Anika reports Q4 and year-end 2023 financial results

Anika Therapeutics, Inc. reported financial results for its fourth quarter and full year ended December 31, 2023.

Fourth quarter 2023 financial summary

• Revenue in the fourth quarter of 2023 was $43.0 million, up 8% compared to $39.6 million in the fourth quarter of 2022.
  • OA Pain Management revenue of $25.1 million, up 12%, on growing global commercial adoption and some order timing
  • Joint Preservation and Restoration revenue of $15.3 million, up 7%
  • Non-Orthopedic revenue of $2.6 million, down 8%

• Gross margin was 61%, including $1.6 million of non-cash acquisition-related intangible asset amortization; Adjusted gross margin was 65%.
• Recorded a non-recurring, non-cash impairment charge in the fourth quarter of $62.2 million for the intangible assets associated with the Q1-2020 acquisitions of Arthrosurface and Parcus Medical.
• Including the non-cash impairment charge, net loss was ($63.0) million, or ($4.30) per share, compared to net loss of ($4.9) million, or ($0.34) per share, in the prior year period.
• Adjusted net income was $0.8 million, or $0.05 per diluted share, compared to adjusted net loss of ($3.0) million, or ($0.21) per share, in the fourth quarter of 2022.
• Adjusted EBITDA was $5.8 million, compared to $1.4 million in the fourth quarter of 2022.
• Cash from operations was $3.6 million; ending cash balance rose to $72.9 million.

Full year 2023 financial summary

• Revenue for fiscal 2023 increased 7% to $166.7 million, compared with $156.2 million in 2022.
  • OA Pain Management revenue of $101.9 million, up 11%
  • Joint Preservation and Restoration revenue of $54.9 million, up 9%
  • Non-Orthopedic revenue of $9.9 million, down 29%

• Gross margin was 62%, including $6.2 million of non-cash acquisition-related intangible asset amortization and $0.7 million of product rationalization charges. Adjusted gross margin, excluding these charges, was 66%.
• Including the fourth quarter non-cash impairment charge, net loss was ($82.7) million, or ($5.64) per share, compared to net loss of ($14.9) million, or ($1.02) per share, in 2022. Net loss also included $18.1 million, or ($1.23) per share, for charges associated with product rationalization, acquisition related amortization, discontinuation of software development, Parcus arbitration settlement and shareholder activism.
• Adjusted net loss for the year was ($4.3) million, or ($0.30) per share, compared to adjusted net loss of ($7.1) million, or ($0.49) per share in 2022.
• Adjusted EBITDA for the year was $15.5 million, compared to $12.6 million in 2022.
• Cash used in operations was $1.8 million.

“We are pleased to report strong fourth quarter and full year results, including a record year in OA Pain Management. These results reflect the evolution of our differentiated HA franchise and the launch of exciting new products in Regenerative, Sports Medicine and Arthrosurface Joint Solutions,” said Cheryl R. Blanchard, Ph.D., Anika’s President and CEO. “Over the course of the year, we achieved key milestones, learned a lot about the business, and are taking decisive action to further reduce spending and focus our strategy on driving the products that provide the greatest growth opportunities. Our plan to optimize performance is designed to capitalize on the significant growth potential across the business while accelerating our pivot to profitability, with adjusted EBITDA expected to grow over 75% at the midpoint in 2024.”

Dr Blanchard continued, “We begin 2024 with renewed energy and strong momentum across the new products in our portfolio. Our HA-based Integrity Implant System is receiving very positive feedback, and its full market release is on track for mid-2024. We also remain focused on bringing Hyalofast and Cingal to the U.S. market. As we focus the business on our core strengths and highest value opportunities, we are confident that we will enhance value for shareholders.”

Cost reductions
In 2023, Anika launched multiple meaningful new products and made considerable progress addressing the new MDR regulatory requirements in Europe. With the progress made in 2023, and in recognition of the slower than expected pace of growth in some of its more mature product lines, the Company has decided to further reduce its planned spending for 2024 and to reduce approximately 9% of its workforce, effective the end of the first quarter. The cost reductions, on an annualized basis, are expected to provide savings of approximately $10 million, excluding the impact of one-time costs. These actions position Anika to focus on its strengths and preserve the Company’s significant opportunities with its strong, growing and differentiated product lines and pipeline, and accelerate Anika’s pivot to profitability.

Fiscal 2024 guidance
In 2024, Anika is prioritizing accelerated growth in profitability, with a focus on the products with the greatest growth opportunities and where the Company has the most differentiated right-to-win.

As such, Anika expects revenue for fiscal year 2024 of $168 to $173 million, representing growth of 1% to 4% compared to 2023. Revenue ranges by product family are:

• OA Pain Management of $102 to $104 million, up 0% to 2%, on sustained above-market growth offset by some unfavorable order timing
• Joint Preservation and Restoration of $58 to $60.5 million, up 6% to 10%
• Non-Orthopedic of $8 to $8.5 million, down 14% to 19%

The Company expects adjusted EBITDA for 2024 to be $25 to $30 million, up over 75% at the midpoint, representing an adjusted EBITDA margin of at least 15%, up over 6 points compared to 2023. Anika’s expectations around improved profitability in 2024 reflect only partial-year cost savings as well as the early-stage ramp from Anika’s new products.
MB Bureau