Akorn, Inc. Reports Record Third Quarter and Nine Months Results
BUFFALO GROVE, Ill.--(BUSINESS WIRE)--Oct. 20, 1998--
Third Quarter Sales Increase 37 Percent and Net Income Increases 58
Percent Before Charges for Purchased R&D and Withdrawal of Stock
Offering
Akorn, Inc. (NASDAQ:AKRN) today announced record results for the
third quarter ended September 30, 1998.
For the third quarter ended September 30, 1998, Akorn reported
sales of $15,138,000, up 37% compared to sales of $11,058,000 reported
for the third quarter of 1997. Net income for the quarter before
one-time charges was $1,301,000 or $0.07 per diluted share. Reported
net income for the quarter was $345,000, after charges of $1,298,000
for purchased R&D and $350,000 for offering costs, compared to
$825,000 for the third quarter of 1997. This translates into diluted
earnings per share in 1998 of $0.02, compared to earnings per share of
$0.05 in 1997. Diluted number of shares outstanding were 18,840,000 in
1998 and 17,031,000 in 1997.
The R&D charges are related to the acquisition of Advanced
Remedies, Inc. (ARI) in July 1998. The approximately $4.0 million
purchase price included, in addition to capital equipment, all
Abbreviated New Drug Applications (ANDAs) for any product previously
approved for ARI or under review by the FDA. The purchase price also
included regulatory files for products under development by ARI but
not yet filed with the FDA. The total purchase price was allocated
among the acquired assets, and the price associated with products not
yet approved by the FDA was designated purchased R&D and charged to
expense.
For the nine months ended September 30, 1998, sales were
$41,177,000, up 37% compared to $30,102,000 reported for the nine
months of 1997. Net income for the nine month period before one-time
charges was $3,450,000, or $0.18 per diluted share. Reported net
income for the nine month period was $2,494,000 or $0.13 per diluted
share, compared to $989,000 or $0.06 per share in the 1997 nine month
period. There were 18,820,000 diluted shares outstanding in the 1998
nine month period compared with 16,883,000 shares outstanding for the
1997 nine months.
Analysis of Results
For the 1998 third quarter compared to the 1997 third quarter,
sales increased 37%; gross profits increased 66%; gross profit margins
increased to 52% from 43%; selling, general and administrative costs
increased 17%; operating income before one-time charges rose 86%; and
net income before one-time charges rose 58%.
Research and development expenses increased 247% over the third
quarter of 1997, reflecting increased development of proprietary,
patented products. The Company is investing heavily in three NDA
products in various stages of development. Two of these products,
piroxicam and a combination miotic, are being developed by the
ophthalmic division, and a third, TP-1000 for migraine, is being
developed by the injectable division. Increased gross profits have
allowed the Company to devote substantial resources to developing
patented products as part of its long-term growth strategy. For the
first nine months of 1998 compared to the 1997 equivalent period,
sales increased 37%; gross profits increased 61%; gross profit margins
increased to 51% from 43%; selling, general and administrative costs
increased 13%; operating income before one-time charges increased
102%; and net income before one-time charges increased 81%. Research
and development expenses increased 194%, reflecting the additional
development activities noted above.
Dr. John N. Kapoor, Chairman and Chief Executive Officer of Akorn,
attributed the strong improvement in performance across the board,
especially in gross margins and higher profits, to a strategy of
successful product acquisitions, a higher margin product mix, and
greater manufacturing plant operating efficiencies.
Dr. Kapoor added, "Our strategy of adding complementary products
to our portfolio through acquisition or internal development is paying
off both in increased sales to existing customers and in expansion of
Akorn's customer base."
Since the beginning of 1998, Akorn has announced the acquisitions
of eight products and an exclusive licensing arrangement for an
additional product. These acquisitions included ophthalmic products
Paremyd, Fluress, Ful-Glo and Rose Bengal from Allergan; Ocusert
Pilo-20 and Pilo-40 from Alza and injectable products Sufenta and
Alfenta from Janssen Pharmaceutica.
The Ocusert acquisition also included non-exclusive rights to the
drug delivery technology for all ophthalmic applications. Akorn
obtained exclusive distribution rights to Biolon, a high-viscosity
viscoelastic solution, from Bio-Technology General.
R. Scott Zion, General Manager of the Ophthalmic Division,
commented, "Ophthalmic Division sales increased 13% for the quarter
and 17% year to date, reflecting our increased national accounts
presence as well as strategic product acquisitions. Favorable product
mix has yielded gross margins of 54% for the quarter. The Division is
actively continuing to evaluate both proprietary and multisource
products for development or acquisition."
Floyd Benjamin, President of Taylor Pharmaceuticals, Inc., Akorn's
Injectable Division, commented, "Injectable sales increased 71% for
the quarter and 67% year to date, reflecting strong sales in the base
business as well as in acquired products. Favorable product mix has
resulted in gross margins of 46% in the third quarter. The Division's
product development and acquisition pipeline contains numerous
multisource and proprietary products."
Akorn, Inc. manufactures and markets sterile ophthalmic and
injectable pharmaceuticals, and markets and distributes an extensive
line of pharmaceuticals, ophthalmic surgical supplies and related
products.
This news release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Actual results may differ materially from anticipated results as a
result of certain risks and uncertainties, including but not limited
to the effects of federal, state and other government regulation of
the Company's business; the Company's success in acquiring,
developing, manufacturing and marketing new products; the effects of
competition from generic pharmaceuticals and other pharmaceutical
companies; and other risks and uncertainties identified in the
Company's Securities and Exchange Commission Filings.
Akorn, Inc.
Consolidated Statement of Earnings
(In thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
Net sales:
Ophthalmic $ 7,392 $ 6,535 $ 21,206 $ 18,160
Injectable 7,746 4,523 19,971 11,942
-------- -------- -------- --------
Total sales 15,138 11,058 41,177 30,102
Cost of sales 7,270 6,313 20,046 17,013
-------- -------- -------- --------
Gross profit 7,868 4,745 21,131 13,089
Selling, general and
administrative 3,408 2,993 9,734 8,797
Amortization of intangibles 652 - 1,740 -
Research and development 1,187 342 3,143 1,071
Purchased R&D (1) 1,298 - 1,298 -
Relocation charges - - - 1,451
-------- -------- -------- --------
6,895 3,335 16,265 11,319
-------- -------- -------- --------
Operating income 1,323 1,410 5,216 1,770
Interest & other income
(expense), net (378) (101) (892) (200)
Offering costs (350) - (350) -
--------- -------- --------- --------
Pretax income 595 1,309 3,974 1,570
Income taxes 250 484 1,480 581
-------- -------- -------- --------
Net income $ 345 $ 825 $ 2,494 $ 989
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Per share:
Net income-basic $ 0.02 $ 0.05 $ 0.14 $ 0.06
======== ======== ======== ========
Net income-diluted $ 0.02 $ 0.05 $ 0.13 $ 0.06
======== ======== ======== ========
Weighted average shares
Basic 17,948 16,606 17,829 16,599
======== ======== ======== ========
Diluted 18,840 17,031 18,820 16,883
======== ======== ======== ========
(1) R&D charges related to the acquisition of Advanced Remedies, Inc.
(ARI) in July 1998.
CONTACT:
Akorn, Inc.
Rita McConville, Chief Financial Officer
(847) 279-6151
or
KCSA Worldwide
Paul Holm/Joseph A. Mansi
(212) 682-6300, ext.201/205
KEYWORD: ILLINOIS
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