Knight Therapeutics Reports Second Quarter 2024

 

Knight Therapeutics Inc. (TSX: GUD) ("Knight" or "the Company"), a leading pan- American (ex-US) specialty pharmaceutical company, today reported financial results for its second quarter ended June 30, 2024. All currency amounts are in thousands except for share and per share amounts. All currencies are Canadian unless otherwise specified.

 

  Q2   2024   Highlights  

 

  Financial Results  

 
  • Delivered record revenues of $95,573, an increase of $5,668 or 6% over the same period in prior year driven by growth of our key promoted products partly offset by our mature products.
  •  
  • Gross margin of $47,337 or 50% of revenues compared to $37,493 or 42% of revenues in the same period in prior year.
  •  
  • Adjusted EBITDA 1 was $15,744, an increase of $1,475 or 10% over the same period in prior year.
  •  
  • Adjusted EBITDA per share 1 of $0.16, an increase of $0.03 or 23% over the same period in prior year.
  •  
  • Net loss was $1,942, compared to net income of $1,840 in the same period in the prior year.
  •  
  • Cash outflow from operations was $1,086, compared to $1,486 in the same period in prior year.
  •  

  Corporate   Developments  

 
  • Completed the NCIB launched in July 2023 with a total purchase of 5,999,524 shares at an average price of $4.87 for aggregate cash consideration of $29,231.
  •  
  • Shareholders re-elected Jonathan Ross Goodman, Samira Sakhia, James C. Gale, Robert N. Lande, Michael J. Tremblay, Nicolás Sujoy and Janice Murray on the Board of Directors.
  •  

  Products  

 
  • Entered into an exclusive supply and distribution agreement for Jornay PM™ (methylphenidate HCI extended-release capsules) for Canada and Latin America.
  •  

  Subsequent   to   quarter-   end  

 
  • Launched a NCIB in July to purchase up to 5,312,846 common shares of the Company over the next year.
  •  

"I am excited to report that for the six months ended June 30, 2024, we delivered record revenues of over $180 million and adjusted EBITDA of over $29 million. This strong performance is the result of the growth of our key promoted products and of our commercial execution across Canada and Latin America. In addition, we have expanded and strengthened our pipeline and will be leveraging our existing neurology infrastructure with the in-licensing of Jornay PM TM , our third neurology product added in the last nine months," said Samira Sakhia, President and Chief Executive Officer of Knight Therapeutics Inc.

 

  1 Adjusted   EBITDA   and   Adjusted   EBITDA   per   share   are   non-GAAP   measures.   Refer   to   section   Non-GAAP   measures   for   additional   details.

 

 
                                                                                                                                 
  SELECTED FINANCIAL RESULTS REPORTED UNDER IFRS
[In thousands of Canadian dollars]
    Change    Change
   Q2-24   Q2-23 $ 1   % 2   YTD-   24   YTD-23 $ 1   % 2
Revenues   95,573   89,905 5,668   6 %   182,177   172,502 9,675   6%
Gross margin   47,337   37,493 9,844   26%   89,036   78,255 10,781   14%
  Gross   margin   %     50     %     42   %        49     %     45   %     
Selling and marketing   13,264   12,874 (390 ) 3%   25,913   23,539 (2,374 ) 10%
General and administrative   12,099   9,119 (2,980 ) 33%   22,637   18,225 (4,412 ) 24%
Research and development   5,806   4,336 (1,470 ) 34%   10,786   8,523 (2,263 ) 27%
Amortization of intangible assets   11,674   11,274 (400 ) 4%   22,546   22,445 (101 ) —%
Operating expenses   42,843   37,603 (5,240 ) 14%   81,882   72,732 (9,150 ) 13%
Operating income (loss)   4,494   (110) 4,604   4185%   7,154   5,523 1,631   30%
Net (loss) income   (1,942   )   1,840 (3,782 ) 206%   (6,488   )   (2,097) (4,391 ) 209%
 

  1   A   positive   variance   represents   a   positive   impact   to   net   income   (loss)   and   a   negative   variance   represents   a   negative   impact   to   net   income   (loss)  
2   Percentage   change   is   presented   in   absolute   values  

 
                                                                                                                                           
  SELECTED FINANCIAL RESULTS EXCLUDING IAS 29 1  
[In thousands of Canadian dollars]
     Change      Change  
   Q2-   24   Q2-23 $    %    YTD-   24   YTD-23 $   %
Revenues   94,121   90,400 3,721   4%   179,917   173,067 6,850   4%
Gross margin   45,281   40,244 5,037   13%   85,977   81,630 4,347   5%
  Gross   margin   %     48     %     45   %        48     %     47   %    
Selling and marketing   12,968   12,985 (17 ) —%   25,461   23,698 1,763   7%
General and administrative   11,578   9,188 2,390   26%   21,790   18,075 3,715   21%
Research and development   5,577   4,623 954   21%   10,417   8,725 1,692   19%
Amortization of intangible assets   11,699   11,189 510   5%   22,545   22,314 231   1%
Operating expenses   41,822   37,985 3,837   10%   80,213   72,812 7,401   10%
EBITDA 1   15,641   14,269 1,372   10%   29,230   32,506 (3,276 ) 10%
Adjusted EBITDA 1   15,744   14,269 1,475   10%   29,333   32,506 (3,173 ) 10%
Adjusted EBITDA per share 1   0.16   0.13 0.03   23%   0.29   0.30 (0.01 ) 3%
 

  1   Financial   results   excluding   the   impact   of   IAS   29,   EBITDA,   adjusted   EBITDA   and   adjusted   EBITDA   per   share   are   non-GAAP   measures.   Refer   to   section   "   Non-   GAAP   measures" for additional details.  

 

  Revenues
For the quarter ended June 30, 2024, revenues excluding the impact of IAS 29 were $94,121 an increase of $3,721 or 4% mainly driven by a growth of $7,125 or 11% from our key promoted products offset by a decline in our mature products. The table below provides revenues by therapeutic area.

 
                                    
   Excluding   the   impact   of   IAS   29   1  
    Change
  Therapeutic   Area    Q2-   24    Q2-   23    $    %
Oncology/Hematology   35,625   27,935 7,690   28%
Infectious Diseases   37,824   45,567 (7,743 ) 17%
Other Specialty   20,672   16,898 3,774   22%
  Total    94,121   90,400 3,721   4%
 

  1   Revenues   excluding   the   impact   of   IAS   29   is   a   non-GAAP   measure,   refer   to   section   "   Non-GAAP   measures"   for   additional   details.  

 

The increase in revenues is explained by the following:

 
  •   Oncology/Hematology : The oncology/hematology portfolio grew by $7,690 due to the continued growth of key promoted products including Lenvima ® , Akynzeo ® , Trelstar ® and the launch of Minjuvi ® in Brazil.
  •  
  •   Infectious Diseases: The infectious diseases portfolio decreased by $7,743 driven mainly by the timing of orders for Ambisome ® under the MOH contract, a decrease in the demand of Impavido ® partly offset by the growth of our key promoted products including Cresemba ® and timing of orders for certain products. During Q2-24 the Company delivered $8,900 of Ambisome ® to MOH compared to $18,000 in Q2-23.
  •  
  •   MOH Contract : The Company signed a contract with the Ministry of Health of Brazil for Ambisome ® in December 2022 ("2022 MOH Contract"). Knight delivered a total of $34,600 under the 2022 MOH Contract as follows: $7,000 in 2022, $25,200 in 2023 ($2,400 in Q1-23, $18,000 in Q2-23 and $4,800 in Q4-23) and $2,400 Q1-24. In December 2023, Knight signed a new contract with the MOH ("2024 MOH Contract") and delivered $6,800 in Q1-24 and $8,900 in Q2-24. The total MOH sales Ambisome ® delivered in Q2-24 and YTD-24 was $8,900 and $18,100, respectively.
  •  
  •   Other   Specialty : The other specialty portfolio increased by $3,774, primarily driven by the commercial transition of Exelon ® from Novartis to Knight. As a result of advanced purchases by certain customers in Q1-23, the revenues of Exelon ® were negatively impacted in Q2-23.
  •  

  Gross   margin  
Excluding the impact of IAS 29, gross margin as a percentage of revenues was 48% in Q2-24 compared to 45% in Q2-23. The increase in the Q2-24 gross margin, as a percentage of revenues, was due to product mix including a lower proportion of Ambisome ® sales to MOH.

 

  Selling   and   marketing   ("S&M")   expenses: For the quarter ended June 30, 2024 S&M expenses excluding the impact of IAS 29, were $12,968 in Q2-24 compared to $12,985 in Q2-23, a decrease of $17. There was no significant variance.

 

  General   and   administrative   ("G&A")   expenses: For the quarter ended June 30, 2024 G&A expenses excluding the impact of IAS 29, were $11,578 in Q2-24 compared to $9,188 in Q2-23, an increase of $2,390 or 26%. The increase was mainly driven by an increase in structure and compensation expenses.

 

  Research   and   development   ("R&D")   expenses: For the quarter ended June 30, 2024 R&D expenses excluding the impact of IAS 29, were $5,577 in Q2-24 compared to 4,623 in Q2-23, an increase of $954 or 21%. The increase was driven by an increase in product development activities in connection with our pipeline products and medical initiatives related to key promoted products. Knight invested $815 in Q2-24, an increase of $795 versus the prior year on its pipeline development activities. All costs related to development activities have been expensed which typically include regulatory submissions, analytical method transfers, stability studies and bio equivalence studies.

 

  Adjusted   EBITDA  
For the quarter ended June 30, 2024, adjusted EBITDA increased by $1,475 or 10%. The increase was driven by a higher gross margin partly offset by higher G&A expenses, mainly related to structure and compensation increase and an increase in R&D expenses mainly due to an increase in our product development activities behind our pipeline.

 
                                             
  SELECT BALANCE SHEET ITEMS
[In
  thousands   of   Canadian   dollars]  
   June   30,
  2024  
  December   31,
  2023  
  Change  
   $     %  
Cash, cash equivalents and marketable securities   152,668   161,825 (9,157 ) 6%
Trade and other receivables   135,203   141,684 (6,481 ) 5%
Inventories   103,645   91,834 11,811   13%
Financial assets   115,728   128,369 (12,641 ) 10%
Accounts payable and accrued liabilities   84,821   90,617 (5,796 ) 6%
Bank loans   50,952   61,866 (10,914 ) 18%
 

  
Cash, cash equivalents and marketable securities
: As at June 30, 2024, Knight had $152,668 in cash, cash equivalents and marketable securities, a decrease of $9,157 or 6% as compared to December 31, 2023. The decrease is mainly due to the settlement of upfront and milestone payments in connection with product licensing agreements including Qelbree™, IPX203, Jornay PM™ and Cresemba ® , principal and interest payments on bank loans and repurchase of shares through the NCIB, partly offset by the cash inflows from operations. The cash inflows from operating activities were $29,795 driven by the operating results adjusted for noncash items such as depreciation, amortization as well as decrease in working capital of $3,576. The decrease in working capital was mainly due to a decrease in accounts receivable driven by the timing of collections from customers and an increase in inventory excluding the impact of IAS 29 driven by the timing of sales and purchases of inventory.

 

  Bank loans: As at June 30, 2024, bank loans were at $50,952, a decrease of $10,914 or 18% as compared December 31, 2023 due to principal repayments of bank loans as well as the depreciation of the Brazilian Real and Colombian Pesos.

 

  Corporate   Updates  

 

  NCIB  

 

On July 11, 2024, the Company announced that the Toronto Stock Exchange approved its notice of intention to launch a NCIB ("2024 NCIB"). Under the terms of the 2024 NCIB, Knight may purchase for cancellation up to 5,312,846 common shares of the Company which represented 10% of its public float as at June 30, 2024. The 2024 NCIB commenced on July 15, 2024 and will end on the earlier of July 14, 2025 or when the Company completes its maximum purchases under the NCIB. Furthermore, Knight entered into an agreement with a broker to facilitate purchases of its common shares under the NCIB.

 

During the three-month period ended June 30, 2024, the Company purchased 205,661 common shares at an average price of $6.04 for aggregate cash consideration of $1,242 under the 2023 NCIB. Subsequent to the quarter-end up to July 31, 2024, the Company purchased an additional 165,000 common shares at an average purchase price of $5.67 for an aggregate cash consideration of $936.

 

The Company has purchased an aggregate of 42.5 million shares at an average price of $5.70 since the launch of its share buy back program in 2019.

 

  Financial   Outlook   Update  

 

  Financial Outlook  

 

Knight provides guidance on revenues on a non-GAAP basis. This is due to both the difficulty in predicting Argentinian inflation rates and its IAS 29 impact.

 

For fiscal 2024, Knight has increased its financial guidance on revenues and now expects to generate between $355 million to $365 million in revenues up from $335 to $350 million. The adjusted EBITDA 1 is expected to be approximately 16% of revenues. The change in the financial outlook is primarily due to an improvement in forecasted LATAM currencies against the Canadian dollar as well as an acceleration of investments on our pipeline products. The guidance is based on a number of assumptions, including but not limited to the following:

 
  • no revenues or expenses for business development transactions not completed as at August 7, 2024
  •  
  • no unforeseen termination to our license, distribution & supply agreements
  •  
  • no interruptions in supply whether due to global supply chain disruptions or general manufacturing issues
  •  
  • no new generic entrants on our key pharmaceutical brands
  •  
  • no unforeseen changes to government mandated pricing regulations
  •  
  • successful commercial execution on product listing arrangements with HMOs, insurers, key accounts, and public payers
  •  
  • successful execution and uptake of newly launched products
  •  
  • no material increase in provisions for inventory or trade receivables
  •  
  • no significant variations of forecasted foreign currency exchange rates
  •  
  • inflation remaining within forecasted ranges
  •  

Should any of the assumptions differ, the financial outlook and the actual results may vary materially. Refer to the risks and assumptions referred to in the Forward-Looking Statements section of this news release for further details.

 

  1   Revenues   excluding   the   impact   of   IAS   29   and   adjusted   EBITDA   are   a   non-GAAP   measure.   Refer   to   the   definitions   in   section   "Non-GAAP   measures"   for   additional   details.  

 

  Conference   Call   Notice  

 

Knight will host a conference call and audio webcast to discuss its second quarter ended June 30, 2024, today at 8:30 am ET. Knight cordially invites all interested parties to participate in this call.

 

  Date: Thursday, August 8, 2024
Time: 8:30 a.m. ET
Telephone : Toll Free: 1-800-836-8184 or International 1-289-819-1350
Webcast:    www.knighttx.com   or   Webcast   
This is a listen-only audio webcast. Media Player is required to listen to the broadcast.

 

  Replay: An archived replay will be available for 30 days at   www.knighttx.com   

 

  About   Knight   Therapeutics   Inc.  

 

Knight Therapeutics Inc., headquartered in Montreal, Canada, is a specialty pharmaceutical company focused on acquiring or in-licensing and commercializing pharmaceutical products for Canada and Latin America. Knight's Latin American subsidiaries operate under United Medical, Biotoscana Farma and Laboratorio LKM. Knight Therapeutics Inc.'s shares trade on TSX under the symbol GUD. For more information about Knight Therapeutics Inc., please visit the Company's web site at   www.knighttx.com   or   www.sedarplus.ca   .

 

  Forward-Looking   Statement  

 

This document contains forward-looking statements for Knight Therapeutics Inc. and its subsidiaries. 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. Knight Therapeutics Inc. considers the assumptions on which these forward-looking statements are based to be reasonable at the time they were prepared but cautions the reader that these assumptions regarding future events, many of which are beyond the control of Knight Therapeutics Inc. 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 Knight Therapeutics Inc.'s Annual Report and in Knight Therapeutics Inc.'s Annual Information Form for the year ended December 31, 2023 as filed on   www.sedarplus.ca   . Knight Therapeutics Inc. disclaims any intention or obligation to update or revise any forward-looking statements whether because of new information or future events, except as required by law.

 

  CONTACT   INFORMATION:  

 
                
  Investor   Contact:   
Knight Therapeutics Inc.  
Samira Sakhia Arvind Utchanah
President & Chief Executive Officer Chief Financial Officer
T: 514.484.4483 T. +598.2626.2344
F: 514.481.4116  
Email:   IR@knighttx.com    Email:   IR@knighttx.com   
Website:   www.knighttx.com    Website:   www.knighttx.com   
 

  
NON-GAAP
  MEASURES  
[In thousands of Canadian dollars]

 

The Company discloses non-GAAP measures and ratios that do not have standardized meanings prescribed by IFRS. The Company believes that shareholders, investment analysts and other readers find such measures helpful in understanding the Company's financial performance. Non-GAAP financial measures and adjusted EBITDA per share ratio do not have any standardized meaning prescribed by IFRS and may not have been calculated in the same way as similarly named financial measures presented by other companies.

 

The Company uses the following non-GAAP measures.

 

  Revenues   and   Financial   results   excluding   the   impact   of   hyperinflation   under   IAS   29  

 

The Company applies IAS 29, Financial Reporting in Hyperinflation Economies, as the Company's Argentine subsidiaries used the Argentine Peso as their functional currency. IAS 29 requires that the financial statements of an entity whose functional currency is the currency of a hyperinflationary economy be adjusted based on an appropriate general price index to express the effects of inflation.

 

Revenues and financial results under IFRS are adjusted to remove the impact of hyperinflation under IAS 29. The impact of hyperinflation under IAS 29 is calculated by applying an appropriate general price index to express the effects of inflation. After applying the effects of translation, the statement of income is converted using the closing foreign exchange rate of the month.

 

Revenues and financial results excluding the impact of hyperinflation under IAS 29 allow results to be viewed without the impact of IAS 29 thereby facilitating the comparison of results period over period. The presentation of revenues and financial results excluding the impact of hyperinflation under IAS 29 is considered to be a non-GAAP measure and does not have any standardized meaning under GAAP. As a result, the information presented may not be comparable to similar measures presented by other companies.

 

The following tables are reconciliations of financial results under IFRS to financial results excluding the impact of hyperinflation under IAS 29.

 
                                                                                                      
   Q2-   24    YTD-   24  
   Reported
  under IFRS  
  IAS 29
Adjustment
 
   Excluding   the
Impact of
  IAS   29  
  Reported
under IFRS
 
  IAS 29
Adjustment
 
   Excluding   the
Impact of
  IAS   29  
Revenues   95,573    (1,452    )    94,121    182,177    (2,260    )    179,917  
Cost of goods sold   48,236    604     48,840    93,141    799     93,940  
  Gross   margin    47,337    (2,056    )    45,281    89,036    (3,059    )    85,977  
  Gross   margin   (%)     50%        48%      49%        48%   
  Expenses          
Selling and marketing   13,264    (296    )    12,968    25,913    (452    )    25,461  
General and administrative   12,099    (521    )    11,578    22,637    (847    )    21,790  
Research and development   5,806    (229    )    5,577    10,786    (369    )    10,417  
Amortization of intangible assets   11,674    25     11,699    22,546    (1    )    22,545  
  Operating   income   (loss)    4,494    (1,035    )    3,459    7,154    (1,390    )    5,764  
 

 

 
                                                                                
   Q2-   23    YTD-   23  
  Reported under IFRS IAS 29
Adjustment
Excluding the Impact of IAS 29 Reported under IFRS IAS 29
Adjustment
Excluding the Impact of IAS 29
Revenues 89,905 495 90,400 172,502 565 173,067
Cost of goods sold 52,412 (2,256) 50,156 94,247 (2,810) 91,437
  Gross   margin    37,493    2,751   40,244   78,255    3,375   81,630
  Gross   margin   (%)    42   %     45%    45   %     47%  
  Expenses        
Selling and marketing 12,874 111 12,985 23,539 159 23,698
General and administrative 9,119 69 9,188 18,225 (150) 18,075
Research and development 4,336 287 4,623 8,523 202 8,725
Amortization of intangible assets 11,274 (85) 11,189 22,445 (131) 22,314
  Operating   income    (110   )    2,369   2,259   5,523    3,295   8,818
 

  
Revenues
  and   Financial   results   at   constant   currency  
Revenues and financial results at constant currency are obtained by translating the prior period revenues and financial results from the functional currencies to CAD using the conversion rates in effect during the current period. Furthermore, with respect to Argentina, the Company excludes the impact of hyperinflation and translates the revenues and results at the average exchange rate in effect for each of the periods.

 

Revenues and financial results at constant currency allow results to be viewed without the impact of fluctuations in foreign currency exchange rates thereby facilitating the comparison of results period over period. The presentation of revenues and financial results under constant currency is considered to be a non-GAAP measure and does not have any standardized meaning under GAAP. As a result, the information presented may not be comparable to similar measures presented by other companies.

 

The following tables are reconciliations of financial results under IFRS to financial results and financial results at constant currency.

 
                                                                                                                                
  Q2-   23  
  YTD-   23  
  Reported under IFRS   IAS 29
Adjustment
  Constant Currency Adjustment   Constant Currency Reported under IFRS IAS 29
Adjustment
  Constant Currency Adjustment Constant Currency
Revenues 89,905   495   112   90,512 172,502 565   3,592 176,659
Cost of goods sold 52,412   (2,256 ) (224 ) 49,932 94,247 (2,810 ) 1,453 92,890
  Gross   margin   37,493   2,751   336   40,580 78,255 3,375   2,139 83,769
 

Expenses  
        
Selling and marketing 12,874   111   (53 ) 12,932 23,539 159   205 23,903
General and administrative 9,119   69   301   9,489 18,225 (150 ) 501 18,576
Research and development 4,336   287   20   4,643 8,523 202   96 8,821
Amortization of intangible assets 11,274   (85 ) 233   11,422 22,445 (131 ) 128 22,442
  Operating   income   (110 ) 2,369   (165 ) 2,094 5,523 3,295   1,209 10,027
 

  
EBITDA
 

 

EBITDA is defined as operating income or loss adjusted to exclude amortization and impairment of intangible assets, depreciation, purchase price allocation accounting adjustments, and the impact of IAS 29 (accounting under hyperinflation) but to include costs related to leases.

 

EBITDA allows results to be viewed without the impact of amortization and impairment of intangible assets, depreciation, purchase price allocation accounting adjustments, and the impact of IAS 29 (accounting under hyperinflation) but to include costs related to leases fluctuations in foreign currency exchange rates thereby facilitating the comparison of results period over period. The presentation of EBITDA is considered to be a non-GAAP measure and does not have any standardized meaning under GAAP. As a result, the information presented may not be comparable to similar measures presented by other companies.

 

  Adjusted   EBITDA  

 

Adjusted EBITDA is defined EBITDA adjusted for acquisition costs and non-recurring expenses.

 

Adjusted EBITDA allows results to be viewed without the impact of amortization and impairment of intangible assets, depreciation, purchase price allocation accounting adjustments, and the impact of IAS 29 (accounting under hyperinflation), acquisition costs and non-recurring expenses but to include costs related to leases fluctuations in foreign currency exchange rates thereby facilitating the comparison of results period over period. The presentation of adjusted EBITDA is considered to be a non-GAAP measure and does not have any standardized meaning under GAAP. As a result, the information presented may not be comparable to similar measures presented by other companies.

 

The following table is a reconciliation of operating income (loss) to EBITDA and adjusted EBITDA.

 
                                                                                          
   Q2-   24     Q2-   23     YTD-   24     YTD-   23   
  Operating   income   (loss)    4,494    (110 )   7,154    5,523  
  Adjustments to operating income (loss):          
Amortization of intangible assets   11,674    11,274    22,546    22,445  
Depreciation of property, plant and equipment and ROU assets   1,495    884    3,204    2,796  
Lease costs (IFRS 16 adjustment)   (982    )   (636 )   (1,864    )   (1,367 )
Impact of IAS 29   (1,040    )   2,857    (1,810    )   3,109  
  EBITDA    15,641    14,269    29,230    32,506  
Acquisition and transition costs   103      103    
  Adjusted   EBITDA    15,744    14,269    29,333    32,506  
 

  
Adjusted
  EBITDA   per   share  

 

Adjusted EBITDA per share is defined as Adjusted EBITDA over number of common shares outstanding at the end of the respective period. The presentation of adjusted EBITDA per share is considered to be a non-GAAP ratio and does not have any standardized meaning under GAAP. As a result, the information presented may not be comparable to similar measures presented by other companies.

 

The following table calculates adjusted EBITDA per share as follows:

 
                    
   Q2-   24    Q2-   23    YTD-   24    YTD-   23  
Adjusted EBITDA   15,744   14,269   29,333   32,506
Adjusted EBITDA per common share   0.16   0.13   0.29   0.30
Number of common shares outstanding at period end (in thousands)   101,327   107,177   101,327   107,177
 

 

 
                                                                                                
  SELECTED FINANCIAL RESULTS AT CONSTANT CURRENCY  
[In thousands of Canadian dollars]
   Excluding impact   of   IAS   29   
   Constant Currency 1   Change    Constant Currency 1   Change  
   Q2- 24    Q2-23 $   %   YTD-   24   YTD-23 $   %
Revenues   94,121   90,512 3,609   4%   179,917    176,659   3,258   2%
Gross margin   45,281   40,580 4,701   12%   85,977    83,769   2,208   3%
  Gross   margin   %     48     %     45   %       48     %      47 %      
Operating expenses   41,822   38,486 (3,336 ) 9%   80,213   73,742 (6,471 ) 9%
EBITDA   15,641   14,227 1,414   10%   29,230   33,915 (4,685 ) 14%
Adjusted EBITDA   15,744   14,227 1,517   11%   29,333   33,915 (4,582 ) 14%
Adjusted EBITDA per share   0.16   0.13 0.03   23%   0.29   0.31 (0.02 ) 6%
 

  1 Financial results at constant currency is a non-GAAP measure. Refer to section "Non-GAAP measures" for additional details.

 
                                                                      
  INTERIM CONSOLIDATED BALANCE SHEETS  
[In thousands of Canadian dollars]
[Unaudited]
  As   at    June   30,   2024   December 31, 2023
  ASSETS    
  Current    
Cash and cash equivalents   60,807   58,761
Marketable securities   88,028   95,657
Trade receivables   84,976   88,722
Other receivables   5,835   7,427
Inventories   103,645   91,834
Prepaids and deposits   4,601   4,881
Other current financial assets   8,631   15,753
Income taxes receivable   4,087   2,080
  Total   current   assets    360,610   365,115
 

Marketable securities
 

3,833  
 

7,407
Prepaids and deposits   7,283   7,767
Right-of-use assets   6,673   6,190
Property, plant and equipment   14,814   11,669
Intangible assets   295,548   289,960
Goodwill   84,604   79,844
Other financial assets   107,097   112,616
Deferred income tax assets   20,510   19,390
Other long-term receivables   44,392   45,535
  Total   non-current   assets    584,754   580,378
  Total   assets    945,364   945,493
 

 

 
                                                                         
  INTERIM CONSOLIDATED BALANCE SHEETS (continued)  
[In thousands of Canadian dollars]
[Unaudited]
  As   at    June   30,   2024   December 31, 2023
 

LIABILITIES   AND   EQUITY  
  
  Current    
Accounts payable and accrued liabilities   77,808   85,366
Lease liabilities   2,569   1,728
Other liabilities   1,801   1,046
Bank loans   16,988   17,850
Income taxes payable   918   1,182
Other balances payable   5,745   6,857
  Total   current   liabilities    105,829   114,029
 

Accounts payable and accrued liabilities
 

7,013  
 

5,251
Lease liabilities   4,587   5,497
Bank loans   33,964   44,016
Other balances payable   26,222   27,012
Deferred income tax liabilities   4,948   2,817
  Total   liabilities    182,563   198,622
 

Shareholders'   equity  
  
Share capital   540,945   540,046
Warrants   117   117
Contributed surplus   25,662   25,991
Accumulated other comprehensive income   51,820   29,829
Retained earnings   144,257   150,888
  Total   shareholders'   equity    762,801   746,871
  Total   liabilities   and   shareholders'   equity    945,364   945,493
 

 

 
                                                                                                                                                                                                                                                                                                             
  INTERIM CONSOLIDATED STATEMENTS OF INCOME (LOSS)   
 
[In thousands of Canadian dollars, except for share and per share amounts]
[Unaudited]
     
   Three months ended June 30,   
 
   Six months ended June 30,   
 
 
   2024    2023    2024    2023  
         
Revenues   95,573    89,905    182,177    172,502  
Cost of goods sold   48,236    52,412    93,141    94,247  
  Gross margin    47,337    37,493    89,036    78,255  
         
  Expenses          
Selling and marketing   13,264    12,874    25,913    23,539  
General and administrative   12,099    9,119    22,637    18,225  
Research and development   5,806    4,336    10,786    8,523  
Amortization of intangible assets   11,674    11,274    22,546    22,445  
  Operating income (loss)    4,494    (110 )   7,154    5,523  
         
Interest income on financial instruments measured at amortized cost     (1,960    )   (2,015 )   (4,096    )   (4,194 )
Other interest income   (624    )   (1,072 )   (1,129    )   (2,245 )
Interest expense   2,284    3,004    4,861    5,795  
Other expense   (42    )   (310 )   (211    )   (216 )
Net loss (gain) on financial instruments measured at fair value through profit or loss   665    (3,939 )   16,932    7,908  
Foreign exchange loss (gain)   5,542    4,918    3,608    4,845  
Gain on hyperinflation   (2,084    )   (908 )   (6,380    )   (1,636 )
  (Loss) income before income taxes    713    212    (6,431    )   (4,734 )
         
  Income tax          
Current   1,245    33    2,914    2,139  
Deferred   1,410    (1,661 )   (2,857    )   (4,776 )
  Income tax expense (recovery)    2,655    (1,628 )   57    (2,637 )
  Net income (loss) for the period    (1,942    )   1,840    (6,488    )   (2,097 )
         
Basic and diluted net income (loss) per share   (0.02    )   0.02    (0.06    )   (0.02 )
  Weighted average number of common shares outstanding          
Basic   101,330,154    108,475,559    101,251,374    109,988,526  
Diluted   101,330,154    108,678,732    101,251,374    109,988,526  
 

 

 
                                                                                                                                                                                                                                                                             
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
[In thousands of Canadian dollars]
[Unaudited]
  Three months ended June 30,   Six months ended June 30,  
  2024   2023   2024   2023  
OPERATING ACTIVITIES     
Net (loss) income for the period (1,942 ) 1,840   (6,488 ) (2,097 )
Adjustments reconciling net income to operating cash flows:     
Depreciation and amortization 13,169   12,158   25,750   25,241  
Net loss (gain) on financial instruments 665   (3,939 ) 16,932   7,908  
Unrealized foreign exchange (gain) loss (4,124 ) (809 ) (6,329 ) (2,062 )
Other operating activities 3,078   407   (3,646 ) (92 )
  10,846   9,657   26,219   28,898  
Changes in non-cash working capital and other items (11,932 ) (11,143 ) 3,576   (26,068 )
Cash inflow (outflow) from operating activities (1,086 ) (1,486 ) 29,795   2,830  
 

INVESTING ACTIVITIES
    
Purchase of marketable securities (41,625 ) (76,334 ) (77,922 ) (185,550 )
Proceeds on maturity of marketable securities 69,674   75,200   91,990   181,168  
Investment in funds (1,072 ) (148 ) (1,203 ) (170 )
Purchase of intangible assets (16,735 )   (26,817 ) (7,667 )
Other investing activities 1,511   5,482   1,339   7,705  
Cash inflow (outflow) from investing activities 11,753   4,200   (12,613 ) (4,514 )
 

FINANCING ACTIVITIES
    
Repurchase of common shares through Normal Course Issuer Bid (1,242 ) (13,951 ) (1,242 ) (24,465 )
Principal repayment of bank loans (6,930 ) (5,422 ) (8,659 ) (6,009 )
Proceeds from bank loans 747   1,443   1,292   2,090  
Other financing activities (3,937 ) (4,165 ) (5,650 ) (5,583 )
Cash outflow from financing activities (11,362 ) (22,095 ) (14,259 ) (33,967 )
 

Increase (decrease) in cash and cash equivalents during the period
 

(695
 

)
 

(19,381
 

)
 

2,923
  

(35,651
 

)
Cash and cash equivalents, beginning of the period 62,835   56,218   58,761   71,679  
Net foreign exchange difference (1,333 ) 1,007   (877 ) 1,816  
Cash and cash equivalents, end of the period 60,807   37,844   60,807   37,844  
 

Cash and cash equivalents
 

60,807
  

37,844
  

60,807
  

37,844
 
Marketable securities 91,861   103,779   91,861   103,779  
Total cash, cash equivalents and marketable securities 152,668   141,623   152,668   141,623  
 

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