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Press release from Marketwire

Paladin Reports Record 2012 Results

Thursday, February 28, 2013

Paladin Reports Record 2012 Results06:30 EST Thursday, February 28, 2013MONTREAL, CANADA--(Marketwire - Feb. 28, 2013) - Paladin Labs Inc. (TSX:PLB), a leading Canadian specialty pharmaceutical company, today reported its financial results for the fourth quarter and year ended December 31, 2012. The Company has achieved its 17th consecutive year of record revenues and its 10th consecutive year of record EBITDA(1). 2012 Highlights FinancialAdjusted(2) revenues for 2012 totalled a record $179.0 million an increase of 27% over 2011 Adjusted(2) EBITDA(1) for 2012 increased 17% to a record $79.0 million compared to $67.7 million in 2011 Sales of promoted products including: Tridural®, Trelstar®, Testim®, Metadol®, Abstral®, Digifab®, Plan B®, Glucagen®, Urocit®-K and and Oralair® grew 13% in 2012 compared to 2011 Product DevelopmentFiled a New Drug Submission (NDS) and obtained approval for Silenor® Received regulatory approval from Health Canada and subsequently launched Oralair® Filed a Non-Traditional Product License Application for Travelan® Entered into a licensing agreement with QRxPharma Limited (ASX:QRX and OTCQX:QRXPY), for MOXDUO® Entered into a licensing and distribution agreement with Dynamiclear Australia, for Dynamiclear Rapid™ Entered into an exclusive distribution agreement with Moberg Derma for Emtrix™ Entered into agreement to loan Nuvo Research Inc. (TSX:NRI) $8.0 million in two equal tranches, of which $4.0 million was advanced on closing Corporate DevelopmentAnnounced closing of the 44.54% acquisition of Litha Healthcare Group ("Litha" - JSE:LHG) effective July 2, 2012 Initiated launch of commercial operations in Latin America with acquisition of a controlling stake of 50.01% in Ativa Pharma S.A. ("Ativa") effective January 1, 2013 Appointed Jonathan Ross Goodman as Chairman of the Board of Directors of Paladin Subsequent to year endEntered into a Canadian distribution agreement with Allergy Therapeutics plc (AIM:AGY) for Pollinex®-R with an option to add Sub-Saharan Africa Entered into an exclusive licensing agreement with Apeiron Biologics AG for APN311, in Canada and Sub-Saharan Africa "The year 2012 further demonstrated our ability to leverage our expertise into opportunity and growth through the expansion of our footprint in Africa and the initiation of our expansion into Latin America. Our ability to capitalize on opportunities and to continue to deliver on growth both locally and internationally is demonstrated through our record 2012 results and record cash position of $258.0 million" said Mark Beaudet, interim President and CEO of Paladin Labs.Financial Results Adjusted(2) revenues increased $37.5 million or 27% to a record $179.0 million in 2012 from $141.5 million in 2011. For the quarter ended December 31, 2012, Paladin recorded adjusted(2) revenues of $52.6 million compared to $37.1 million in the fourth quarter of 2011, a 42% year over year increase. The increase is mostly attributable to the proportionate consolidation of Litha's revenues of $12.1 million for the quarter and $25.1 million for the second half of the year. In addition, revenues further increased as a result of incremental revenues from products acquired and/or launched by Paladin including corporate acquisitions since 2011, which contributed $10.2 million for the year. In addition, the sales growth of certain significant promoted products, including Tridural®, Trelstar®, Testim®, Metadol®, Abstral®, Digifab®, Plan B®, Glucagen®, Urocit®-K and Oralair®, combined increased by 13% for the quarter and year. Consolidated revenues for the fourth quarter and year ended December 31, 2012 were $67.6 million and $210.2 million, an increase of 82% and 49% over the same periods last year. The increase is mostly attributable to the consolidation of Litha's revenues of $27.1 million for the quarter and $56.3 million for the second half of the year. Adjusted(2) EBITDA(1) for the year increased 17% to a record $79.0 million compared to $67.7 million in 2011. Adjusted(2) EBITDA(1) for the fourth quarter of 2012 increased 63% to $22.8 million compared to EBITDA of $14.0 million in the fourth quarter 2011. The increase in adjusted(2) EBITDA(1) for Paladin was driven by the strong sales performance of our promoted products, partially offset by increased costs associated with the launch of new products, including Abstral® and Oralair®. Litha contributed adjusted(2) EBITDA(1) of $1.0 million for the quarter and $2.5 million for the second half of the year. Litha's adjusted(2) EBITDA(1) includes certain integration and acquisition costs related to Pharmaplan as well as the impact of the decline in the South African Rand. In addition, adjusted(2) EBITDA(1) from Litha was negatively impacted by fair value adjustments from the Paladin/Pharmaplan acquisition. Consolidated EBITDA(1) for 2012 increased 21% to a record $82.0 million compared to $67.7 million in 2011. Consolidated EBITDA(1) for the fourth quarter of 2012 increased 71% to $24.0 million compared to EBITDA of $14.0 million in the fourth quarter 2011. The consolidation of Litha contributed $2.2 million for the quarter and $5.5 million for the second half of the year in consolidated EBITDA(1).Net income attributable to shareholders of the company for the fourth quarter decreased 19% to $12.8 million or $0.61 per fully diluted share compared to net income of $15.8 million or $0.76 per fully diluted share for the same period in 2011. Net income attributable to shareholders for the year ended December 31, 2012 increased $9.7 million or 19% to $59.9 million from $50.2 million. Consolidated selling, general and administrative expense for 2012 increased to $49 million compared to $32.0 million in 2011. Selling, general and administrative expense, as a percentage of revenues, remained steady at 23% for 2012. Selling, general and administrative expense for the fourth quarter of 2012 increased to $15.5 million compared to $9.0 million in the fourth quarter of 2011. Selling general and administrative expense, as percentage of revenues, decreased to 23% compared to 24% for the same quarter last year. The increase in selling, general and administrative expenses is attributable to Litha which contributed $8.7 million for the quarter and $18.3 million for the second half of the year. Amortization expense for 2012 decreased to $16.1 million from $22.0 million in 2011. Amortization expense for the fourth quarter 2012 decreased to $5.6 million from $6.2 million in the corresponding period a year ago. The decrease in amortization expense is the result of certain pharmaceutical product licenses and rights having reached full amortization during the year, partly offset by amortization related to the acquisition of intangible assets, mostly for acquisitions of Litha and Labopharm. As at December 31 2012, Paladin's cash, cash equivalents and investments in marketable securities net of bank overdraft totalled a record $258.0 million. From this strong cash position, Paladin continues to pursue acquisition opportunities. Product DevelopmentsDuring 2012, Paladin advanced its product pipeline with the in-licensing and launch of new products. Oralair®, a sublingual grass pollen immunotherapy tablet for the treatment of symptoms of moderate to severe seasonal grass pollen allergic rhinitis with or without conjunctivitis, obtained regulatory approval and was subsequently launched during the fourth quarter. Furthermore, Paladin obtained approval for Silenor® (doxepin) for the treatment and symptomatic relief of insomnia. Paladin expects to launch Silenor® in the first half of 2013. In addition, Paladin in-licensed MOXDUO®, a novel, patented, immediate release, fixed dose formulation of morphine and oxycodone for the treatment of acute pain. Paladin expects to submit MOXDUO® for regulatory approval in the first half of 2013. During 2012, Paladin enhanced its OTC portfolio with the regulatory approval and in-licensing of new products. Paladin in-licensed and obtained approval for AmnioSense ™, a novel diagnostic test for the detection of amniotic fluid leakage during pregnancy, and VagiSense™, which is used to detect bacterial vaginosis or trichomonas infections. Both products are expected to launch in the first half of 2013. In addition, Paladin in-licensed two new OTC products for Canada: Dynamiclear Rapid™, for the symptomatic treatment of cold sores, and Emtrix™, for the treatment of fingernail and toenail fungal infections. Emtrix™ is approved for sale in Canada and Dynamiclear Rapid™ is expected to be submitted for regulatory approval in the first half of 2013.Corporate DevelopmentsOn February 21, 2012, the Company entered into a strategic partnership whereby it agreed to accelerate the purchase of the remaining 55.01% interest in Pharmaplan it did not own at that date and to merge the Pharmaplan business with the pharma division of Litha. On July 2, 2012, the Company closed these transactions effectively owning a 44.54% interest in Litha.In November 2012, Paladin initiated the launch of commercial operations in Latin America with the acquisition of a controlling stake of 50.01% in Ativa Pharma S.A., a Mexico City based start up specialty pharma company. The investment in Ativa provides Paladin with the management team, infrastructure and the necessary regulatory permits to import, distribute and promote pharmaceuticals in the Mexican market. Ativa is currently focusing its activities on the registration of various products for regulatory approvals and it is expected that the Ativa's first commercial launches will occur in 2014. Financial OutlookFor fiscal 2013, Paladin expects to generate at least $255 million and $190 million in consolidated revenue and adjusted2 revenue respectively of which $115 million and $50 million is attributable to the consolidation of Litha. This forecast excludes the impact of acquisitions and of product launches resulting from new regulatory approvals that may be made by the Company between now and the end of 2013.(1) EBITDA - Non-IFRS Financial Measures The term EBITDA (earnings before interest, taxes, depreciation and amortization) does not have any standardized meaning under International Financial Reporting Standards ("IFRS") and therefore may not be comparable to similar measures presented by other companies. The Company defines EBITDA as earnings before interest expense, other expense (income), taxes, depreciation and amortization, foreign exchange gains (losses), share of net income (loss) in associates and joint venture and unusual items; such as write-downs and gains (losses) on intellectual property and investments. EBITDA is calculated and presented consistently from period to period and agrees, on a consolidated basis, with the amount disclosed as "Earnings before under-noted items" on the consolidated statements of income. The Company believes EBITDA to be an important measurement that allows it to assess the operating performance of its ongoing business on a consistent basis without the impact of amortization expenses. The Company excludes amortization expenses because their level depends substantially on non-operating factors such as the historical cost of intangible assets. The Company's method for calculating EBITDA may differ from that used by other issuers and, accordingly, this measure may not be comparable to EBITDA used by other issuers. (2) Adjusted The term "adjusted" refers to the proportional consolidation of Litha's results. Given that Litha is being accounted for on a consolidated basis, the consolidated results include amounts attributable to minority shareholders. Consequently, adjusted results have been provided to highlight Paladin's 44.54% economic interest in Litha's results.Conference Call Notice Paladin will host a conference call to discuss its fourth quarter results today at 10:00 a.m. EST. The dial-in number for the conference call is 1-800-736-4594 or 416-981-9000. The call will be audio-cast live and archived for 30 days at www.paladinlabs.com. About Paladin Labs Inc. Paladin Labs Inc., headquartered in Montreal, Canada, is a specialty pharmaceutical company focused on acquiring or in-licensing innovative pharmaceutical products for the Canadian and world markets. With this strategy, a focused national sales team and proven marketing expertise, Paladin has evolved into one of Canada's leading specialty pharmaceutical companies. Paladin's shares trade on the Toronto Stock Exchange under the symbol PLB. For more information, please visit the Company's web site at www.paladinlabs.com.This press release may contain forward-looking statements and predictions. These forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. The Company considers the assumptions on which these forward-looking statements are based to be reasonable at the time they were prepared, but cautions that these assumptions regarding the future events, many of which are beyond the control of the Company and its subsidiaries, may ultimately prove to be incorrect. Factors and risks, which could cause actual results to differ materially from current expectations, are discussed in the annual report as well as in the Company's Annual Information Form for the year ended December 31, 2011. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information or future events and except as required by law. For additional information on risks and uncertainties relating to these forward-looking statements, investors should consult the Company's ongoing quarterly filings, annual report and Annual Information Form and other fillings found on SEDAR at www.sedar.com.CONSOLIDATED BALANCE SHEETS(In thousands of Canadian dollars)As atDecember 31, 2012December 31, 2011$$ASSETS(unaudited)(audited3)CurrentCash and cash equivalents118,74472,115Marketable securities146,258166,894Trade and other receivables38,58720,208Inventories37,44113,327Income tax receivable5,479718Other current assets1,6611,476Total current assets348,170274,738Investment in associates62620,850Interest in a joint venture30,476-Loans receivable from a joint venture11,661-Financial assets4,5619,311Investment tax credits recoverable24,84024,674Deferred income tax assets25,40240,613Property, plant and equipment9,754162Intangible assets112,85127,565Goodwill36,176-Total assets604,517397,913LIABILITIES AND EQUITYCurrentBank overdraft7,044-Payables, accruals and provisions50,16538,849Finance lease liability796984Deferred revenue2,7342,999Income tax payable24,14022,205Other balances payable2,0002,306Long-term liabilities5,804-Total current liabilities92,68367,343Finance lease liability6,8435,745Deferred revenue1,7342,099Deferred tax liability24,415-Long-term liabilities28,327-Total liabilities154,00275,187EquityShare capital172,282166,681Other paid-in capital7,0395,144Other capital reserves(4,076)553Retained earnings208,461150,348Attributable to shareholders of the Company383,706322,726Non-controlling interests66,809-Total equity450,515322,726Total liabilities and equity604,517397,913CONSOLIDATED INCOME STATEMENTS(In thousands of Canadian dollars except for share and per share amounts)Three months ended December 31Twelve months ended December 312012201120122011$$$$(unaudited)(unaudited)(unaudited)(audited3)Revenues67,60837,083210,200141,466Cost of sales28,38811,54376,81039,294Gross income39,22025,540133,390102,172Expenses (income)Selling, general and administrative15,5089,04949,01331,983Research and development1,8133,6287,7949,773Interest income(2,123)(1,089)(5,460)(7,296)Earnings before under-noted items24,02213,95282,04367,712Amortization of intangible assets5,5656,16816,13222,028Depreciation of property, plant and equipment44519703136Other finance expense (income)314(70)1,164(8,687)Other income71-(3,035)(97)Foreign exchange loss1,0892841,21180Interest expense1,225182,18118Share of net loss from a joint venture(46)-725-Share of net income from associates(19)(660)(999)(1,756)Income before income tax and under-noted items15,3788,19363,96155,990Purchase gain on business combination-(17,070)-(17,070)Gain on revaluation of equity investment--(12,294)-Restructuring, shutdown and other costs-8,795-8,795Income before income tax15,37816,46876,25564,265Provision for income taxes3,95869617,90014,114Net income for the year11,42015,77258,35550,151Attributable to:Shareholders of the Company12,83415,77259,90650,151Non-controlling interests(1,414)-(1,551)-Attributable to shareholdersBasic earnings per share0.630.782.942.51Diluted earnings per share0.610.762.862.43Weighted average number of shares outstandingBasic20,402,56520,232,94720,347,80519,970,658Diluted20,963,32720,849,40820,946,17820,659,276CONSOLIDATED STATEMENTS OF CASH FLOWSPeriods ended December 31Three months ended December 31, 2012Twelve months ended December 31, 2012(In thousands of Canadian dollars)2012201120122011$$$$(unaudited)(unaudited)(unaudited)(audited3)Operating activitiesNet income for the year11,42015,77258,35550,151Adjustments reconciling net income to operating cash flowsAmortization of intangible assets5,5656,16816,13222,028Deferred tax4,276(1,144)15,8452,577Share-based compensation expense9664383,2161,946Other finance expense (income)318(69)1,164(8,687)Unrealized foreign exchange loss (gain)1,4678251,143(7)Gain on revaluation of equity investment--(12,294)-Other income(3)-(2,838)-Depreciation of property, plant and equipment46022726187Share of net income from associates(19)(660)(999)(1,756)Share of net loss from a joint venture(46)-725-Purchase gain on business combination-(17,070)-(17,070)Restructuring, shutdown and other costs-3,946-3,94624,4048,22881,17553,315Net change in non-cash balances relating to operations(1,407)3,913(11,572)14,798Cash inflow from operating activities22,99712,14169,60368,113Investing activitiesDisposals and maturities of marketable securities47,47427,020187,57578,373Dividends from an associate-1,9803,3192,871Proceeds from disposal of financial assets5,78513,1096,620102,119Proceeds from disposal of intangible assets749-1,466-Proceeds from disposal of property, plant and equipment180-220-Acquisition of subsidiaries, net of cash acquired(2)(1,109)(42,358)(1,109)Purchases of marketable securities(46,636)(50,561)(167,615)(201,618)Purchases of financial assets-(1,000)(4,000)(89,873)Payment of other balances payable--(995)(250)Purchases of property, plant and equipment(926)(9)(1,453)(78)Additions to intangible assets(1,004)-(1,111)(7,617)Investment in an associate---(2,936)Net cash inflow (outflow) from investing activities5,620(10,570)(18,332)(120,118)Financing activitiesCommon shares issued for cash, net of issue costs of $nil (2011: $1,643)1278801,47841,918Increase in bank overdraft634-1,353-Repurchase of shares-(259)(2,278)(580)Settlement of finance lease liability--(3,366)-Repayment of long-term liabilities(1,230)(13,241)(1,766)(13,241)Payment of obligation under finance lease-(167)(500)(167)Net cash (outflow) inflow from financing activities(469)(12,787)(5,079)27,930Foreign exchange gain (loss) on cash and cash equivalents12-437(105)Increase (decrease) in cash and cash equivalents during the period28,160(11,216)46,629(24,180)Cash and cash equivalents, beginning of period90,58483,33172,11596,295Cash, cash equivalents, end of period118,74472,115118,74472,115Paladin cash and cash equivalents113,22972,115Paladin marketable securities146,258166,894Paladin cash, cash equivalents and marketable securities259,487239,009Litha cash and cash equivalents5,515-Litha bank overdraft(7,044)-Litha cash and cash equivalents and bank overdraft(1,529)-Cash, cash equivalents and marketable securities net of bank overdraft257,958239,009Reconciliation of the adjusted2consolidated results from operationsThree months ended December 31, 2012PaladinLitha 100%Consolidated results from operationsLitha 44.54%Adjusted2consolidated results from operations$$$$$Revenues40,50927,09967,60812,07052,579Cost of sales12,02316,36528,3887,28919,312Gross Income28,48610,73439,2204,78133,267EBITDA121,8332,18924,02297522,808Net income (loss) before income taxes18,742(3,364)15,378(1,498)17,244Net Income (loss)13,973(2,553)11,420(1,137)12,836Net Income (loss) attributable to shareholders 13,973 (1,139)12,834 (1,139)12,834Twelve months ended December 31, 2012PaladinLitha 100%Consolidated results from operationsLitha 44.54%Adjusted2consolidated results from operations$$$$$Revenues153,87356,327210,20025,088178,961Cost of sales44,11232,69876,81014,56458,676Gross Income109,76123,629133,39010,524120,285EBITDA176,5215,52282,0432,45978,980Net income (loss) before income taxes79,479(3,224)76,255(1,436)78,043Net Income (loss)61,065(2,710)58,355(1,207)59,858Net Income (loss) attributable to shareholders 61,065 (1,159)59,906 (1,159)59,9063 Derived from the audited annual financial statements filed on SEDAR at http://www.sedar.com/FOR FURTHER INFORMATION PLEASE CONTACT: Contact Information: Samira SakhiaChief Financial OfficerPaladin Labs Inc.Tel: 514-669-5367514-344-4675 (FAX)Email: info@paladinlabs.comWebsite: www.paladinlabs.com