July 24, 2019
BEDFORD, Mass.–(BUSINESS WIRE)–Anika Therapeutics, Inc. (NASDAQ: ANIK), a global, integrated orthopedic and regenerative medicines company specializing in therapeutics based on its proprietary hyaluronic acid (“HA”) technology, today reported financial results for the second quarter ended June 30, 2019, and provided an update on its business progress in the period.
“Anika delivered strong earnings and cash flow in the second quarter, while we continued our transformation into a global commercial company,” said Joseph Darling, President and Chief Executive Officer of Anika Therapeutics. “With an ongoing commitment to our people, products and performance, during the quarter we further strengthened our executive leadership team, continued to realize the benefits of our international expansion efforts and prepared for the launch of our first surgically-delivered therapy for bone repair procedures in the U.S. under our hybrid commercial model in the third quarter of 2019. Additionally, based on extensive analysis and discussions, and building on the strength of our international viscosupplement results, we have decided to move forward with our efforts to obtain regulatory approval for CINGAL in the U.S. Anika remains well positioned to deliver a continuum of orthopedic and regenerative medicine therapies and create sustained value for patients and shareholders.”
Second Quarter Financial Results
- Total revenue for the second quarter of 2019 was $30.4 million, compared to $30.5 million for the second quarter of 2018.
- Global Viscosupplement revenue decreased slightly year-over-year for the second quarter of 2019. U.S. Viscosupplement revenue decreased 6% year-over-year for the quarter, due primarily to lower ORTHOVISC revenue. International Viscosupplement revenue increased 28% year-over-year for the quarter, primarily due to international CINGAL revenue growth of 125%.
- Total operating expenses for the second quarter of 2019 decreased to $18.5 million, compared to $19.3 million for the second quarter of 2018. The decrease in total operating expenses was due to lower cost of product revenue and research and development expenses, partially offset by higher selling, general and administrative expenses.
- Net income for the second quarter of 2019 was $9.4 million, or $0.67 per diluted share, compared to net income of $10.1 million, or $0.68 per diluted share, for the second quarter of 2018. The decrease in net income was due primarily to tax benefits from employee stock option exercises in the second quarter of 2018.
- Adjusted EBITDA (see description below) for the second quarter of 2019 increased to $14.8 million, compared to $14.0 million for the second quarter of 2018. The increase in adjusted EBITDA is primarily due to improvements in product gross profit and operating income as a result of more favorable revenue mix and a reduction in inventory related charges.
- Cash, cash equivalents and investments were $141.5 million as of June 30, 2019, compared to $159.0 million as of December 31, 2018. The decrease in cash, cash equivalents and investments was due to the Company’s $30.0 million accelerated share repurchase program announced in May 2019, partially offset by strong operating cash flow for the first half of 2019. Cash provided by operating activities was $13.9 million for the first half of 2019.
Recent Business Highlights
- Completed the evaluation of CINGAL’s clinical, regulatory, and commercial path forward, and determined to initiate a pilot study as the next step to advance CINGAL towards regulatory approval in the U.S. market. The pilot study is expected to enroll approximately 240 patients across 15 sites primarily located in the U.S. Patients will be randomized to receive either CINGAL, a steroid (triamcinolone hexacetonide), or saline placebo. The Company expects the pilot study to commence in the first half of 2020 and to take approximately one year to complete.
- Strengthened the executive leadership team with the appointment of James Loerop to the newly created position of Executive Vice President of Business Development and Strategic Planning. Mr. Loerop will oversee the Company’s global business development function and advance its efforts to identify and evaluate potential acquisitions, partnerships, alliances, and licensing opportunities to expand the Company’s commercial portfolio and global footprint.
- Continued to execute commercial expansion plans, including hiring three Regional Sales Directors to drive the upcoming launch of the Company’s first surgically-delivered therapy for bone repair procedures in the U.S. utilizing a hybrid commercial model, which is planned for the third quarter of 2019.
- Executed a $30.0 million accelerated share repurchase (ASR) program in the second quarter of 2019, and received an initial delivery of approximately 450,000 shares of common stock. Anika expects the ASR program to be completed no later than the first quarter of 2020.
- Executing its five-year strategic plan, which Anika intends to present at its Analyst and Investor Day on September 18 in Boston.
Full Year 2019 Revised Corporate Outlook
Based on currently available information, the Company expects total revenue growth to be in the range of 1% to 4% for the full year of 2019. Total operating expenses are now anticipated to be in the high $70 million range, as a result of internal cost control initiatives. Adjusted EBITDA is now expected to be in the high $30 million to low $40 million range, which is based on anticipated U.S. GAAP net income around the mid $20 million range.
To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company is reporting Adjusted EBITDA, which is a non-GAAP financial measure and should not be considered an alternative to net income or other measurements under GAAP. The Company believes that Adjusted EBITDA provides additional useful information to investors in their assessment of its operating performance as it is a metric routinely used by management to evaluate the Company’s performance. Adjusted EBITDA is not calculated identically by all companies, and therefore the Company’s measurements of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. Adjusted EBITDA is defined by the Company as GAAP net income excluding depreciation and amortization, interest and other income (expense), income taxes and stock-based compensation expense. A reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, is shown in the table below for the three- and six-month periods ended June 30, 2019 and 2018 (in thousands).
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