Q4/15 - Slight Beat to RBC and Consensus, Guidance Reiterate March 23, 2016
Concordia Healthcare Corp.
Q4/15 - Slight Beat to RBC and Consensus,
Guidance Reiterated (Constant FX Basis)
Impact: Positive
First impression
•
Slight Beat vs. consensus; expect more detail from the conference call
tomorrow.
CXRX's Q4 results, which contained a partial contribution
from AMCo (closed Oct 21st, 2015) were a bit above consensus and
our recently revised outlook for revenue ($189.9MM) and Adj. EBITDA
($118.8MM). The beat vs. our forecast is largely related to stronger than
anticipated AMCo (Concordia International) revenues of $115.7MM vs.
our $92.2MM forecast. Legacy (Concordia North America) revenues of
$74.2MM were weaker than our expected $92.2MM likely due in part
to the genericization of Dibenzyline. We also note that gross margins
of 78% were a bit below our expectations (~82%) and reflect a higher
proportion of lower margin AMCo revenue vs. U.S. legacy revenue. We
remain buyers of CXRX given its continued discount to the peer group.
•
Q4 revenues of $191.9MM for the quarter vs. $42.9MM last year,
above our $189.4MM forecast and consensus of $187.9MM.
Concordia
reported Q4 revenues of $191.9MM for the quarter vs. $42.9MM
last year, above our $189.4MM forecast and consensus of $187.9MM
(FactSet: 10 analysts, range $154.5-201.4MM). The large YoY increase
is attributed to the addition of the Covis portfolio (deal closed in April
2015) and AMCo (deal closed October 21, 2015).
•
Adj. EBITDA $120.1MM vs. $117.5MM consensus, RBC forecast of
$118.8MM.
Adjusted EBITDA in Q4 was $120.1MM vs. $25.4MM last
year, our $118.8MM forecast, and consensus of $117.5MM (FactSet:
9 analysts, range $110.5-120.7MM). The YoY increase is largely due to
M&A activity (Covis and AMCo).
•
Cash EPS of $1.24 in-line with our $1.23 forecast, below $1.29
consensus.
Q4 cash EPS of $1.24 was slightly above our $1.23 estimate
but below consensus of $1.29 (FactSet: 6 analysts, range $1.23-$1.48).
Cash EPS in Q4/14 was $0.74. We note that without the $1.48 outlier,
the EPS would have been essentially in-line.
•
Guidance reaffirmed but on a constant exchange basis.
Management
also reaffirmed its 2016 guidance of $1.02-1.06B in revenue (consensus
$1.0B), Adj. EBITDA of $610-640MM (consensus $612MM), Adj. EPS
of $6.29-6.77, and year-end Net Debt/EBITDA of ~5.5x. We believe
this signals that nothing has changed operationally, but does not
reflect recent FX headwinds, particularly those facing sterling/USD.
However, we note that our forecasts already take into account these FX
headwinds.
•
Conference call on Thursday, March 24th, at 8:30 a.m. ET.
Management
will discuss results on a conference call tomorrow morning (March 24th)
at 8:30am. Dial in is 647-427-7450 or 888-231-8191, reference number:
45328971. On the call, we are looking for detail on AMCo strength and
legacy weakness.