Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Anika Therapeutics Inc (ANIK, Financial) reported a 7% growth in joint preservation and restoration, driven by new product launches like X-Twist and the regenerative HA-based integrity implant system.
- International growth in OA pain management was strong, with a 17% increase year-to-date, driven by market share gains and new country expansions.
- The company completed over 300 surgeries with the integrity implant system during its limited market release, exceeding expectations and attracting new customers.
- Anika Therapeutics Inc (ANIK) achieved significant cost savings through restructuring initiatives, resulting in a $3 million reduction in operating expenses in the second quarter.
- The company initiated a $40 million share buyback program, demonstrating a commitment to returning capital to shareholders.
Negative Points
- Overall revenue for the second quarter decreased by 5% due to the timing of strong US Orthovisc and Monovisc orders in the previous year.
- OA pain management revenue was down 9% in the quarter, primarily due to lower US sales and softer pricing dynamics.
- Adjusted EBITDA is expected to be at the lower end of the $25 million to $30 million range due to a mix shift in OA pain management revenue.
- Non-orthopedic revenue decreased by 26%, in line with prior guidance, due to lower sales of mature products.
- The company faces ongoing regulatory challenges with the FDA regarding the approval of Cingal in the US, requiring additional meetings and clarifications.
Q & A Highlights
Q: Are the international growth prospects for OA pain management products sufficient to offset the headwinds in the US market?
A: Stephen Griffin, Executive Vice President, Chief Financial Officer, Treasurer, confirmed that international growth is indeed sufficient to offset US market headwinds. The company is reaffirming its total revenue guidance for OA pain, with international sales up 17% in the first half of the year, which is expected to continue into the second half.
Q: How do you plan to distribute new products like Hyalofast and Cingal in the coming years?
A: Cheryl Blanchard, President, Chief Executive Officer, Director, stated that Hyalofast is a regenerative product with strong clinical data and ongoing engagement with the FDA. For Cingal, which fits into the pain management portfolio, distribution strategies in the US have not been announced yet, but more information will be provided in the future.
Q: Were there any one-time cost savings in the quarter, or should these levels be expected going forward?
A: Stephen Griffin explained that while there were some non-recurring items, the company achieved about $3 million in real cost savings on operating expenses due to actions taken in the first quarter. These savings are expected to continue moving forward.
Q: What is the status of the more mature products in the joint preservation and restoration segment?
A: Cheryl Blanchard noted that some legacy products in the Joint Preservation & Restoration (JPR) business are flat or declining, but this is offset by growth in newer products like X-Twist and Integrity. The focus is on leveraging expertise in hyaluronic acid for new product development.
Q: Can you provide more details on the international expansion for OA pain management products?
A: Cheryl Blanchard mentioned that while specific new country launches are not disclosed unless material, the company has expanded in Europe, Canada, South America, and Latin America. The growth is primarily driven by market share capture in existing countries rather than new country launches.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
