Elan Reports Fourth Quarter and Full-Year 2012 Financial Results

• Full Year 2012 guidance met; Pro-forma Revenues up 13%; Adjusted EBITDA up 31%
• Capital structure strengthened through debt refinancing and Alkermes shares sale
• Tysabri transaction creates greater financial flexibility to grow shareholder value - $3.25 billion upfront plus double-digit future royalties

DUBLIN--(BUSINESS WIRE)-- Elan Corporation, plc today reported its fourth quarter and full-year 2012 financial results.

Mr Kelly Martin, CEO said "2012 was a year in which we continued to make significant progress and adjustments in our business. We achieved top line revenue growth of 13%; advanced ELND005 into two Phase 2 programs for neuropsychiatry; strengthened our balance sheet through refinancing and sale of our Alkermes shares; we remained disciplined with our cost structure and investment decisions. In addition, we demerged our pathology-based drug discovery platform into a new listed company, Prothena Corporation plc, enabling shareholders investment choice."

Mr Martin added "The Tysabri business restructuring announced earlier today with our collaborator Biogen Idec provides for a meaningful de-risking of the business. With $3.25 billion in upfront cash and double digit tiered royalties, we have created the opportunity to diversify our business across all areas of the industry value chain with tax efficient capital and cash flow. As we move through 2013 and beyond, the close of the Tysabri transaction gives us strategic flexibility to add to the shareholder value proposition and investment thesis by enabling continued prudent and risk justified investment in our pipeline, selectively adding commercial and clinical assets, and exploring the return of capital to shareholders at the appropriate time and in the right manner."

Mr. Nigel Clerkin, chief financial officer, said, "We were pleased to have delivered on all of our financial guidance for 2012. The number of patients taking Tysabri grew by 12% in 2012, and this strong growth drove our recorded Tysabri revenues to $1.2 billion for the year. Including Tysabri, our Adjusted EBITDA increased by over 30% in 2012 to $220 million, well ahead of our goal of $200 million. We successfully refinanced our debt, extending the maturity and lowering the annual interest expense by one-third. We also recently sold our remaining shareholding in Alkermes, bringing the total EDT sale proceeds to $1.05 billion."

Mr. Clerkin added, "The Tysabri transaction will provide us with greatly increased strategic flexibility, while maintaining a substantial participation in the future growth potential of this tremendous product. We expect Tysabri in-market sales to show further strong growth in 2013, and to increase by approximately 15% over the $1.6 billion achieved in 2012. Additionally, we expect our operating expenses, excluding Tysabri, to be substantially lower than in 2012, and to be in the range of $170-190 million for the year."

⁽¹⁾ A reconciliation of Adjusted EBITDA to net income/(loss) on a pro forma basis, including the results of the Tysabri business for the three and twelve months ended December 31, 2011 and 2012, is set out in Appendix I and Appendix II. A reconciliation of Adjusted EBITDA from discontinued operations to net income/(loss) from discontinued operations for the three and twelve months ended December 31, 2011 and 2012 is set out in Appendix III and IV.

To supplement its consolidated financial statements presented on a U.S. GAAP basis, Elan provides readers with Adjusted EBITDA, a non-GAAP measure of operating results. Adjusted EBITDA is defined as net income/(loss) from continuing operations plus or minus net income or loss from discontinued operations, net interest expense, provision for or benefit from income taxes, depreciation and amortization of costs and revenue, share-based compensation, other net charges, net loss on equity method investment, impairment of investments, net charge on debt retirement and net investment gains. Adjusted EBITDA is not presented as, and should not be considered an alternative measure of operating results or cash flows from operations, as determined in accordance with U.S. GAAP. Elan's management uses Adjusted EBITDA to evaluate the operating performance of Elan and its business and this measure is among the factors considered as a basis for Elan's planning and forecasting for future periods. Elan believes Adjusted EBITDA is a measure of performance used by some investors, equity analysts and others to make informed investment decisions. Adjusted EBITDA is used as an analytical indicator of income generated to service debt and to fund capital expenditures. Adjusted EBITDA does not give effect to cash used for interest payments related to debt service requirements and does not reflect funds available for investment in the business of Elan or for other discretionary purposes. Adjusted EBITDA, as defined by Elan and presented in this press release, may not be comparable to similarly titled measures reported by other companies. A reconciliation of Adjusted EBITDA to net income/(loss) is set out in the table above titled, "Non-GAAP Financial Information Reconciliation Schedule".

Share

Learn about investing from the comfort of your own home.

Portfolio Basics

Take the first steps to building your portfolio.

View Course »

Investment Strategies

Learn the strategies you need to build a winning portfolio

View Course »

View All Courses

Add a Comment

Sign in »

Add a Comment Type your comment here *0 / 3000 Character Maximum Submit

Unaudited Consolidated U.S. GAAP Cash Flow Data
Three Months Ended December 31						Twelve Months Ended December 31
2011 US$m		2012 US$m				2011 US$m			2012 US$m
(47.4)		(41.5)		Adjusted EBITDA from continuing operations		(174.9)			(168.1)
77.1		92.3		Adjusted EBITDA from discontinued operations(1)		387.9			361.7
(9.1)		(8.6)		Net interest and tax		(98.1)			(52.6)
(17.8)		(62.7)		Other net charges		(153.0)		(2)	(105.8)
(27.1)		—		EDT divestment transaction costs		(34.1)			—
(11.8)		46.8		Working capital decrease/(increase)		(48.0)			20.1
(36.1)		26.3		Cash flows provided by/(used in) operating activities		(120.2)			55.3
(7.4)		(2.7)		Net purchases of tangible and intangible assets		(28.5)			(12.3)
0.2		(0.2)		Net proceeds from sale/(purchase) of investments		2.2			(0.7)
—		(28.1)		Funding provided to equity method investment (Janssen AI)		—			(76.9)
—		—		Purchase of equity method investment (Proteostasis)		(20.0)			—
—		—		Net proceeds from sale of equity method investment (Alkermes plc)		—			381.1
—		—		Net proceeds from sale of EDT business		500.0			—
—		5.0		Receipt of deferred consideration (Prialt)		—			12.0
—		(125.0)		Prothena distribution		—			(125.0)
(695.5)		(90.6)		Cash used in financing activities		(691.1)			(73.9)
1.3

TWX

-1.03

57.86