Akorn, Inc. (NASDAQ:AKRX) announced its financial results for the third quarter of 2016. Akorn reported net revenue of $284 million for the third quarter 2016, an 11% increase from the third quarter 2015.
GAAP net income for the third quarter 2016 was $48 million, or $0.38 per diluted share, compared to GAAP net income of$48 million, or $0.39 per diluted share, for the same quarter of 2015. Including a net adjustment of $22 million to net income for non-GAAP items, adjusted diluted earnings per share for the third quarter 2016 were $0.56, compared to $0.56 in the same quarter 2015, after a net adjustment of $22 million to net income for non-GAAP items.
Raj Rai, Akorn’s Chief Executive Officer, commented, “We are pleased with our third quarter results. We remain focused on investing in our company to support future growth endeavors through expansion of our research and development capabilities, modernization of our plants, expansion of our capacities and technology enhancements.”
Rai further added, “We expect to finish the year with strong results and momentum, despite the regulatory challenges and industry headwinds. We completed a $25 million share buyback in the third quarter, however, our focus for capital deployment is on business development opportunities to further enhance our long-term growth prospects.”
Earnings before interest, taxes, depreciation and amortization was $117 million for the third quarter 2016 compared to $108 million for the third quarter 2015. Adjusted EBITDA, which is another non-GAAP measure used by management to evaluate the continuing operations of the Akorn business, was $127 million for the third quarter 2016, compared to $125 million for the third quarter 2015. As of the quarter ended September 30, 2016, Akorn had GAAP debt of $832 million and trailing twelve months net debt to adjusted EBITDA ratio of approximately 1.3x.
2016 Guidance Update:
The Company expects that full year net revenue, GAAP diluted earnings per share, adjusted diluted earnings per share and adjusted EBITDA to increase as compared to the previously communicated range. Accordingly, the Company has revised guidance as denoted in the table below:
At October 31, 2016, Akorn had 83 ANDAs pending at the FDA, representing approximately $9 billion in annual branded and generic market value according to IMS Health. Akorn has over 75 additional ANDAs in various stages of development, representing approximately $13 billion in annual branded and generic market value according to IMS Health.
Cranbury, New Jersey R&D Facility:
Subsequent to the quarter ended September 30, 2016, the Company expanded its R&D footprint by opening a facility in theNew Jersey pharmaceutical corridor which has the capacity to house up to 40 scientists devoted to product development and the filing of ANDA’s to facilitate the Company’s strategy to replenish and enhance its pipeline. Product development is expected to focus on alternate dosage form generics including topicals, nasals, and ophthalmics. Akorn is actively recruiting for a number of new R&D scientist and leadership positions that will be based at this new facility.
Stock Repurchase Program:
During the quarter ended September 30, 2016, the Company repurchased 0.9 million shares at an average price of $27.74. As of September 30, 2016, the Company had $175 million remaining on the repurchase authorization.(Original Source)
Shares of Akorn are currently trading at $22.26, down $2.48 or 10%. AKRX has a 1-year high of $39.46 and a 1-year low of $17.57. The stock’s 50-day moving average is $27.65 and its 200-day moving average is $28.85.
On the ratings front, Akorn has been the subject of a number of recent research reports. In a report issued on September 15, Piper Jaffray analyst David Amsellem upgraded AKRX to Buy, with a price target of $34, which represents a potential upside of 37% from where the stock is currently trading. Separately, on August 29, Jefferies’ David Steinberg reiterated a Buy rating on the stock .
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, David Amsellem and David Steinberg have a yearly average loss of 8.8% and 8.2% respectively. Amsellem has a success rate of 36% and is ranked #3886 out of 4165 analysts, while Steinberg has a success rate of 31% and is ranked #3887.
Akorn, Inc. is a niche pharmaceutical company that develops, manufactures and markets generic and branded prescription pharmaceuticals as well as animal and consumer health products. It specializes in difficult-to-manufacture sterile and non-sterile dosage forms including: ophthalmics, injectables, oral liquids, otics, topicals, inhalants, and nasal sprays. The company markets its products to retail pharmacies, ophthalmologists, optometrists, physicians, veterinarians, hospitals, clinics, wholesalers, distributors, group purchasing organizations, and government agencies. It operates through the following segments: Prescription Pharmaceuticals and Consumer Health. The Prescription Pharmaceuticals segment engages in the sales of generic and branded prescription pharmaceuticals including ophthalmics, injectables, oral liquids, otics, topicals, inhalants, and nasal sprays. The Consumer Health segment engages in the sales of animal health and over-the-counter OTC products, both branded and private label.