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Anika Therapeutics, Inc. (ANIK) SEC Filing 10-Q Quarterly Report for the period ending Thursday, September 30, 2021

Anika Therapeutics, Inc.

CIK: 898437 Ticker: ANIK

EXHIBIT 99.1

Anika Reports Third Quarter 2021 Financial Results

Revenue growth of 25% year-over-year
Company revises revenue growth outlook for 2021 to 9-11% on COVID Delta headwinds

BEDFORD, Mass., Nov. 04, 2021 (GLOBE NEWSWIRE) --

Anika Therapeutics, Inc. (NASDAQ: ANIK), a global joint preservation company in early intervention orthopedics, today reported financial results for its third quarter ended September 30, 2021.

Third Quarter 2021 Financial Summary

  • Revenue in the third quarter of 2021 was $39.5 million, 25% higher than prior year, compared with $31.7 million in the third quarter of 2020, due primarily to favorable order timing in Joint Pain Management.
    • Joint Pain Management revenue of $26.2 million, up 42%
    • Joint Preservation and Restoration revenue of $11.2 million, lower by 4%
    • Other revenue of $2.2 million
  • Gross margin was 58%, reflecting $3.0 million of acquisition related amortization expenses. Adjusted gross margin1, excluding these charges, was 66%.
  • Net income was $0.6 million, or $0.04 per diluted share, compared to net loss of $6.4 million, or $0.45 loss per diluted share, in the prior year. Net income this quarter benefited from a reduction in the value of contingent consideration of $1.9 million, net of tax, or $0.13 per diluted share. Adjusted net income1 for the quarter was $0.8 million, or $0.05 per diluted share, compared to $0.8 million, or $0.05 per diluted share, in the prior year.
  • Adjusted EBITDA1 was $5.8 million, compared to $4.9 million in the third quarter of 2020.
  • Operating cash flow was $2.1 million; cash balance was $91.0 million.

1 See description of non-GAAP financial information contained in this release.

Recent Operational Highlights

  • Launched Anika’s WristMotion® Total Wrist Arthroplasty System at the American Society for Surgery of the Hand (ASSH) annual meeting. The WristMotion® Total Wrist Arthroplasty System is designed to preserve natural motion and maximize stability providing an advanced solution for wrist arthritis.
  • Received additional 510(k) clearance for Tactoset® Injectable Bone Substitute for hardware augmentation. This 510(k) clearance expands the capability of Tactoset for augmenting suture anchor fixation during surgical procedures.
  • Attended first major industry event, American Academy of Orthopedic Surgeons annual meeting, in August 2021 showcasing the full integrated Anika portfolio.
  • Continued to strengthen Anika’s leadership team with the addition of Anne Nunes as Vice President of Operations bringing industry leading expertise to our global manufacturing and supply chain organization.
  • Anika’s Board of Directors appointed 35-year industry veteran Sheryl Conley as a new independent director bringing deep orthopedic industry commercial leadership experience to the Board.
  • Executed on planned operational initiative to roll-out Anika’s existing global ERP system, SAP, to legacy Parcus and Arthrosurface operations, providing additional operational capabilities and synergies in support of the Company’s growth strategy.

“We continue to make progress in our transformational strategy as Anika establishes itself in the joint preservation and restoration markets,” Cheryl R. Blanchard, Ph.D., Anika’s President and CEO, commented. “We are pleased with our third quarter results despite the continued headwinds and ongoing unpredictability due to COVID, and more recently the Delta variant. We are seeing the demand for our products in the ambulatory surgical center as a significant opportunity as we continue to invest in expanding our product portfolio for minimally invasive joint preservation treatments. We remain laser focused on our long-term strategy to double our revenues by 2024, off our 2019 base despite near term COVID challenges.”

Fiscal 2021 Outlook

The Company expects its overall revenue for fiscal year 2021 to grow 9-11% year-over year, compared with previous guidance of 11-14%, primarily due to the increased impact of COVID. This annual revenue growth is driven by Joint Preservation and Restoration growth in the upper-teens percent range with mid-single digit growth in Joint Pain Management. Other revenue is expected to grow mid-single digits for the year.

There remains continued uncertainty in the global market associated with the impact of the COVID pandemic, and the Company’s outlook for fiscal 2021 is subject to changing dynamics associated with COVID including additional variants, vaccine distribution, and other related developments.

Conference Call Information

Anika’s management will hold a conference call and webcast to discuss its financial results and business highlights today, Thursday, November 4, 2021 at 5:00 pm ET. The conference call can be accessed by dialing 1-866-437-2398 (toll-free domestic) or 1-856-344-9206 (international) and providing the conference ID number 8047540. A live audio webcast will be available in the Investor Relations section of Anika’s website, 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.

Non-GAAP Financial Information

Non-GAAP financial measures should be considered supplemental to, and not a substitute for, the Company’s reported financial results prepared in accordance with GAAP. Furthermore, the Company’s definition of non-GAAP measures may differ from similarly titled measures used by others. Because non-GAAP financial measures exclude the effect of items that will increase or decrease the Company’s reported results of operations, Anika strongly encourages investors to review the Company’s consolidated financial statements and publicly filed reports in their entirety. The Company presents these non-GAAP financial measures because it uses them as supplemental measures in internally assessing the Company’s operating performance, and, in the case of Adjusted EBITDA, it is set as a key performance metric to determine executive compensation. The Company also recognizes that these non-GAAP measures are commonly used in determining business performance more broadly and believes that they are helpful to investors, securities analysts, and other interested parties as a measure of comparative operating performance from period to period.

Adjusted Gross Margin

In Q3 2021, adjusted gross margin is defined by the Company as adjusted gross profit divided by total revenue. The Company defines adjusted gross profit as GAAP gross profit excluding amortization of certain acquired assets, the impact of inventory fair-value step up associated with our recent acquisitions and non-cash product rationalization charges.

Adjusted EBITDA

In Q3 2021, adjusted EBITDA is defined by the Company as GAAP net income excluding depreciation and amortization, interest and other income (expense), income taxes, stock-based compensation expense, acquisition related expenses, non-cash charges related to goodwill impairment and changes in the fair value of contingent consideration associated with the Company’s recent acquisitions as a result of the COVID pandemic, and non-cash product rationalization charges.

Adjusted Net Income and Adjusted EPS

Adjusted net income is defined by the Company as GAAP net income excluding acquisition related expenses, inclusive of the impact of purchase accounting, on a tax effected basis, and the non-cash product rationalization charges. In the context of adjusted net income, the impact of purchase accounting includes amortization of inventory step up and intangible assets recorded as part of purchase accounting for acquisition transactions. The amortized assets contribute to revenue generation, and the amortization of such assets will recur in future periods until such assets are fully amortized. These assets include the estimated fair value of certain identified assets acquired in acquisitions in 2020 and beyond, including in-process research and development, developed technology, customer relationships and acquired tradenames. As a result of COVID, the Company is also specifically excluding the impacts of goodwill impairment charges and changes in the fair value of contingent consideration associated with the acquisition transactions, each on a tax effected basis. Adjusted diluted EPS is defined by the Company as GAAP diluted EPS excluding acquisition related expenses and the impact of purchase accounting, each on a tax-adjusted per share basis, and non-cash product rationalization charges. Again, the Company is also specifically excluding the impacts of goodwill impairment charges and changes in the fair value of contingent consideration associated with recent acquisition transactions, each on a tax effected basis if applicable.

A reconciliation of adjusted gross profit to gross profit (and the associated adjusted gross margin calculation), adjusted EBITDA to net income, adjusted net income to net income 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 those statements in the last two sentences of the quotation from Dr. Blanchard, and in the section captioned “Fiscal 2021 Outlook” related to potential future revenues and the impacts of COVID. 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.

About Anika
Anika Therapeutics, Inc. (NASDAQ: ANIK), is a global joint preservation company that creates and delivers meaningful advancements in early intervention orthopedic care. We partner with clinicians to understand what they need most to treat their patients and we develop minimally invasive products that restore active living for people around the world. We are committed to leading in high opportunity spaces within orthopedics, including osteoarthritis pain management, regenerative solutions, soft tissue repair and bone preserving joint technologies. Anika is headquartered in Massachusetts with operations in the United States and Europe. For more information about Anika, please visit www.anika.com.  

For Investor Inquiries:
Anika Therapeutics, Inc.
Mark Namaroff, 781-457-9287
Executive Director, Investor Relations and Corporate Communications
investorrelations@anika.com

 

         
Anika Therapeutics, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
         
  For the Three Months Ended September 30, For the Nine Months Ended September 30,
   2021   2020   2021   2020 
Revenue $39,536  $31,694  $111,973  $97,769 
Cost of Revenue  16,513   14,351   47,164   45,487 
Gross Profit  23,023   17,343   64,809   52,282 
         
Operating expenses:        
Research and development  7,673   5,217   21,327   15,799 
Selling, general and administrative  17,500   15,903   53,664   44,884 
Goodwill impairment  -   -   -   18,144 
Change in fair value of contingent consideration  (3,450)  4,150   (21,920)  (16,176)
Total operating expenses  21,723   25,270   53,071   62,651 
Income (loss) from operations  1,300   (7,927)  11,738   (10,369)
Interest and other expense, net  (48)  (228)  (141)  (118)
Income (loss) before income taxes  1,252   (8,155)  11,597   (10,487)
Income taxes  694   (1,744)  1,670   (2,161)
Net income (loss) $558  $(6,411) $9,927  $(8,326)
         
Net income (loss) per share:        
  Basic $0.04  $(0.45) $0.69  $(0.59)
  Diluted $0.04  $(0.45) $0.68  $(0.59)
         
Weighted average common shares outstanding:        
  Basic  14,429   14,205   14,389   14,202 
  Diluted  14,647   14,205   14,588   14,202 


    
Anika Therapeutics, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except per share data)
(unaudited)
    
 September 30, December 31,
ASSETS 2021   2020 
Current assets:   
Cash, cash equivalents and investments$90,976  $98,318 
Accounts receivable, net 32,352   24,102 
Inventories, net 35,019   46,209 
Prepaid expenses and other current assets 7,433   8,754 
Total current assets 165,780   177,383 
Property and equipment, net 49,111   50,613 
Right-of-use assets 21,397   22,619 
Other long-term assets 23,671   15,420 
Intangible assets, net 85,021   91,157 
Goodwill 7,950   8,413 
Total assets$352,930  $365,605 
    - 
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Current liabilities:   
Accounts payable$7,942  $8,984 
Accrued expenses and other current liabilities 17,339   14,793 
Contingent consideration 3,490   13,090 
Total current liabilities 28,771   36,867 
Other long-term liabilities 1,489   1,244 
Contingent consideration -   22,320 
Deferred tax liability 12,972   11,895 
Lease liabilities 19,638   20,879 
    
Stockholders’ equity:   
Common stock, $0.01 par value 144   143 
Additional paid-in-capital 63,864   55,355 
Accumulated other comprehensive loss (5,319)  (4,542)
Retained earnings 231,371   221,444 
Total stockholders’ equity 290,060   272,400 
Total liabilities and stockholders’ equity$352,930  $365,605 


 
Anika Therapeutics, Inc. and Subsidiaries
Reconciliation of GAAP Gross Profit to Adjusted Gross Profit
(per share data)
(unaudited)
       
       
  For the Three Months Ended September 30, For the Nine Months Ended September 30,
      in thousands  2021  2020   2021  2020 
Gross Profit $23,023 $17,343  $64,809 $52,282 
Product rationalization related charges  -  -   2,063  1,920 
Acquisition related intangible asset amortization  1,562  1,562   4,686  4,283 
Acquisition related inventory step up  1,458  3,273   6,244  7,396 
Adjusted Gross Profit $26,043 $22,178  $77,802 $65,881 
       
Adjusted Gross Margin  66% 70%  69% 67%
       
       
Anika Therapeutics, Inc. and Subsidiaries
Reconciliation of GAAP Net Income to Adjusted EBITDA
(in thousands, except per share data)
(unaudited)
       
  For the Three Months Ended September 30, For the Nine Months Ended September 30,
      in thousands, except per share data  2021  2020   2021  2020 
Net income (loss) $558 $(6,411) $9,927 $(8,326)
Interest and other expense, net  48  228   141  118 
Provision (benefit) for income taxes  694  (1,744)  1,670  (2,161)
Depreciation and amortization  1,789  1,718   5,226  5,132 
Share-based compensation  2,863  1,920   7,919  3,953 
Product rationalization  -  -   2,063  2,892 
Acquisition related expenses  -  -   -  4,157 
Acquisition related intangible asset amortization  1,787  1,760   5,361  4,831 
Acquisition related inventory step up  1,458  3,273   6,244  7,396 
Goodwill impairment  -  -   -  18,144 
Change in fair value of contingent consideration  (3,450) 4,150   (21,920) (16,176)
Adjusted EBITDA $5,747 $4,894  $16,631 $19,960 
       
       
Anika Therapeutics, Inc. and Subsidiaries
Reconciliation of GAAP Net Income to Adjusted Net Income
(in thousands, except per share data)
(unaudited)
       
  For the Three Months Ended September 30, For the Nine Months Ended September 30,
      in thousands, except per share data  2021  2020   2021  2020 
Net income (loss) $558 $(6,411) $9,927 $(8,326)
Product rationalization, tax effected  -  -   1,590  2,377 
Acquisition related expenses, tax effected  -  -   -  3,174 
Acquisition related intangible asset amortization, tax effected  1,146  1,340   3,898  3,688 
Acquisition related inventory step up, tax effected  935  2,492   4,626  5,646 
Goodwill impairment, tax effected  -  -   -  15,773 
Change in fair value of contingent consideration, tax effected  (1,865) 3,336   (17,152) (13,873)
Adjusted net income $774 $757  $2,889 $8,459 
       
 
Anika Therapeutics, Inc. and Subsidiaries
Reconciliation of GAAP Diluted Earnings Per Share to Adjusted Diluted Earnings Per Share
(per share data)
(unaudited)
       
  For the Three Months Ended September 30, For the Nine Months Ended September 30,
      in thousands, except per share data  2021  2020   2021  2020 
Diluted earnings (loss) per share (EPS) $0.04 $(0.45) $0.68 $(0.59)
Product rationalization, tax effected  -  -   0.11  0.17 
Acquisition related expenses per share, tax effected  -  -   -  0.22 
Acquisition related intangible asset amortization, tax effected  0.08  0.09   0.27  0.26 
Acquisition related inventory step up, tax effected  0.06  0.18   0.32  0.40 
Goodwill impairment, tax effected  -  -   -  1.11 
Change in fair value of contingent consideration, tax effected  (0.13) 0.23   (1.18) (0.98)
Adjusted diluted EPS $0.05 $0.05  $0.20 $0.59 
         


Revenue by Product Family
(in thousands, except percentages)
(unaudited)
          
 For the Three Months Ended September 30, For the Nine Months Ended September 30,
in thousands 2021 % 2020 %  2021 % 2020 %
Joint Pain Management 26,153 66%$18,439 58%  69,790 62%$66,168 68%
Joint Preservation and Restoration 11,193 28% 11,715 37%  35,296 32% 26,233 27%
Other 2,190 6% 1,540 5%  6,887 6% 5,368 5%
Revenue 39,536 100% 31,694 100%  111,973 100% 97,769 100%



The following information was filed by Anika Therapeutics, Inc. (ANIK) on Thursday, November 4, 2021 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside Anika Therapeutics, Inc.'s 10-Q Quarterly Report:

Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Document And Entity Information
Consolidated Balance Sheets (Current Period Unaudited)
Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals)
Consolidated Statements Of Cash Flows (Unaudited)
Consolidated Statements Of Operations And Comprehensive Income (Unaudited)
Consolidated Statements Of Stockholders' Equity (Unaudited)
Note 1 - Nature Of Business
Note 10 - Revenue
Note 10 - Revenue (Details Textual)
Note 10 - Revenue (Tables)
Note 10 - Revenue - Product Revenue By Product Group (Details)
Note 10 - Revenue - Total Revenue By Geographic Location (Details)
Note 11 - Equity Incentive Plan
Note 11 - Equity Incentive Plan (Details Textual)
Note 11 - Equity Incentive Plan (Tables)
Note 11 - Equity Incentive Plan - Assumptions Used To Estimate Fair Value Of Stock Options And Stock Appreciation Rights (Details)
Note 11 - Equity Incentive Plan - Performance Stock Units (Details)
Note 11 - Equity Incentive Plan - Restricted Stock Units (Details)
Note 11 - Equity Incentive Plan - Stock Options (Details)
Note 11 - Equity Incentive Plan - Total Stock-Based Compensation Expense (Details)
Note 12 - Income Taxes
Note 12 - Income Taxes (Details Textual)
Note 13 - Earnings Per Share ("Eps")
Note 13 - Earnings Per Share ("Eps") (Details Textual)
Note 13 - Earnings Per Share ("Eps") (Tables)
Note 13 - Earnings Per Share ("Eps") - Basic And Diluted Earnings Per Share (Details)
Note 2 - Basis Of Presentation
Note 3 - Business Combinations
Note 3 - Business Combinations (Details Textual)
Note 3 - Business Combinations (Tables)
Note 3 - Business Combinations - Consideration Transferred (Details)
Note 3 - Business Combinations - Fair Value Of Net Assets Acquired (Details)
Note 3 - Business Combinations - Intangible Assets Acquired (Details)
Note 3 - Business Combinations - Pro Forma Information (Details)
Note 4 - Fair Value Measurements
Note 4 - Fair Value Measurements (Details Textual)
Note 4 - Fair Value Measurements (Tables)
Note 4 - Fair Value Measurements - Contingent Consideration (Details)
Note 4 - Fair Value Measurements - Fair Value Of Financial Instruments (Details)
Note 5 - Inventories
Note 5 - Inventories (Tables)
Note 5 - Inventories - Summary Of Inventories (Details)
Note 6 - Intangible Assets
Note 6 - Intangible Assets (Details Textual)
Note 6 - Intangible Assets (Tables)
Note 6 - Intangible Assets - Summary Of Intangible Assets (Details)
Note 7 - Goodwill
Note 7 - Goodwill (Tables)
Note 7 - Goodwill - Changes In The Carrying Value Of Goodwill (Details)
Note 8 - Accrued Expenses And Other Liabilities
Note 8 - Accrued Expenses And Other Liabilities (Tables)
Note 8 - Accrued Expenses And Other Liabilities - Summary Of Accrued Expenses (Details)
Note 9 - Commitments And Contingencies
Note 9 - Commitments And Contingencies (Details Textual)
Significant Accounting Policies (Policies)
Ticker: ANIK
CIK: 898437
Form Type: 10-Q Quarterly Report
Accession Number: 0001171843-21-007580
Submitted to the SEC: Thu Nov 04 2021 5:51:28 PM EST
Accepted by the SEC: Fri Nov 05 2021
Period: Thursday, September 30, 2021
Industry: Surgical And Medical Instruments And Apparatus

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