RE:Updated OutlookThere were three people on the call: Samira, Amal and Arvind, as per Samira's introduction. It's anyone's guess why. Perhaps there's been a demotion of some sort... or perhaps they've just determined that four's a crowd on the call and they can do just fine with the three of them.
Some further thoughts on the business:
Lots of activity with submissions during and subsequent the quarter. This is the type of activity that we should be seeing every quarter to start producing great returns. I'm happy with this part of the report.
I'm disappointed in the lack of new releases this year... which of course follows from a lack of submissions within the past year or two. I'd say it's almost certain they're not happy with the amount of product they've been able to bring onboard. On the other hand, the revenue is progressing despite of this. A big part of this is the MOH contract but there's significant growth in the innovative portfolio as well. Next year will make for a slightly tougher compare as we will not have the $20M contract during the first half of the year. In a year or two, with the current pipeline, I predict we'll be quite pleased with the growing results... but we definitely need to add more products to the pipeline to continue being pleased from that point on. To avoid what's happening this year. The silence with new deals means that there will be possibly be another quiet phase at some point unless they find some products soon.
Which begs the question: why is there a lack of in-licensing new products? Is it because of market conditions or because of the ability of the people involved? If it's because of market conditions, will those improve or is the market somehow going to provide poor opportunities far into the future? Or is it just about running into the right opportunities at the right time (which hasn't happened lately)?
The analysts have repeatedly asked about "valuations" and stuff. The answer we get is valuations have remained the same and the team is busy etc. While this is likely the case, I think we all would like to get to the heart of the issue: why is there a lack of new deals? Is this what they expected? Is this normal? What has to happen for the situation to improve?
The operational cash flow has been really poor this year. We have about $3M so far compared to $26.5M the year before. That's almost entirely attributable to increases in working capital ($26M). When will we start producing cash from operations again?
With that said, the business is growing despite a quiet year, EBITDA per share is up 11% YTD, and we finally have several submissions that will generate cash in the future. Furthermore, we do have the balance sheet to take on attractive opportunities. When will we find them?