Anika Reports Fourth Quarter and Year-End 2023 Financial Results
Anika Therapeutics, Inc. (ANIK) reports strong financial results for Q4 and full year 2023, with revenue growth exceeding expectations. The company achieved record annual revenues of $102 million, up 11% in 2023. Anika anticipates generating adjusted EBITDA of $25 to $30 million in 2024, a significant increase. Despite a non-recurring impairment charge, the company is optimistic about its performance and cost reduction initiatives.
Positive
Revenue growth and adjusted EBITDA exceeded expectations in Q4 and full year 2023.
OA Pain Management achieved record annual revenues of $102 million, up 11% in 2023.
Anika positioned to generate adjusted EBITDA of $25 to $30 million in 2024, up over 75% at the midpoint.
Cost reduction initiatives to provide annualized savings of approximately $10 million.
The company reported strong financial performance despite a non-recurring impairment charge.
Anika's President and CEO, Cheryl R. Blanchard, expressed satisfaction with the results and highlighted key milestones achieved.
Negative
Recorded a non-recurring, non-cash impairment charge in Q4 2023 for intangible assets associated with acquisitions.
Net loss for the year was significant due to impairment charges and other associated costs.
Non-Orthopedic revenue saw a decline in Q4 and full year 2023.
Cash used in operations for the year was $1.8 million.
Anika Therapeutics' reported revenue and adjusted EBITDA growth in the fourth quarter and full year are indicators of the company's operational efficiency and market adoption of its products. The notable 11% increase in OA Pain Management annual revenues suggests a strong market presence and effective commercial strategies. However, the non-recurring, non-cash impairment charge of $62.2 million is a significant event that reflects adjustments in the valuation of acquired assets, often indicative of changes in expected future cash flows or market conditions.
The projected adjusted EBITDA of $25 to $30 million for 2024, representing a substantial increase over 75% at the midpoint and an adjusted EBITDA margin of at least 15%, is a forward-looking statement that may influence investor expectations. This projection, combined with the announced cost reduction initiatives aimed at saving $10 million annually, suggests that the company is focusing on cost efficiency and profitability. However, it is essential to consider the sustainability of these measures and their potential impact on the company's growth trajectory.
The increase in OA Pain Management revenue indicates a growing demand for Anika's products in this segment, which could be due to an aging population or advances in treatment options. The upward trend in Joint Preservation and Restoration revenue, with a 9% increase, also points to a broader market acceptance. Nonetheless, the decrease in Non-Orthopedic revenue by 29% suggests challenges in that sector, which may require strategic realignment.
Understanding the market dynamics and competitive landscape is crucial for forecasting the company's future performance. The emphasis on regenerative and sports medicine products, as well as joint solutions, is aligned with current industry trends towards less invasive and more regenerative treatment options. The company's ability to innovate and meet market demands will be critical for its continued success.
The reported financial outcomes are reflective of Anika Therapeutics' strategic focus on early intervention orthopedics. The record annual revenues in OA Pain Management underscore the potential of the company's hyaluronic acid (HA) franchise, which is a cornerstone in managing osteoarthritis pain. The launch of new products in regenerative and sports medicine aligns with the industry's shift towards personalized and advanced therapeutic options.
It is essential to evaluate the clinical impact of these new products, as their efficacy and safety profiles will play a significant role in their market penetration and, consequently, the company's financial performance. The announced cost reduction initiatives, while beneficial from a financial standpoint, should not compromise the quality of research and development, which is vital for maintaining a competitive edge in the biotechnology and pharmaceutical sectors.
03/13/2024 - 04:05 PM
Revenue growth and adjusted EBITDA1 exceeded expectations in the fourth quarter and full year
OA Pain Management achieved record annual revenues of $102 million , up 11% in 2023
Announces cost reduction initiatives providing annualized savings of approximately $10 million
Anika positioned to generate adjusted EBITDA1 of $25 t o $30 million in 2024, up over 75% at the midpoint, representing an adjusted EBITDA1 margin of at least 15%
BEDFORD, Mass., March 13, 2024 (GLOBE NEWSWIRE) -- Anika Therapeutics, Inc.
Fourth Quarter 202 3 Financial Summary
Revenue in the fourth quarter of 2023 was $43.0 million , up 8% compared to $39.6 million in the fourth quarter of 2022. OA Pain Management revenue of $25.1 million , up 12% , on growing global commercial adoption and some order timing Joint Preservation and Restoration revenue of $15.3 million , up 7% Non-Orthopedic revenue of $2.6 million , down 8% Gross margin was 61% , including $1.6 million of non-cash acquisition-related intangible asset amortization; Adjusted gross margin1 was 65% . Recorded a non-recurring, non-cash impairment charge in the fourth quarter of $62.2 million for the intangible assets associated with the Q1-2020 acquisitions of Arthrosurface and Parcus Medical. Including the non-cash impairment charge, net loss was ($63.0) million , or ($4.30) per share, compared to net loss of ($4.9) million , or ($0.34) per share, in the prior year period. Adjusted net income1 was $0.8 million , or $0.05 per diluted share, compared to adjusted net loss1 of ($3.0) million , or ($0.21) per share, in the fourth quarter of 2022. Adjusted EBITDA1 was $5.8 million , compared to $1.4 million in the fourth quarter of 2022. Cash from operations was $3.6 million ; ending cash balance rose to $72.9 million . Full Year 2023 Financial Summary
Revenue for fiscal 2023 increased 7% to $166.7 million , compared with $156.2 million in 2022. OA Pain Management revenue of $101.9 million , up 11% Joint Preservation and Restoration revenue of $54.9 million , up 9% Non-Orthopedic revenue of $9.9 million , down 29% Gross margin was 62% , including $6.2 million of non-cash acquisition-related intangible asset amortization and $0.7 million of product rationalization charges. Adjusted gross margin1 , excluding these charges, was 66% . Including the fourth quarter non-cash impairment charge, net loss was ($82.7) million , or ($5.64) per share, compared to net loss of ($14.9) million , or ($1.02) per share, in 2022. Net loss also included $18.1 million , or ($1.23) per share, for charges associated with product rationalization, acquisition related amortization, discontinuation of software development, Parcus arbitration settlement and shareholder activism. Adjusted net loss1 for the year was ($4.3) million , or ($0.30) per share, compared to adjusted net loss of ($7.1) million , or ($0.49) per share in 2022. Adjusted EBITDA1 for the year was $15.5 million , compared to $12.6 million in 2022. Cash used in operations was $1.8 million . 1 See description of non-GAAP financial information contained in this release.
“We are pleased to report strong fourth quarter and full year results, including a record year in OA Pain Management. These results reflect the evolution of our differentiated HA franchise and the launch of exciting new products in Regenerative, Sports Medicine and Arthrosurface Joint Solutions,” said Cheryl R. Blanchard, Ph.D., Anika’s President and CEO. “Over the course of the year, we achieved key milestones, learned a lot about the business, and are taking decisive action to further reduce spending and focus our strategy on driving the products that provide the greatest growth opportunities. Our plan to optimize performance is designed to capitalize on the significant growth potential across the business while accelerating our pivot to profitability, with adjusted EBITDA expected to grow over 75% at the midpoint in 2024.”
Dr. Blanchard continued, “We begin 2024 with renewed energy and strong momentum across the new products in our portfolio. Our HA-based Integrity Implant System is receiving very positive feedback, and its full market release is on track for mid-2024. We also remain focused on bringing Hyalofast and Cingal to the U.S. market. As we focus the business on our core strengths and highest value opportunities, we are confident that we will enhance value for shareholders.”
Fiscal 2023 and Recent Business Highlights
Strengthening Leadership Position in OA Pain Management Achieved record annual revenues of $102 million in OA Pain Management on global growth of its Monovisc® single injection viscosupplement and continued double-digit international growth of its Cingal® next generation non-opioid single injection pain product, on growing global commercial adoption and some order timing; increasing #1 U.S. market share position2 . Awaiting FDA feedback on proposed non-clinical next steps regarding Cingal U.S. regulatory approval following a Type C meeting with the FDA in early 2023 and its success in meeting its latest Phase III Pivotal primary endpoint in the fall of 2022. Continuing to explore commercial partnerships for Cingal in the U.S. and select Asian markets. Advancing a Highly Differentiated Portfolio of HA-Based Regenerative Solutions Successfully completed over 100 cases with the Integrity™ Implant System, Anika’s HA-based regenerative rotator cuff patch system, following the limited market release in late November 2023; on-track for full market release in mid-2024 Fully enrolled Phase III clinical trial for Hyalofast® Launched Key Products in Sports Medicine and Arthrosurface Joint Solutions X-Twist™ Biocomposite Fixation System launched in Q1-2024, compliments the PEEK version launched in early 2023, together addressing the more than $600 million U.S. rotator cuff market2 . RevoMotion™ Reverse Shoulder Arthroplasty System full market release in September 2023, expanding Anika’s shoulder arthroplasty portfolio into the more than $1 billion U.S. reverse shoulder market2 . 2 SmartTRAK Q3-2023 data
Cost Reductions 9% of its workforce, effective the end of the first quarter. The cost reductions, on an annualized basis, are expected to provide savings of approximately $10 million , excluding the impact of one-time costs. These actions position Anika to focus on its strengths and preserve the Company’s significant opportunities with its strong, growing and differentiated product lines and pipeline, and accelerate Anika’s pivot to profitability.
Fiscal 2024 Guidance
As such, Anika expects revenue for fiscal year 2024 of $168 t o $173 million , representing growth of 1% to 4% compared to 2023. Revenue ranges by product family are:
OA Pain Management of $102 t o $104 million , up 0% to 2% , on sustained above-market growth offset by some unfavorable order timing Joint Preservation and Restoration of $58 t o $60.5 million , up 6% to 10% Non-Orthopedic of $8 t o $8.5 million , down 14% to 19% The Company expects adjusted EBITDA for 2024 to be $25 t o $30 million , up over 75% at the midpoint, representing an adjusted EBITDA margin of at least 15% , up over 6 points compared to 2023. Anika’s expectations around improved profitability in 2024 reflect only partial-year cost savings as well as the early-stage ramp from Anika’s new products.
Strategic Business Update
Conference Call and Webcast Information Investor Relations www.anika.com . A slide presentation with highlights from the conference call will be available in the Investor Relations section of the Anika website. A replay of the webcast will be available on Anika’s website approximately two hours after the completion of the event.
About Anika Anika Therapeutics, Inc. www.anika.com .
ANIKA, ANIKA THERAPEUTICS, ARTHROSURFACE, CINGAL, HYALOFAST, INTEGRITY, MONOVISC, PARCUS MEDICAL, REVOMOTION, X-TWIST, and the Anika logo are trademarks of Anika Therapeutics, Inc. or its subsidiaries or are licensed to Anika Therapeutics, Inc. for its use.
Non-GAAP Financial Information
Adjusted Gross Margin
Adjusted EBITDA
Adjusted Net Income (Loss) and Adjusted EPS
A reconciliation of adjusted gross profit to gross profit (and the associated adjusted gross margin calculation), adjusted EBITDA to net income (loss), adjusted net income (loss) to net income (loss) and adjusted diluted EPS to diluted EPS, the most directly comparable financial measures calculated and presented in accordance with GAAP, is shown in the tables at the end of this release.
Forward-Looking Statements This press release may contain forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, concerning the Company's expectations, anticipations, intentions, beliefs or strategies regarding the future which are not statements of historical fact, including statements in the sub-headings, Dr. Blanchard’s quote, and the section titled Cost Reductions about potential cost savings and future profitability, the statements in Dr. Blanchard’s quote and the section titled Fiscal 2023 and Recent Business Highlights about the timing of future product launches, and the statements made in the section titled Fiscal 2024 Guidance. These statements are based upon the current beliefs and expectations of the Company's management and are subject to significant risks, uncertainties, and other factors. The Company's actual results could differ materially from any anticipated future results, performance, or achievements described in the forward-looking statements as a result of a number of factors including, but not limited to, (i) the Company's ability to successfully commence and/or complete clinical trials of its products on a timely basis or at all; (ii) the Company's ability to obtain pre-clinical or clinical data to support domestic and international pre-market approval applications, 510(k) applications, or new drug applications, or to timely file and receive FDA or other regulatory approvals or clearances of its products; (iii) that such approvals will not be obtained in a timely manner or without the need for additional clinical trials, other testing or regulatory submissions, as applicable; (iv) the Company's research and product development efforts and their relative success, including whether we have any meaningful sales of any new products resulting from such efforts; (v) the cost effectiveness and efficiency of the Company's clinical studies, manufacturing operations, and production planning; (vi) the strength of the economies in which the Company operates or will be operating, as well as the political stability of any of those geographic areas; (vii) future determinations by the Company to allocate resources to products and in directions not presently contemplated; (viii) the Company's ability to successfully commercialize its products, in the U.S. and abroad; (ix) the Company's ability to provide an adequate and timely supply of its products to its customers; and (x) the Company's ability to achieve its growth targets. Additional factors and risks are described in the Company's periodic reports filed with the Securities and Exchange Commission, and they are available on the SEC's website at www.sec.gov . Forward-looking statements are made based on information available to the Company on the date of this press release, and the Company assumes no obligation to update the information contained in this press release.
For Investor Inquiries: investorrelations@anika.com
Anika Therapeutics, Inc. and Subsidiaries Consolidated Statements of Operations (in thousands, except per share data) (unaudited) For the Three Months Ended December 31, For the Twelve Months Ended December 31, 2023 2022 2023 2022 Revenue $ 42,971 $ 39,622 $ 166,662 $ 156,236 Cost of Revenue 16,642 15,491 63,574 62,660 Gross Profit 26,329 24,131 103,088 93,576 Operating expenses: Research and development 7,585 7,749 32,690 28,182 Selling, general and administrative 20,335 23,049 95,847 84,794 Impairment of intangible assets 62,190 - 62,190 - Total operating expenses 90,110 30,798 190,727 112,976 Loss from operations (63,781 ) (6,667 ) (87,639 ) (19,400 ) Interest and other income (expense), net 577 276 2,312 654 Loss before income taxes (63,204 ) (6,391 ) (85,327 ) (18,746 ) Benefit from income taxes (204 ) (1,483 ) (2,660 ) (3,887 ) Net loss $ (63,000 ) $ (4,908 ) $ (82,667 ) $ (14,859 ) Net loss per share: Basic $ (4.30 ) $ (0.34 ) $ (5.64 ) $ (1.02 ) Diluted $ (4.30 ) $ (0.34 ) $ (5.64 ) $ (1.02 ) Weighted average common shares outstanding: Basic 14,647 14,640 14,656 14,561 Diluted 14,647 14,640 14,656 14,561
Anika Therapeutics, Inc. and Subsidiaries Consolidated Balance Sheets (in thousands, except per share data) (unaudited) December 31, December 31, ASSETS 2023 2022 Current assets: Cash and cash equivalents $ 72,867 $ 86,327 Accounts receivable, net 35,961 34,627 Inventories, net 46,386 39,765 Prepaid expenses and other current assets 8,095 8,828 Total current assets 163,309 169,547 Property and equipment, net 46,198 48,279 Right-of-use assets 28,767 30,696 Other long-term assets 18,672 17,219 Deferred tax assets 1,489 1,449 Intangible assets, net 4,626 74,599 Goodwill 7,571 7,339 Total assets $ 270,632 $ 349,128 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 9,860 $ 9,074 Accrued expenses and other current liabilities 21,199 18,840 Total current liabilities 31,059 27,914 Other long-term liabilities 404 398 Deferred tax liability - 6,436 Lease liabilities 26,904 28,817 Stockholders’ equity: Common stock, $0.01 par value 147 146 Additional paid-in-capital 90,009 81,141 Accumulated other comprehensive loss (5,943 ) (6,443 ) Retained earnings 128,052 210,719 Total stockholders’ equity 212,265 285,563 Total liabilities and stockholders’ equity $ 270,632 $ 349,128
Anika Therapeutics, Inc. and Subsidiaries Reconciliation of GAAP Gross Profit to Adjusted Gross Profit (in thousands) (unaudited) For the Three Months Ended December 31, For the Twelve Months Ended December 31, 2023 2022 2023 2022 Gross Profit $ 26,329 $ 24,131 $ 103,088 $ 93,576 Product rationalization related charges - 563 748 3,199 Acquisition related intangible asset amortization 1,560 1,560 6,244 6,240 Adjusted Gross Profit $ 27,889 $ 26,254 $ 110,080 $ 103,015 Unadjusted Gross Margin 61 % 61 % 62 % 60 % Adjusted Gross Margin 65 % 66 % 66 % 66 %
Anika Therapeutics, Inc. and Subsidiaries Reconciliation of GAAP Net Income to Adjusted EBITDA (in thousands) (unaudited) For the Three Months Ended December 31, For the Twelve Months Ended December 31, 2023 2022 2023 2022 Net loss $ (63,000 ) $ (4,908 ) $ (82,667 ) $ (14,859 ) Interest and other (income) expense, net (577 ) (276 ) (2,312 ) (654 ) Benefit from income taxes (204 ) (1,483 ) (2,660 ) (3,887 ) Depreciation and amortization 1,787 1,880 7,069 7,340 Stock-based compensation 3,815 3,813 15,243 14,315 Product rationalization - 563 748 3,199 Arbitration settlement - - 3,250 - Acquisition related intangible asset amortization 1,787 1,786 7,148 7,147 Impairment of intangible assets 62,190 - 62,190 - Discontinuation of software development project - - 4,473 - Costs of shareholder activism - - 3,033 - Adjusted EBITDA $ 5,798 $ 1,375 $ 15,515 $ 12,601
Anika Therapeutics, Inc. and Subsidiaries Reconciliation of GAAP Net Income to Adjusted Net Income (in thousands) (unaudited) For the Three Months Ended December 31, For the Twelve Months Ended December 31, 2023 2022 2023 2022 Net loss $ (63,000 ) $ (4,908 ) $ (82,667 ) $ (14,859 ) Product rationalization, tax effected - 456 725 2,410 Arbitration settlement, tax effected - - 3,148 - Acquisition related intangible asset amortization, tax effected 1,781 1,446 6,926 5,386 Impairment of intangible assets, tax effected 61,991 - 60,250 - Discontinuation of software development project, tax effected - - 4,333 - Costs of shareholder activism, tax effected - - 2,938 - Adjusted net income (loss) $ 772 $ (3,006 ) $ (4,347 ) $ (7,063 )
Anika Therapeutics, Inc. and Subsidiaries Reconciliation of GAAP Diluted Earnings Per Share to Adjusted Diluted Earnings Per Share (in thousands, except per share data) (unaudited) For the Three Months Ended December 31, For the Twelve Months Ended December 31, 2023 2022 2023 2022 Diluted net loss per share $ (4.30 ) $ (0.34 ) $ (5.64 ) $ (1.02 ) Product rationalization, tax effected - 0.03 0.05 0.17 Arbitration settlement, tax effected - - 0.21 - Acquisition related intangible asset amortization, tax effected 0.12 0.10 0.47 0.36 Impairment of intangible assets, tax effected 4.23 - 4.11 - Discontinuation of software development project, tax effected - - 0.30 - Costs of shareholder activism, tax effected - - 0.20 - Adjusted diluted net income (loss) per share $ 0.05 $ (0.21 ) $ (0.30 ) $ (0.49 ) Stock-based compensation, tax effected 3,803 3,088 14,767 10,783 Stock-based compensation (EPS impact) $ 0.26 $ 0.21 $ 1.01 $ 0.74
Anika Therapeutics, Inc. and Subsidiaries Revenue by Product Family (in thousands, except percentages) (unaudited) For the Three Months Ended December 31, For the Twelve Months Ended December 31, 2023 2022 $ change % change 2023 2022 $ change % change OA Pain Management $ 25,072 $ 22,451 $ 2,621 12 % $ 101,927 $ 91,984 $ 9,943 11 % Joint Preservation and Restoration 15,296 14,347 949 7 % 54,879 50,402 4,477 9 % Non-Orthopedic 2,603 2,824 (221 ) -8 % 9,856 13,850 (3,994 ) -29 % Revenue $ 42,971 $ 39,622 $ 3,349 8 % $ 166,662 $ 156,236 $ 10,426 7 %
What was Anika Therapeutics, Inc.'s revenue in the fourth quarter of 2023?
Anika Therapeutics, Inc. reported revenue of $43.0 million in the fourth quarter of 2023, up 8% compared to the same period in 2022.
What was the annual revenue for OA Pain Management in 2023?
OA Pain Management achieved record annual revenues of $102 million in 2023, marking an 11% increase from the previous year.
What is Anika's projected adjusted EBITDA for 2024?
Anika is positioned to generate adjusted EBITDA of $25 to $30 million in 2024, representing a substantial increase over the previous year.
What cost reduction initiatives did Anika announce?
Anika announced cost reduction initiatives that are expected to provide annualized savings of approximately $10 million.
Who is the President and CEO of Anika Therapeutics, Inc.?
Cheryl R. Blanchard, Ph.D., serves as the President and CEO of Anika Therapeutics, Inc.
