- Continued strong performance of existing
assets and financial results -
- Completion of Vonjo™ royalty
transaction -
TORONTO, May 10, 2022
/CNW/ - DRI Healthcare Trust (TSX: DHT.UN) (TSX: DHT.U) ("DRI" or
"the Trust") today announced its financial results for the quarter
ended March 31, 2022. The Trust's first quarter 2022 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.
"Our successful start to the year was highlighted by the closing
of the Vonjo royalty transaction, adding another high quality,
growth-oriented asset to our portfolio and demonstrating our
ability to build our asset base," said Behzad Khosrowshahi, Chief Executive Officer of
DRI Healthcare Trust. "Our portfolio continued to perform well,
providing strong cash flows in the first quarter. In terms of
growing our portfolio, we continue to see a robust market producing
a strong pipeline of attractive opportunities. With our strong
balance sheet at the end of the quarter and the recent increase in
our credit facility, we are well-positioned to capitalize on these
opportunities and create meaningful value for our unitholders."
First Quarter Highlights
- Completed the Vonjo royalty transaction deploying US$60 million;
- Total Income of US$22.6
million;
- Total Cash Receipts of US$21.0
million1;
- Adjusted EBITDA of US$17.8
million1;
- Net Earnings and Comprehensive Earnings of US$5.7 million;
- Adjusted Cash Earnings per Unit (basic and diluted) of
US$0.491,2;
- Net Earnings per Unit (basic and diluted) of US$0.152;
- Paid a quarterly cash distribution of US$0.075 per unit on April
20, 2022; and
- The Trust acquired 477,980 of its own units under its normal
course issuer bid ("NCIB") and received TSX approval to increase
the number of units that can be purchased under the NCIB to
2,500,000 units until October 4,
2022.
Subsequent to Quarter End
- On April 20, 2022, the Trust
entered into an amended and restated credit agreement increasing
total credit facilities to U$350 million to fund transactions;
and
- Today, the board of trustees declared a quarterly cash
distribution of US$0.075 per unit for
the second quarter of 2022, which is payable on July 20, 2022, to unitholders of record on
June 30, 2022.
1 Total Cash Receipts and
Adjusted EBITDA are non-GAAP financial 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 and diluted units for the three months ended
March 31, 2022, were 38,743,644 units and 38,743,769
units,
respectively.
|
Financial Highlights
(thousands of
U.S. dollars, except per unit amounts)
|
Three months
ended
March 31, 2022
|
Pro Forma three
months ended
March 31, 20211
|
Total income
|
22,625
|
12,691
|
Management
fees
|
1,437
|
883
|
Amortization
expenses
|
12,775
|
6,793
|
Other
expenses
|
2,719
|
1,824
|
Net earnings and other
comprehensive earnings
|
5,694
|
3,191
|
Earnings per unit –
basic2
|
0.15
|
0.17
|
Earnings per unit –
diluted2
|
0.15
|
0.17
|
Total Cash Receipts/
Pro Forma Total Cash Receipts3,4
|
20,952
|
30,590
|
Adjusted EBITDA/ Pro
Forma Adjusted EBITDA3,4
|
17,811
|
27,963
|
Adjusted EBITDA Margin/
Pro Forma Adjusted EBITDA Margin3,4
|
85 %
|
91 %
|
Adjusted Cash Earnings
per Unit – Basic2,3
|
0.49
|
0.54
|
Adjusted Cash Earnings
per Unit – Diluted2,3
|
0.49
|
0.54
|
Asset Performance
As at March 31, 2022, the Trust's portfolio included 18
royalty streams on 14 products that address medically necessary
therapeutic areas, such as oncology, rare diseases, ophthalmology,
endocrinology, dermatology, autoimmune diseases and vaccines. On
March 31, 2022, the royalty asset portfolio had a book value,
net of accumulated amortization, of US$341.2
million, which generated Total Cash Royalty Receipts of
US$19.7 million3 and
royalty income of US$21.3 million
during the three months ended March 31, 2022. In addition, the
Trust held a loan receivable with a gross principal outstanding
balance of US$50.0 million as at
March 31, 2022, which generated interest income and cash
interest received of US$1.3 million
in the quarter.
_____________
|
1 The Trust completed its
initial public offering ("IPO") on February 19, 2021. The Trust had
no active operations prior to February 19, 2021.
|
2 The weighted average
number of basic and diluted units for the three months ended
March 31, 2022, were 38,743,644 units and 38,743,769
units, respectively. The weighted average number of basic and
diluted units for the three months ended March 31, 2021, were
18,271,153 units.
|
3 Total Cash Receipts
(including Pro Forma Total Cash Receipts) and Adjusted EBITDA
(including Pro Forma Adjusted EBITDA) are non-GAAP financial
measures. Adjusted EBITDA Margin (including Pro Forma Adjusted
EBITDA Margin) and Adjusted Cash Earnings per Unit are non-GAAP
ratios.
These measures and ratios 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.
|
4 Total Cash
Receipts for the three months ended March 31, 2021, include
cash that was received by the Trust's current subsidiaries prior to
the
completion of the Trust's acquisition of those subsidiaries and
therefore, along with the Adjusted EBITDA and Adjusted EBITDA
Margin are
presented on a pro forma basis and are referred to as Pro Forma
Total Cash Receipts, Pro Forma Adjusted EBITDA and Pro Forma
Adjusted EBITDA
Margin.
|
|
Portfolio (for the three months ended)
|
(thousands of U.S. dollars)
|
|
Total Cash Receipts1
|
|
Product
|
Therapeutic
Area
|
Marketer(s)
|
March
31, 2022
|
Pro Forma
March 31,
20212
|
%
Change
|
|
Core Products
|
|
|
|
|
|
|
Eylea I
|
Ophthalmology
|
Regeneron, Bayer,
Santen
|
1,418
|
3,027
|
(53)%
|
|
Eylea II
|
Ophthalmology
|
Regeneron, Bayer,
Santen
|
1,528
|
1,345
|
14%
|
|
FluMist
|
Vaccine
|
AstraZeneca
|
2,218
|
2,239
|
(1)%
|
|
Natpara
|
Endocrinology
|
Takeda
|
673
|
510
|
32%
|
|
Oracea
|
Dermatology
|
Galderma
|
1,749
|
—
|
n/a
|
|
Rydapt
|
Oncology
|
Novartis
|
2,963
|
2,601
|
14%
|
|
Spinraza
|
Rare
Diseases
|
Biogen
|
4,278
|
5,308
|
(19)%
|
|
Vonjo3
|
Oncology
|
CTI
Biopharma
|
—
|
—
|
n/a
|
|
Xolair
|
Respiratory
|
Roche,
Novartis
|
2,641
|
2,266
|
17%
|
|
Zytiga4
|
Oncology
|
Johnson &
Johnson
|
—
|
—
|
n/a
|
|
Total Core Products
|
|
|
17,468
|
17,296
|
1%
|
|
|
|
|
|
|
|
|
Mature Products
|
|
|
|
|
|
|
Autoimmune
Portfolio5
|
Autoimmune
|
Johnson & Johnson,
Merck, Novartis
|
1,810
|
4,361
|
(58)%
|
|
Rilpivirine
Portfolio6
|
HIV
|
Johnson & Johnson,
Gilead, ViiV
|
—
|
8,467
|
(100)%
|
|
Total Mature Products
|
|
1,810
|
12,828
|
(86)%
|
|
|
|
|
|
|
|
|
Other Products7
|
Various
|
Various
|
424
|
466
|
(9)%
|
|
Total Cash Royalty
Receipts1,2
|
|
19,702
|
30,590
|
(36)%
|
|
Interest Receipts on
Loan Receivable
|
|
1,250
|
—
|
n/a
|
|
Total Cash
Receipts1,2
|
|
20,952
|
30,590
|
(32)%
|
|
__________________
|
1 Total
Cash Receipts and Total Cash Royalty Receipts are non-GAAP
financial measures. 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 Total Cash Receipts and
Total Cash Royalty Receipts for the three months ended
March 31, 2021, include cash that was received by the
Trust's
current subsidiaries prior to completion of the Trust's acquisition
of those subsidiaries and are presented on a pro forma
basis.
|
3
The Trust acquired Vonjo on March 7, 2022. In accordance with
the terms of the royalty agreement, royalty will be collected with
a one quarter
lag.
|
4 Cash royalties from
Zytiga are received on a semi-annual basis during the second and
fourth quarters of the year.
|
5
The Autoimmune Portfolio consists of an agreement to receive
royalties on sales of Stelara, Simponi and Ilaris. The royalty
assets include two
royalty streams on each product, for a total of six royalty
streams.
|
6 The Rilpivirine Portfolio
consists of an agreement to receive royalties on sales of Complera,
Edurant, Odefsey and Juluca. The Trust's entitlement
to royalties ended during the second quarter of 2021 in accordance
with the terms of the royalty agreement.
|
7 Other Products includes
royalty income from certain other royalty assets as well as royalty
assets which are fully amortized and, where applicable,
the entitlements to which have generally expired.
|
|
Liquidity and Capital
On March 31, 2022, the Trust had cash and cash equivalents
of US$30.0 million. The Trust's
credit facility had an outstanding principal balance of
US$71.0 million on March 31,
2022.
On April 20, 2022, the Trust
entered into an amended and restated credit agreement with a
syndicate of banks regarding US$350
million of credit facilities, increasing the capacity of the
credit facilities announced on October 22,
2021, by US$150 million.
The Trust had 38,636,928 units issued and outstanding on
March 31, 2022.
Distributions
On March 7, 2022, the board of
trustees approved a quarterly cash distribution of US$0.075 per unit, which was paid to unitholders
on April 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 second quarter of 2022,
payable on July 20, 2022, to
unitholders of record on June 30,
2022.
Normal Course Issuer Bid
During the quarter, the Trust repurchased and cancelled 477,980
of its own units under its NCIB for an aggregate amount of
US$2.5 million. As previously
announced, the Trust received approval on March 8, 2022, from the Toronto Stock Exchange to
increase the total number of units that can be repurchased under
its NCIB to 2,500,000 units. The expiry date of October 4, 2022, for the NCIB remains unchanged.
Since the NCIB commenced in October
2021, the Trust has acquired an aggregate of 1,521,050 trust
units.
Vonjo Royalty Transaction
On February 28, 2022, the FDA
approved pacritinib, under the brand name Vonjo, for the treatment
of adult myelofibrosis patients with platelets below 50 x 109/L,
triggering the funding of the previously announced tiered royalty
transaction on March 7, 2022. The
Trust expects to receive its first cash royalty receipts from Vonjo
in the second quarter of 2022.
First Quarter 2022 Conference Call & Webcast
As previously announced, management will hold a conference call
on Wednesday, May 11, 2022, at
8:00 a.m. (ET) to review the Trust's
2022 first quarter results. You can join the call by dialing
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/DRIQ12022. 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.
Non-GAAP Financial Measures
The reconciliations of our non-GAAP financial measures and
non-GAAP ratios for three months ended March 31, 2022, and
March 31, 2021, to the most directly
comparable measures calculated in accordance with IFRS are
presented below.
Total Cash Royalty Receipts and Total Cash Receipts
Total Cash Royalty Receipts refers to all cash royalty receipts
from the Trust's entire portfolio of royalty assets and Total Cash
Receipts refers to Total Cash Royalty Receipts plus cash receipts
for interest and principal payments collected from its loan
receivable. Because of the lag between when we record royalty
income and receive the corresponding cash payments on our
royalties, we believe Total Cash Receipts and Total Cash Royalty
Receipts are useful measures when evaluating our operations, as
they represent actual cash generated in respect of all royalty
assets held during a period.
(thousands of U.S.
dollars, except per unit amounts)
|
Three months
ended
March 31, 2022
|
Pro
Forma
three months ended
March 31, 20211
|
Total income
|
22,625
|
12,691
|
[+] Royalties
receivable, beginning of period
|
30,148
|
—
|
[-] Royalties
receivable, end of period
|
(31,590)
|
(39,560)
|
[+] Acquired royalties
receivable2
|
—
|
55,190
|
[+] Acquired cash
royalties received2
|
—
|
2,269
|
[-] Non-cash royalty
income3
|
(157)
|
—
|
[-] Non-cash interest
income on loan receivable4
|
(74)
|
—
|
Total Cash
Receipts
|
20,952
|
30,590
|
[-] Interest income on
loan receivable
|
(1,324)
|
—
|
[+] Non-cash interest
income on loan receivable4
|
74
|
—
|
Total Cash Royalty
Receipts
|
19,702
|
30,590
|
|
|
|
____________
|
1
Cash receipts for the three months ended March 31, 2021, are
presented on a pro forma basis and represent the cash that was
received by the
Trust's current subsidiaries prior to completion of the Trust's
acquisition of those subsidiaries. The Trust was the beneficiary of
royalty cash receipts
from the assets acquired in the Closing Transactions from January
1, 2021, to February 18, 2021, and has recorded the increase of
$2,269 in
acquired cash and cash equivalents related to the royalty cash
receipts within that period, as described under the Transactions
Completed section
of the MD&A.
|
2
Acquired royalties receivable and acquired cash royalties
received were used to reduce the net purchase paid for the assets
acquired by the Trust,
as described under the Transactions Completed section of the
MD&A.
|
3 During the third quarter
of 2021, the Trust recorded an other current liability of $718 with
a corresponding charge to other items to reflect the
obligation for excess royalty payments received in connection with
the Autoimmune Portfolio prior to the Trust's acquisition of the
asset, as
described under the Financial Review: Results of Operations section
of the MD&A. Royalty income of $157 (2021 – nil) was used to
reduce the
obligation during the three months ended March 31,
2022.
|
4 For the three months
ended March 31, 2022, non-cash interest income on loan receivable
represents the amortization of commitment fee of $25
(2021 – nil) and the accretion of exit fee receivable of $49 (2021
– nil).
|
|
Adjusted EBITDA and Adjusted EBITDA Margin
We believe Adjusted EBITDA provides meaningful information about
our operating cash flows as it eliminates the effects of accruals
and non-cash expenses recorded on the statement of income and
comprehensive income. We refer to EBITDA when reconciling our net
earnings and other comprehensive earnings to Adjusted EBITDA, but
we do not use EBITDA as a measure of our performance. We believe
that Adjusted EBITDA Margin is a useful supplemental measure to
demonstrate the operating efficiency of our business on a cash
basis.
(thousands of U.S.
dollars, except per unit amounts)
|
Three months
ended
March 31, 2022
|
Pro Forma three months
ended March 31, 2021
|
Net earnings and other
comprehensive earnings
|
5,694
|
3,191
|
[+] Amortization or
royalty assets
|
12,775
|
6,793
|
[+] Interest
expense
|
418
|
252
|
EBITDA
|
18,887
|
10,236
|
[+] Royalties
receivable, beginning of period
|
30,148
|
—
|
[-] Royalties
receivable, end of period
|
(31,590)
|
(39,560)
|
[+] Acquired royalties
receivable1
|
—
|
55,190
|
[+] Acquired cash
royalties received1
|
—
|
2,269
|
[+] Unit-based
compensation
|
527
|
—
|
[+] Board of trustees
unit-based compensation2
|
70
|
—
|
[+] Net gain on
interest rate derivatives
|
—
|
(4)
|
[-] Net loss (gain) on
foreign exchange derivatives
|
—
|
(168)
|
[-] Non-cash royalty
income3
|
(157)
|
—
|
[-] Non-cash interest
income on loan receivable4
|
(74)
|
—
|
Adjusted
EBITDA
|
17,811
|
27,963
|
[÷] Total Cash
Receipts
|
20,952
|
30,590
|
Adjusted EBITDA
Margin
|
85%
|
91%
|
__________________
|
1
Acquired royalties receivable and acquired cash royalties
received were used to reduce the net purchase paid for the assets
acquired by the Trust,
as described under the Transactions Completed section of the
MD&A.
|
2 During 2022, certain
members of the board of trustees elected to be compensated fully or
partially in DUs under the Trust's Incentive Plan.
|
3 During the third quarter
of 2021, the Trust recorded an other current liability of $718 with
a corresponding charge to other items to reflect the
obligation for excess royalty payments received in connection with
the Autoimmune Portfolio prior to the Trust's acquisition of the
asset, as
described under the Financial Review: Results of Operations section
of the MD&A. Royalty income of $157 (2021 – nil) was used to
reduce the
obligation during the three months ended March 31,
2022.
|
4 For the three months
ended March 31, 2022, non-cash interest income on loan receivable
represents the amortization of commitment fee of $25
(2021 – nil) and the accretion of exit fee receivable of $49 (2021
– nil).
|
|
Adjusted Cash Earnings per Unit
We believe that Adjusted Cash Earnings per Unit provides
meaningful information about our performance as it provides a
measure of the cash generated by our assets on a per unit basis.
(thousands of U.S.
dollars, except per unit amounts)
|
Three months
ended
March 31, 2022
|
Pro Forma three
months
ended March 31, 2021
|
Net earnings and other
comprehensive earnings
|
5,694
|
3,191
|
[+] Amortization or
royalty assets
|
12,775
|
6,793
|
[+] Unit-based
compensation
|
527
|
—
|
[+] Board of trustees
unit-based compensation1
|
70
|
—
|
[+] Net gain on
interest rate derivatives
|
—
|
(4)
|
[-] Net loss (gain) on
foreign exchange derivatives
|
—
|
(168)
|
[-] Non-cash royalty
income2
|
(157)
|
—
|
[-] Non-cash interest
income on loan receivable3
|
(74)
|
—
|
Adjusted Cash
Earnings
|
18,835
|
9,812
|
Adjusted Cash
Earnings per Basic Unit4
|
0.49
|
0.54
|
Adjusted Cash
Earnings per Fully Diluted Unit4
|
0.49
|
0.54
|
|
_________________
|
1 During 2022, certain
members of the board of trustees elected to be compensated fully or
partially in DUs under the Trust's Incentive Plan.
|
2 During the third quarter
of 2021, the Trust recorded an other current liability of $718 with
a corresponding charge to other items to reflect the
obligation for excess royalty payments received in connection with
the Autoimmune Portfolio prior to the Trust's acquisition of the
asset, as
described under the Financial Review: Results of Operations section
of the MD&A. Royalty income of $157 (2021 – nil) was used to
reduce the
obligation during the three months ended March 31,
2022.
|
3 For the three months
ended March 31, 2022, non-cash interest income on loan receivable
represents the amortization of commitment fee of $25
(2021 – nil) and the accretion of exit fee receivable of $49 (2021
– nil).
|
4 The weighted average
number of basic and diluted units for the three months ended
March 31, 2022, were 38,743,644 units and 38,743,769
units, respectively. The weighted average number of basic and
diluted units for the three months ended March 31, 2021, were
18,271,153 units.
|
|
About DRI Healthcare Trust
DRI Healthcare Trust provides unitholders with differentiated
exposure to the anticipated growth in the global pharmaceuticals
and biotechnology markets. Our business model is focused on
managing and growing a diversified portfolio of pharmaceutical
royalties with the aim to deliver attractive growth in cash royalty
receipts over the long term. DRI Healthcare Trust is an
unincorporated open-ended trust governed by the laws of the
Province of Ontario, externally
managed by its manager, DRI Capital Inc. DRI Healthcare Trust's
units are listed and trade on the Toronto Stock Exchange in
Canadian dollars under the symbol "DHT.UN" and in U.S. dollars
under the symbol "DHT.U".
Caution concerning forward-looking statements
This news release may contain forward-looking information within
the meaning of applicable securities legislation. Forward-looking
information generally can be identified by the use of
forward-looking words such as "expect", "continue", "anticipate",
"intend", "aim", "plan", "believe", "budget", "estimate",
"forecast", "foresee", "close to", "target" or negative versions
thereof and similar expressions. Some of the specific
forward-looking information in this news release may include, among
other things, statements regarding our belief that our strong
balance sheet, combined with the recent increase in our credit
facility, will support further growth, that we continue to see a
robust market producing a strong pipeline of attractive
opportunities and are looking forward to continued growth in 2022
that will create meaningful value for our unitholders, and that we
expect to receive our first cash royalty receipts from Vonjo in the
second quarter of 2022. Forward-looking information is based on a
number of assumptions and is subject to a number of risks and
uncertainties, many of which are beyond the Trust's control that
could cause actual results to differ materially from those that are
disclosed in or implied by such forward-looking information. These
risks and uncertainties include, but are not limited to, those that
are disclosed in the Trust's most recent annual information form.
Certain assumptions underlying the forward-looking information in
this news release include: the Trust's assumptions regarding demand
and growth in pharmaceutical sales, R&D and opportunities for
royalty investing; the competitive environment in which the Trust
operates; the performance of the Trust's manager; the Trust's
ability to implement its growth strategies; the Trust's ability to
obtain financing and maintain its existing financing on acceptable
terms; the Trust's ability to maintain good business relationships
with marketers and other industry partners; timely receipt of cash
royalty receipts; expectations regarding the duration of royalties;
the Trust's ability to keep pace with changing consumer
preferences; the absence of material adverse changes in the Trust's
industry or the global economy; currency exchange and interest
rates; the impact of competition; the changes and trends in the
Trust's industry or the global economy; and stability in laws,
rules, regulations and global standards in the pharmaceutical
industry. All forward-looking information in this news release
speaks as of the date of this news release. The Trust does not
undertake to update any such forward-looking information whether as
a result of new information, future events or otherwise except as
required by law. Additional information about these assumptions and
risks and uncertainties is contained in the Trust's filings with
securities regulators, including its latest annual information form
and Management's Discussion and Analysis. These filings are also
available at the Trust's website at dricapital.com.
SOURCE DRI Healthcare Trust