Anika Therapeutics Reports 20% Total Revenue Growth and Record Third-Quarter Earnings Total Revenue Grows to $17.8 Million Net Income Rises to $5.0 Million and EPS Increase to $0.33 Business Wire BEDFORD, Mass. -- October 30, 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 ended September 30, 2013. Management Commentary “This was another strong quarter for Anika, driven by continued product revenue growth in our Orthobiologics franchise,” said Charles H. Sherwood, Ph.D., President and Chief Executive Officer. “Net income and earnings per share rose to third-quarter record high levels, reflecting strong demand for our viscosupplementation products as well as our ongoing initiatives to improve performance across the business. These results measure against a weak set of financial comparatives in the third quarter of 2012, which reflected the temporary decline in product shipments that we experienced in that year-earlier period.” “Our growth in Orthobiologics continues to reflect solid demand for our flagship product, Orthovisc^®, in both domestic and international markets,” said Sherwood. “Our U.S. distribution partner, DePuy Mitek, is continuing to make strategic investments in patient and physician education and distribution channel support to expand the Orthovisc franchise and drive sales in high-potential areas of the viscosupplementation market. Paralleling these initiatives, our internal commercial and business development team was active this quarter in efforts to strengthen and expand our international Orthobiologics distribution network.” “This was also an active quarter for Anika on the product development front,” Sherwood said. “We continued to enroll patients in our multinational Phase III clinical study in support of our CE Mark application for Cingal. Our third-generation viscosupplementation product, Cingal, is a single-injection osteoarthritis treatment that includes a therapeutic anti-inflammatory agent. In connection with the International Cartilage Repair Society annual congress in Turkey, we hosted a well-received symposium on our Hyalofast™ product as well as a regenerative product development advisory panel meeting with world renowned physicians in the orthopedic field.” “Given the positive demand outlook for our Orthobiologics products and the improved efficiencies in our business, we believe that Anika is well-positioned for continued growth and profitability improvement in the quarters ahead,” concluded Sherwood. Revenue Total revenue for the third quarter of 2013 was $17.8 million, compared with $14.8 million a year earlier. Anika’s revenue continues to be largely driven by increased domestic and international viscosupplementation product sales. The favorable comparison with the third quarter of 2012 also reflected lower product sales in that period. This was the result of a temporary scale-up issue at Anika’s Bedford manufacturing facility during that quarter, which resulted in uneven revenue patterns for the last two quarters of 2012. Product Gross Margin Product gross margin for the third quarter of 2013 improved to 68%, from 49% in the third quarter last year. This improvement reflected the company’s ongoing initiatives to realize the planned operational efficiencies, as well as more favorable product mix and the elimination of the company’s unprofitable tissue engineering operations since the beginning of 2013. The improvement also reflected the higher cost of product revenue reported for the year-earlier quarter due to new manufacturing facility scale-up activities. Operating Expenses Research and development expenses for the third quarter of 2013 rose 33% from the third quarter a year earlier. The increase reflected expenses for the company’s Cingal clinical trial and other planned product pipeline initiatives. Selling, general and administrative expenses decreased 11% from the third quarter of 2012, primarily as a result of the company’s ongoing cost reduction initiatives, and certain non-recurring legal expenses last year. Operating and Net Income Operating income for the third quarter of 2013 was $7.8 million, compared with $2.7 million in the same period in 2012. Net income was $5.0 million, or $0.33 per diluted share, compared with $1.6 million, or $0.11 per diluted share, in the third quarter last year. Operating income, net income and earnings per share were higher, year-over-year, primarily due to the improvement in product gross profit. Cash and Cash Equivalents Anika’s cash and cash equivalents at September 30, 2013 increased to $64.1 million, from $44.1 million at December 31, 2012, driven primarily by higher income from operations, increased cash collections on accounts receivable and option exercises during the year. Conference Call Information Anika will hold a conference call to discuss its financial results, business highlights and outlook tomorrow, Thursday, October 31, 2013 at 9:00 a.m. ET. In addition, the company will answer questions concerning business and financial developments and trends, regulatory activity related to Monovisc, 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 877-280-4962 (international callers dial 857-244-7319) and use the passcode 26253796. 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 anti-adhesion and ophthalmic 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. Its regenerative 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 ongoing initiatives to improve performance across the business, (ii) our efforts and ability to strengthen and expand our international Orthobiologics distribution network, (iii) the company’s plans to continue to drive efficiencies in operations and manufacturing, (iv) the prospects for the company’s product pipeline, including regenerative product development, (v) bringing Cingal to market, and (vi) expectations for future growth and profitability improvement in the quarters ahead. 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 domestic and international pre-market approval applications 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, 2012, 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 (unaudited) Three Months Ended September Nine Months Ended September 30, 30, 2013 2012 2013 2012 Product $ 17,023,346 $ 14,055,440 $ 51,585,242 $ 46,551,045 revenue Licensing, milestone and 731,092 711,171 2,244,584 2,200,995 contract revenue Total revenue 17,754,438 14,766,611 53,829,826 48,752,040 Operating expenses: Cost of product 5,377,568 7,221,028 16,530,070 21,718,735 revenue Research & 1,618,012 1,217,086 5,029,974 4,048,359 development Selling, general & 3,188,669 3,601,737 10,536,462 11,061,256 administrative Restructuring (196,084 ) - (442,869 ) - charges Total operating 9,988,165 12,039,851 31,653,637 36,828,350 expenses Income from 7,766,273 2,726,760 22,176,189 11,923,690 operations Interest income (32,816 ) (45,161 ) (108,755 ) (145,493 ) (expense), net Income before 7,733,457 2,681,599 22,067,434 11,778,197 income taxes Provision for 2,776,199 1,036,349 8,147,282 4,483,960 income taxes Net income $ 4,957,258 $ 1,645,250 $ 13,920,152 $ 7,294,237 Basic net income per share: Net income $ 0.36 $ 0.12 $ 1.03 $ 0.55 Basic weighted average common 13,682,449 13,287,463 13,534,334 13,237,629 shares outstanding Diluted net income per share: Net income $ 0.33 $ 0.11 $ 0.95 $ 0.51 Diluted weighted average common 14,958,965 14,459,154 14,673,879 14,357,791 shares outstanding Anika Therapeutics, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (unaudited) September 30, December 31, 2013 2012 ASSETS Current assets: Cash and cash equivalents $ 64,055,438 $ 44,067,477 Accounts receivable, net of reserves of $369,989 and $337,459 at September 30, 16,496,917 21,462,481 2013 and December 31, 2012, respectively Inventories 11,582,492 8,283,472 Current portion deferred income taxes 1,989,422 2,031,583 Prepaid expenses and other 878,472 1,539,477 Total current assets 95,002,741 77,384,490 Property and equipment, at cost 52,067,759 52,376,013 Less: accumulated depreciation (18,805,895 ) (17,263,032 ) 33,261,864 35,112,981 Long-term deposits and other 145,563 171,053 Intangible assets, net 19,197,226 20,334,636 Goodwill 9,275,130 9,065,891 Total Assets $ 156,882,524 $ 142,069,051 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 2,136,679 $ 2,341,838 Accrued expenses 5,228,399 5,837,044 Deferred revenue 850,067 2,875,067 Current portion of long-term debt 1,600,000 1,600,000 Income taxes payable 542,302 1,798,669 Total current liabilities 10,357,447 14,452,618 Other long-term liabilities 1,172,099 1,541,124 Long-term deferred revenue 2,027,778 2,152,778 Deferred tax liability 8,319,038 6,997,397 Long-term debt 6,800,000 8,000,000 Commitments and contingencies - - Stockholders’ equity: Preferred stock, $.01 par value; 1,250,000 shares authorized, no shares issued and - - outstanding at September 30, 2013 and December 31, 2012, respectively Common stock, $.01 par value; 30,000,000 shares authorized, 14,266,098 and 13,866,060 shares issued and outstanding 142,661 138,659 at September 30, 2013 and December 31, 2012, respectively Additional paid-in-capital 70,281,179 65,431,424 Accumulated currency translation (2,147,511 ) (2,654,630 ) adjustment Retained earnings 59,929,833 46,009,681 Total stockholders’ equity 128,206,162 108,925,134 Total Liabilities and Stockholders’ Equity $ 156,882,524 $ 142,069,051 Anika Therapeutics, Inc. and Subsidiaries Supplemental Financial Data Revenue by Product Line and Product Gross Margin (unaudited) Three Months Ended September 30, 2013 2012 % Change Orthobiologics $ 12,830,566 $ 9,242,783 39% Dermal 267,766 376,251 (29%) Surgical 1,136,248 1,426,273 (20%) Ophthalmic 1,425,609 1,891,433 (25%) Veterinary 1,363,157 1,118,700 22% Total Product Revenue $ 17,023,346 $ 14,055,440 21% Product gross profit $ 11,645,778 $ 6,834,412 Product gross margin 68 % 49 % Nine Months Ended September 30, 2013 2012 % Change Orthobiologics $ 40,620,339 $ 30,262,991 34% Dermal 1,066,409 1,033,302 3% Surgical 3,955,134 3,874,405 2% Ophthalmic 2,818,407 8,515,160 (67%) Veterinary 3,124,953 2,865,187 9% Total Product Revenue $ 51,585,242 $ 46,551,045 11% Product gross profit $ 35,055,172 $ 24,832,310 Product gross margin 68 % 53 % Anika Therapeutics, Inc. and Subsidiaries Supplemental Financial Data Total Revenue by Geographic Region (unaudited) Three Months Ended September 30, 2013 2012 % Change United States $ 14,485,821 $ 12,628,612 15% Europe 1,656,656 1,064,165 56% Other 1,611,961 1,073,834 50% Total $ 17,754,438 $ 14,766,611 20% Nine Months Ended September 30, 2013 2012 % Change United States $ 42,251,336 $ 40,463,657 4% Europe 5,226,619 3,993,708 31% Other 6,351,871 4,294,675 48% Total $ 53,829,826 $ 48,752,040 10% Contact: Anika Therapeutics, Inc. Charles H. Sherwood, Ph.D., 781-457-9000 President and CEO or Sylvia Cheung, 781-457-9000 CFO
Anika Therapeutics Reports 20% Total Revenue Growth and Record Third-Quarter Earnings
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