasms (IS). BioVectra, the Company's specialty manufacturing subsidiary which Questcor acquired in January 2013, had net sales of $12.6 million in the fourth quarter of 2013. GAAP earnings for the fourth quarter of 2013 were $1.44 per diluted common share, up 40 percent from the year ago quarter. Fourth quarter 2013 non-GAAP earnings per share were $1.67, an increase of 53 percent from the prior year period driven by non cash and one time related items as outlined in the Non-GAAP Adjusted Financial Disclosure attached to the Consolidated Statement of Income.
Questcor shipped 8,100 vials of Acthar during the fourth quarter of 2013 compared to 6,330 vials in the year ago quarter. For the full year of 2013, Questcor shipped 28,112 vials of Acthar compared to 20,741 vials in 2012. As the Company has previously disclosed, quarterly vial shipments are subject to significant variation due to the size and timing of individual orders received from Questcor's distributor. The timing of when these orders are received and filled can significantly affect net sales and net income in any particular quarter. The Company believes that investors should consider the Company's results over several quarters when analyzing the Company's performance.
"In 2013, Acthar net sales grew in all therapeutic areas, with the biggest growth occurring in rheumatology," said Don M. Bailey, President and CEO of Questcor. "At the same time, the body of evidence related to Acthar expanded from investments in multiple company-sponsored clinical and non-clinical studies, as well as our ongoing support for investigator-initiated studies. In addition, we began diversifying and globalizing our business while still returning substantial cash to shareholders."
"As we turn to 2014, our highest priority is to continue our commercial momentum, while further building the body of scientific evidence for Acthar and actively exploring various strategic alternatives," continued Mr. Bailey. "Management is working closely with the Board's newly formed Strategic Advisory Committee to support the Company's investigation and evaluation of potential strategies to use its future potential cash flow to generate long-term growth and value for shareholders, patients and the healthcare community."
"New paid prescriptions for Acthar continued to be strong across all of our markets, and grew about 30% in the fourth quarter from the year ago period to approximately 2,450 to 2,500," commented Steve Cartt, Chief Operating Officer of Questcor. "Prescribing of Acthar in the FDA-approved rheumatology-related indications of dermatomyositis, polymyositis, lupus and rheumatoid arthritis remained strong with 540 to 550 new paid Acthar prescriptions in the fourth quarter, up about 20% from the third quarter. Notably, rheumatology prescriptions now account for nearly 30% of total Acthar business after only our third full quarter of educating rheumatologists on Acthar."
Mr. Cartt continued, "There were also 390 to 400 new paid prescriptions for NS in the quarter, up about 5% year-over-year. Net sales resulting from NS prescriptions currently account for approximately a third of our Acthar business. During the fourth quarter there were also 1,345 to 1,355 new paid prescriptions for MS relapse patients, up about 9% year-over-year. Net sales generated from MS relapse prescriptions currently represent over 25% of our Acthar business. There were also 180 to 185 new paid prescriptions for IS during the quarter, an increase of 3% year-over-year, but down significantly from the prior quarter."
"Regarding our newest commercial endeavor, in January we fielded a small pilot sales force to educate pulmonologists about Acthar in the treatment of respiratory manifestations of symptomatic sarcoidosis, an orphan inflammatory disease with high unmet medical need for which Acthar is FDA-approved. While still very early in this pilot selling effort, we have already begun to see encouraging results and look forward to providing further updates in the coming months," concluded Mr. Cartt.
The Company believes that insurance coverage for Acthar continues to remain favorable, when Acthar is prescribed for patients in need of an FDA-approved treatment alternative.
To allow comparable analysis, the Company has defined "new paid" prescriptions in the above paragraphs to include prescriptions covered by commercial carriers, Medicare, Medicaid and Tricare in all periods regardless of the rebate percentage applicable in those periods. The numbers are based on internal company estimates.
Full Year Financial Results
Net sales for the full year of 2013 were $798.9 million, with BioVectra contributing $37.6 million. Net sales for the full year of 2013 include the effect in the second quarter of the Company's decision to accrue, based on information received in the second quarter, an incremental Medicaid rebate liability of $11.5 million related to Questcor's 2001 entry into the Medicaid system subsequent to Questcor's acquisition of Acthar in 2001. The incremental liability covers periods from 2002 to 2009. Due to health care legislation passed in early 2010, there is no incremental liability for periods subsequent to 2009. On a non-GAAP basis, excluding this charge, net sales for 2013 were $810.4 million, up 59% from $509.3 million in the full year of 2012. GAAP earnings for the full year of 2013 were $4.76 per diluted common share, compared to $3.14 per diluted common share for the comparable period of 2012.
Research and Development Progress
Research and development (R&D) investment increased 62% to $19.6 million in the three months ended December 31, 2013, as compared to $12.1 million for the year ago period. R&D investments were $59.7 million for the full year of 2013, as compared to $34.3 million for the year ago period. The increased R&D investment reflects the Company's efforts to further clarify the potential immune-modulating properties of Acthar and Synacthen (the product licensed from Novartis) and identify mechanisms of action applicable to other inflammatory and auto-immune diseases with high unmet medical need. The Company is also identifying new patient populations in which to evaluate Acthar and Synacthen through clinical studies. Questcor is funding research and development, both in-house and through independent physician sponsored studies, for the following:
New Indications for Label Enhancement Programs:
-- Acute Respiratory Distress Syndrome (ARDS): Site selection has been
initiated for a Phase 2 study to explore the safety and efficacy of
Acthar in patients with ARDS. ARDS is an acute life threatening lung
condition that can result from pulmonary and non-pulmonary infections or
a multitude of other serious conditions.
-- Amyotrophic Lateral Sclerosis (ALS): Patient enrollment has been
completed in a company-sponsored dose-ranging Phase 2 clinical trial to
evaluate the safety and tolerability of Acthar in patients with ALS,
often referred to as Lou Gehrig's disease. ALS is a life-threatening,
progressive neurodegenerative disease that affects nerve cells in the
brain and the spinal cord.
-- Diabetic Nephropathy: Enrollment continues in a company-sponsored Phase
2 trial to evaluate the efficacy and safety of Acthar in patients with
diabetic nephropathy, one of the most common causes of end-stage renal
disease in the United States.
Research Regarding Approved Indications:
-- Idiopathic Membranous Nephropathy: Enrollment continues in a
company-sponsored Phase 4 trial in idiopathic membranous nephropathy.
Patients enrolled in this study are refractory, or non-responsive, to
current standard therapies or have relapsed after partial remission on
current standard therapies.
-- Lupus: Enrollment continues in a company-sponsored multi-site Phase 4
company-sponsored clinical trial to evaluate the efficacy and safety of
daily Acthar administration over a 6-month period in patients with
persistently active lupus.
Preclinical work related to the evaluation of a select group of potential Synacthen indications is in progress. Questcor will provide further updates on this development program in future communications.
Cash, Share Repurchase Program and Dividends
As of February 21, 2014, Questcor had cash, cash equivalents and short-term investments of $379 million, including restricted cash of $75 million set aside to secure certain post-closing payment obligations related to Questcor's acquisition of Synacthen. During the fourth quarter of 2013, Questcor used $53.1 million in cash to repurchase 960,000 shares of its common stock in open market transactions, at an average price of $55.26 per common share. As of December 31, 2013, there are approximately 5.3 million shares authorized remaining under the stock repurchase plan. Diluted shares outstanding for the three months ended December 31, 2013 were 62.3 million shares.
The Company announced on February 14, 2014 that its Board of Directors declared a quarterly cash dividend of $0.30 per share ($1.20 per share on an annual basis). The dividend will be paid on or about April 25, 2014 to shareholders of record at the close of business on April 18, 2014. Questcor currently intends to pay regular quarterly cash dividends for the foreseeable future.
2013 Corporate Highlights
-- Approximately 7,400 patients with serious diseases were treated with
Acthar by approximately 3,000 physicians.
-- Questcor acquired BioVectra, providing the Company with third party
manufacturing capabilities and enabling Questcor to further secure the
manufacturing process trade secrets surrounding Acthar.
-- Questcor acquired the rights to develop Synacthen and Synacthen Depot in
the U.S. Subject to certain closing conditions, Questcor also acquired
rights to Synacthen(®) and Synacthen Depot(®) in certain countries
outside the U.S.
-- The Company completed hiring and training its Rheumatology Sales Force
and began the process of educating rheumatologists about the several
FDA-approved rheumatology indications on the Acthar label. Questcor also
initiated a pilot commercialization effort in pulmonology.
-- Questcor initiated company-sponsored, multi-center clinical trials in
Amyotrophic Lateral Sclerosis (ALS) and Acute Respiratory Distress
Syndrome (ARDS). Questcor also provided financial grantsto an increased
number of investigator-initiated studies, some of which have resulted in
important publications in peer-reviewed journals. The Company also began
preclinical work on Synacthen, its first non Acthar U.S. pipeline
program.
-- The Board of Directors of Questcor formed two new committees. The
Science Committee is charged with providing advice and counsel on all of
the Company's scientific and R&D efforts. The Strategic Advisory
Committee was formed to help management's investigation and evaluation
of strategic alternatives, including business development opportunities,
partnering, in-licensing, acquisitions, mergers, other strategic
transactions and financial transactions.
-- Questcor also continued to demonstrate its commitment to returning
capital to shareholders, by returning over $100 million to shareholders
through dividend payouts, which were increased twice during 2013, and
through share repurchases.
Following the end of the fourth quarter of 2013:
-- On February 5, 2014, Questcor strengthened its management team with the
appointment of Rajesh (Raj) Asarpota as the Company's new Chief
Financial Officer, effective February 17, 2014. Michael H. Mulroy, the
Company's prior CFO, was appointed Executive Vice President, Strategic
Affairs and General Counsel, to spend increased time on the Company's
initiative to investigate and evaluate potential strategic transactions
to enhance shareholder value.
Acthar Label Information
The product label for Acthar includes 19 FDA-approved indications. Substantially all of the Company's net sales currently result from Acthar prescriptions for the following on-label indications of:
-- Nephrotic Syndrome (NS): "to induce a diuresis or a remission of
proteinuria in the nephrotic syndrome without uremia of the idiopathic
type or that due to lupus erythematosus." NS can result from several
underlying conditions, and prescribing physicians indicate that Acthar
is most commonly being prescribed for patients who have proteinuria and
suffer from NS due to idiopathic membranous nephropathy, focal segmental
glomerulosclerosis (FSGS), IgA nephropathy, minimal change disease and
lupus nephritis.
-- Rheumatology Related Conditions: Acthar is approved for the following
rheumatology related conditions: (i) Collagen Diseases: Acthar is
indicated "during an exacerbation or as maintenance therapy in selected
cases of systemic lupus erythematosus, systemic dermatomyositis
(polymyositis)" and (ii) Rheumatic Disorders: Acthar is indicated as
"adjunctive therapy for short-term administration (to tide the patient
over an acute episode or exacerbation) in: Psoriatic arthritis,
Rheumatoid arthritis, including juvenile rheumatoid arthritis (selected
cases may require low-dose maintenance therapy), Ankylosing
spondylitis."
-- Multiple Sclerosis (MS): "for the treatment of acute exacerbations of
multiple sclerosis in adults. Clinical controlled trials have shown H.P.
Acthar Gel to be effective in speeding the resolution of acute
exacerbations of multiple sclerosis. However, there is no evidence that
it affects the ultimate outcome or natural history of the disease." When
Acthar is used, it is typically prescribed as second line treatment for
patients with MS exacerbations.
-- Infantile Spasms (IS): "as monotherapy for the treatment of infantile
spasms in infants and children under 2 years of age."
Non-GAAP Financial Measures
The Company believes it is important to share non-GAAP financial measures with investors as these measures may better represent the ongoing economics of the business and reflect how we manage the business. Accordingly, management believes investors' understanding of the Company's financial performance is enhanced as a result of the disclosure of these non-GAAP financial measures. Non-GAAP financial measures should not be viewed in isolation, or as a substitute for, or as superior to, reported GAAP financial measures. The reconciliation between GAAP and Non-GAAP financial measures are provided with the financial tables included with this release.
Conference Call and Webcast Details
The Company will host a conference call and slide presentation via webcast today, February 25, 2014, at 4:30 p.m. ET/ 1:30 p.m. PT. The call can be accessed three ways:
-- By webcast: At Questcor's investor relations website,
http://ir.questcor.com/.
-- By telephone: For both "listen-only" participants and those participants
who wish to take part in the question-and-answer portion of the call,
the dial-in number in the U.S. is (877) 354-0215. For participants
outside the U.S., the dial-in number is (253) 237-1173.
-- By audio replay: A replay of the conference call will be available for
seven business days following conclusion of the live call. The
telephone dial-in number for U.S. participants is (855) 859-2056. For
participants outside the U.S., the replay dial-in number is (404)
537-3406. The replay access code for all callers is 55826448.
About Questcor
Questcor Pharmaceuticals, Inc. is a biopharmaceutical company focused on the treatment of patients with serious, difficult-to-treat autoimmune and inflammatory disorders. Questcor also provides specialty contract manufacturing services to the global pharmaceutical industry through its wholly-owned subsidiary BioVectra Inc. For more information about Questcor, please visit www.questcor.com.
Note: Except for the historical information contained herein, this press release contains forward-looking statements that have been made pursuant to the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "believes," "continue," "could," "ensuring," "estimates," "expects," "growth," "may," "momentum," "plans," "potential," "remain," "should," "start," "substantial," "sustainable" or "will" or the negative of such terms and other comparable terminology. These statements are only predictions. Actual events or results may differ materially. Factors that could cause or contribute to such differences include, but are not limited to, the following:
-- Our reliance on Acthar for substantially all of our net sales and
profits;
-- Reductions in vials used per prescription resulting from changes in
treatment regimens by physicians or patient compliance with physician
recommendations;
-- Our ability to receive high reimbursement levels from third party
payers;
-- The complex nature of our manufacturing process and the potential for
supply disruptions or other business disruptions;
-- The lack of patent protection for Acthar; and the possible FDA approval
and market introduction of additional competitive products;
-- Our ability to continue to generate revenue from sales of Acthar to
treat on-label indications associated with NS, rheumatology-related
conditions, MS, or IS, and our ability to develop other therapeutic uses
for Acthar;
-- Research and development risks, including risks associated with
Questcor's work in the area of NS and Lupus, efforts to develop and
obtain FDA approval of Synacthen, our reliance on third-parties to
conduct research and development, our ability to conduct our own
clinical trial research and development projects, and the ability of
research and development to generate successful results;
-- The results of any pending or future litigation, investigations or
claims, including government investigations and private securities
litigation;
-- Our ability to comply with federal and state regulations, including
regulations relating to pharmaceutical sales and marketing practices;
-- Regulatory changes or other policy actions by governmental authorities
and other third parties in connection with U.S. health care reform or
efforts to reduce federal and state government deficits;
-- An increase in the proportion of our Acthar unit sales comprised of
Medicaid-eligible patients and government entities;
-- Our ability to estimate reserves required for Acthar used by government
entities and Medicaid-eligible patients and the impact that unforeseen
invoicing of historical Medicaid prescriptions may have upon our
results;
-- Our ability to effectively manage our growth, including the expansion of
our sales forces, planned international expansion, and our reliance on
key personnel;
-- Our ability to successfully identify, acquire or integrate acquisition
targets or other business combinations;
-- Our ability to integrate the BioVectra business with our business and to
manage, and grow, a contract manufacturing business;
-- Our ability to comply with foreign regulations related to the operation
of BioVectra's business and the international sales of Synacthen;
-- The impact to our business caused by economic conditions;
-- Our ability to protect our trade secrets and other proprietary rights;
-- The risk of product liability lawsuits;
-- Our ability to successfully enter into, and operate in, international
markets;
-- The risk of unfavorable changes in currency exchange rates;
-- Unforeseen business interruptions and security breaches;
-- Volatility in Questcor's Acthar shipments, estimated channel inventory,
and end-user demand, as well as volatility in our stock price;
-- Our ability and willingness to continue to pay our quarterly dividend or
make future increases in our quarterly dividend; and
-- Other risks discussed in Questcor's annual report on Form 10-K for the
year ended December 31, 2012 as filed with the Securities and Exchange
Commission, or SEC, on February 27, 2013, and other documents filed with
the SEC.
The risk factors and other information contained in these documents should be considered in evaluating Questcor's prospects and future financial performance.
Questcor undertakes no obligation to publicly release the result of any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date of this release.
For more information, please visit www.questcor.com or www.acthar.com.
QUESTCOR PHARMACEUTICALS, INC
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In thousands, except net income per share data)
(unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
------------ ------------
2013 2012 2013 2012
---- ---- ---- ----
Revenue
-------
Pharmaceutical
net
sales $230,234 $160,532 $761,347 $509,292
Contract
manufacturing
net
sales 12,647 - 37,582 -
------ --- ------ ---
Net
sales 242,881 160,532 798,929 509,292
Cost
of asset)
sales
(exclusive
of
amortization
of
purchased
technology
and
IPR&D 20,921 9,156 74,365 28,555
------ ----- ------ ------
Gross
profit 221,960 151,376 724,564 480,737
Operating expenses:
Selling
and
marketing 38,784 33,051 152,856 114,139
General
and
administrative 15,305 11,175 56,408 33,596
Research
and
development 19,603 12,122 59,730 34,269
Depreciation
and
amortization 976 268 4,055 1,219
Change
in
fair
value
of
contingent
consideration 10,958 - 10,958 -
Impairment
of
goodwill
and
intangibles - - 719 987
--- --- --- ---
Total
operating
expenses 85,626 56,616 284,726 184,210
------ ------ ------- -------
Income
from
operations 136,334 94,760 439,838 296,527
Interest
and
other
income
(expense),
net 2,488 167 (298) 703
----- --- ---- ---
Income
before
income
taxes 138,822 94,927 439,540 297,230
Income
tax
expense 48,839 32,987 146,931 99,555
------ ------ ------- ------
Net
income $89,983 $61,940 $292,609 $197,675
======= ======= ======== ========
Net income per share:
Basic $1.51 $1.07 $4.99 $3.28
===== ===== ===== =====
Diluted $1.44 $1.03 $4.76 $3.14
===== ===== ===== =====
Shares used in computing
net income per share:
Basic 59,406 58,009 58,616 60,243
====== ====== ====== ======
Diluted 62,280 60,266 61,447 63,045
====== ====== ====== ======
Reconciliation of Non-
GAAP Adjusted Financial
Disclosure
------------------------
Adjusted
net
income $103,697 $65,705 $336,514 $209,644
Share-
based
compensation
expense
(1) (5,358) (3,590) (19,149) (10,502)
Depreciation
and
amortization
expense
(2) (3,171) (175) (9,439) (811)
Other
non-
cash
expense
(income)
related
to
acquisition
of
BioVectra
(3) (4,076) - (4,912) -
Other
non-
cash
expense
(income)
related
to
acquisition
of
Synacthen
(4) (1,109) - (2,267) -
Change
in
accounting
estimate
(5) - - (7,659) -
Impairment
of
goodwill
and
intangibles
(6) - - (479) (656)
--- --- ---- ----
Net
income
-
GAAP $89,983 $61,940 $292,609 $197,675
======= ======= ======== ========
Adjusted
net
income
per
share
-
basic $1.75 $1.13 $5.74 $3.48
Share-
based
compensation
expense
(1) (0.09) (0.06) (0.33) (0.17)
Depreciation
and
amortization
expense
(2) (0.05) (0.00) (0.16) (0.01)
Other
non-
cash
expense
(income)
related
to
acquisition
of
BioVectra
(3) (0.07) - (0.08) -
Other
non-
cash
expense
(income)
related
to
acquisition
of
Synacthen
(4) (0.02) - (0.04) -
Change
in
accounting
estimate
(5) - - (0.13) -
Impairment
of
goodwill
and
intangibles
(6) - - (0.01) (0.01)
Net
income
per
share
-
basic $1.51 $1.07 $4.99 $3.28
===== ===== ===== =====
Adjusted
net
income
per
share
-
diluted $1.67 $1.09 $5.48 $3.33
Share-
based
compensation
expense
(1) (0.09) (0.06) (0.31) (0.17)
Depreciation
and
amortization
expense
(2) (0.05) (0.00) (0.15) (0.01)
Other
non-
cash
expense
(income)
related
to
acquisition
of
BioVectra
(3) (0.07) - (0.08) -
Other
non-
cash
expense
(income)
related
to
acquisition
of
Synacthen
(4) (0.02) - (0.04) -
Change
in
accounting
estimate
(5) - - (0.12) -
Impairment
of
goodwill
and
intangibles
(6) - - (0.01) (0.01)
--- --- ----- -----
Net
income
per
share
-
diluted $1.44 $1.03 $4.76 $3.14
===== ===== ===== =====
Pharmaceuticals
net
sales $230,234 $160,532 $761,347 $509,292
Contract
manufacturing
net
sales 12,647 - 37,582 -
------ --- ------ ---
Consolidated
net
sales 242,881 160,532 798,929 509,292
Medicaid
adjustment - - 11,500 -
--- --- ------ ---
Adjusted
consolidated
net
sales $242,881 $160,532 $810,429 $509,292
======== ======== ======== ========
Notes to Reconciliation of Non-GAAP Adjusted Financial Disclosure
-----------------------------------------------------------------
Net income per share - basic and diluted may not foot due to rounding.
Use of Non-GAAP Financial Measures
Our "non-GAAP adjusted net income" excludes the following items from GAAP net income:
1. Share-based compensation expense.
2. Depreciation and amortization expense, including amortization expense on our purchased intangibles.
3. Expense associated with the net present value adjustment on our contingent consideration.
4. Expense associated with the net present value adjustment on the R&D liability in conjunction with acquisition of Synacthen.
5. Medicaid adjustment for prior period 2002 - 2009.
6. Impairment of purchased technology related to our acquisition of Doral.
QUESTCOR PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share information)
(unaudited)
December 31,
------------
2013 2012
---- ----
ASSETS
Current assets:
Cash and cash equivalents $175,840 $80,608
Short-term investments 69,166 74,705
Total cash, cash equivalents and
short-term investments 245,006 155,313
Accounts receivable, net of
allowances for doubtful accounts of
$475 and $0 at December 31, 2013 and
December 31, 2012, respectively 87,069 61,417
Inventories, net of allowances of
$1,329 and $52 at December 31, 2013
and December 31, 2012, respectively 16,368 9,909
Restricted cash - current portion 25,000 -
Prepaid expenses and other current
assets 7,124 4,900
Deferred tax assets 16,209 5,737
Total current assets 396,776 237,276
Property and equipment, net 31,733 2,073
Purchased technology, net - 1,493
Goodwill 20,464 -
In process R&D asset 191,451 -
Intangibles and other non current
assets 30,131 -
Restricted cash 50,000 -
Deposits and other assets 389 70
Deferred tax assets 15,410 11,519
Total assets $736,354 $252,431
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $14,302 $13,069
Accrued compensation 16,489 21,300
Sales-related reserves 35,370 37,376
Accrued royalties 35,163 9,802
Dividend payable 18,093 -
Current portion of contingent
consideration 4,238 -
Current portion of in process R&D
liability 25,000 -
Income taxes payable 3,693 7,360
Current portion of long-term debt 1,665 -
Other accrued liabilities 7,159 1,492
Total current liabilities 161,172 90,399
Long-term debt, less current portion 13,998 -
Contingent consideration 33,224 -
In process R&D liability 115,066 -
Non current deferred tax liability 10,569 -
Other non current liabilities 2,961 203
Total liabilities 336,990 90,602
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value,
5,334,285 shares authorized; none
outstanding - -
Common stock, no par value,
105,000,000 shares authorized,
60,137,758 and 58,544,206 shares
issued and outstanding at December
31, 2013 and December 31, 2012,
respectively 30,386 15,938
Retained earnings 372,231 145,851
Accumulated other comprehensive
income (loss) (3,253) 40
Total shareholders' equity 399,364 161,829
Total liabilities and shareholders'
equity $736,354 $252,431
QUESTCOR PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Years Ended December 31,
------------------------
2013 2012 2011
---- ---- ----
Cash Flows
From
Operating
Activities
Net income $292,609 $197,675 $79,591
Adjustments
to
reconcile
net income
to net cash
provided by
operating
activities:
Share-
based
compensation
expense 28,753 15,792 7,326
Deferred
income
taxes (14,849) 241 (4,896)
Amortization
of
investments 412 1,330 1,250
Depreciation
and
amortization 14,172 1,219 1,044
Impairment
of
goodwill
and
intangibles 719 987 299
Loss on
disposal
of
property
and
equipment 95 72 11
Changes in
fair value
of
contingent
consideration 6,429 - -
Imputed
interest
for
contingent
consideration
and in-
process
R&D 4,529 - -
Other
compensation
expense 1,892
Changes in
operating
assets and
liabilities:
Accounts
receivable (19,155) (33,616) (16,673)
Inventories 4,577 (4,683) (1,500)
Prepaid
income
taxes - 6,940 (3,408)
Prepaid
expenses
and other
current
assets (1,335) (1,509) (1,527)
Accounts
payable (589) 7,566 1,634
Accrued
compensation (4,811) 9,710 7,432
Accrued
royalties 25,361 5,463 3,030
Sales-
related
reserves (2,006) 3,257 12,608
Income
taxes
payable (3,667) 7,360 -
Other
accrued
liabilities 3,307 1,317 (504)
Other non-
current
liabilities 1,335 (84) (118)
Net cash
provided
by
operating
activities 337,778 219,037 85,599
Cash Flows
From
Investing
Activities
Purchase of
short-
term
investments (120,645) (145,384) (162,301)
Proceeds
from the
sale and
maturities
of short-
term
investments 125,737 191,105 112,636
Purchase of
property,
equipment
and
leasehold
improvements (3,536) (1,065) (1,823)
Restricted
cash
associated
with the
acquisition
of
Synacthen (75,000) - -
Acquisition
of
BioVectra,
net of cash
acquired (46,692) - -
Acquisition
of
Synacthen (60,000) - -
Proceeds
from sale
of Doral 700 - -
Changes in
deposits
and other
assets 2,119 (14) 9
Net cash
(used in)
/provided
by
investing
activities (177,317) 44,642 (51,479)
Cash Flows
From
Financing
Activities
Repayment
of funded
long-term
debt (1,219) - -
Repayment
of other
long-term
debt (491) - -
Income tax
benefit
realized
from
share-
based
compensation
plans 22,809 7,488 17,712
Issuance of
common
stock, net 15,940 6,335 6,582
Dividends
paid (48,136) (23,533) -
Repurchase
of common
stock (53,054) (261,830) (11,453)
Net cash
(used in)
/provided
by
financing
activities (64,151) (271,540) 12,841
Impact of
exchange
rate on
cash flows (1,078) - -
Increase
(decrease)
in cash
and cash
equivalents 95,232 (7,861) 46,961
Cash and
cash
equivalents
at
beginning
of year 80,608 88,469 41,508
Cash and
cash
equivalents
at end of
year $175,840 $80,608 $88,469
Supplemental
disclosures
of Cash
Flow
Information:
Cash paid
for
interest $704 $23 $16
Cash paid
for income
taxes $141,515 $77,556 $25,278
Supplemental
disclosures
of
Investing
and
Financing
Activities:
Dividend
payable $18,093 $11,691 $ -
Supplemental
disclosure
of non-
cash
investing
and
financing
activities:
Capital
lease
obligation $ - $31 $34
In
conjunction
with the
acquisition
of
BioVectra
at January
18, 2013:
Incremental
fair value
of assets
acquired,
net $80,698
Less: fair
value of
contingent
consideration (30,383)
50,315
Loss on
foreign
exchange
rate 488
Total cash
paid for
acquisition
of
BioVectra $50,803
SOURCE Questcor Pharmaceuticals, Inc.
