LANNETT REPORTS IMPROVED FISCAL 2023 SECOND QUARTER FINANCIAL RESULTS; RAISES FULL-YEAR GUIDANCE

Q2 Business and Financial Highlights:

• Net Sales were $80.9 Million
• Gross Margin was 18%, Adjusted Gross Margin was 19%
• Net Sales, Gross Margin and Adjusted Gross Margin Up Versus Preceding Two Quarters
• $19 Million Income Tax Refund Received, Cash Balance of $56 Million at December 31^st

Pipeline Updates:

• Pivotal Biosimilar Insulin Glargine Clinical Trial Top-line Results Anticipated in Current Quarter; BLA Filing Targeted for Middle of Calendar 2023
• Positive Results from Study of Biosimilar Insulin Aspart vs US NovoLog^®; Commencement of Pivotal Trial Anticipated by Fall of Current Year
• Executed Sub-License Agreement Related to Insulin Pen Delivery Device, Improving Ability to Freely Market Insulin Products Upon Approval
• Generic FLOVENT^® DISKUS^® ANDA Filing Anticipated by Mid Year

TREVOSE, Pa., Feb. 1, 2023 /PRNewswire/ — Lannett Company, Inc. (NYSE: LCI) today reported financial results for its fiscal 2023 second quarter ended December 31, 2022.

“For the quarter, net sales, gross margin and adjusted gross margin increased compared with the two preceding quarters,” said Tim Crew, chief executive officer of Lannett. “This improved performance was in part driven by higher product sales across our offering, notably, generic Adderall due to an ongoing market shortage where our partner was able to maintain their supply; the sale of certain products under a private label agreement; and less competitive intensity than we anticipated. During the quarter, we received, as expected, approximately $19 million of income tax refunds.

“With regard to our pipeline, we are nearing the launch, subject to approval, of a few products that have the potential to be meaningful contributors to our financial results. For our biosimilar insulin glargine product, initial results from the pivotal trial are expected shortly; and with regard to our biosimilar insulin aspart product, positive results from the animal study indicated that our product was highly comparable to the reference biologic. Importantly, we previously entered into a supply agreement for a pen injector delivery device for use with our biosimilar insulin glargine and biosimilar insulin aspart products. Recently we acquired a sublicense to the various patents held by the reference product owner, related to the pen injector device, thereby removing potential related litigation risk associated with the insulin glargine product and improving our ability to freely market our biosimilar insulin products, once approved.

“Looking ahead, we have raised our full-year guidance for net sales and adjusted gross margin, which reflects, in part, our improved performance over the first half of our current fiscal year and our belief that our and our partners’ reliable and high-quality supply of affordable medicines has contributed to some stabilization of our current business.”

Restructuring, Cost Reduction Initiatives

In December 2022, the company authorized a restructuring and cost savings plan that, once fully implemented, is estimated to generate cost savings of approximately $11 million, annually. The plan includes operational improvements and cost efficiencies, as well as a restructuring of the company’s research and development (R&D) function. These actions will result in a workforce reduction of approximately 60 staffed positions and 40 recently vacant positions, which will be implemented in phases over the remainder of the company’s current fiscal year. The company also anticipates exiting two facilities located in Philadelphia, Pennsylvania this year. While the plan is expected to reduce certain R&D-related costs, the company plans to maintain its level of investment in product development.

Second-Quarter Financial Results: Fiscal 2023 vs Fiscal 2022

GAAP basis:

• Net sales were $80.9 million compared with $86.5 million
• Gross profit was $14.3 million, or 18% of net sales, compared with $5.7 million, or 7% of net sales
• Asset impairment charges were $6.0 million compared with $49.4 million
• Net loss was $36.3 million, or $0.88 per share, compared with $81.1 million, or $2.01 per share

Non-GAAP basis:

• Net sales were $80.9 million compared with $86.5 million
• Adjusted gross profit was $15.7 million, or 19% of net sales, compared with $9.7 million, or 11% of net sales
• Adjusted interest expense increased to $13.3 million from $12.9 million
• Adjusted net loss was $14.0 million, or $0.34 per share compared with $15.9 million, or $0.39 per share
• Adjusted EBITDA was $1.0 million versus negative adjusted EBITDA of $1.0 million

Guidance for Fiscal 2023

Based on its current outlook, the company raised guidance for fiscal year 2023, as follows:

	GAAP	Adjusted*
Net sales	$285 million to $305 million, up from $275 million to $300 million	$285 million to $305 million, up from $275 million to $300 million
Gross margin %	Approximately 15% to 17%, up from approximately 13% to 15%	Approximately 17% to 19%, up from approximately 15% to 17%
R&D expense	$21 million to $23 million, down from $23 million to $25 million	$21 million to $23 million, down from $23 million to $25 million
SG&A expense	$66 million to $68 million, up from $64 million to $67 million	$61 million to $63 million, up from $56 million to $59 million
Restructuring expenses	$3 million to $4 million, up from $0 to $1 million	—
Asset impairment charges	$10.7 million, up from $4.7 million	—
Interest and other	Approximately $67 million, up from approximately $60 million	Approximately $53 million, unchanged
Effective tax rate	Approximately 0% to 1%, changed from approximately 0% to 4%	Approximately 20% to 22%, down from approximately 23.5% to 24.5%
(Negative) Adjusted EBITDA	N/A	($5 million) to $1 million, changed from ($12 million) to $0 million
Capital expenditures	Approximately $8 million to $10 million, changed from approximately $8 million to $12 million	Approximately $8 million to $10 million, changed from approximately $8 million to $12 million

*A reconciliation of Adjusted amounts to most directly comparable GAAP amounts can be found in the financial tables following this release.

Conference Call Information and Forward-Looking Statements

Later today, the company will host a conference call at 4:30 p.m. ET to review its results of operations for its fiscal 2023 second quarter ended December 31, 2022. The conference call will be available to interested parties by dialing 877-407-9716 from the U.S. or Canada, or 201-493-6779 from international locations. The call will be broadcast via the Internet at www.lannett.com. Listeners are encouraged to visit the website at least 10 minutes prior to the start of the scheduled presentation to register, download and install any necessary audio software. A playback of the call will be archived and accessible on the same website for at least three months.

Discussion during the conference call may include forward-looking statements regarding such topics as, but not limited to, the company’s financial status and performance, regulatory and operational developments, and any comments the company may make about its future plans or prospects in response to questions from participants on the conference call.

Use of Non-GAAP Financial Measures

This release contains references to non-GAAP financial measures, including Adjusted EBITDA, which are financial measures that are not prepared in conformity with United States generally accepted accounting principles (U.S. GAAP). Management uses these measures internally for evaluating its operating performance. The company’s management believes that the presentation of non-GAAP financial measures provides useful supplementary information regarding operational performance, because it enhances an investor’s overall understanding of the financial results for the company’s core business. Additionally, it provides a basis for the comparison of the financial results for the company’s core business between current, past and future periods. The company also believes that including Adjusted EBITDA and the other non-GAAP financial measures presented in this release is appropriate to provide additional information to investors. Non-GAAP financial measures should be considered only as a supplement to, and not as a substitute for or as a superior measure to, financial measures prepared in accordance with U.S. GAAP. 

Detailed reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the financial tables following this release.

Non-GAAP financial measures exclude, among others, the effects of (1) amortization of purchased intangibles and other purchase accounting entries, (2) restructuring expenses, (3) asset impairment charges, (4) non-cash interest expense, as well as (5) certain other items considered unusual or non-recurring in nature.

NovoLog^® is a registered trademark of Novo Nordisk A/S. ADVAIR DISKUS^® and Flovent^® Diskus^® are registered trademarks of GlaxoSmithKline. Spiriva^® Handihaler^® is a registered trademark of Boehringer Ingelheim.

About Lannett Company, Inc.:

Lannett Company, founded in 1942, develops, manufactures, packages, markets and distributes generic pharmaceutical products for a wide range of medical indications – see financial schedule below for net sales by medical indication. For more information, visit the company’s website at www.lannett.com.

Cautionary Statement Regarding Forward-Looking Statements

This release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts and can be identified by the words “estimate,” “expect,” “believe,” “target,” “anticipate” and other similar expressions. Any such statements, including, but not limited to, statements regarding the company’s competitive environment and other market conditions; regulatory and operational developments; the timing related to commencing and successfully completing the pivotal clinical trials, filing the Biologics License Applications, and successfully launching any products, including biosimilar insulin glargine and biosimilar insulin aspart; the potential material impact of COVID-19 on future financial results; the timing of the company’s restructuring plan and its ability to realize estimated cost reductions and other benefits therefrom; the company’s financial status and performance; and the company’s ability to achieve the financial metrics stated in the company’s guidance for fiscal 2023, whether expressed or implied, are subject to risks and uncertainties which can cause actual results to differ materially from those currently anticipated due to a number of factors beyond the company’s control. Such factors include, but are not limited to, the difficulty in predicting the timing or outcome of FDA or other regulatory approvals or actions, the ability to successfully commercialize products upon approval, including acquired products, and the company’s estimated or anticipated future financial results, future inventory levels, future competition or pricing future levels of operating expenses, product development efforts or performance, and other risk factors discussed in the company’s latest Form 10-K, subsequent Form 8-Ks and 10-Qs and other documents filed with the Securities and Exchange Commission from time to time. You should not place undue reliance upon any such forward-looking statements, which represent the company’s judgment as of the date of this release. To the fullest extent permitted by law, the company disclaims any intent or obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

FINANCIAL SCHEDULES FOLLOW

 

LANNETT COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
				(Unaudited)
				December 31, 2022		June 30, 2022
ASSETS
Current assets:
Cash and cash equivalents				nbsp;                                 55,850		nbsp;                   87,854
Accounts receivable, net				80,344		56,241
Inventories				94,776		95,158
Current income taxes receivable				–		36,793
Assets held for sale				1,300		–
Other current assets				18,257		14,070
Total current assets				250,527		290,116
Property, plant and equipment, net				116,473		133,178
Intangible assets, net				29,639		32,179
Operating lease right-of-use asset				9,274		9,646
Income taxes receivable				17,984		–
Other assets				14,462		19,316
TOTAL ASSETS				nbsp;                              438,359		nbsp;                 484,435
LIABILITIES
Current liabilities:
Accounts payable				nbsp;                                 33,165		nbsp;                   29,737
Accrued expenses				25,688		23,667
Accrued payroll and payroll-related expenses				9,151		8,342
Rebates payable				21,377		21,568
Royalties payable				7,466		5,677
Restructuring liability				410		490
Current operating lease liabilities				2,074		2,064
Other current liabilities				12,885		13,395
Total current liabilities				112,216		104,940
Long-term debt, net				623,855		614,948
Long-term operating lease liabilities				9,441		9,994
Other liabilities				5,121		5,616
TOTAL LIABILITIES				750,633		735,498
STOCKHOLDERS’ DEFICIT
Common stock ($0.001 par value, 100,000,000 shares authorized; 42,996,851 and 42,269,137 shares issued;
41,247,806 and 40,704,572 shares outstanding at December 31, 2022 and June 30, 2022, respectively)				43		42
Additional paid-in capital				367,134		363,957
Accumulated deficit				(660,713)		(596,386)
Accumulated other comprehensive loss				(367)		(411)
Treasury stock (1,749,045 and 1,564,565 shares at December 31, 2022 and June 30, 2022, respectively)				(18,371)		(18,265)
Total stockholders’ deficit				(312,274)		(251,063)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT				nbsp;                              438,359		nbsp;                 484,435

 

LANNETT COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except share and per share data)
		Three months ended				Six months ended
		December 31,				December 31,
		2022		2021		2022		2021
Net sales		nbsp;              80,894		nbsp;          86,508		nbsp;            155,973		nbsp;        188,033
Cost of sales		65,258		76,990		126,543		157,998
Amortization of intangibles		1,358		3,808		2,553		7,804
Gross profit		14,278		5,710		26,877		22,231
Operating expenses (income):
Research and development expenses		4,928		4,747		12,107		10,511
Selling, general and administrative expenses		18,317		18,791		35,014		37,696
Restructuring expenses		335		891		481		891
Asset impairment charges		5,969		49,361		10,637		49,361
Gain on sale of intangible assets		(500)		–		(3,563)		–
Total operating expenses		29,049		73,790		54,676		98,459
Operating loss		(14,771)		(68,080)		(27,799)		(76,228)
Other income (expense), net:
Investment income		399		46		491		80
Interest expense		(15,184)		(14,430)		(30,214)		(28,654)
Loss on loan receivable		(6,826)		–		(6,826)		–
Other		106		11		87		(51)
Total other expense, net		(21,505)		(14,373)		(36,462)		(28,625)
Loss before income tax		(36,276)		(82,453)		(64,261)		(104,853)
Income tax expense (benefit)		32		(1,368)		66		(1,426)
Net loss		nbsp;            (36,308)		nbsp;        (81,085)		nbsp;             (64,327)		nbsp;       (103,427)
Loss per common share:
Basic		nbsp;                 (0.88)		nbsp;            (2.01)		nbsp;                 (1.57)		nbsp;             (2.58)
Diluted		nbsp;                 (0.88)		nbsp;            (2.01)		nbsp;                 (1.57)		nbsp;             (2.58)
Weighted average common shares outstanding:
Basic		41,170,839		40,358,137		41,056,607		40,142,974
Diluted		41,170,839		40,358,137		41,056,607		40,142,974

 

LANNETT COMPANY, INC.

RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED)

(In thousands, except percentages, share and per share data)

Six months ended December 31, 2022

Net sales

Cost of sales

Amortization of intangibles

Gross Profit

Gross Margin %

R&D expenses

SG&A expenses

Restructuring expenses

Asset impairment charges

Gain on sale of intangible assets

Operating loss

Other expense

Loss before income tax

Income tax expense (benefit)

Net loss

Diluted loss per share (k)

GAAP Reported

nbsp;       155,973

nbsp;       126,543

nbsp;            2,553

nbsp;         26,877

17 %

nbsp;         12,107

nbsp;         35,014

nbsp;               481

nbsp;         10,637

nbsp;          (3,563)

nbsp;        (27,799)

nbsp;        (36,462)

nbsp;        (64,261)

nbsp;                 66

nbsp;        (64,327)

nbsp;            (1.57)

Adjustments:

Amortization of intangibles (a)

–

–

(2,553)

2,553

–

–

–

–

–

2,553

–

2,553

–

2,553

Cody API business (b)

–

(90)

–

90

–

(16)

–

–

–

106

–

106

–

106

Depreciation on capitalized software costs (c)

–

–

–

–

–

(2,102)

–

–

–

2,102

–

2,102

–

2,102

Restructuring expenses (d)

–

–

–

–

–

–

(481)

–

–

481

–

481

–

481

Asset impairment charges (e)

–

–

–

–

–

–

–

(10,637)

–

10,637

–

10,637

–

10,637

Gain on sale of intangible assets (f)

–

–

–

–

–

–

–

–

3,563

(3,563)

–

(3,563)

–

(3,563)

Non-cash interest (g)

–

–

–

–

–

–

–

–

–

–

3,637

3,637

–

3,637

Loss on loan receivable (h)

–

–

–

–

–

–

–

–

–

–

6,826

6,826

–

6,826

Other (i)

–

–

–

–

–

(2,603)

–

–

–

2,603

(140)

2,463

–

2,463

Tax adjustments (j)

–

–

–

–

–

–

–

–

–

–

–

–

(7,945)

7,945

Non-GAAP Adjusted

nbsp;         155,973

nbsp;         126,453

nbsp;                   –

nbsp;           29,520

19 %

nbsp;           12,107

nbsp;           30,293

nbsp;                   –

nbsp;                   –

nbsp;                   –

nbsp;          (12,880)

nbsp;          (26,139)

nbsp;          (39,019)

nbsp;            (7,879)

nbsp;          (31,140)

nbsp;              (0.76)

(a)

To exclude amortization of purchased intangible assets primarily related to the acquisition of KUPI

(b)

To exclude the operating results of the ceased Cody API business

(c)

To exclude depreciation on previously capitalized software integration costs associated with the KUPI acquisition

(d)

To exclude expenses primarily associated with the 2022 Restructuring Plan

(e)

To exclude asset impairment charges related to the Company’s State Road and Torresdale facilities

(f)

To exclude the gain on sale of assets related to several ANDAs, primarily purchased by Chartwell Pharmaceuticals, Inc.

(g)

To exclude non-cash interest expense associated with debt issuance costs

(h)

To exclude the write-down of a loan receivable to a third party company operating in the online pharmaceutical business

(i)

To primarily exclude costs related to strategic review initiatives and the gain on a legal settlement

(j)

To exclude the tax effect of the pre-tax adjustments included above at applicable tax rates

(k)

The weighted average share number for the six months ended December 31, 2022 is 41,056,607 for GAAP and non-GAAP loss per share calculations.

 

LANNETT COMPANY, INC.

RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED)

(In thousands, except percentages, share and per share data)

Six months ended December 31, 2021

Net sales

Cost of sales

Amortization of intangibles

Gross Profit

Gross Margin %

R&D expenses

SG&A expenses

Restructuring expenses

Asset impairment charges

Operating loss

Other expense

Loss before income tax

Income tax benefit

Net loss

Diluted loss per share (j)

GAAP Reported

nbsp;       188,033

nbsp;       157,998

nbsp;            7,804

nbsp;         22,231

12 %

nbsp;         10,511

nbsp;         37,696

nbsp;               891

nbsp;         49,361

nbsp;        (76,228)

nbsp;        (28,625)

nbsp;     (104,853)

nbsp;          (1,426)

nbsp;     (103,427)

nbsp;            (2.58)

Adjustments:

Amortization of intangibles (a)

–

–

(7,804)

7,804

–

–

–

–

7,804

–

7,804

–

7,804

Cody API business (b)

–

(50)

–

50

(6)

(270)

–

–

326

–

326

–

326

Depreciation on capitalized software costs (c)

–

–

–

–

–

(2,102)

–

–

2,102

–

2,102

–

2,102

Restructuring expenses (d)

–

–

–

–

–

–

(891)

–

891

–

891

–

891

Distribution agreement renewal costs (e)

–

–

–

–

–

(219)

–

–

219

–

219

–

219

Asset impairment charges (f)

–

–

–

–

–

–

–

(49,361)

49,361

–

49,361

–

49,361

Non-cash interest (g)

–

–

–

–

–

–

–

–

–

2,959

2,959

–

2,959

Other (h)

–

(177)

–

177

(1)

(5,944)

–

–

6,122

–

6,122

–

6,122

Tax adjustments (i)

–

–

–

–

–

–

–

–

–

–

–

(7,162)

7,162

Non-GAAP Adjusted

nbsp;         188,033

nbsp;         157,771

nbsp;                   –

nbsp;           30,262

16 %

nbsp;           10,504

nbsp;           29,161

nbsp;                   –

nbsp;                   –

nbsp;            (9,403)

nbsp;          (25,666)

nbsp;          (35,069)

nbsp;            (8,588)

nbsp;          (26,481)

nbsp;              (0.66)

(a)

To exclude amortization of purchased intangible assets primarily related to the acquisition of KUPI

(b)

To exclude the operating results of the ceased Cody API business

(c)

To exclude depreciation on previously capitalized software integration costs associated with the KUPI acquisition

(d)

To exclude expenses associated with the 2021 Restructuring Plan

(e)

To exclude the consideration recorded to renew the Company’s distribution agreement with Recro Gainesville LLC

(f)

To exclude asset impairment charges primarily related to the KUPI product rights intangible assets and the facility and certain equipment at Silarx in Carmel, NY

(g)

To exclude non-cash interest expense associated with debt issuance costs

(h)

To primarily exclude the reimbursement of legal costs associated with a distribution agreement, one-time employee retention awards and separation costs related to the Company’s former Chief Information Officer

(i)

To exclude the tax effect of the pre-tax adjustments included above at applicable tax rates

(j)

The weighted average share number for the six months ended December 31, 2021 is 40,142,974 for GAAP and non-GAAP loss per share calculations.

 

LANNETT COMPANY, INC.

RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED)

(In thousands, except percentages, share and per share data)

Three months ended December 31, 2022

Net sales

Cost of sales

Amortization of intangibles

Gross Profit

Gross Margin %

R&D expenses

SG&A expenses

Restructuring expenses

Asset impairment charges

Gain on sale of intangible assets

Operating loss

Other expense

Loss before income tax

Income tax expense (benefit)

Net loss

Diluted loss per share (k)

GAAP Reported

nbsp;            80,894

nbsp;            65,258

nbsp;              1,358

nbsp;            14,278

18 %

nbsp;              4,928

nbsp;            18,317

nbsp;               335

nbsp;              5,969

nbsp;                (500)

nbsp;          (14,771)

nbsp;          (21,505)

nbsp;          (36,276)

nbsp;                    32

nbsp;          (36,308)

nbsp;               (0.88)

Adjustments:

Amortization of intangibles (a)

–

–

(1,358)

1,358

–

–

–

–

–

1,358

–

1,358

–

1,358

Cody API business (b)

–

(40)

–

40

–

(7)

–

–

–

47

–

47

–

47

Depreciation on capitalized software costs (c)

–

–

–

–

–

(1,051)

–

–

–

1,051

–

1,051

–

1,051

Restructuring expenses (d)

–

–

–

–

–

–

(335)

–

–

335

–

335

–

335

Asset impairment charges (e)

–

–

–

–

–

–

–

(5,969)

–

5,969

–

5,969

–

5,969

Gain on sale of intangible assets (f)

–

–

–

–

–

–

–

–

500

(500)

–

(500)

–

(500)

Non-cash interest (g)

–

–

–

–

–

–

–

–

–

–

1,860

1,860

–

1,860

Loss on loan receivable (h)

–

–

–

–

–

–

–

–

–

–

6,826

6,826

–

6,826

Other (i)

–

–

–

–

–

(1,500)

–

–

–

1,500

(140)

1,360

–

1,360

Tax adjustments (j)

–

–

–

–

–

–

–

–

–

–

–

–

(3,954)

3,954

Non-GAAP Adjusted

nbsp;              80,894

nbsp;              65,218

nbsp;                      –

nbsp;              15,676

19 %

nbsp;                4,928

nbsp;              15,759

nbsp;                   –

nbsp;                      –

nbsp;                      –

nbsp;              (5,011)

nbsp;            (12,959)

nbsp;            (17,970)

nbsp;              (3,922)

nbsp;            (14,048)

nbsp;                (0.34)

(a)

To exclude amortization of purchased intangible assets

(b)

To exclude the operating results of the ceased Cody API business

(c)

To exclude depreciation on previously capitalized software integration costs associated with the KUPI acquisition

(d)

To exclude expenses primarily associated with the 2022 Restructuring Plan

(e)

To exclude asset impairment charges related to the Company’s Torresdale facility

(f)

To exclude the gain on sale of one of the Company’s ANDAs

(g)

To exclude non-cash interest expense associated with debt issuance costs

(h)

To exclude the write-down of a loan receivable to a third party company operating in the online pharmaceutical business

(i)

To primarily exclude costs related to strategic review initiatives and the gain on a legal settlement

(j)

To exclude the tax effect of the pre-tax adjustments included above at applicable tax rates

(k)

The weighted average share number for the three months ended December 31, 2022 is 41,170,839 for GAAP and non-GAAP loss per share calculations.

 

LANNETT COMPANY, INC.

RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED)

(In thousands, except percentages, share and per share data)

Three months ended December 31, 2021

Net sales

Cost of sales

Amortization of intangibles

Gross Profit

Gross Margin %

R&D expenses

SG&A expenses

Restructuring expenses

Asset impairment charges

Operating loss

Other expense

Loss before income tax

Income tax benefit

Net loss

Diluted loss per share (i)

GAAP Reported

nbsp;            86,508

nbsp;            76,990

nbsp;              3,808

nbsp;              5,710

7 %

nbsp;              4,747

nbsp;            18,791

nbsp;               891

nbsp;            49,361

nbsp;          (68,080)

nbsp;          (14,373)

nbsp;          (82,453)

nbsp;             (1,368)

nbsp;          (81,085)

nbsp;               (2.01)

Adjustments:

Amortization of intangibles (a)

–

–

(3,808)

3,808

–

–

–

–

3,808

–

3,808

–

3,808

Cody API business (b)

–

(17)

–

17

–

(257)

–

–

274

–

274

–

274

Depreciation on capitalized software costs (c)

–

–

–

–

–

(1,051)

–

–

1,051

–

1,051

–

1,051

Restructuring expenses (d)

–

–

–

–

–

–

(891)

–

891

–

891

–

891

Asset impairment charges (e)

–

–

–

–

–

–

–

(49,361)

49,361

–

49,361

–

49,361

Non-cash interest (f)

–

–

–

–

–

–

–

–

–

1,520

1,520

–

1,520

Other (g)

–

(177)

–

177

(1)

(3,525)

–

–

3,703

–

3,703

–

3,703

Tax adjustments (h)

–

–

–

–

–

–

–

–

–

–

–

(4,588)

4,588

Non-GAAP Adjusted

nbsp;              86,508

nbsp;              76,796

nbsp;                      –

nbsp;                9,712

11 %

nbsp;                4,746

nbsp;              13,958

nbsp;                   –

nbsp;                      –

nbsp;              (8,992)

nbsp;            (12,853)

nbsp;            (21,845)

nbsp;              (5,956)

nbsp;            (15,889)

nbsp;                (0.39)

(a)

To exclude amortization of purchased intangible assets primarily related to the acquisition of KUPI

(b)

To exclude the operating results of the ceased Cody API business

(c)

To exclude depreciation on previously capitalized software integration costs associated with the KUPI acquisition

(d)

To exclude expenses associated with the 2021 Restructuring Plan

(e)

To exclude asset impairment charges primarily related to the KUPI product rights intangible assets and the facility and certain equipment at Silarx in Carmel, NY

(f)

To exclude non-cash interest expense associated with debt issuance costs

(g)

To primarily exclude the reimbursement of legal costs associated with a distribution agreement, one-time employee retention awards and separation costs related to the Company’s former Chief Information Officer

(h)

To exclude the tax effect of the pre-tax adjustments included above at applicable tax rates

 

	LANNETT COMPANY, INC.
	RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (UNAUDITED)
	($ in thousands)
			Three months ended
			December 31, 2022
	Net loss		nbsp;                              (36,308)
	Interest expense		15,184
	Depreciation and amortization		6,287
	Income tax expense		32
	EBITDA		(14,805)
	Share-based compensation		1,532
	Inventory write-down		592
	Asset impairment charges (a)		5,969
	Loss on loan receivable (b)		6,826
	Investment income		(399)
	Gain on sale of intangible assets (c)		(500)
	Other non-operating expense		(106)
	Restructuring expenses		335
	Other (d)		1,548
	Adjusted EBITDA (Non-GAAP)		nbsp;                                      992
(a)	To exclude asset impairment charges related to the Company’s Torresdale facility
(b)	To exclude the write-down of a loan receivable to a third party company operating in the online pharmaceutical business
(c)	To exclude the gain on sale of one of the Company’s ANDAs
(d)	To primarily exclude costs related to strategic review initiatives

 

 

LANNETT COMPANY, INC.

RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED)

($ in millions)

Fiscal Year 2023 Guidance

Non-GAAP

GAAP

Adjustments

Adjusted

Net sales

$285 – $305

–

$285 – $305

Gross margin percentage

approx. 15% to 17%

2 %

(a)

approx. 17% to 19%

R&D expense

$21 – $23

–

$21 – $23

SG&A expense

$66 – $68

($5)

(b)

$61 – $63

Restructuring expenses

$3 – $4

($3 – $4)

(c)

–

Asset impairment charges

$10.7

($10.7)

(d)

–

Interest and other

approx. $67

($14)

(e)

approx. $53

Effective tax rate

approx. 0% to 1%

–

approx. 20% to 22%

Adjusted EBITDA

N/A

N/A

$(5) – $1

Capital expenditures

$8 – $10

–

$8 – $10

(a) The adjustment primarily reflects amortization of purchased intangible assets

(b) The adjustment primarily excludes costs related to strategic review initiatives as well as depreciation on previously capitalized software integration costs associated with the KUPI acquisition

(c) To exclude expenses associated primarily with the 2022 Restructuring Plan

(d) To exclude asset impairment charges related to the Company’s State Road and Torresdale facilities

(e) To primarily exclude non-cash interest expense associated with debt issuance costs and the write-down of a loan receivable to a third party company operating in the online pharmaceutical business

 

 

LANNETT COMPANY, INC.
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (UNAUDITED)
($ in millions)
	Fiscal Year 2023 Guidance
	Low		High
Net loss	nbsp;              (122.2)		nbsp;              (118.5)
Interest expense	60.0		60.0
Depreciation and amortization	24.0		24.0
Income taxes	–		(1.0)
EBITDA	(38.2)		(35.5)
Share-based compensation	6.0		6.4
Inventory write-down	6.3		7.2
Asset impairment charges (a)	10.7		10.7
Restructuring expenses (b)	3.0		4.0
Gain on sale of assets (c)	(3.6)		(3.6)
Loss on loan receivable (d)	6.8		6.8
Other (e)	4.0		5.0
Adjusted EBITDA (Non-GAAP)	nbsp;                  (5.0)		nbsp;                    1.0
(a) To exclude asset impairment charges related to the Company’s State Road and Torresdale facilities
(b) To exclude expenses associated primarily with the 2022 Restructuring Plan
(c) To exclude the gain on sale of assets related to several ANDAs, primarily purchased by Chartwell Pharmaceuticals, Inc.
(d) To exclude the write-down of a loan receivable to a third party company operating in the online pharmaceutical business
(e) To primarily exclude costs related to strategic review initiatives

 

	LANNETT COMPANY, INC.
	NET SALES BY MEDICAL INDICATION
		Three months ended				Six months ended
	($ in thousands)	December 31,				December 31,
	Medical Indication	2022		2021		2022		2021
	Analgesic	nbsp;            2,592		nbsp;            3,919		nbsp;            6,016		nbsp;            9,233
	Anti-Psychosis	2,575		2,095		5,195		5,810
	Cardiovascular	13,089		9,753		23,971		23,853
	Central Nervous System	21,782		22,340		42,576		45,125
	Endocrinology	5,831		8,297		13,143		16,142
	Gastrointestinal	8,716		14,023		16,658		29,263
	Infectious Disease	4,989		6,520		10,058		19,035
	Migraine	3,574		4,446		6,898		9,131
	Respiratory/Allergy/Cough/Cold	1,468		1,868		2,670		4,982
	Other	10,955		10,275		19,714		20,627
	Contract Manufacturing revenue	5,323		2,972		9,074		4,832
	Net Sales	nbsp;           80,894		nbsp;           86,508		nbsp;         155,973		nbsp;         188,033

 

Contact:	Robert Jaffe
	Robert Jaffe Co., LLC
	(424) 288-4098

 

 

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SOURCE Lannett Company, Inc.