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Anika Therapeutics Reports Fourth Quarter and Full Year 2012 Financial Results



  Anika Therapeutics Reports Fourth Quarter and Full Year 2012 Financial
  Results

      Fourth Quarter Revenue Increases 23% on Strong Sales of Orthovisc

Earnings Grow 48% to $0.31 per Share in Quarter and 32% to $0.82 per Share for
                                     Year

Business Wire

BEDFORD, Mass. -- February 27, 2013

Anika Therapeutics, Inc. (Nasdaq: ANIK), a leader in products for tissue
protection, healing and repair, based on hyaluronic acid (“HA”) technology,
today reported financial results for the quarter and full year ended December
31, 2012. The company generated record quarterly and full year revenue in
2012.

Management Commentary

“In addition to achieving record quarterly and full year revenue, Anika
delivered double-digit revenue and net income growth in the fourth quarter of
2012, concluding an excellent year from both financial and operational
perspectives,” said Charles H. Sherwood, Ph.D., President and Chief Executive
Officer. “These results were in line with the preliminary financial results we
released on January 22, 2013.”

“Our top-line performance continues to be driven by strong demand for
Orthovisc, our flagship orthobiologics product,” Sherwood said. “Orthovisc
revenue in our U.S. market was up nearly 42% for the full year. Through the
strength of our partner Depuy Mitek’s marketing activities over the past year,
Orthovisc closed 2012 as the market leader in the U.S. multi-injection segment
and the number two U.S. brand in viscosupplementation overall. On the bottom
line, growing revenue, coupled with operating efficiencies, have enabled us to
drive continued growth in income from operations and generate robust cash
flow. Our financial performance remains strong despite a one time
restructuring charge in the fourth quarter implemented to strengthen our
business and refocus our development programs.”

“We have made progress in our efforts to secure U.S. regulatory approval for
Monovisc^®,” said Sherwood. “Subsequent to our Monovisc announcement on
December 4, 2012, we completed an encouraging discussion with the FDA in
January 2013 to determine our next steps. We followed up on that discussion by
submitting a new PMA amendment incorporating existing data.”

“The year 2012 was successful for Anika, and we are well-positioned for
further success in 2013,” Sherwood said. “Demand for Orthovisc is growing. We
continue to streamline our operations and improve our manufacturing
capabilities, and we are excited about our product pipeline. Anika is evolving
from an HA biomaterials company into a products company focused on promising
new medical solutions, and a company dedicated to capturing more of the value
we have created by enhancing our capabilities in commercialization. We look
forward to reporting our progress as the rest of 2013 unfolds.”

Revenue

Anika’s total revenue increased 23% to $22.6 million in the fourth quarter of
2012, from $18.4 million in the fourth quarter of 2011. For the full year
2012, total revenue grew 10% to $71.4 million, from $64.8 million a year
earlier. The company’s revenue growth for both periods was primarily driven by
increased sales of its flagship Orthobiologics product, Orthovisc^®.

Product Gross Margin

Product gross margin for the fourth quarter of 2012 improved to 66.1%, from
59.8% in the fourth quarter last year. For the 12 months ended December 31,
2012, product gross margin increased to 57.4%, compared with 56.8% for full
year 2011. The improvements for both the quarter and the year were driven by
higher production volume, a more favorable product mix, and the realization of
operational efficiencies from our new manufacturing facility after
consolidation of sites.

Operating Income

Operating income for the fourth quarter of 2012 increased to $7.8 million,
from $4.9 million in the same period in 2011. For the 12 months ended December
31, 2012, operating income increased to $19.7 million, from $14.0 million a
year earlier. This growth was driven by a combination of increased revenue,
higher product gross profit, lower R&D spending related to clinical studies,
and reduced general and administrative expenses in 2012.

Net Income

Net income for the fourth quarter of 2012 rose to $4.5 million, or $0.31 per
diluted share, from $2.9 million, or $0.21 per diluted share, in the fourth
quarter last year. For full year 2012, net income grew to $11.8 million, or
$0.82 per diluted share, from $8.5 million, or $0.62 per diluted share, in
2011. Net income for both 2012 periods includes, a one-time, pre-tax charge of
$2.5 million related to the closure of the company’s tissue engineering
facility in Italy. The company’s effective tax rate for 2012 increased to
39.8%, from 38.6% for 2011.

Operating Expenses

Research and development expenses for the fourth quarter of 2012 were $1.3
million, compared with $1.5 million in the fourth quarter last year. For the
full year, R&D expenses decreased to $5.4 million, from $6.2 million in 2011.
Anika expects a significant year-over-year increase in R&D expense for 2013
due to the anticipated initiation of a clinical study and new product pipeline
initiatives.

Selling, general and administrative (“SG&A”) expenses in the fourth quarter of
2012 decreased to $3.7 million, from $4.9 million in the fourth quarter of
2011. For full year 2012, SG&A expenses decreased to $14.7 million, compared
with $17.9 million in 2011. The declines for both periods were primarily due
to U.S. manufacturing facilities consolidation, and the assumption of
litigation costs by a third party.

Cash and Cash Equivalents

Anika’s cash and cash equivalents at December 31, 2012 increased to $44.1
million, from $35.8 million at December 31, 2011, driven by higher profits.

Conference Call Information

Anika will hold a conference call to discuss its financial results, business
highlights and outlook tomorrow, Thursday, February 28, 2013 at 9:00 a.m. ET.
In addition, the company will answer questions concerning business and
financial developments and trends, and other business and financial matters
affecting the company, some of the responses to which may contain information
that has not been previously disclosed.

To listen to the conference call, dial 800-291-5365 (international callers
dial 617-614-3922) and use the passcode 89264114. Please call approximately 10
minutes before the starting time and reference Anika Therapeutics. In
addition, the conference call will be available through a live audio webcast
in the “Investor Relations” section of the Anika Therapeutics website,
www.anikatherapeutics.com. An accompanying slide presentation also can be
accessed via the Anika Therapeutics website. The conference call will be
archived and accessible on the same website shortly after the conclusion of
the call.

About Anika Therapeutics, Inc.

Headquartered in Bedford, Mass., Anika Therapeutics, Inc. develops,
manufactures and commercializes therapeutic products for tissue protection,
healing, and repair. These products are based on hyaluronic acid (HA), a
naturally occurring, biocompatible polymer found throughout the body. Anika’s
products range from orthopedic/joint health solutions led by Orthovisc, a
treatment for osteoarthritis of the knee, to surgical aids in the ophthalmic
and anti-adhesion fields. The company also offers aesthetic dermal fillers for
the correction of facial wrinkles. Anika’s Italian subsidiary, Anika S.r.l.,
provides complementary HA products in orthopedic/joint health and
anti-adhesion, as well as therapeutics in areas such as advanced wound
treatment and ear, nose and throat care. Anika S.r.l.’s regenerative tissue
technology advances Anika’s vision to offer therapeutic products and medical
solutions that go beyond pain relief to protect and restore damaged tissue.

The statements made in this press release which are not statements of
historical fact are forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These statements include, but are
not limited to, those relating to:(i) our discussions with the FDA regarding
U.S. regulatory approval of Monovisc, including the FDA’s decision regarding
the recently submitted PMA amendment, and our abilities to obtain FDA approval
for Monovisc, (ii) future demand for Orthovisc, (iii) the company’s plans to
continue streamlining operations and improving its manufacturing capabilities,
(iv) the prospects for the company’s product pipeline, and (v) expectations
regarding research and development spending. These statements are based upon
the current beliefs and expectations of the company's management and are
subject to significant risks, uncertainties and other factors. The company's
actual results could differ materially from any anticipated future results,
performance or achievements described in the forward-looking statements as a
result of a number of factors including (i) the company's ability to
successfully commence and/or complete clinical trials of its products on a
timely basis or at all, obtain pre-clinical or clinical data to support a
pre-market approval application or 510(k) application, or timely file and
receive FDA or other regulatory approvals or clearances of its products, or
that such approvals will not be obtained in a timely manner or without the
need for additional clinical trials, other testing or regulatory submissions,
as applicable; (ii) the company's research and product development efforts and
their relative success, including whether the company has any meaningful sales
of any new products resulting from such efforts; (iii) the cost effectiveness
and efficiency of our clinical studies, manufacturing operations and
production planning; (iv) the strength of the economies in which the company
operates or will be operating, as well as the political stability of any of
those geographic areas; (v) future determinations by the company to allocate
resources to products and in directions not presently contemplated, (vi) the
company’s ability to launch Monovisc in the U.S., if at all; (vii) the
company’s ability to provide an adequate and timely supply of its ophthalmic,
Orthovisc and other products to its customers, (viii) our ability to
successfully manage and turnaround Anika S.r.l.’s business, and (ix) the
company’s ability to achieve its stated growth targets. Certain other factors
that might cause the company's actual results to differ materially from those
in the forward-looking statements include those set forth under the headings
"Business," "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the company's Annual Report
on Form 10-K for the year ended December 31, 2011, as well as those described
in the company's other press releases and SEC filings.

Anika Therapeutics, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
                                                                                                        
                   Three Months Ended December 31,                 Year Ended December 31,
                   2012               2011               %         2012               2011               %
Product            $ 21,459,124       $ 17,725,546       21  %     $ 68,010,169       $ 61,956,386       10  %
revenue
Licensing,
milestone and        1,147,341          718,741                      3,348,336          2,822,249   
contract
revenue
Total revenue        22,606,465         18,444,287       23  %       71,358,505         64,778,635       10  %
                                                                                                          
Operating
expenses:
Cost of
product              7,269,886          7,128,450        2   %       28,988,621         26,783,738       8   %
revenue
Research &           1,339,677          1,530,762        -12 %       5,388,036          6,168,937        -13 %
development
Selling,
general &            3,667,406          4,869,290        -25 %       14,728,662         17,858,558       -18 %
administrative
Restructuring        2,537,988          -                            2,537,988          -           
charge
Total
operating            14,814,957         13,528,502       10  %       51,643,307         50,811,233       2   %
expenses
Income from          7,791,508          4,915,785        58  %       19,715,198         13,967,402       41  %
operations
Interest
income               (42,284    )       (49,917    )                 (187,777   )       (182,388   )
(expense), net
Income before        7,749,224          4,865,868        59  %       19,527,421         13,785,014       42  %
income taxes
Provision for        3,286,001          1,982,758                    7,769,961          5,318,334   
income taxes
Net income         $ 4,463,223        $ 2,883,110        55  %     $ 11,757,460       $ 8,466,680        39  %
                                                                                                          
Basic net
income per
share:
Net income         $ 0.33             $ 0.22                       $ 0.89             $ 0.65
Basic weighted
average common       13,324,942         13,122,004                   13,260,739         13,064,051
shares
outstanding
Diluted net
income per
share:
Net income         $ 0.31             $ 0.21                       $ 0.82             $ 0.62
Diluted
weighted
average common       14,299,211         13,804,806                   14,344,577         13,747,813
shares
outstanding
                                                                                                          

Anika Therapeutics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
                                                              
                                           December 31,
ASSETS                                     2012                2011
Current assets:
Cash and cash equivalents                  $ 44,067,477        $ 35,777,222
Accounts receivable, net of reserves
of $337,459 and $334,473 at December         21,462,481          17,307,786
31, 2012 and 2011, respectively
Inventories                                  8,283,472           7,302,483
Current portion deferred income taxes        2,031,583           1,918,926
Prepaid expenses and other                   1,539,477           1,831,127    
Total current assets                         77,384,490          64,137,544
Property and equipment, at cost              52,376,013          50,850,630
Less: accumulated depreciation               (17,263,032 )       (14,380,752 )
                                             35,112,981          36,469,878
Long-term deposits and other                 171,053             205,042
Intangible assets, net                       20,334,636          23,148,563
Goodwill                                     9,065,891           8,883,407    
Total Assets                               $ 142,069,051       $ 132,844,434  
                                                                
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable                           $ 2,341,838         $ 4,299,680
Accrued expenses                             5,837,044           5,321,594
Deferred revenue                             2,875,067           2,866,667
Current portion of long-term debt            1,600,000           1,600,000
Income taxes payable                         1,798,669           450,482      
Total current liabilities                    14,452,618          14,538,423   
Other long-term liabilities                  1,541,124           1,548,652
Long-term deferred revenue                   2,152,778           5,019,440
Deferred tax liability                       6,997,397           7,375,141
Long-term debt                               8,000,000           9,600,000
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.01 par value;
1,250,000 shares authorized, no shares       -                   -
issued and outstanding at December 31,
2012 and 2011, respectively
Common stock, $.01 par value;
30,000,000 shares authorized,
13,866,060 and 13,630,607 shares             138,659             136,305
issued and outstanding at December 31,
2012 and 2011, respectively
Additional paid-in-capital                   65,431,424          63,441,433
Accumulated currency translation             (2,654,630  )       (3,067,181  )
adjustment
Retained earnings                            46,009,681          34,252,221   
Total stockholders’ equity                   108,925,134         94,762,778   
Total Liabilities and Stockholders’        $ 142,069,051       $ 132,844,434  
Equity
                                                                              

Anika Therapeutics, Inc. and Subsidiaries
Supplemental Financial Data
                                                                                                                       
                                                                                                                         
Revenue by Product Line
                                                                                                                         
                   Quarter Ended December 31,                              Year Ended December 31,
                   2012             %          2011             %          2012             %          2011             %
Product Line:
Orthobiologics     $ 19,691,122     92   %     $ 11,681,024     66   %     $ 49,954,112     74   %     $ 39,858,139     64   %
Dermal               351,101        2    %       1,345,285      8    %       1,384,403      2    %       3,681,166      6    %
Surgical             1,148,050      5    %       1,227,984      7    %       5,022,456      7    %       4,976,261      8    %
Ophthalmic           268,851        1    %       2,918,619      16   %       8,784,011      13   %       10,963,822     18   %
Veterinary           -              -    %       552,634        3    %       2,865,187      4    %       2,476,998      4    %
Total Product      $ 21,459,124     100  %     $ 17,725,546     100  %     $ 68,010,169     100  %     $ 61,956,386     100  %
Revenue
                                                                                                                         
                                                                                                                         
Product Gross Profit Margin
                                                                                                                         
                   Quarter Ended December 31,                              Year Ended December 31,
                   2012             %          2011             %          2012             %          2011             %
Product gross      $ 14,189,238     66.1 %     $ 10,597,096     59.8 %     $ 39,021,548     57.4 %     $ 35,172,648     56.8 %
profit
                                                                                                                         
                                                                                                                         
Product Revenue by Geographic Location
                                                                                                                         
                   Quarter Ended December 31,                              Year Ended December 31,
                   2012             %          2011             %          2012             %          2011             %
Geographic
Location:
United States      $ 16,792,632     78   %     $ 12,480,149     71   %     $ 55,063,559     81   %     $ 45,652,253     74   %
Europe               2,119,867      10   %       3,401,434      19   %       6,148,345      9    %       10,865,628     17   %
Other                2,546,625      12   %       1,843,963      10   %       6,798,265      10   %       5,438,505      9    %
Total Product      $ 21,459,124     100  %     $ 17,725,546     100  %     $ 68,010,169     100  %     $ 61,956,386     100  %
Revenue
                                                                                                                              

Contact:

Anika Therapeutics, Inc.
Charles H. Sherwood, Ph.D., 781-457-9000
CEO
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