– 2022 deployment of US$281 million continues to validate growth
strategy –
– Continued strong performance of existing
assets and financial results –
TORONTO, March 1,
2023 /CNW/ - DRI Healthcare Trust (TSX: DHT.UN) (TSX:
DHT.U) ("DRI" or "the Trust") today announced its financial results
for the fourth quarter and fiscal year ended December 31,
2022. The Trust's annual 2022 financial statements and Management's
Discussion & Analysis ("MD&A") have been filed on SEDAR
(www.sedar.com). All dollar amounts are expressed in US dollars
unless otherwise indicated.
"The Trust had another successful year, with continued strong
performance of our assets" said Behzad
Khosrowshahi, Chief Executive Officer of DRI Healthcare
Trust. "During 2022 we added royalties on Vonjo, Empaveli, Zejula,
Omidria and Xenpozyme to the portfolio, high-quality assets with
long-term horizons and attractive growth prospects. Our financial
flexibility and robust pipeline driven by a favourable market
environment puts us in excellent position to continue sourcing and
executing on attractive opportunities and deliver on the value
proposition for our unitholders."
Fourth Quarter Highlights
- Deployed US$30 million in the
Xenpozyme royalty transaction;
- Total Income of US$22.6
million;
- Total Cash Receipts of US$31.2
million1;
- Adjusted EBITDA of US$27.4
million1;
- Net Loss and Comprehensive Loss of US$4.8 million;
- Adjusted Cash Earnings per Unit (basic and diluted) of
US$0.391,2;
- Net Loss per Unit (basic and diluted) of US$0.132;
- Acquired a total of 910,460 trust units for an aggregate
purchase price of US$4.8 million
under the Trust's normal course issuer bid ("NCIB");
- Declared a quarterly cash distribution of US$0.075 per unit and a special unit distribution
of US$0.1655 per unit to unitholders
of record as at December 31,
2022.
Fiscal 2022 Highlights
- Total Income of US$93.0
million;
- Total Cash Receipts of US$96.2
million1;
- Adjusted EBITDA of US$82.4
million1;
- Net Earnings and Comprehensive Earnings of US$11.6 million;
- Adjusted Cash Earnings per Unit (basic and diluted) of
US$1.871,3;
- Net Earnings per Unit (basic and diluted) of US$0.303;
- Total cash returned to unitholders of US$18.8 million through cash distributions
declared in the year of US$11.5
million and unit buybacks under the Trust's NCIB of
US$7.3 million;
- Total deployment of US$281.0
million through the purchase of royalties on Vonjo,
Empaveli, Zejula, Omidria and Xenpozyme.
Subsequent to Quarter End
- Payment of Vonjo milestone of US$6.5
million based on product sales exceeding the defined
threshold;
- US$95.0 million private placement
of preferred securities and warrants;
- Declaration of a quarterly cash distribution of US$0.075 per unit for the first quarter of 2023,
payable on April 20, 2023 to
unitholders of record on March 31,
2023.
_____________________________
|
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
December 31, 2022 were 38,231,059 units and 38,270,508 units,
respectively.
|
3 The weighted average
number of basic and diluted units for the year ended
December 31, 2022 were 38,570,499 units and 38,591,392 units,
respectively.
|
Financial Highlights
|
Three months
ended
|
Year
ended
|
(thousands of US
dollars, except per unit amounts)
|
December 31,
2022
|
December 31,
2021
|
December 31,
2022
|
December 31,
20211
|
Total
income
|
22,642
|
22,214
|
93,034
|
81,765
|
Management
fees
|
2,055
|
2,112
|
6,532
|
6,275
|
Amortization
expenses
|
19,078
|
12,914
|
59,266
|
41,837
|
Other
expenses
|
6,316
|
3,826
|
15,638
|
12,090
|
Net earnings (loss)
and
comprehensive earnings
(loss)
|
(4,807)
|
3,362
|
11,598
|
21,563
|
Net earnings (loss)
per unit – basic
|
(0.13)
|
0.08
|
0.30
|
0.62
|
Net earnings (loss)
per unit – diluted
|
(0.13)
|
0.08
|
0.30
|
0.62
|
Total Cash Receipts/
Pro Forma Total Cash Receipts2,3
|
31,150
|
36,278
|
96,232
|
115,644
|
Adjusted EBITDA/ Pro
Forma Adjusted EBITDA2,3
|
27,371
|
31,969
|
82,439
|
100,627
|
Adjusted EBITDA
Margin/
Pro Forma Adjusted
EBITDA Margin2,3
|
88 %
|
88 %
|
86 %
|
87 %
|
Adjusted Cash Earnings
per Unit – Basic2
|
0.39
|
0.41
|
1.87
|
1.85
|
Adjusted Cash Earnings
per Unit – Diluted2
|
0.39
|
0.41
|
1.87
|
1.85
|
Weighted average
number of Units – Basic
|
38,231,059
|
39,802,522
|
38,570,499
|
34,646,277
|
Weighted average
number of Units - Diluted
|
38,570,508
|
39,810,526
|
38,591,392
|
34,654,282
|
|
|
|
|
|
_______________________
|
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 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.
|
3Total Cash Receipts for
the year ended December 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 cash that was
received as part of the Oracea transaction related to royalties
earned prior to the closing of the transaction. Therefore, Total
Cash Receipts, along with the Adjusted EBITDA and Adjusted EBITDA
Margin, are presented on a pro forma basis for the year ended
December 31, 2021 and are referred to as Pro Forma Total Cash
Receipts, Pro Forma Adjusted EBITDA and Pro Forma Adjusted EBITDA
Margin, respectively.
|
Asset Performance
As at December 31, 2022, the Trust's portfolio included 22
royalty streams on 18 products that address severe and
life-threatening conditions, such as oncology, spinal muscular
atrophy, ophthalmology, endocrinology, hematology, dermatology,
acid sphingomyelinase deficiency, autoimmune diseases and
influenza. On December 31, 2022, the royalty asset portfolio
had a book value, net of accumulated amortization, of US$518.1 million, which generated Total Cash
Royalty Receipts3 of US$29.6
million and US$90.8 million
during the three months and year ended December 31, 2022, respectively, and royalty
income of US$21.0 million and
US$87.3 million during the three
months and year ended December 31,
2022, respectively. In addition, the Trust held a secured
loan receivable with a gross principal outstanding balance of
US$50.0 million as at
December 31, 2022, which generated cash interest receipts of
US$1.5 million and US$5.4 million during the three months and year
ended December 31, 2022,
respectively, and interest income of US$1.6
million and US$5.7 million
during the three months and year ended December 31, 2022, respectively.
Portfolio
(thousands of US
dollars)
|
|
Total Cash
Receipts1
|
Product
|
Therapeutic
Area
|
Marketer(s)
|
Three months
ended
|
Year
ended
|
December 31,
2022
|
December 31,
2021
|
December 31,
2022
|
Pro
Forma
December 31,
20212
|
Empaveli
|
Hematology
|
Apellis, Swedish Orphan
Biovitrum
|
269
|
—
|
269
|
—
|
Eylea
I3
|
Ophthalmology
|
Regeneron, Bayer,
Santen
|
1,290
|
6,710
|
5,399
|
12,750
|
Eylea
II3
|
Ophthalmology
|
Regeneron, Bayer,
Santen
|
1,407
|
2,972
|
5,881
|
5,656
|
FluMist
|
Influenza
|
AstraZeneca
|
734
|
910
|
2,952
|
3,179
|
Natpara
|
Endocrinology
|
Takeda
|
575
|
634
|
2,625
|
2,208
|
Omidria
|
Ophthalmology
|
Rayner
Surgical
|
1,670
|
—
|
1,670
|
—
|
Oracea
|
Dermatology
|
Galderma
|
1,845
|
2,303
|
7,662
|
6,014
|
Rilpivirine
Portfolio4
|
HIV
|
Johnson & Johnson,
Gilead, ViiV
|
—
|
—
|
—
|
14,368
|
Rydapt
|
Oncology
|
Novartis
|
2,226
|
2,527
|
10,102
|
11,297
|
Spinraza
|
Spinal Muscular
Atrophy
|
Biogen
|
3,879
|
4,382
|
16,466
|
19,631
|
Stelara, Simponi
and Ilaris5
|
Autoimmune
Diseases
|
Johnson & Johnson,
Merck, Novartis
|
597
|
1,786
|
3,704
|
9,387
|
Vonjo
|
Oncology
|
CTI
Biopharma
|
1,751
|
—
|
3,155
|
—
|
Xenpozyme6
|
Acid Sphingomyelinase
Deficiency
|
Sanofi
|
—
|
—
|
—
|
—
|
Xolair
|
Respiratory
|
Roche,
Novartis
|
3,019
|
2,703
|
9,646
|
8,744
|
Zejula
|
Oncology
|
GSK, Takeda, Zai
Lab
|
692
|
—
|
692
|
—
|
Zytiga
|
Oncology
|
Johnson &
Johnson
|
9,101
|
9,020
|
18,059
|
18,518
|
Other
Products7,8
|
Various
|
Various
|
562
|
540
|
2,563
|
2,101
|
Total Cash Royalty
Receipts1,2
|
29,617
|
34,487
|
90,845
|
113,853
|
Interest Receipts from
Loan Receivable
|
1,533
|
1,791
|
5,387
|
1,791
|
Total Cash
Receipts1,2
|
31,150
|
36,278
|
96,232
|
115,644
|
____________________________________
|
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 year ended December 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 cash received as part
of the Oracea transaction related to royalties earned prior to the
closing of the transaction and are presented on a pro forma
basis.
|
3 Cash
royalty receipts from Eylea I and Eylea II in the fourth quarter of
2021 include late payments of US$4,718 related to royalty
receivables from the third quarter of 2021.
|
4 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.
|
5 Stelara, Simponi and
Ilaris were previously referred to as the Autoimmune
Portfolio. The royalty assets include two royalty streams on
each product, for a total of six royalty streams.
|
6 The
Trust completed a transaction in respect of Xenpozyme
during the fourth quarter of 2022. In accordance with the terms of
the royalty agreements, cash royalty receipts are collected on a
two-quarter lag from the respective half-year
period.
|
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.
|
8 For the year ended
December 31, 2022, the Trust received US$750 related to the
settlement of litigation on a royalty asset held by the Trust's
current subsidiary prior to the Trust's acquisition of the
subsidiary.
|
Liquidity and Capital
On December 31, 2022, the Trust had cash and cash
equivalents of US$36.7 million. The
Trust's credit facility had an outstanding principal balance of
US$246.9 million on December 31,
2022.
The Trust had 37,790,395 units issued and outstanding on
December 31, 2022.
Distributions
On November 7, 2022, the board of
trustees approved a quarterly cash distribution of US$0.075 per unit, which was paid to unitholders
on January 20, 2023. On December 21, 2022, the board of trustees approved
a special unit distribution of US$0.1655 per unit, which was issued to
unitholders of record on December 31,
2022 and resulted in no change to the number of issued and
outstanding units. 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 first
quarter of 2023, payable on April 20,
2023, to unitholders of record on March 31, 2023.
Normal Course Issuer Bid
During the year, the Trust repurchased and cancelled 1,388,440
of its units under its NCIB for an aggregate amount of US$7.3 million at a weighted average price of
C$6.87 per unit (US$5.23). As previously announced, the Trust
received approval on November 10,
2022 from the Toronto Stock Exchange ("TSX") to acquire,
from time to time, if considered advisable, up to 2,493,280 units
of the Trust for cancellation. Purchases will conclude on the
earlier of the date on which the Trust has purchased the maximum
number of trust units permitted under the NCIB and November 13, 2023. Under the Trust's prior NCIB
that commenced on October 5, 2021 and
concluded on October 4, 2022, the
Trust obtained approval from the TSX to purchase 2,500,000
units.
Xenpozyme Transaction
On November 25, 2022, the Trust
completed a transaction for a royalty on sales of Xenpozyme for a
purchase price of US$30.0 million.
The transaction entitles the Trust to royalties equal to
approximately one percent of worldwide net sales of Xenpozyme. The
Trust is entitled to receive semi-annual royalty payments in
respect of net sales of Xenpozyme commencing from the transaction
date on a two-quarter lag from the respective half-year period. For
sales made in the first and second quarters of the year, the Trust
expects to receive its royalty payment in the second quarter of
that year. For sales made in the third and fourth quarters of the
year, the Trust expects to receive its royalty payment in the
second quarter of the following year. The Trust expects to receive
royalties on net sales of Xenpozyme for approximately 15 years.
In accordance with the terms of the royalty agreement, the
royalty seller may also be entitled to additional consideration of
up to US$26.5 million in the event
that cumulative royalties received by the Trust on Xenpozyme sales
exceed certain thresholds within a predefined period of time.
Preferred Securities
On February 8, 2023, the Trust
completed a private placement (the "Private Placement") to a group
of investors. The Private Placement provides gross proceeds to
DRI of US$95 million through the sale
of US$95 million principal amount of
Series A Preferred Securities and US$19.8
million principal amount of Series B Preferred Securities
(collectively, the "Preferred Securities"), which are unsecured,
subordinated debt securities of the Trust. The Preferred Securities
will initially pay cash interest at a rate of 7.04% per annum on
the principal amount of the Preferred Securities, payable
semi-annually on June 30 and
December 31 of each year.
The Series A Preferred Securities will mature on February 8, 2073 and the Series B Preferred
Securities will mature on December 27,
2027. The Series A Preferred Securities can be redeemed at
par, at the option of DRI, at any time from and after December 27, 2027. The Preferred Securities will
not be redeemable by the Trust prior to December 27, 2027, except in the event of a
change of control of the Trust, in which case the Preferred
Securities will be subject to a mandatory redemption.
The interest rate on the Series A Preferred Securities will
increase to 10% per annum if any of the Series A Preferred
Securities are outstanding on January 1,
2028 and will be subject to an annual increase of 1.5% per
annum if any of the Series A Preferred Securities remain
outstanding on each one year anniversary of such date, up to a
specified cap.
In connection with the Private Placement, DRI also issued
6,369,180 warrants (the "Warrants") to the Private Placement
investors. Each Warrant entitles the holder thereof to acquire one
unit of the Trust for an exercise price of US$11.62 at any time until the expiry of the
Warrant on February 8, 2028.
2022 Highlights
In addition to the strong performance of the asset portfolio
during the year, the Trust continued to execute on the growth
strategy outlined to its unitholders since going public in
February 2021.
On February 28, 2022, the FDA
approved pacritinib, to be marketed under the brand name Vonjo, for
the treatment of adult myelofibrosis patients with platelets below
50 x 109/L, triggering a US$60.0
million tiered royalty transaction in accordance with the
terms of the transaction with CTI BioPharma announced in
August 2021. The Trust received its
first cash royalty receipts in respect of Vonjo in the second
quarter of 2022.
On July 20, 2022, the Trust
completed a transaction for a royalty interest in Empaveli
(pegcetacoplan) for a purchase price of US$24.5 million. The transaction entitles the
Trust to a less than one percent royalty on the worldwide net sales
of Empaveli, subject to a cap at net sales of US$500.0 million in each calendar year, above
which the Trust will not be entitled to any royalty. As part of the
transaction, the Trust has an option to increase the annual sales
cap to US$1.1 billion in return for a
one-time payment by the Trust of US$21.0
million. The Trust received its first cash royalty receipts
in respect of Empaveli in the fourth quarter of 2022.
On September 9, 2022, the Trust
completed a transaction for a royalty interest in Zejula for a
purchase price of US$35.0 million. An
additional milestone payment of US$10.0
million will be paid by the Trust should Zejula be approved
by the FDA for the treatment of endometrial cancer on or before
December 31, 2025. The transaction
entitles the Trust to a net 0.5% royalty on worldwide net sales of
Zejula by GSK plc. The Trust received its first cash royalty
receipts in respect of Zejula in the fourth quarter of 2022.
On September 30, 2022, The Trust
completed a transaction for a royalty interest in Omidria for a
purchase price of US$125.0 million.
In accordance with the terms of the royalty agreement, the Trust
will be entitled to receive royalties until December 2030 subject to a series of escalating
annual caps. The Trust received its first cash royalty receipts in
respect of Omidria in the fourth quarter of 2022.
On November 25, 2022, the Trust
completed a transaction for a tiered royalty on sales of Xenpozyme
for a purchase price of US$30.0
million. The transaction entitles the Trust to royalties
equal to approximately one percent of worldwide net sales of
Xenpozyme. The Trust expects to receive its first cash royalty
receipts in respect of Xenpozyme in the second quarter of 2023.
Throughout 2022, the Trust declared and subsequently paid cash
distributions totalling US$0.30 per
unit, for aggregate distributions of US$11.5
million, consistent with the Trust's policy of distributing
cash equal to 20-30% of available cash flow to its unitholders.
Fourth Quarter and Fiscal Year 2022 Conference Call &
Webcast
As previously announced, management will hold a conference call
on Wednesday, March 2, 2023, at
8:00 a.m. (ET) to review the Trust's
2022 annual 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://app.webinar.net/5dpLg07Py3D. 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 non-GAAP financial measures and non-GAAP
ratios for the three months and years ended December 31, 2022 and 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 the Trust records
royalty income and when it receives the corresponding cash payments
on its royalties, management believes Total Cash Receipts and Total
Cash Royalty Receipts are useful measures when evaluating the
Trust's operations, as they represent actual cash generated in
respect of all royalty assets held during a period. Total income
represents royalty income, interest income on loan receivable and
other interest income.
|
Three months
ended
|
Year
ended
|
(thousands of US
dollars)
|
December 31,
2022
|
December 31,
2021
|
December 31,
2022
|
Pro Forma
December 31,
20211
|
Total
income
|
22,642
|
22,214
|
93,034
|
81,765
|
[-] Other interest
income
|
(50)
|
(1)
|
(83)
|
(8)
|
[+] Royalties
receivable, beginning of period
|
36,386
|
43,965
|
30,148
|
—
|
[-] Royalties
receivable, end of period
|
(27,748)
|
(30,148)
|
(27,748)
|
(30,148)
|
[+] Acquired royalties
receivable2
|
—
|
—
|
1,366
|
58,120
|
[+] Acquired cash
royalties received2
|
—
|
—
|
—
|
6,405
|
[-] Non-cash royalty
income3
|
(4)
|
(190)
|
(194)
|
(384)
|
[+] Interest
receivable, beginning of period
|
—
|
514
|
—
|
—
|
[-] Interest
receivable, end of period
|
—
|
—
|
—
|
—
|
[-] Non-cash interest
income on loan receivable4
|
(76)
|
(76)
|
(291)
|
(106)
|
Total Cash
Receipts
|
31,150
|
36,278
|
96,232
|
115,644
|
[-] Interest income on
loan receivable
|
(1,609)
|
(1,353)
|
(5,678)
|
(1,897)
|
[-] Interest
receivable, beginning of period
|
—
|
(514)
|
—
|
—
|
[+] Interest
receivable, end of period
|
—
|
—
|
—
|
—
|
[+] Non-cash interest
income on loan receivable4
|
76
|
76
|
291
|
106
|
Total Cash Royalty
Receipts
|
29,617
|
34,487
|
90,845
|
113,853
|
|
|
|
|
|
________________________
|
1Total Cash Receipts and Total
Cash Royalty Receipts for the year ended December 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 US$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 Trust's MD&A. Cash receipts for the year ended December 31,
2021 also include the Trust's entitlement to cash royalties
received from the assets acquired in the Oracea transaction, as
described under the Oracea Transaction section of the Trust's
MD&A.
|
2Acquired 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 Trust's
MD&A.
|
3Non-cash royalty income is
related to excess royalty payments received in prior periods in
which the Trust has an obligation to the royalty payers. Royalty
income for the three months and year ended December 31, 2022 of nil
and US$334, respectively, were used to reduce the obligation for
excess royalty payment received in connection with Ilaris (2021 –
US$190 and US$384, respectively). In addition, the Trust recorded
other current liabilities and a corresponding deduction to royalty
income of US$155 to reflect an additional obligation for excess
royalty payments received related to other royalty assets. Royalty
income of US$4 and US$15, respectively, were used to reduce the
obligation during the three months and year ended December 31,
2022. Royalty income earned in future periods related to other
royalty assets will be used to repay the remaining obligation of
US$140.
|
4For the three months and year
ended December 31, 2022, non-cash interest income on loan
receivable represents the amortization of commitment fee of US$25
and US$97, respectively, (2021 – US$25 and US$35, respectively) and
the accretion of exit fee receivable of US$51 and US$194,
respectively (2021 – US$51 and US$71, respectively).
|
Adjusted EBITDA and Adjusted EBITDA Margin
Management believes Adjusted EBITDA provides meaningful
information about the Trust's operating cash flows as it eliminates
the effects of accruals and non-cash expenses recorded on the
statement of net earnings and comprehensive earnings. The Trust
refers to EBITDA when reconciling its net earnings and
comprehensive earnings to Adjusted EBITDA, but does not use EBITDA
as a measure of its performance. Management believes that Adjusted
EBITDA Margin is a useful supplemental measure to demonstrate the
operating efficiency of the Trust's business on a cash basis. The
reconciliation for the comparative period has been adjusted to
conform with the current period's composition.
|
Three months
ended
|
Year
ended
|
(thousands of US
dollars)
|
December 31,
2022
|
December 31,
2021
|
December 31,
2022
|
Pro Forma
December 31,
2021
|
Net
earnings (loss) and comprehensive earnings (loss)
|
(4,807)
|
3,362
|
11,598
|
21,563
|
[+] Amortization or royalty
assets
|
19,078
|
12,914
|
59,266
|
41,837
|
[+] Amortization of other
current assets1
|
146
|
—
|
260
|
—
|
[-] Other interest
income
|
(50)
|
(1)
|
(83)
|
(8)
|
[+] Interest
expense
|
4,013
|
1,125
|
6,630
|
2,236
|
EBITDA
|
18,380
|
17,400
|
77,671
|
65,628
|
[+] Royalties receivable,
beginning of period
|
36,386
|
43,965
|
30,148
|
—
|
[-] Royalties receivable,
end of period
|
(27,748)
|
(30,148)
|
(27,748)
|
(30,148)
|
[+] Interest receivable,
beginning of period
|
—
|
514
|
—
|
—
|
[-] Interest receivable, end
of period
|
—
|
—
|
—
|
—
|
[+] Acquired royalties
receivable2
|
—
|
—
|
1,366
|
58,120
|
[+] Acquired cash royalties
received2
|
—
|
—
|
—
|
6,405
|
[+] Unit-based
compensation
|
342
|
448
|
1,191
|
473
|
[+] Board of trustees
unit-based compensation3
|
91
|
—
|
296
|
—
|
[+] Net gain on interest
rate derivatives
|
—
|
(2)
|
—
|
(2)
|
[-] Net loss (gain) on
foreign exchange derivatives
|
—
|
58
|
—
|
(77)
|
[+] Other
items4
|
—
|
—
|
—
|
718
|
[-] Non-cash royalty
income5
|
(4)
|
(190)
|
(194)
|
(384)
|
[-] Non-cash interest income
on loan receivable6
|
(76)
|
(76)
|
(291)
|
(106)
|
Adjusted
EBITDA
|
27,371
|
31,969
|
82,439
|
100,627
|
[÷] Total Cash
Receipts
|
31,150
|
36,278
|
96,232
|
115,644
|
Adjusted EBITDA
Margin
|
88 %
|
88 %
|
86 %
|
87 %
|
________________________
|
1In connection with the Empaveli
transaction completed in 2022, the Trust acquired other current
assets, as described under the Empaveli Transaction section of the
Trust's MD&A. The related amortization expense is recorded in
other operating expenses.
|
2Acquired 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 Trust's
MD&A.
|
3During 2022, certain members of
the board of trustees elected to be compensated fully or partially
in deferred units ("DUs") under the Trust's Incentive
Plan.
|
4During the third quarter of
2021, the Trust recorded other current liabilities of US$718 with a
corresponding charge to other items to reflect the obligation for
excess royalty payments received in connection with Ilaris prior to
the Trust's acquisition of the asset.
|
5Non-cash royalty income is
related to excess royalty payments received in prior periods in
which the Trust has an obligation to the royalty payers. Royalty
income for the three months and year ended December 31, 2022 of nil
and US$334, respectively, were used to reduce the obligation for
excess royalty payment received in connection with Ilaris (2021 –
US$190 and US$384, respectively). In addition, the Trust recorded
other current liabilities and a corresponding deduction to royalty
income of US$155 to reflect an additional obligation for excess
royalty payments received related to other royalty assets. Royalty
income of US$4 and US$15, respectively, were used to reduce the
obligation during the three months and year ended December 31,
2022. Royalty income earned in future periods related to other
royalty assets will be used to repay the remaining obligation of
US$140.
|
6For the three months and year
ended December 31, 2022, non-cash interest income on loan
receivable represents the amortization of commitment fee of US$25
and US$97, respectively, (2021 – US$25 and US$35, respectively) and
the accretion of exit fee receivable of US$51 and US$194,
respectively (2021 – US$51 and US$71, respectively).
|
Adjusted Cash Earnings per Unit
Management believes that Adjusted Cash Earnings per Unit
provides meaningful information about the Trust's performance as it
provides a measure of the cash generated by the Trust's assets on a
per unit basis.
|
Three months
ended
|
Year
ended
|
(thousands of US
dollars, except per unit amounts)
|
December 31,
2022
|
December 31,
2021
|
December 31,
2022
|
December 31,
2021
|
Net
earnings (loss) and comprehensive earnings (loss)
|
(4,807)
|
3,362
|
11,598
|
21,563
|
[+] Amortization or
royalty assets
|
19,078
|
12,914
|
59,266
|
41,837
|
[+] Amortization of
other current assets1
|
146
|
—
|
260
|
—
|
[+] Unit-based
compensation
|
342
|
448
|
1,191
|
473
|
[+] Board of trustees
unit-based compensation2
|
91
|
—
|
296
|
—
|
[+] Net gain on
interest rate derivatives
|
—
|
(2)
|
—
|
(2)
|
[-] Net loss (gain) on
foreign exchange derivatives
|
—
|
58
|
—
|
(77)
|
[+] Other
items3
|
—
|
—
|
—
|
718
|
[-] Non-cash royalty
income4
|
(4)
|
(190)
|
(194)
|
(384)
|
[-] Non-cash interest
income on loan receivable5
|
(76)
|
(76)
|
(291)
|
(106)
|
Adjusted Cash
Earnings
|
14,770
|
16,514
|
72,126
|
64,022
|
Adjusted Cash
Earnings per Basic Unit
|
0.39
|
0.41
|
1.87
|
1.85
|
Adjusted Cash
Earnings per Fully Diluted Unit
|
0.39
|
0.41
|
1.87
|
1.85
|
Weighted average
number of Units – Basic
|
38,231,059
|
39,802,522
|
38,570,499
|
34,646,277
|
Weighted average
number of Units - Diluted
|
38,570,508
|
39,810,526
|
38,591,392
|
34,654,282
|
___________________________
|
1In connection with the Empaveli
transaction completed in 2022, the Trust acquired other current
assets, as described under the Empaveli Transaction section of the
Trust's MD&A. The related amortization expense is recorded in
other operating expenses.
|
2During 2022, certain members of
the board of trustees elected to be compensated fully or partially
in DUs under the Trust's Incentive Plan.
|
3During the third quarter of
2021, the Trust recorded other current liabilities of US$718 with a
corresponding charge to other items to reflect the obligation for
excess royalty payments received in connection with Ilaris prior to
the Trust's acquisition of the asset.
|
4Non-cash royalty income is
related to excess royalty payments received in prior periods in
which the Trust has an obligation to the royalty payers. Royalty
income for the three months and year ended December 31, 2022 of nil
and US$334, respectively, were used to reduce the obligation for
excess royalty payment received in connection with Ilaris (2021 –
US$190 and US$384, respectively). In addition, the Trust recorded
other current liabilities and a corresponding deduction to royalty
income of US$155 to reflect an additional obligation for excess
royalty payments received related to other royalty assets. Royalty
income of US$4 and US$15, respectively, were used to reduce the
obligation during the three months and year ended December 31,
2022. Royalty income earned in future periods related to other
royalty assets will be used to repay the remaining obligation of
US$140.
|
5For the three months and year
ended December 31, 2022, non-cash interest income on loan
receivable represents the amortization of commitment fee of US$25
and US$97, respectively, (2021 – US$25 and US$35, respectively) and
the accretion of exit fee receivable of US$51 and US$194,
respectively (2021 – US$51 and US$71, respectively).
|
About DRI Healthcare Trust
DRI Healthcare Trust is managed by DRI Capital Inc. ("DRI
Capital"), the pioneer in global pharmaceutical royalty
monetization with a more than 30-year history of accelerating
innovation by providing capital to inventors, academic institutions
and biopharma companies. Since its founding in 1989, DRI Capital
has deployed more than US$2.5
billion, acquiring more than 60 royalties on 40-plus drugs,
including Eylea, Spinraza, Zytiga, Remicade, Keytruda and Stelara.
DRI Healthcare Trust's units are listed and trade on the Toronto
Stock Exchange in Canadian dollars under the symbol "DHT.UN" and in
US dollars under the symbol "DHT.U". To learn more, visit
drihealthcare.com or follow us on LinkedIn.
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 management's belief that the
Trust's financial flexibility and robust pipeline driven by strong
market conditions puts it in excellent position to continue
sourcing and executing on attractive opportunities and deliver on
the value proposition for its unitholders and that the Trust
expects to receive its first cash royalty receipts in respect of
Xenpozyme in the second quarter of 2023. 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. No assurance can be given that
these are all the factors that could cause actual results to vary
materially from the forward-looking statements in this press
release. You should not put undue reliance on forward-looking
statements. No assurances can be given that any of the events
anticipated by the forward-looking statements will transpire or
occur, or if any of them do occur, the actual results, performance
or achievements of the Trust could differ materially from the
results expressed in, or implied by, any forward-looking
statements. 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
drihealthcare.com.
SOURCE DRI Healthcare Trust