Total Revenue for the Fourth Quarter and Full Year of 2015 Grows 3.4% and 4.0%, respectively, on a Constant Currency Basis
SAN ANTONIO - Thursday, January 28th 2016 [ME NewsWire]
(BUSINESS WIRE)-- Acelity L.P. Inc.:
Fourth Quarter Financial Highlights
Revenue for the fourth quarter of 2015 of $483.8 million, grew 0.2% as reported on a GAAP basis from the prior-year period and grew 3.4% on a constant currency basis, bringing revenue for the full year of 2015 to $1.867 billion, which was comparable to the prior year as reported on a GAAP basis and up 4.0% on a constant currency basis
Revenue from Advanced Wound Therapeutics ("AWT") decreased 1.3% as reported on a GAAP basis and grew 2.5% on a constant currency basis, led by solid volume growth in advanced devices compared to the prior-year period
Revenue from Regenerative Medicine ("RM") grew 6.9% as reported on a GAAP basis and grew 8.4% on a constant currency basis, led by double-digit increases in revenue related to breast reconstruction procedures in the U.S.
Loss from continuing operations was $15.5 million, as reported on a GAAP basis, compared to $30.9 million for the prior-year period
Adjusted EBITDA from continuing operations1 of $183.5 million, declined 7.5% as reported from the prior-year period and was down 5.3% on a constant currency basis, achieving an Adjusted EBITDA margin of 37.9%
Operational Highlights
Closed the acquisition of the SNaP® business from Spiracur, Inc., expanding our offering in disposable, portable, mechanical negative pressure wound therapy ("NPWT") technology, allowing Acelity’s sales and service channels to support the expansion of the SNaP® Therapy System to patients and their care teams around the world who need access to NPWT devices
Returned the Regenerative Medicine segment to growth for the full year with two consecutive quarters of strong growth led by revenue from breast reconstruction procedures and international sales
Joe Woody, President and Chief Executive Officer, commented, “Our strong fourth quarter performance reflects the realization of strategic investments we’ve made in our business and employees to drive sustainable, long-term growth. With five consecutive quarters of organic revenue growth, 2015 marks a pivotal year for Acelity as we continue to execute our strategy.
“We delivered a solid quarter in both Advanced Wound Therapeutics and Regenerative Medicine, led by continued volume increases in advanced devices as well as double-digit growth in revenue from breast reconstruction procedures. Sales of our expansion products, led by Prevena™ and Revolve™, accelerated in the fourth quarter and continue to diversify our growth profile.
“We continue to provide value to our customers through focused innovation and an enhanced portfolio of offerings across our business. The solid momentum we generated in 2015 supports our confidence in our ability to sustain long-term growth.”
Results of the fourth quarter and twelve months ended December 31, 2015
Acelity revenue for the fourth quarter of 2015 was $483.8 million, up from the prior-year period by 0.2% as reported on a GAAP basis and 3.4% on a constant currency basis.
AWT revenue was $364.3 million, down 1.3% as reported on a GAAP basis and up 2.5% on a constant currency basis, compared to the prior-year period. Excluding the impact of foreign exchange rate movements, growth in AWT revenue was driven by mid-single digit volume growth in advanced devices, including strong Prevena™ sales.
RM revenue was $116.8 million, up 6.9% as reported on a GAAP basis and 8.4% on a constant currency basis, compared to the prior-year period. The revenue growth was driven by a double-digit increase in revenue related to breast reconstruction procedures in the U.S. and Strattice growth in Europe, partially offset by a decline in revenue related to abdominal wall reconstruction procedures in the U.S.
Loss from continuing operations for the fourth quarter of 2015 was $15.5 million, as reported on a GAAP basis, compared to $30.9 million for the prior-year period. Adjusted EBITDA from continuing operations for the fourth quarter of 2015 decreased 7.5% to $183.5 million from $198.3 million in the prior-year period and decreased 5.3% on a constant currency basis. Adjusted EBITDA decreased in the fourth quarter of 2015 primarily due to investment in establishing our six global franchises and increased incentive compensation expense as a result of improved financial performance, partially offset by improved production yields, primarily in our RM business, as well as expense savings associated with integration and business optimization efforts. Additionally, loss from continuing operations for the fourth quarter of 2015 was negatively impacted by non-cash impairment charges while loss from continuing operations in the prior year period was negatively impacted by the LifeNet litigation jury verdict of $34.7 million recorded in the fourth quarter.
Acelity revenue for the year ended December 31, 2015, was $1.867 billion, comparable to the prior year as reported on a GAAP basis and up 4.0% on a constant currency basis.
AWT revenue was $1.422 billion, up 0.1% as reported on a GAAP basis and 4.8% on a constant currency basis, compared to the prior year. Growth in AWT revenue was driven by mid-single digit volume growth globally in advanced devices and strong Prevena™ sales.
RM revenue was $433.9 million, up 1.3% as reported on a GAAP basis and 2.7% on a constant currency basis, compared to the prior year. The RM revenue growth was driven by a mid-single digit increase in revenue related to breast reconstruction procedures, partially offset by a decline in revenue related to abdominal wall reconstruction procedures.
Loss from continuing operations for the year ended December 31, 2015, was $47.7 million, as reported on a GAAP basis, compared to $235.0 million in the prior year. Adjusted EBITDA from continuing operations for the year ended December 31, 2015, decreased 0.3% to $709.7 million from $712.1 million in the prior year and increased 2.3% on a constant currency basis. Excluding the impact of foreign exchange movements, adjusted EBITDA for the year ended December 31, 2015, increased primarily due to revenue growth, improved production yields, primarily in our RM business, as well as expense savings associated with integration and business optimization efforts, partially offset by investment in establishing our six global franchises and increased incentive compensation expense as a result of improved financial performance. Additionally, loss from continuing operations for the year ended December 31, 2015, was negatively impacted by non-cash impairment charges while loss from continuing operations in the prior year was negatively impacted by the Wake Forest settlement and LifeNet litigation jury verdict.
Financial Position
Total cash at December 31, 2015, was $88.4 million. During 2015, Acelity generated cash of $80.9 million from operations, used cash of $125.3 million in investing activities and used cash of $41.1 million in financing activities.
As of December 31, 2015, total long-term debt outstanding was $4.797 billion and our Net Leverage Ratio2 was 6.5x. Availability under our Revolving Credit Facility was $161.8 million as of December 31, 2015.
Company Structure
Acelity is a leading global medical technology company committed to the development and commercialization of advanced wound care and regenerative medicine solutions. Acelity was formed by uniting the strengths of three organizations, KCI, Systagenix and LifeCell, into our two business segments: Advanced Wound Therapeutics and Regenerative Medicine. Our mission is to change the clinical practice of medicine with solutions that speed healing, reduce complications, create economic value and improve patients’ lives. Acelity is controlled by investment funds advised by Apax Partners LLP and Apax Partners L.P. and controlled affiliates of Canada Pension Plan Investment Board and the Public Sector Pension Investment Board and certain other co-investors. Unless otherwise noted in this report, the terms “we,” “our” or “Company,” refer to Acelity and its subsidiaries, collectively.
Non-GAAP Financial Information
The following provides information regarding non-GAAP financial measures used in this earnings release:
To supplement our consolidated results presented in accordance with accounting principles generally accepted in the United States (“GAAP”), we have disclosed non-GAAP financial measures of operating results that exclude or adjust certain items. A reconciliation of Adjusted EBITDA from continuing operations and Adjusted EBITDA to net loss is provided later in this earnings release. In addition, the Company presents certain of its financial results on a constant currency basis in addition to GAAP results. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. In this release, we calculate constant currency by calculating current-year results using prior-year foreign currency exchange rates.
Management believes these non-GAAP financial measures provide useful supplemental information for its and investors' evaluation of our business performance and are useful for period-over-period comparisons of the performance of our business. While management believes that these financial measures are useful in evaluating our business, this information should be considered as supplemental in nature and should not be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similarly entitled measures reported by other companies. See "Reconciliation from GAAP to Non-GAAP" included within this release for a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures.
1Adjusted EBITDA from continuing operations excludes the operations of our previously divested SPY ELITE® business and the impact of merger-related expenses, foreign currency gains or losses, business optimization expenses and other expenses specified in the reconciliation within this release.
2 The Net Leverage Ratio represents Net Debt divided by Consolidated EBITDA for the last twelve months. Net Debt consists of total indebtedness including capital leases and other financing obligations, less cash and cash equivalents up to the greater of $300.0 million or 40% of Consolidated EBITDA for the last twelve months. Consolidated EBITDA, as defined in our senior secured credit agreement, represents Adjusted EBITDA from continuing operations plus “run rate” cost savings.
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Contacts
Acelity
Investors
Caleb Moore, 210-255-6433
caleb.moore@acelity.com
or
Media
Cheston Turbyfill, 210-515-7757
cheston.turbyfill@acelity.com
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