Teligent, Inc. Announces Third Quarter 2020 Results
Financial Highlights
Third Quarter 2020 vs. Second Quarter 2020
- Revenues of
$14.3 million , an increase of$0.8 million or 6%, on stronger demand for US topical products - Gross profit of
$0.1 million , a decrease of$2.4 million driven by additional inventory reserves and write offs - Product development and research expenses of
$2.4 million , an increase of$0.5 million due to API write offs for development programs not being pursued - Selling, general and administrative expenses of
$6.5 million , an increase of$1.6 million or 31% driven by increased professional fee for debt and strategic consulting and bad debt expense - Operating loss of
$8.8 million , an increase of$4.4 million driven by an increase of$3.1 million of cost of revenue and$1.5 million selling, general and administrative expenses - Net loss of
$0.5 million , a decrease of$13.8 million driven by gain on debt restructuring - Adjusted EBITDA gain of
$4.1 million , an increase of$6.3 million
Third Quarter 2020 vs. Third Quarter 2019
- Revenues of
$14.3 million , a decrease of$4.1 million or 22%, driven by lost contract volume and price erosion - Gross profit of
$0.1 million , a decrease of$7.2 million , driven by inventory reserves and increased absorption allocations due to lower contract volume and price erosion in light of COVID-19 - Product development and research expenses of
$2.4 million , an increase of$0.3 million or 15% driven by API write offs for development programs not being pursued - Selling, general and administrative expenses of
$6.5 million , an increase of$1.5 million or 31% driven by increased professional fee for debt and strategic consulting and bad debt expense - Operating loss of
$8.8 million , an increase of$9 million driven by a$4.1 drop in revenue and increase of$3 million cost of revenue and$1.5 million selling, general and administrative expenses - Net loss of
$0.5 million , a decrease of$6.6 million driven by gain on debt restructuring - Adjusted EBITDA gain of
$4.1 million , an increase of$2.0 million
Warning Letter Update
As part of the Company’s efforts to remediate the issues identified in the FDA’s warning letter and to strengthen its quality systems, the Company has undertaken a comprehensive review of all of its products that was completed
COVID-19 Response Summary
In alignment with the directives in the state of
In order to preserve cash and align manufacturing-related resources with downward adjustments made to our production schedule, we initiated a reduction in force at our
The Company provided terminated employees with a severance package and will continue to provide health insurance coverage to its furloughed employees. The associated one-time employee severance costs totaled
Other Matter
2023 Series D Convertible Notes
On
Following the issuance of the 2023 Series D Convertible Notes, all amounts owed with respect to the 2023 Series A Convertible Notes and 2023 Series B Convertible Notes had been paid and the related indentures and the Company’s obligations thereunder were satisfied and discharged.
Holders of the 2023 Series D Convertible Notes are entitled to convert principal and accrued, unpaid interest on the 2023 Series D Convertible Notes into, at the Company’s election, cash, shares of the Company’s common stock, or a combination thereof, subject to certain limitations, at an initial conversion price per share of common stock equal to
Outlook for Three Months Ending
For the three months ending
The information included above in respect of the Company’s forecasts of operating results is subject to a number of uncertainties and risks based on the relevant assumptions and expectations, including those described below in “Cautionary Note Concerning Forward-Looking Statements.” Specifically, there is a high level of uncertainty associated with the COVID-19 pandemic along with our quality review of our product portfolio and the effects thereof on the Company’s future performance and results of operations. Any of these risks or uncertainties, including in respect of the COVID-19 pandemic and quality review of our products, could cause the Company’s actual results, performance or achievements to differ materially from those expressed or implied by the Company’s forecasts above.
The above forecasts are based upon the Company’s current estimates and is subject to completion of its financial closing procedures. Moreover, this forecasted financial information has been prepared solely on the basis of information that is currently available to management. Finally, the above forecasts should not be construed as financial guidance and should not be relied upon as such.
About
Forward-Looking Statements
This press release includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions, and other statements contained in this press release that are not historical facts and statements identified by words such as “plan,” “believe,” “continue,” “should” or words of similar meaning. Factors that could cause actual results to differ materially from these expectations include, but are not limited to: our inability to meet current or future regulatory requirements in connection with existing or future ANDAs; our inability to achieve profitability; our failure to obtain FDA approvals as anticipated; our inability to execute and implement our business plan and strategy; the potential lack of market acceptance of our products; our inability to protect our intellectual property rights; changes in global political, economic, business, competitive, market and regulatory factors; and our inability to successfully complete future product acquisitions. These statements are based on our current beliefs or expectations and are inherently subject to various risks and uncertainties, including those set forth under the caption “Risk Factors” in
Non-GAAP Financial Measures
In addition to reporting financial information required in accordance with
Adjusted EBITDA, as defined by the Company, is calculated as follows:
Net loss, plus:
Depreciation expense
Amortization of intangibles
Interest expense and other expenses, net
Amortization of debt issuance costs, debt discounts and debt extinguishment
Impairment charges
Provision for income taxes
Foreign currency exchange loss
Changes in the fair value of derivatives
Non-cash stock-based compensation expense
Other one-time expense
The Company believes that Adjusted EBITDA is a meaningful indicator, to both management and investors, of the past and expected ongoing operating performance of the Company. EBITDA is a commonly used and widely accepted measure of financial performance. Adjusted EBITDA is deemed by the Company to be a useful performance indicator because it adds back non-cash and non-recurring operating expenses which have little to no bearing on the Company's cash flows, may subject to uncontrollable factors and not reflective of the Company's true operational performance.
The Company uses EBITDA, Adjusted EBITDA, and Adjusted EBITDA before product development and research costs in managing and analyzing its business and financial condition. Even though it believes that these financial measurements are useful to investors in evaluating the Company's performance, it also believes these financial measurements are subject to certain shortcomings. EBITDA, Adjusted EBITDA and Adjusted EBITDA before product development and research costs do not take into account the impact of capital expenditures on either the liquidity or the financial performance of the Company or omitting share-based compensation expenses that may vary over time but represent a material portion of the overall compensation expense. Due to the inherent limitations of EBITDA, Adjusted EBITDA, and Adjusted EBITDA before product development and research costs, the Company's management utilizes comparable GAAP financial measures to evaluate the business in conjunction with EBITDA, Adjusted EBITDA and Adjusted EBITDA before product, development and research costs and encourages investors to do likewise.
The Company also presents a non-GAAP financial measures of adjusted net income/(loss) and adjusted net income/(loss) per diluted share, to show the adjusted net income/(loss) when EBITDA adjustments are added back or subtracted out of the traditional GAAP reported net income/(loss). Adjusted diluted earnings per share, as defined by the Company, is equal to adjusted net income/(loss) divided by the actual or anticipated diluted share count for the applicable period.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except shares and per share information)
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2020 | 2019 | 2020 | 2019 | ||||||||||||
Revenue, net | $ | 14,339 | $ | 18,466 | $ | 35,372 | $ | 49,929 | |||||||
Costs and Expenses: | |||||||||||||||
Cost of revenues | 14,225 | 11,186 | 33,919 | 28,346 | |||||||||||
Selling, general and administrative expenses | 6,543 | 5,007 | 18,249 | 15,707 | |||||||||||
Impairment charges | — | — | 8,373 | — | |||||||||||
Product development and research expenses | 2,370 | 2,064 | 6,050 | 7,721 | |||||||||||
Total costs and expenses | 23,138 | 18,257 | 66,591 | 51,774 | |||||||||||
Operating income/(loss) | (8,799 | ) | 209 | (31,219 | ) | (1,845 | ) | ||||||||
Other Expense: | |||||||||||||||
Foreign currency exchange gain/(loss) | 1,856 | (2,167 | ) | 2,384 | (2,458 | ) | |||||||||
Debt partial extinguishment of 2019 Notes | — | — | — | (185 | ) | ||||||||||
Interest and other expense, net | (8,056 | ) | (5,160 | ) | (21,452 | ) | (15,262 | ) | |||||||
Gain on debt restructuring | 10,882 | — | 10,882 | — | |||||||||||
Inducement loss | (701 | ) | — | (701 | ) | — | |||||||||
Change in the fair value of derivatives | 4,326 | — | (1,523 | ) | — | ||||||||||
Loss before income tax expense/(benefit) | (492 | ) | (7,118 | ) | (41,629 | ) | (19,750 | ) | |||||||
Income tax expense/(benefit) | 18 | (5 | ) | 49 | 76 | ||||||||||
Net loss | $ | (510 | ) | $ | (7,113 | ) | $ | (41,678 | ) | $ | (19,826 | ) | |||
Basic and diluted loss per share | $ | (0.08 | ) | $ | (1.32 | ) | $ | (7.32 | ) | $ | (3.68 | ) | |||
Weighted average shares of common stock outstanding: | |||||||||||||||
Basic and diluted shares | 6,082,517 | 5,385,041 | 5,690,164 | 5,383,531 | |||||||||||
(a | ) | (b | ) |
(a ) In accordance with ASC 260-10-45-13, the Company includes the Warrants issued to its Term Loan lenders to purchase 134,667 shares of the Company’s common stock at an exercise price of
(b) The Company includes the Warrants issued to its Term Loan lenders to purchase 134,667 shares of the Company's common stock at an exercise price of
GROSS TO NET DEDUCTIONS
(in thousands)
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2020 | 2019 | 2020 | 2019 | ||||||||||||
Gross product sales | $ | 44,264 | $ | 41,814 | $ | 104,147 | $ | 108,550 | |||||||
Reduction to gross product sales: | |||||||||||||||
Chargebacks and billbacks | 24,585 | 14,573 | 54,091 | 37,285 | |||||||||||
Wholesaler fees for service | 1,445 | 2,355 | 4,191 | 6,303 | |||||||||||
Sales discounts and other allowances | 4,302 | 6,658 | 11,769 | 16,371 | |||||||||||
Total reduction to gross product sales | 30,332 | 23,586 | 70,051 | 59,959 | |||||||||||
Product sales, net | 13,932 | 18,228 | 34,097 | 48,591 | |||||||||||
Contract manufacturing product sales | 306 | 167 | 813 | 1,097 | |||||||||||
Research and development services and other income | 100 | 71 | 462 | 241 | |||||||||||
Total product sales, net | $ | 14,339 | $ | 18,466 | $ | 35,372 | $ | 49,929 |
RECONCILIATION OF NON-GAAP MEASURES
(in thousands)
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2020 | 2019 | 2020 | 2019 | |||||||||||||
Net loss | $ | (510 | ) | $ | (7,113 | ) | $ | (41,678 | ) | $ | (19,826 | ) | ||||
Depreciation | 961 | 922 | 2,933 | 2,700 | ||||||||||||
Amortization of intangibles | 664 | 746 | 2,032 | 2,260 | ||||||||||||
Impairment charges | — | — | 8,373 | — | ||||||||||||
Interest expense (1) | 5,673 | 3,585 | 15,198 | 10,605 | ||||||||||||
Amortization of debt issuance costs, debt discounts and debt extinguishment | 2,383 | 1,575 | 6,254 | 4,842 | ||||||||||||
Provision for income taxes | 18 | (5 | ) | 49 | 76 | |||||||||||
EBITDA | 9,189 | (290 | ) | (6,839 | ) | 657 | ||||||||||
Foreign currency exchange (gain)/loss | (1,856 | ) | 2,167 | (2,384 | ) | 2,458 | ||||||||||
EBITDA after foreign currency exchange (gain)/loss | 7,333 | 1,877 | (9,223 | ) | 3,115 | |||||||||||
Non-cash stock-based compensation expense | 137 | 212 | 795 | 896 | ||||||||||||
Change in the fair value of derivatives | (4,326 | ) | — | 1,523 | — | |||||||||||
Other one-time expense | 928 | — | 1,238 | — | ||||||||||||
Adjusted EBITDA (2) | 4,072 | 2,089 | (5,667 | ) | 4,011 | |||||||||||
Product development and research expenses | 2,177 | 1,837 | 5,444 | 6,832 | ||||||||||||
Adjusted EBITDA before product development and research expenses | $ | 6,249 | $ | 3,926 | $ | (223 | ) | $ | 10,843 |
(1) Includes
(2) Adjusted EBITDA excludes certain add backs available to the Company in calculating Consolidated Adjusted EBITDA under the terms of the Ares Loan Agreement used for determining covenant compliance.
RECONCILIATION OF NON-GAAP ADJUSTED NET LOSS
(in thousands, except share and per share information)
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2020 | 2019 | 2020 | 2019 | ||||||||||||
Net loss | $ | (510 | ) | $ | (7,113 | ) | $ | (41,678 | ) | $ | (19,826 | ) | |||
Amortization of debt issuance costs, debt discounts and debt extinguishment | 2,383 | 1,575 | 6,254 | 4,842 | |||||||||||
Provision for income taxes | 18 | (5 | ) | 49 | 76 | ||||||||||
Amortization of intangibles | 664 | 746 | 2,032 | 2,260 | |||||||||||
Impairment charges | — | — | 8,373 | — | |||||||||||
Foreign currency exchange (gain)/ loss | (1,856 | ) | 2,167 | (2,384 | ) | 2,458 | |||||||||
Non-cash stock-based compensation expense | 137 | 212 | 795 | 896 | |||||||||||
Change in the fair value of derivative liabilities | (4,326 | ) | — | 1,523 | — | ||||||||||
Other one-time expense | 928 | 1,238 | — | ||||||||||||
Adjusted net loss | $ | (2,562 | ) | $ | (2,418 | ) | $ | (23,798 | ) | $ | (9,294 | ) | |||
Non-GAAP adjusted net loss per basic and diluted share | $ | (0.42 | ) | $ | (0.45 | ) | $ | (4.18 | ) | $ | (1.73 | ) |
Contact: | (856) 776-4632 www.teligent.com |
Source: Teligent, Inc.