- 53% adjusted EBITDA growth over prior year period shows
strong focus on cash generation
- Recent acquisitions and credit facility expansion highlight
growth under new leadership
TORONTO,
Nov. 6,
2024 /CNW/ - DRI Healthcare Trust (TSX: DHT.UN)
(TSX: DHT.U) ("DRI" or "the Trust") today announced its
financial results for the quarter ended September 30, 2024.
The Trust's third quarter 2024 financial statements and
Management's Discussion & Analysis ("MD&A") have been filed
on SEDAR+ (www.sedarplus.ca). All dollar amounts are expressed in
U.S. dollars unless otherwise indicated.
"The third quarter brought with it significant
changes and the Trust ultimately emerged a much stronger
organization," said Gary Collins,
the Trust's Chairman and Chief Executive Officer. "We have worked
tirelessly over the past four months improving our governance
process and internal control systems. At the same time, we have
pushed forward with deal execution, culminating in the closing of
two transactions within a few short weeks subsequent to quarter
end. We are excited about these deals, our robust pipeline, as well
as the continued support from our banking partners, and how these
positively position the growth of our portfolio for years to
come."
Third Quarter Highlights
- Total Income of $41.6
million;
- Normalized Total Cash Receipts of $38.9
million1;
- Adjusted EBITDA of $31.3
million1;
- Comprehensive Loss of $3.3
million;
- Adjusted Cash Earnings per Unit of $0.45 (basic and diluted)1,2;
- Net Loss per Unit of $0.03 (basic
and diluted)2;
- Repurchased 198,746 Units under its Normal Course Issuer Bid
("NCIB") at an average price of $8.72, totaling $ 1.7
million, under the Automated Purchase Plan ("AUPP").
- Paid a quarterly cash distribution of US$0.085 per unit on October 18, 2024.
Subsequent to Quarter End
- Deployed $57.0 million in a
royalty interest in Casgevy.
- Deployed $100.0 million in a
royalty interest in sebetralstat and $5.0
million in a private placement transaction equity
investment.
- Increased total credit available under the credit facility to
$631.6 million.
- Declared a quarterly cash distribution of US$0.085 per unit for the fourth quarter of 2024,
payable on January 20, 2025 to
unitholders of record on December 31,
2024.
________________
|
1
|
Normalized 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 purposes of calculating
Earnings per Unit for the three months ended September 30, 2024
were 56,293,275 units.
|
Financial Highlights
|
Three months ended
|
Nine months ended
|
|
(thousands of US dollars, except per unit
amounts)
|
September 30,
2024
|
September 30,
2023
|
September 30,
2024
|
September 30,
2023
|
|
Total
income
|
41,555
|
34,143
|
125,226
|
90,437
|
|
Management
fees
|
1,470
|
1,673
|
8,459
|
18,909
|
|
Performance
fees
|
—
|
—
|
231
|
18,616
|
|
Amortization of
royalty assets1
|
26,098
|
23,564
|
76,823
|
62,295
|
|
Impairment of royalty
assets
|
901
|
—
|
6,101
|
—
|
|
Other
expenses1
|
14,778
|
12,593
|
44,578
|
29,380
|
|
Net gain from sale of
royalty asset
|
—
|
150
|
—
|
110,122
|
|
Net gain on debt
refinancing
|
—
|
—
|
2,176
|
—
|
|
Other
loss1
|
—
|
(791)
|
(1,575)
|
(1,786)
|
|
Net earnings
(loss)1
|
(1,692)
|
(4,328)
|
(10,365)
|
69,573
|
|
Net unrealized gain
(loss) on derivative instruments
|
(1,632)
|
652
|
(207)
|
652
|
|
Comprehensive earnings
(loss)1
|
(3,324)
|
(3,676)
|
(10,572)
|
70,225
|
|
Net earnings (loss)
per unit – basic1
|
(0.03)
|
(0.09)
|
(0.18)
|
1.72
|
|
Net earnings (loss)
per unit – diluted1
|
(0.03)
|
(0.09)
|
(0.18)
|
1.71
|
|
Normalized Total Cash
Receipts2
|
38,921
|
25,249
|
145,393
|
78,928
|
|
Adjusted
EBITDA2
|
31,310
|
20,473
|
119,677
|
67,561
|
|
Adjusted EBITDA
Margin2
|
80 %
|
81 %
|
82 %
|
86 %
|
|
Adjusted Cash Earnings
per Unit – Basic1,2
|
0.45
|
0.47
|
1.42
|
1.37
|
|
Adjusted Cash Earnings
per Unit – Diluted1,2
|
0.45
|
0.47
|
1.42
|
1.37
|
|
Weighted average
number of Units – Basic
|
56,293,275
|
46,115,848
|
56,359,017
|
40,485,450
|
|
Weighted average
number of Units – Diluted
|
56,293,275
|
46,205,568
|
56,359,017
|
40,664,366
|
Asset Performance
As at September 30, 2024, the Trust's
portfolio included 26 royalty streams on 19 products that address a
variety of therapeutic areas, such as oncology, neurology,
ophthalmology, endocrinology, hematology, dermatology, lysosomal
storage disorders, immunology. On September 30, 2024, the
royalty asset portfolio had a book value, net of accumulated
amortization, of $747.8 million,
which during the three and nine months ended September 30, 2024 generated Total Cash Royalty
Receipts2 of $38.9 million
and $145.4 million, respectively, and
royalty income of $41.0 million and
$123.3 million, respectively.
__________________
|
1
|
Comparative figures
have been restated as a result of a retrospective reclassification
of certain expenses and capitalized costs.
|
|
2
|
Normalized Total Cash
Receipts, Total Cash Royalty Receipts and Adjusted EBITDA are
non-GAAP financial measures. 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.
|
Portfolio
|
(thousands of US dollars)
|
|
Cash Receipts
|
|
|
|
Three months ended
|
Nine months ended
|
|
Product
|
Therapeutic Area
|
Marketer(s)
|
September
30, 2024
|
September
30, 2023
|
September
30, 2024
|
September
30, 2023
|
|
Empaveli/Syfovre
|
Hematology/Ophthalmology
|
Apellis,
Sobi
|
1,716
|
—
|
4,291
|
438
|
|
Eylea I
|
Ophthalmology
|
Regeneron, Bayer,
Santen
|
1,442
|
1,331
|
4,170
|
4,055
|
|
Eylea II
|
Ophthalmology
|
Regeneron, Bayer,
Santen
|
312
|
289
|
902
|
1,705
|
|
FluMist
|
Influenza
|
AstraZeneca
|
—
|
4
|
—
|
1,479
|
|
Natpara
|
Endocrinology
|
Takeda
|
439
|
585
|
1,702
|
1,806
|
|
Omidria
|
Ophthalmology
|
Rayner
Surgical
|
9,580
|
3,250
|
29,401
|
9,750
|
|
Oracea
|
Dermatology
|
Galderma
|
1,463
|
2,770
|
5,799
|
6,052
|
|
Orserdu
I1
|
Oncology
|
Menarini
|
6,462
|
3,453
|
19,797
|
3,453
|
|
Orserdu
II1
|
Oncology
|
Menarini
|
4,742
|
—
|
31,913
|
—
|
|
Rydapt2
|
Oncology
|
Novartis
|
603
|
1,694
|
4,779
|
6,544
|
|
Spinraza
|
Neurology
|
Biogen
|
3,954
|
4,319
|
11,069
|
12,358
|
|
Stelara, Simponi
and
Ilaris3
|
Immunology
|
Johnson & Johnson,
Merck,
Mitsubishi Tanabe, Novartis
|
179
|
222
|
609
|
1,022
|
|
Vonjo I
|
Hematology
|
Sobi
|
3,053
|
2,716
|
8,842
|
7,055
|
|
Vonjo
II1
|
Hematology
|
Sobi
|
650
|
396
|
6,870
|
396
|
|
Xenpozyme4
|
Lysosomal Storage
Disorder
|
Sanofi
|
—
|
247
|
662
|
247
|
|
Xolair
|
Immunology
|
Roche,
Novartis
|
3,011
|
2,671
|
7,123
|
6,747
|
|
Zejula
|
Oncology
|
GSK
|
1,053
|
777
|
2,947
|
2,259
|
|
Zytiga4
|
Oncology
|
Johnson &
Johnson
|
—
|
—
|
3,546
|
8,543
|
|
Other
Products5
|
Various
|
Various
|
262
|
525
|
971
|
1,755
|
|
Total Cash Royalty
Receipts6
|
|
38,921
|
25,249
|
145,393
|
75,664
|
|
Interest receipts from
loan receivable7
|
|
—
|
—
|
—
|
3,264
|
|
Principal repayment of
loan receivable7,8
|
|
—
|
—
|
—
|
50,000
|
|
Exit fee received for
loan receivable7,8
|
|
—
|
—
|
—
|
1,000
|
|
Premiums for
prepayment7,8
|
|
—
|
—
|
—
|
2,140
|
|
Proceeds from sale of
royalty assets8,9
|
|
—
|
—
|
—
|
210,000
|
|
Total Cash Receipts6
|
|
38,921
|
25,249
|
145,393
|
342,068
|
|
Principal repayment of
loan receivable7,8
|
|
—
|
—
|
—
|
(50,000)
|
|
Exit fee received for
loan receivable7,8
|
|
—
|
—
|
—
|
(1,000)
|
|
Premiums for
prepayment7,8
|
|
—
|
—
|
—
|
(2,140)
|
|
Proceeds from sale of
royalty assets8,9
|
|
—
|
—
|
—
|
(210,000)
|
|
Normalized Total Cash
Receipts6
|
|
38,921
|
25,249
|
145,393
|
78,928
|
|
|
|
|
|
|
|
___________________
|
1
|
Cash receipts for the
nine months ended September 30, 2024 includes milestone royalty
receipts of $2,104 from Orserdu I, $18,939 from Orserdu II and
$5,000 from Vonjo II received in Q1 2024.
|
|
2
|
Cash receipts for the
nine months ended September 30, 2024 includes $1,000 in additional
cash receipts related to a one-time payment received in Q1
2024.
|
|
3
|
Stelara, Simponi and
Ilaris includes two royalty streams on each product, for a total of
six royalty streams held directly and indirectly.
|
|
4
|
Cash receipts
from Xenpozyme and Zytiga are received on a semi-annual basis
during the second and fourth quarters of each year. Cash receipts
from Xenpozyme was received during Q3 2023 as it was the first
quarter the Trust was entitled to royalties from the
product.
|
|
5
|
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.
|
|
6
|
Total Cash Receipts,
Total Cash Royalty Receipts and Normalized Total Cash 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.
|
|
7
|
Interest receipts from
loan receivable relates to the loan receivable, which was repaid in
full on June 26, 2023. In accordance with the loan agreement, the
Trust was also entitled to receive an exit fee and prepayment
premiums upon prepayment of the loan, which were received in the
second quarter of 2023.
|
|
8
|
This item represents
cash received by the Trust that is not expected to recur in the
normal course of our operations. As such, these items are not
included in Normalized Total Cash Receipts.
|
|
9
|
On April 27, 2023, the
Trust sold the Tzield royalty asset.
|
Liquidity and Capital
On September 30, 2024, the Trust had cash
and cash equivalents of US$89.4
million. The Trust's credit facility had an outstanding
principal balance of US$233.4 million
on September 30, 2024.
Subsequent to September
30, 2024, the Trust used existing cash and cash flows of
$57.0 million to fund the Casgevy
transaction and drew $105.0 million
from its credit facility to fund the sebetralstat transaction.
Also subsequent to September 30, 2024, the
Trust increased the total credit available under its credit
facility to $631.6 million. As part
of the amendment, the interest rate on for drawings was reduced by
0.25% based on the Trust's leverage ratio. The facilities are
secured by all of the assets of the Trust and most of its
subsidiaries, and the maturity date has been extended to
November 1, 2027, three years from
the date of closing.
The Trust had 56,268,820 units issued and
outstanding on September 30, 2024.
Distributions
On August 6, 2024,
the board of trustees approved a quarterly cash distribution of
US$0.0850 per unit to unitholders of
record as of September 30, 2024,
which was paid on October 18, 2024.
The Trust also announced today that its board of trustees has
declared a quarterly cash distribution in the amount of
US$0.0850 per unit for the fourth
quarter of 2024, payable on January 20,
2025, to unitholders of record as of December 31, 2024.
Normal Course Issuer Bid
During the quarter, the Trust repurchased and
cancelled 198,746 of its own units under its NCIB for an aggregate
amount of $1.7 million at a weighted
average price of C$11.92 per unit
(US$8.72). As previously announced,
the Trust received approval on November 13,
2023 from the Toronto Stock Exchange ("TSX") to acquire,
from time to time, if considered advisable, up to an aggregate of
3,280,195 of its trust units 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 19, 2024. In
connection with the NCIB, the Trust established an AUPP where by
units of the Trust may be repurchased at the discretion of a dealer
to the AUPP using commercially reasonable efforts and subject to
trading parameters defined in the AUPP.
Casgevy Royalty Transaction
On October 3, 2024,
the Trust acquired a share of payment rights on a Cas9 gene-editing
technology for Casgevy for a purchase price of $57.0 million. The transaction entitles us to a
share of the annual license fees, which range from $5.0 million to $40.0
million, and include certain sales-based annual license fee
increases. We are also entitled to receive a mid-double-digit
percentage of a $50.0 million
contingent payment eligible under the license agreement. The first
payment is expected to be received in January 2025 and the term of the payment streams
runs until 2034.
Casgevy is the first treatment approved by the
U.S. Food and Drug Administration ("FDA") to utilize CRISPR
technology. Casgevy was approved by the FDA in December 2023 for the treatment of sickle cell
disease ("SCD") and in January 2024
for the treatment of transfusion-dependent beta thalassemia
("TDT"), and by the European Medicines Agency for the treatment of
both SCD and TDT in February 2024.
Casgevy is the only approved gene-edited cell therapy for SCD and
TDT. Casgevy is marketed worldwide by Vertex Pharmaceuticals
Inc.
Sebetealstat Royalty Transaction
On November 4,
2024, the Trust acquired a royalty interest in the worldwide
net sales of all formulations of sebetralstat from KalVista
Pharmaceuticals ("KalVista") for an aggregate purchase price of up
to $179.0 million, comprised of a
$100.0 million upfront payment, up to
$57.0 million in sales-based
milestone payment and a one-time $22.0
million optional payment. Additionally, the Trust made a
$5.0 million investment in KalVista's
common stock in a private placement transaction.
The transaction entitles the Trust to a tiered
royalty of 5.0% on net sales up to and including $500.0 million, 1.1% on net sales above
$500.0 million and up to and
including $750.0 million, and 0.25%
on net sales above $750.0 million.
Royalty receipts will be collected quarterly on a one-quarter lag,
with the first royalty receipt being paid to the Trust in the
quarter immediately following the launch of sebetralstat. Royalty
receipts are anticipated to be collected through at least 2041.
If approved, sebetralstat would be the first and
only oral on-demand therapy for treating attacks associated with
hereditary angioedema ("HAE"). HAE is a rare genetic disorder
characterized by recurring episodes of severe swelling in various
parts of the body, including the face, extremities,
gastrointestinal tract, and airways. The FDA has accepted
KalVista's New Drug Application submission for sebetralstat and the
agency set a Prescription Drug User Fee Act date of June 17, 2025.
Third Quarter 2024 Conference Call &
Webcast
As previously announced, management will hold a
conference call on Thursday, November 7,
2024, at 8:00 a.m. (ET) to
review the Trust's 2024 third quarter results. You can join the
call by dialing 1-888-699-1199 or 416-945-7677 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://emportal.ink/3NgZED7.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 nine months
ended September 30, 2024 and 2023 to
the most directly comparable measures calculated in accordance with
IFRS are presented below.
Total Cash Royalty Receipts, Total Cash
Receipts and Normalized Total Cash Receipts
Total Cash Receipts refers to Total Cash Royalty
Receipts plus cash receipts from all products. Total Cash Receipts
includes cash receipts from interest as well as non-recurring cash
receipts such as the principal payments related to the Trust's loan
receivable, fees and premiums related thereto and proceeds from the
sale of royalty assets which consist of the proceeds from the sale
of the Tzield royalty. Total Cash Royalty Receipts refers to
aggregate cash royalty receipts from the Trust's portfolio of
royalty assets and forms part of Total Cash Receipts. Because of
the lag between when the Trust records royalty income and 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. The Trust also presents Normalized Total Cash
Receipts, which refers to Total Cash Receipts adjusted to remove
cash receipts that are not expected to recur in the normal course
of its operations. Management believes that Normalized Total Cash
Receipts will assist readers in evaluating the period over period
performance of the Trust's royalty portfolio since Normalized Total
Cash Receipts only includes cash receipts generated by royalties
and other amounts payable pursuant to the terms of the Trust's
royalty assets and interest on the Trust's loan receivable.
|
Three months ended
|
Nine months ended
|
|
(thousands of US dollars)
|
September 30,
2024
|
September 30,
2023
|
September 30,
2024
|
September 30,
2023
|
|
Total
income
|
45,555
|
34,143
|
125,226
|
90,437
|
|
[-] Other interest
income
|
(596)
|
(179)
|
(1,895)
|
(468)
|
|
[+] Royalties
receivable, beginning of period
|
43,542
|
29,110
|
64,082
|
87,632
|
|
[-] Royalties
receivable, end of period
|
(45,580)
|
(40,886)
|
(45,580)
|
(100,770)
|
|
[+] Acquired royalties
receivable1
|
—
|
3,061
|
3,560
|
5,343
|
|
[-] Non-cash royalty
income2
|
—
|
—
|
—
|
(4)
|
|
[-] Non-cash interest
and other income on loan receivable3
|
—
|
—
|
—
|
(1,102)
|
|
[+] Principal
repayment of loan receivable
|
—
|
—
|
—
|
50,000
|
|
[+] Exit
fee4
|
—
|
—
|
—
|
1,000
|
|
[+] Proceeds from sale
of royalty assets
|
—
|
—
|
—
|
210,000
|
|
Total Cash Receipts
|
38,921
|
25,249
|
145,393
|
342,068
|
|
[-] Principal
repayment of loan receivable4
|
—
|
—
|
—
|
(50,000)
|
|
[-] Exit fee received
for loan receivable4
|
—
|
—
|
—
|
(1,000)
|
|
[-] Premiums for
prepayment of loan receivable4
|
—
|
—
|
—
|
(2,140)
|
|
[-] Proceeds from sale
of royalty assets4
|
—
|
—
|
—
|
(210,000)
|
|
Normalized Total Cash Receipts
|
38,921
|
25,249
|
145,393
|
78,928
|
|
[-] Interest and other
income on loan receivable
|
—
|
—
|
—
|
(6,506)
|
|
[+] Non-cash interest
and other income on loan receivable3
|
—
|
—
|
—
|
1,102
|
|
[+] Premiums for
prepayment of loan receivable4
|
—
|
—
|
—
|
2,140
|
|
Total Cash Royalty Receipts
|
38,921
|
25,249
|
145,393
|
75,664
|
__________________
|
1
|
Acquired royalties
receivable represent the Trust's royalty entitlements prior to the
completion of the royalty transactions they relate to, as described
under the Transactions Completed section of the MD&A. Acquired
royalties receivable of $96 previously recognized for the Tzield
transaction were reversed during the second quarter of 2023 as the
royalty asset and its associated royalty interest was
sold.
|
|
2
|
Non-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 of nil and nil, respectively, was used to reduce the
obligation during three and nine months ended September 30, 2024
(2023 – nil and $4, respectively). Royalty income earned in future
periods related to other royalty assets will be used to repay the
remaining obligation of $136.
|
|
3
|
As the loan receivable
was fully prepaid on June 26, 2023, there was no non-cash interest
and other income for the three and nine months ended September 30,
2024. For the three and nine months ended September 30, 2023,
non-cash interest and other income on loan receivable represents
the amortization of commitment fees of nil and $368, respectively,
and the accretion of exit fees receivable of nil and $734,
respectively.
|
|
4
|
This item represents
cash received by the Trust that is not expected to recur in the
normal course of its operations. As such, this item is not included
in Normalized Total Cash Receipts.
|
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 other non-cash expenses and accruals and
income and expenses that are not expected to recur, that have been
recorded on the statement of net earnings (loss) and comprehensive
earnings (loss). The Trust refers to EBITDA when reconciling its
comprehensive earnings (loss) 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.
|
Three months ended
|
Nine months ended
|
|
(thousands of US dollars)
|
September 30,
2024
|
September 30,
2023
|
September 30,
2024
|
September 30,
2023
|
|
Comprehensive earnings
(loss)1
|
(3,324)
|
(3,676)
|
(10,572)
|
70,225
|
|
[+] Amortization or
royalty assets1
|
26,098
|
23,564
|
76,823
|
62,295
|
|
[+] Impairment of
royalty assets
|
901
|
—
|
6,101
|
—
|
|
[+] Amortization of
other current assets2
|
—
|
—
|
—
|
240
|
|
[-] Other interest
income
|
(596)
|
(179)
|
(1,895)
|
(468)
|
|
[+] Interest
expense
|
8,377
|
7,717
|
25,416
|
20,167
|
|
EBITDA
|
31,456
|
27,426
|
95,873
|
152,459
|
|
[+] Royalties
receivable, beginning of period
|
43,542
|
29,110
|
64,082
|
27,748
|
|
[-] Royalties
receivable, end of period
|
(45,580)
|
(40,886)
|
(45,580)
|
(40,886)
|
|
[-] Performance fees
payable, beginning of period
|
—
|
—
|
(5,918)
|
—
|
|
[+] Performance fees
payable, end of period
|
—
|
—
|
—
|
—
|
|
[+] Acquired royalties
receivable3
|
—
|
3,061
|
3,560
|
5,343
|
|
[+] Unit-based
compensation4
|
347
|
1,637
|
7,589
|
2,352
|
|
[+] Board of trustees'
unit-based compensation5
|
(87)
|
136
|
465
|
513
|
|
[-] Non-cash royalty
income6
|
—
|
—
|
—
|
(4)
|
|
[-] Non-cash interest
and other income on loan receivable7
|
—
|
—
|
—
|
(1,102)
|
|
[-] Premiums for
prepayment of loan receivable8
|
—
|
—
|
—
|
(2,140)
|
|
[-] Net gain on sale
of royalty asset1,9
|
—
|
(150)
|
—
|
(110,122)
|
|
[+] Management fees on
sale of royalty asset10
|
—
|
—
|
—
|
13,650
|
|
[+] Performance fees
on sale of royalty asset10
|
—
|
—
|
—
|
18,616
|
|
[-] Net gain on debt
refinancing11
|
—
|
—
|
(2,176)
|
—
|
|
[+] Other
loss1
|
—
|
791
|
1,575
|
1,786
|
|
[+] Net unrealized
(loss) gain on derivative instruments
|
1,632
|
(652)
|
207
|
(652)
|
|
Adjusted EBITDA
|
31,310
|
20,473
|
119,677
|
67,561
|
|
[÷] Normalized Total
Cash Receipts
|
38,921
|
25,249
|
145,393
|
78,928
|
|
Adjusted EBITDA Margin
|
80 %
|
81 %
|
82 %
|
86 %
|
__________________
|
1
|
Comparative figures
have been restated as a result of a retrospective reclassification
of certain expenses and capitalized costs.
|
|
2
|
In connection with the
Empaveli/Syfovre transaction completed in 2022, the Trust acquired
other current assets. The related amortization expense is recorded
in other operating expenses.
|
|
3
|
Acquired royalties
receivable represent the Trust's royalty entitlements prior to the
completion of the royalty transactions they relate to, as described
under the Transactions Completed section of the MD&A. Acquired
royalties receivable of $96 previously recognized for the Tzield
transaction were reversed during the second quarter of 2023 as the
royalty asset and its associated royalty interest was
sold.
|
|
4
|
For the nine months
ended September 30, 2024, unit-based compensation expense were $347
and $7,589, respectively (2023 – $2,843 and $3,700, respectively,
which includes $1,206 and $1,348, respectively, paid in
cash).
|
|
5
|
Certain members of the
board of trustees elected to be compensated fully or partially in
deferred units ("DUs") under the Trust's Omnibus Equity Incentive
Plan.
|
|
6
|
Non-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 of nil and nil, respectively, was used to reduce the
obligation during three and nine months ended September 30, 2024
(2023 – nil and $4, respectively). Royalty income earned in future
periods related to other royalty assets will be used to repay the
remaining obligation of $136.
|
|
7
|
As the loan receivable
was fully prepaid on June 26, 2023, there was no non-cash interest
and other income for the three months ended September 30, 2024.
For the three and nine months ended September 30, 2023,
non-cash interest and other income on loan receivable represents
the amortization of commitment fees of nil and $368, respectively,
and the accretion of exit fees receivable of nil and $734,
respectively.
|
|
8
|
The Trust received a
prepayment premium for prepayment of the loan receivable, as
described under the Loan receivable section of the
MD&A.
|
|
9
|
During the second
quarter of 2023, the Trust sold its royalty interest in the
worldwide sales of Tzield, as described under the Tzield
Transactions section of the MD&A.
|
|
10
|
During the nine months
ended September 30, 2024, the Trust paid management fees of $13,650
and performance fees ofS$18,616 related to the sale of the Tzield
royalty asset, pursuant to the investment management agreement, as
described in note 2(n) to the Trust's 2023 amended and restated
annual consolidated financial statements.
|
|
11
|
During the second
quarter of 2024, the Trust refinanced its 2023 Preferred Securities
and 2023 Warrants, as result of the refinancing an accounting gain
was recorded.
|
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, excluding cash earnings
that are not expected to recur.
|
Three months ended
|
Nine months ended
|
|
(thousands of US dollars, except per unit
amounts)
|
September 30,
2024
|
September 30,
2023
|
September 30,
2024
|
September 30,
2023
|
|
Comprehensive earnings
(loss)1
|
(3,324)
|
(3,676)
|
(10,572)
|
70,225
|
|
[+] Amortization or
royalty assets1
|
26,098
|
23,564
|
76,823
|
62,295
|
|
[+] Impairment of
royalty assets
|
901
|
—
|
6,101
|
—
|
|
[+] Amortization of
other current assets2
|
—
|
—
|
—
|
240
|
|
[+] Unit-based
compensation
|
347
|
1,637
|
7,589
|
2,352
|
|
[+] Board of trustees'
unit-based compensation4
|
(87)
|
136
|
465
|
513
|
|
[-] Non-cash royalty
income5
|
—
|
—
|
—
|
(4)
|
|
[-] Non-cash interest
and other income on loan receivable6
|
—
|
—
|
—
|
(1,102)
|
|
[-] Premiums for
prepayment of loan receivable7
|
—
|
—
|
—
|
(2,140)
|
|
[-] Net gain on sale
of royalty assets8
|
—
|
(150)
|
—
|
(110,122)
|
|
[+] Management fee on
sale of royalty asset9
|
—
|
—
|
—
|
13,650
|
|
[+] Performance fee on
sale of royalty asset9
|
—
|
—
|
—
|
18,616
|
|
[-] Net gain on debt
refinancing10
|
—
|
—
|
(2,176)
|
—
|
|
[+] Other
loss1
|
—
|
791
|
1,575
|
1,786
|
|
[+] Net unrealized
loss (gain) on derivative instruments
|
1,632
|
(652)
|
207
|
(652)
|
|
Adjusted Cash Earnings
|
25,567
|
21,650
|
80,012
|
55,657
|
|
Adjusted Cash Earnings per Basic
Unit
|
0.45
|
0.47
|
1.42
|
1.37
|
|
Adjusted Cash Earnings per Fully Diluted
Unit
|
0.45
|
0.47
|
1.42
|
1.37
|
|
Weighted average
number of Units – Basic
|
56,293,275
|
46,115,848
|
56,359,017
|
40,485,450
|
|
Weighted average
number of Units – Diluted
|
56,293,275
|
46,205,568
|
56,359,017
|
40,664,366
|
__________________
|
1
|
Comparative figures
have been restated as a result of a retrospective reclassification
of certain expenses and capitalized costs.
|
|
2
|
In connection with the
Empaveli/Syfovre Transaction completed in 2022, the Trust acquired
other current assets. The related amortization expense is recorded
in other operating expenses.
|
|
3
|
For the nine months
ended September 30, 2024, unit-based compensation expense were $347
and $7,589, respectively (2023 – $2,843 and $3,700, respectively,
of which $1,206 and $1,348, respectively was paid in
cash).
|
|
4
|
Certain members of the
board of trustees elected to be compensated fully or partially in
deferred units ("DUs") under the Trust's Omnibus Equity Incentive
Plan.
|
|
5
|
Non-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 of nil and nil, respectively, was used to reduce the
obligation during three and nine months ended September 30, 2024
(2023 – nil and $4, respectively). Royalty income earned in future
periods related to other royalty assets will be used to repay the
remaining obligation of $136.
|
|
6
|
As the loan receivable
was fully prepaid on June 26, 2023, there was no non-cash interest
and other income for the three and nine months ended September 30,
2024. For the three and nine months ended September 30, 2023,
non-cash interest and other income on loan receivable represents
the amortization of commitment fees of nil and $368, respectively,
and the accretion of exit fees receivable of nil and $734,
respectively.
|
|
7
|
The Trust received a
prepayment premium for prepayment of the loan receivable, as
described under the Loan receivable section of the
MD&A.
|
|
8
|
During the second
quarter of 2023, the Trust sold its royalty interest in the
worldwide sales of Tzield, as described under the Tzield
Transactions section of the MD&A.
|
|
9
|
During the nine months
ended September 30, 2024, the Trust paid management fees of $13,650
and performance fees of $18,616 related to the sale of the Tzield
royalty asset, pursuant to the investment management agreement, as
described in note 2(n) to the Trust's 2023 annual consolidated
financial statements.
|
|
10
|
During the second
quarter of 2024, the Trust refinanced its 2023 Preferred Securities
and 2023 Warrants, as result of the refinancing an accounting gain
was recorded.
|
About DRI Healthcare Trust
The Trust is managed by DRI Capital Inc. ("DRI
Healthcare"), the pioneer in global pharmaceutical royalty
monetization. Since its initial public offering in 2021, the Trust
has deployed more than US$1.0
billion, acquiring more than 25 royalties on 20-plus drugs,
including Eylea, Orserdu, Omidria, Spinraza, Stelara, Vonjo, Zejula
and Zytiga. The 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". 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 can generally be
identified by the use of 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 the Trust's ability to execute
on its strategy, the value to be provided to unitholders, timing of
royalty payments, statements that we expect to receive payments
based on licensing in connection with CASGEVY®, the potential and
timing of royalty payments, the timing of closing of the
private placement transaction in KalVista's common stock,
expectations regarding KalVista's regulatory submissions, and the
anticipated royalty income and anticipated sales of the products
underlying such royalties. 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
and under "Risk Factors" in the Trust's MD&A. The anticipated
royalty terms for products in our portfolio may be shorter than the
period of patent protection for the applicable product, depending
on many factors, including the entry of generic drugs into the
marketplace and competition, all of which are outside our control.
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
