News
DRI Healthcare earns $21.56-million (U.S.) in 2021
2022-03-07 17:30 ET - News Release
Mr. Behzad Khosrowshahi reports
DRI HEALTHCARE TRUST REPORTS FOURTH QUARTER AND FISCAL 2021 RESULTS
DRI Healthcare Trust has released its financial results for the fourth quarter and fiscal year ended Dec. 31, 2021. The Trust's 2021 annual financial statements and Management's Discussion & Analysis ("MD&A") have been filed on SEDAR (www.sedar.com). All dollar amounts are expressed in U.S. dollars unless otherwise indicated.
"We had a very successful first year as a public trust, executing multiple transactions and demonstrating our ability to build our asset base," said Behzad Khosrowshahi, Chief Executive Officer of DRI Healthcare Trust. "Our existing assets performed well, providing strong cash flows in the fourth quarter, and we finished the year with a strong balance sheet supportive of continued growth. By executing our acquisition strategy, and with a strong pipeline buoyed of attractive opportunities we are looking forward to continued growth in 2022 that will create meaningful value for our unit holders."
Fourth Quarter Highlights
- Royalty Income and Interest Income of US$22.2 million;
- Total Cash Receipts of US$36.3 million 1;
- Adjusted EBITDA of US$32.0 million 1;
- Net Earnings and Comprehensive Earnings of US$3.4 million;
- Adjusted Cash Earnings per Unit (basic and diluted) of US$0.41 1,2;
- Net Earnings per Unit (basic and diluted) of US$0.08 2;
- Entered an agreement for a US$200 million syndicated credit facility, with an initial partial draw made to repay the existing secured notes;
- Paid a quarterly cash distribution of US$0.075 per unit and a special cash distribution of US$0.22 per unit, on January 20, 2022.
Fiscal 2021 Highlights
- Royalty Income and Interest Income of US$81.8 million;
- Total Cash Receipts of US$115.6 million 1;
- Adjusted EBITDA of US$100.6 million 1;
- Net Earnings and Comprehensive Earnings of US$21.6 million;
- Adjusted Cash Earnings per Unit (basic and diluted) of US$1.85 1,2;
- Net Earnings per Unit (basic and diluted) of US$0.62 2;
- Total cash returned to unitholders of US$20.7 million through declared distributions of US$15.2 million and unit buybacks under the Trust's normal course issuer bid ("NCIB") of US$5.5 million;
- Entered into transactions valued at up to US$185.5 million for the purchase of royalties from four new products, including pacritinib and Oracea.
1 Total Cash Receipts and Adjusted EBITDA are non-GAAP measures. Adjusted Cash Earnings per Unit is a non-GAAP ratio. These measures are not standardized measures under IFRS and might not be comparable to similar financial measures disclosed by other issuers. The reconciliation of these measures can be found later in this press release and in the Trust's MD&A.
2 The weighted average number of basic units for the three months and year ended December 31, 2021 were 39,802,522 units and 34,646,277 units, respectively. The weighted average number of fully diluted units for the three months and year ended December 31, 2021 were 39,810,526 units and 34,654,282 units, respectively.
Subsequent to Quarter End
- On February 28, 2022, the United States Food & Drug Administration ("FDA") approved pacritinib under the brand name VONJOTM for the treatment of myelofibrosis patients with platelets below 50 x 109/L, resulting in the closing of the previously announced transaction for a tiered royalty on VONJO for US$60 million;
- Today, the Board of Trustees declared a quarterly cash distribution of US$0.075 per unit for the first quarter of 2022, which is payable on April 20, 2022 to unitholders of record on March 31, 2022.
- Between January 1, 2022 to February 28, 2022, the Trust further repurchased 400,000 units under its NCIB for an aggregate amount of US$2.1 million and will amend its NCIB to increase the total number of units that can be repurchased under its NCIB to 2,500,000 units, representing approximately 7.6% of the Trust's public float as at September 30, 2021. The effective date of the amendment will be March 10, 2022.
Asset Performance
As at December 31, 2021, the Trust's portfolio included 17 royalty streams on 13 products that address medically necessary therapeutic areas, such as oncology, rare diseases, ophthalmology, endocrinology, dermatology, autoimmune and vaccines. On December 31, 2021, the royalty asset portfolio had a book value, net of accumulated amortization, of US$293.7 million, which generated Total Cash Royalty Receipts of US$34.5 million 1 and U$113.9 million during the three months and year ended December 31, 2021. The royalty asset portfolio generated royalty income US$20.9 million and US$79.9 million over the same periods, respectively. In addition, the Trust held a loan receivable with a gross principal outstanding balance of US$50.0 million at December 31, 2021, which generated US$1.8 million of cash interest received in the quarter and year-to-date. Interest income on the loan receivable was US$1.4 million and US$1.9 million during the three months and year ended December 31, 2021, respectively. As expected, the Trust's entitlement to royalties on the Rilpivirine portfolio expired in the second quarter of 2021.
Liquidity and Capital
On December 31, 2021, the Trust had cash and cash equivalents of US$61.7 million. The Trust's credit facility had an outstanding principal balance of US$45.5 million on December 31, 2021. On January 27, 2022, the Trust made a voluntary repayment of US$30.5 million and, on March 7, 2022, the Trust drew US$60.0 million to fund the purchase of the tiered royalty on pacritinib, bringing the outstanding principal balance of the credit facility to US$75.0 million.
The Trust had 39,079,680 units issued and outstanding on December 31, 2021.
Distributions
On November 8, 2021, the Board of Trustees approved a quarterly cash distribution of US$0.075 per unit, and on December 22, 2021, approved a special cash distribution of US$0.22 per trust unit, both of which were paid to unitholders on January 20, 2022. The Trust also announced today that its Board of Trustees has declared a quarterly cash distribution in the amount of US$0.075 per unit for the first quarter of 2022, payable on April 20, 2022, to unitholders of record on March 31, 2022.
Normal Course Issuer Bid
During the quarter, the Trust purchased 1,043,070 of its own units under its NCIB for an aggregate amount of US$5.5 million. Between January 1, 2022 to February 28, 2022, the Trust purchased another 400,000 units under its NCIB for an aggregate amount of US$2.1 million and will extend its share buyback program by receiving approval from the Toronto Stock Exchange to increase the total number of units that can be repurchased under its NCIB to 2,500,000 units, representing approximately 7.6% of the Trust's public float as at September 30, 2021. The effective date of the amendment will be March 10, 2022. The expiry date of October 4, 2022 for the NCIB remains unchanged.
2021 Highlights
In addition to the strong performance of the asset portfolio during the year, the Trust took a number of steps to execute on the strategy outlined to its unitholders since its initial public offering in February.
On August 25, 2021, a wholly-owned subsidiary of the Trust entered transactions with CTI BioPharma Corp. ("CTI"), comprised of secured debt and, upon product approval of pacritinib by the U.S. Food and Drug Administration ("FDA"), the purchase of a tiered royalty on sales of pacritinib. CTI will use the secured debt financing to fund the commercialization of pacritinib. On February 28, 2022, the FDA approved pacritinib, under the brand name VONJOTM, for the treatment of adult myelofibrosis patients with platelets below 50 x 109/L, and the royalty transaction closed on March 7, 2022.
On September 30, 2021, a wholly-owned subsidiary of DRI acquired a royalty interest on the worldwide sales of Oracea (doxycycline), which has been approved by the FDA for the treatment of inflammatory lesions of rosacea in adult patients. Oracea is marketed by Galderma Laboratories, Inc., a subsidiary of Galderma SA. As part of the transaction, DRI also acquired royalty interests in two additional products, neither of which are expected to make a material contribution to DRI's royalty income.
On October 22, 2021, a subsidiary of the Trust entered into a credit agreement with a syndicate of banks, providing for credit facilities of up to US$200 million. An initial draw was made on the facility to repay the existing secured notes, with the balance of the debt capacity being available to fund future acquisitions of royalty assets.
Throughout 2021, the Trust declared and subsequently paid cash distributions totalling US$0.3867 per unit. The Trust also commenced a NCIB under which, as of as of February 28, 2022, the Trust has repurchased and cancelled 1,443,070 units, for an aggregate purchase price of approximately US$7.6 million.
"We are in an excellent position to continue to execute," added Mr. Khosrowshahi. "The market remains very strong as a result of high levels of drug approvals, the rapid increase in the number of biotech companies seeking financing, and continued demand from academic institutions and inventors".
Fourth Quarter and Fiscal Year 2021 Conference Call & Webcast
As previously announced, management will hold a conference call on Tuesday, March 8, 2022, at 8:30 a.m. (ET) to review the Trust's 2021 fourth quarter and year-end results. You can join the call by dialling 1-888-664-6392 or 416-764-8659 approximately 15 minutes prior to the call to secure a line.
A live webcast of the conference call, including a slide presentation, will be available at https://bit.ly/DRI2021Q4. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived on the Trust's website following the call date.
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