- 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, |
September 30, |
September 30, |
September 30, |
|
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 |
September |
September |
September |
|
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 |
Immunology |
Johnson & Johnson, Merck, |
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, |
September 30, |
September 30, |
September 30, |
|
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, |
September 30, |
September 30, |
September 30, |
|
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, |
September 30, |
September 30, |
September 30, |
|
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
For further information, please contact: David Levine, Director, Investor Relations, Tel: (416) 324-5738, ir@drihealthcare.com