KEY HIGHLIGHTS
- Fiscal 2023 revenue was
$63.1 million , Adjusted EBITDA1 was$21.1 million and cash from operations was$15.8 million , compared to$61.5 million ,$23.8 million and$16.9 million , respectively, in 2022. - Q4 2023 revenue was
$15.9 million , Adjusted EBITDA was$5.3 million and cash from operations was$3.7 million , compared to$15.7 million ,$5.3 million and$3.5 million , respectively, in Q4 2022. - Q4 2023 and fiscal 2023 product sales in
Canada increased 11% and 10%, respectively, in Canadian dollars, compared to the same periods in 2022. - Introduced the updated Pfizer partnering model in primary care on
January 1, 2024 . - Completed a Product Listing Agreement ("PLA") on
February 6, 2024 , with the province ofBritish Columbia ("BC"), for the listing and public reimbursement of Vascepa.
"2023 was a year of transition for HLS with leadership changes and an increased focus on operational execution that has us entering 2024 well-positioned for our next phase of growth," said
"Clozaril continued to be a consistent performer and generator of cash flow in 2023. The number of patients on Clozaril in
Q4 & FISCAL 2023 OTHER HIGHLIGHTS
- Craig Millian appointed Chief Executive Officer,
Brian T. Walsh appointed Senior Vice President, Commercial andJohn Hanna appointed Interim Chief Financial Officer. - Reduced the size of the Board of Directors from ten to eight members; John Welborn appointed Chair.
- Vascepa total prescriptions in fiscal 2023 increased by 86% from 2022.
- Q4 2023 Vascepa net revenue was
C$5.1 million , up 42% compared toC$3.6 million in Q4 2022. - The number of patients on Clozaril in
Canada increased by more than 1% in 2023, compared to 2022. - Clozaril sales in
Canada in Q4 2023 were essentially flat compared to Q4 2022.
"Going forward, we will also provide our outlook for Vascepa in
2024 OUTLOOK
HLS is targeting 2024 consolidated revenue of
Vascepa revenue is expected to be in a range of
HLS is targeting 2024 consolidated Adjusted EBITDA that is flat compared to 2023 as product-related Adjusted EBITDA growth is projected to fully offset the significant decline in royalties. The Company will pursue this goal through a combination of top-line growth and cost management. HLS expects non-royalty related Adjusted EBITDA driven by its marketed products to increase by approximately 60% over 2023. The royalty portfolio is expected to contribute just
CREDIT AGREEMENT
Subsequent to year end, the Company amended the terms of its credit agreement to modify certain covenant ratios. This was done to provide the Company with operating flexibility while revenue for Vascepa continues to ramp up in fiscal 2024 and while quarterly royalty revenues are expected to grow sequentially after Q1 2024.
Under the amended agreement, the Company's revolving facility has been reduced to
"These amendments provide HLS with added flexibility in the near term during a transition period with the royalty portfolio in 2024," said
Q4 & FISCAL 2023 FINANCIAL REVIEW
The Company's Management's Discussion and Analysis and Consolidated Financial Statements for the three- and twelve-month periods ended
Revenue
Three months ended | Year ended | |||
2023 | 2022 | 2023 | 2022 | |
Product sales | ||||
| 10,464 | 9,442 | 39,219 | 36,942 |
United States | 3,835 | 3,991 | 13,515 | 14,742 |
14,299 | 13,433 | 52,734 | 51,684 | |
Royalty revenue | 1,564 | 2,242 | 10,340 | 9,783 |
15,863 | 15,675 | 63,074 | 61,467 |
Q4 2023 and fiscal 2023 revenue increased 1% and 3%, respectively, compared to the same periods in 2022. Q4 2023 and fiscal 2023 revenue increased 1% and 5%, respectively, in constant currency terms, compared to the same periods in 2022, as the decline in the Canadian dollar had an impact on the reported values, which are in
Product sales –
000's of CAD | Three months ended | Year ended | ||||
2023 | 2022 | % change | 2023 | 2022 | % change | |
Clozaril | 9,131 | 9,195 | (0.7) % | 35,160 | 35,776 | (1.7) % |
Vascepa | 5,118 | 3,605 | 42.0 % | 17,779 | 12,325 | 44.3 % |
Other | 11 | 6 | 27 | 6 | ||
14,260 | 12,806 | 11.4 % | 52,966 | 48,107 | 10.1 % |
Q4 2023 and fiscal 2023 product sales in
Q4 2023 and fiscal 2023 Clozaril revenue in
Product Sales –
In the
Royalty revenues
Royalty revenues were
Operating Expenses
Three months ended | Year ended | |||
2023 | 2022 | 2023 | 2022 | |
Cost of product sales | 2,533 | 1,517 | 7,624 | 4,981 |
Selling and marketing | 4,716 | 5,169 | 19,896 | 17,846 |
Medical, regulatory and patient support | 1,386 | 1,606 | 5,574 | 5,727 |
General and administrative | 1,888 | 2,046 | 8,928 | 9,086 |
10,523 | 10,338 | 42,022 | 37,640 |
Cost of product sales was up for the year due to higher sales volumes of Vascepa. In addition, Q4 2023 included a provision of
Selling and marketing expenses were up for the year due to increased promotional efforts related to Vascepa. However, selling and marketing expenses were lower in Q4 2023 and medical, regulatory and patient support expenses, as well as general and administrative expenses, were lower for both the quarter and the year due to the Company's ongoing cost management efforts.
Adjusted EBITDA1
Three months ended | Year ended | |||
2023 | 2022 | 2023 | 2022 | |
Net loss for the period | (5,401) | (6,429) | (27,531) | (23,598) |
Stock-based compensation | (601) | 752 | (538) | 2,922 |
Amortization and depreciation | 7,047 | 8,692 | 31,939 | 34,402 |
Finance and related costs, net | 2,109 | 2,188 | 11,237 | 5,040 |
Other costs | 2,111 | 229 | 6,217 | 5,185 |
Income tax expense (recovery) | 75 | (95) | (272) | (124) |
Adjusted EBITDA | 5,340 | 5,337 | 21,052 | 23,827 |
Q4 2023 Adjusted EBITDA was
For fiscal 2023, the direct brand contribution from Clozaril to Adjusted EBITDA was
Net Loss
Net loss for Q4 2023 was
Cash from Operations and Financial Position
Cash generated from operations in Q4 2023 and fiscal 2023 was
Total borrowings under the credit agreement at
Q4 FISCAL 2023 CONFERENCE CALL
HLS will hold a conference call today at
CONFERENCE ID: 51683499
DATE: Thursday, March 14, 2024
TIME: 8:30 a.m. ET
WEBCAST LINK: https://app.webinar.net/1lgp2aPDwy0
TRADITIONAL DIAL-IN NUMBER: 1-888-664-6392 or 416-764-8659
RAPIDCONNECT: To instantly join the conference call by phone, please use the following URL to easily register and be connected into the conference call automatically: https://emportal.ink/3vCiu23
TAPED REPLAY: 1-888-390-0541 or 416-764-8677
REPLAY CODE: 683499#
The taped replay will be available for 14 days and the archived webcast will be available for 365 days.
A link to the live audio webcast of the conference call will also be available on the events page of the investors section of
ABOUT
Formed in 2015, HLS is a pharmaceutical company focused on the acquisition and commercialization of late-stage development, commercial stage promoted and established branded pharmaceutical products in the North American markets. HLS's focus is on products targeting the central nervous system and cardiovascular therapeutic areas. HLS's management team is composed of seasoned pharmaceutical executives with a strong track record of success in these therapeutic areas and at managing products in each of these lifecycle stages. For more information visit: www.hlstherapeutics.com
1CAUTIONARY NOTE REGARDING NON-IFRS MEASURES
This press release refers to certain non-IFRS measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of HLS's results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of HLS's financial information reported under IFRS. HLS uses non-IFRS measures to provide investors with supplemental measures of its operating performance and thus highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS financial measures. HLS also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. HLS's management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess HLS's ability to meet its future debt service, capital expenditure and working capital requirements.
In particular, management uses Adjusted EBITDA as a measure of HLS's performance. To reconcile net income (loss) for the period with Adjusted EBITDA, each of (i) "stock-based compensation", (ii) "amortization and depreciation", (iii) "finance and related costs, net", (iv) "other costs", and (v) "income tax recovery" appearing in the Consolidated Statement of Net Income (Loss) are added to net income (loss) for the period to determine Adjusted EBITDA. Adjusted EBITDA does not have any standardized meaning prescribed by IFRS and is not necessarily comparable to similar measures presented by other companies. Adjusted EBITDA should not be considered in isolation or as a substitute for net income (loss) prepared in accordance with IFRS as issued by the IASB.
2CONSISTENT PRESCRIBER
A consistent prescriber is a physician that has prescribed Vascepa in at least 4 of the past 5 weeks.
FORWARD LOOKING INFORMATION
This release includes forward-looking statements regarding HLS and its business. Such statements are based on the current expectations and views of future events of HLS's management. In some cases the forward-looking statements can be identified by words or phrases such as "may", "will", "expect", "plan", "anticipate", "intend", "potential", "estimate", "believe" or the negative of these terms, or other similar expressions intended to identify forward-looking statements, including, among others, statements with respect to HLS's pursuit of additional product and pipeline opportunities in certain therapeutic markets, statements regarding growth opportunities, expectations regarding financial performance, and the NCIB and ASPP. The forward-looking events and circumstances discussed in this release may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting HLS, including risks relating to the specialty pharmaceutical industry, risks related to the regulatory approval process, economic factors and many other factors beyond the control of HLS. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause HLS's actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement or information. Accordingly, readers should not place undue reliance on any forward-looking statements or information. A discussion of the material risks and assumptions associated with this release can be found in the Company's Annual Information Form dated
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | |||
Unaudited | |||
[in thousands of | |||
As at | As at | ||
ASSETS | |||
Current | |||
Cash | 21,952 | 20,723 | |
Accounts receivable | 10,608 | 10,999 | |
Inventories | 9,534 | 8,902 | |
Income taxes recoverable | 86 | 195 | |
Other current assets | 1,915 | 3,555 | |
Total current assets | 44,095 | 44,374 | |
Property, plant and equipment | 965 | 1,127 | |
Intangible assets | 162,344 | 195,018 | |
Deferred tax asset | 1,037 | 465 | |
Other non-current assets | 619 | 668 | |
Total assets | 209,060 | 241,652 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||
Current | |||
Accounts payable and accrued liabilities | 14,107 | 12,785 | |
Provisions | 5,424 | 2,934 | |
Debt and other liabilities | 6,876 | 15,471 | |
Income taxes payable | 281 | — | |
Total current liabilities | 26,688 | 31,190 | |
Debt and other liabilities | 84,233 | 84,578 | |
Deferred tax liability | 442 | 566 | |
Total liabilities | 111,363 | 116,334 | |
Shareholders' equity | |||
Share capital | 262,127 | 265,206 | |
Contributed surplus | 13,865 | 13,821 | |
Accumulated other comprehensive loss | (2,838) | (5,260) | |
Deficit | (175,457) | (148,449) | |
Total shareholders' equity | 97,697 | 125,318 | |
Total liabilities and shareholders' equity | 209,060 | 241,652 | |
INTERIM CONSOLIDATED STATEMENTS OF LOSS | |||||
Unaudited | |||||
[in thousands of | |||||
Three months ended | Year ended | ||||
2023 | 2022 | 2023 | 2022 | ||
Revenue | 15,863 | 15,675 | 63,074 | 61,467 | |
Expenses | |||||
Cost of product sales | 2,533 | 1,517 | 7,624 | 4,981 | |
Selling and marketing | 4,716 | 5,169 | 19,896 | 17,846 | |
Medical, regulatory and patient support | 1,386 | 1,606 | 5,574 | 5,727 | |
General and administrative | 1,888 | 2,046 | 8,928 | 9,086 | |
Stock-based compensation | (601) | 752 | (538) | 2,922 | |
Amortization and depreciation | 7,047 | 8,692 | 31,939 | 34,402 | |
Finance and related costs, net | 2,109 | 2,188 | 11,237 | 5,040 | |
Other costs | 2,111 | 229 | 6,217 | 5,185 | |
Loss before income taxes | (5,326) | (6,524) | (27,803) | (23,722) | |
Income tax recovery | 75 | (95) | (272) | (124) | |
Net loss for the period | (5,401) | (6,429) | (27,531) | (23,598) | |
Net loss per share: | |||||
Basic and diluted |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||||
Unaudited | ||||
[in thousands of | ||||
Three months ended | Year ended | |||
2023 | 2022 | 2023 | 2022 | |
Net loss for the period | (5,401) | (6,429) | (27,531) | (23,598) |
Item that may be reclassified subsequently to net loss | ||||
Unrealized foreign currency translation adjustment | 2,186 | 1,345 | 2,422 | (8,219) |
Comprehensive loss for the period | (3,215) | (5,084) | (25,109) | (31,817) |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | ||||||
Unaudited | ||||||
[in thousands of | ||||||
Share capital | Contributed surplus | Accumulated other | Deficit | Total | ||
Balance, | 265,917 | 11,717 | 2,959 | (119,857) | 160,736 | |
Stock options exercised | 251 | (67) | — | — | 184 | |
Shares repurchased | (962) | — | — | (36) | (998) | |
Share purchase obligation | — | (185) | — | — | (185) | |
Stock option expense | — | 2,356 | — | — | 2,356 | |
Net loss for the year | — | — | — | (23,598) | (23,598) | |
Dividends declared | — | — | — | (4,958) | (4,958) | |
Unrealized foreign currency | — | — | (8,219) | — | (8,219) | |
Balance, | 265,206 | 13,821 | (5,260) | (148,449) | 125,318 | |
Stock options exercised | 178 | (44) | — | — | 134 | |
Shares repurchased | (3,257) | — | — | 1,705 | (1,552) | |
Share purchase obligation | — | (115) | — | — | (115) | |
Stock option expense | — | 203 | — | — | 203 | |
Net loss for the year | — | — | — | (27,531) | (27,531) | |
Dividends declared | — | — | — | (1,182) | (1,182) | |
Unrealized foreign currency | — | — | 2,422 | — | 2,422 | |
Balance, | 262,127 | 13,865 | (2,838) | (175,457) | 97,697 |
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
Unaudited | ||||
[in thousands of | ||||
Three months ended | Year ended | |||
2023 | 2022 | 2023 | 2022 | |
OPERATING ACTIVITIES | ||||
Net loss for the period | (5,401) | (6,429) | (27,531) | (23,598) |
Adjustments to reconcile net loss to cash provided by operating activities | ||||
Stock-based compensation | (601) | 752 | (538) | 2,922 |
Amortization and depreciation | 7,047 | 8,692 | 31,939 | 34,402 |
Impairment charge | 1,541 | — | 3,893 | 3,051 |
Accreted interest | 217 | 198 | 797 | 810 |
Fair value adjustment on financial assets and liabilities | (263) | 237 | 2,888 | (2,330) |
Deferred income taxes | 107 | (95) | (696) | 138 |
Net change in non-cash working capital balances related to operations | 1,087 | 166 | 5,037 | 1,547 |
Cash provided by operating activities | 3,734 | 3,521 | 15,789 | 16,942 |
INVESTING ACTIVITIES | ||||
Additions to property, plant and equipment | (14) | (9) | (41) | (45) |
Royalty milestone payment | — | — | — | (10,000) |
Additions to intangible assets | — | (11) | (148) | (103) |
Cash used in investing activities | (14) | (20) | (189) | (10,148) |
FINANCING ACTIVITIES | ||||
Stock options exercised | — | — | 134 | 184 |
Shares repurchased | (580) | (350) | (1,552) | (998) |
Dividends paid | — | (1,193) | (2,398) | (4,962) |
Drawdown under credit agreement | — | — | — | 10,000 |
Repayment of borrowing under credit agreement | (3,172) | (2,389) | (8,855) | (9,778) |
Debt costs | — | — | (1,360) | (639) |
Lease payments | (134) | (162) | (608) | (663) |
Cash used in financing activities | (3,886) | (4,094) | (14,639) | (6,856) |
Net increase (decrease) in cash during the period | (166) | (593) | 961 | (62) |
Foreign exchange on cash | 310 | 37 | 268 | (394) |
Cash, beginning of period | 21,808 | 21,279 | 20,723 | 21,179 |
Cash, end of period | 21,952 | 20,723 | 21,952 | 20,723 |
SOURCE
© Canada Newswire, source