- Transactions for Empaveli, Zejula and
Omidria royalties mark significant progress -
- Cash receipts expected to be flat to
slightly increasing through 2025 even with no further deployment
-
- Continued strong performance of existing
assets and financial results -
TORONTO, Nov. 7, 2022
/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, 2022. The Trust's third quarter 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.
"This has been DRI's busiest quarter since becoming a public
entity, with three completed transactions," said Behzad Khosrowshahi, Chief Executive Officer of
DRI Healthcare Trust. "The combination of robust expected cash
flows derived from the success of Omidria, and the growth prospects
for Empaveli and Zejula, demonstrates our commitment to building
long-term value for our unitholders by partnering with leading
inventors, companies, and institutions in the bio-pharma value
chain. Importantly, the cash receipts from these assets in addition
to those acquired in our previous transactions are expected to
flatten to slightly increase our cash flow curve through the end of
2025".
Highlights
- Completed three royalty transactions deploying US$184.5 million;
- Total Income of US$26.5
million;
- Total Cash Receipts of US$18.8
million1;
- Adjusted EBITDA of US$15.8
million1;
- Net Earnings and Comprehensive Earnings of US$7.6 million or US$0.202 per Unit (basic and
diluted);
- Adjusted Cash Earnings per Unit (basic and diluted) of
US$0.571,2.
Subsequent to Quarter End
- Today, the board of trustees declared a quarterly cash
distribution of US$0.075 per unit for
the fourth quarter of 2022, which is payable on January 20, 2022 to unitholders of record on
December 31, 2022.
- Received Toronto Stock Exchange (the "TSX") approval for normal
course issuer bid to allow Trust to acquire up to 2,493,280 of its
Trust units over next twelve months.
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
September 30, 2022 were 38,657,266 units and 38,694,492 units,
respectively.
|
|
Financial Highlights
|
Three months
ended
|
Nine months
ended
|
(thousands of US
dollars, except per unit amounts)
|
September 30,
2022
|
September 30,
2021
|
September 30,
2022
|
September 30,
20211
|
Total
income
|
26,471
|
23,409
|
70,392
|
59,551
|
Management
fees
|
1,322
|
1,113
|
4,477
|
4,163
|
Amortization
expenses
|
13,992
|
11,125
|
40,188
|
28,923
|
Other
expenses
|
3,543
|
3,536
|
9,322
|
8,264
|
Net earnings and other
comprehensive earnings
|
7,614
|
7,635
|
16,405
|
18,201
|
Earnings per unit –
basic2
|
0.20
|
0.19
|
0.42
|
0.55
|
Earnings per unit –
diluted2
|
0.20
|
0.19
|
0.42
|
0.55
|
Total Cash Receipts/
Pro Forma Total Cash Receipts3,4
|
18,844
|
15,447
|
65,082
|
79,366
|
Adjusted EBITDA/ Pro
Forma Adjusted EBITDA3,4,5
|
15,814
|
11,869
|
55,068
|
68,658
|
Adjusted EBITDA
Margin/ Pro Forma Adjusted
EBITDA Margin3,4,5
|
84 %
|
77 %
|
85 %
|
87 %
|
Adjusted Cash Earnings
per Unit – Basic2,3,4,5
|
0.57
|
0.48
|
1.48
|
1.44
|
Adjusted Cash Earnings
per Unit – Diluted2,3,4,5
|
0.57
|
0.48
|
1.48
|
1.44
|
Asset Performance
As at September 30, 2022, the Trust's portfolio included 22
royalties and secured loans on 17 products that address medically
necessary therapeutic areas, such as oncology, rare diseases,
ophthalmology, endocrinology, hematology, dermatology, autoimmune
diseases, and vaccines. On September 30, 2022, the royalty
asset portfolio had a book value, net of accumulated amortization,
of US$505.5 million, generated Total
Cash Royalty Receipts3 of US$17.5
million and US$61.2 million
during the three and nine months ended September 30, 2022, respectively, and earned
royalty income of US$25.0 million and
US$66.3 million during the three and
nine months ended September 30, 2022,
respectively. In addition, the Trust held a loan receivable with a
gross principal outstanding balance of US$50.0 million as at September 30, 2022,
which generated cash interest receipts of US$1.3 million and US$3.9
million during the three and nine months ended September 30, 2022, respectively, and earned
interest income of US$1.4 million and
US$4.1 million during the three and
nine months ended September 30, 2022,
respectively.
________________________
|
1The Trust completed its initial
public offering ("IPO") on February 19, 2021. The Trust had no
active operations prior to February 19, 2021.
|
2The weighted average number of
basic and diluted units for the three months ended
September 30, 2022 were 38,657,266 units and 38,694,492 units,
respectively. The weighted average number of basic and diluted
units for the three months ended September 30, 2021 was
40,107,407 units. The weighted average number of basic and diluted
units for the nine months ended September 30, 2022 were 38,684,889
units and 38,710,064 units, respectively. The weighted average
number of basic and diluted units for the nine months ended
September 30, 2021 was 32,908,642 units.
|
3Total 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.
|
4Total Cash Receipts for the
nine months ended September 30, 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 Total Cash Receipts
for the three and nine months ended September 30, 2021 include 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 and are
referred to as Pro Forma Total Cash Receipts, Pro Forma Adjusted
EBITDA and Pro Forma Adjusted EBITDA Margin.
|
5Pro Forma Adjusted EBITDA, Pro
Forma Adjusted EBITDA Margin and Adjusted Cash Earnings per Unit
for the three and nine months ended September 30, 2021 have been
adjusted to conform with the current period's composition. The
reconciliation of these measures can be found later in this press
release.
|
|
Portfolio
(thousands of US
dollars)
|
|
Total Cash
Receipts1
|
|
|
|
Three months
ended
|
Nine months
ended
|
Product
|
Therapeutic
Area
|
Marketer(s)
|
September 30,
2022
|
Pro
Forma
September 30,
20212
|
September 30,
2022
|
Pro
Forma
September 30,
20212
|
Core
Products
|
|
|
|
|
|
|
Empaveli3
|
Hematology
|
Apellis, Swedish Orphan
Biovitrum
|
—
|
—
|
—
|
—
|
Eylea I
|
Ophthalmology
|
Regeneron, Bayer,
Santen
|
1,318
|
—
|
4
4,109
|
6,0404
|
Eylea II
|
Ophthalmology
|
Regeneron, Bayer,
Santen
|
1,444
|
—
|
4
4,474
|
2,6844
|
FluMist
|
Influenza
|
AstraZeneca
|
—
|
7
|
2,218
|
2,269
|
Natpara
|
Endocrinology
|
Takeda
|
728
|
551
|
2,050
|
1,574
|
Omidria3
|
Ophthalmology
|
Rayner
Surgical
|
—
|
—
|
—
|
—
|
Oracea
|
Dermatology
|
Galderma
|
2,109
|
3,711
|
5,817
|
3,711
|
Rydapt
|
Oncology
|
Novartis
|
2,578
|
2,313
|
7,876
|
8,770
|
Spinraza
|
Spinal Muscular
Atrophy
|
Biogen
|
3,736
|
4,326
|
12,587
|
15,249
|
Vonjo
|
Oncology
|
CTI
Biopharma
|
1,184
|
—
|
1,404
|
—
|
Xolair
|
Respiratory
|
Roche,
Novartis
|
2,528
|
2,358
|
6,627
|
6,041
|
Zejula3
|
Oncology
|
GSK
|
—
|
—
|
—
|
—
|
Zytiga5
|
Oncology
|
Johnson &
Johnson
|
—
|
—
|
8,958
|
9,498
|
Total Core
Products
|
|
|
15,625
|
13,266
|
56,120
|
55,836
|
|
|
|
|
|
|
|
Mature
Products
|
|
|
|
|
|
|
Autoimmune
Portfolio6
|
Autoimmune
Diseases
|
Johnson& Johnson,
Merck,
Novartis
|
721
|
1,493
|
3,107
|
7,601
|
Rilpivirine
Portfolio7
|
HIV
|
Johnson&
Johnson, Gilead, ViiV
|
—
|
—
|
—
|
14,368
|
Total Mature
Products
|
|
721
|
1,493
|
3,107
|
21,969
|
|
|
|
|
|
|
|
Other
Products8,9
|
Various
|
Various
|
1,158
|
688
|
2,001
|
1,561
|
Total Cash Royalty
Receipts1,2
|
|
17,504
|
15,447
|
61,228
|
79,366
|
Interest Receipts from
Loan Receivable
|
|
1,340
|
—
|
3,854
|
—
|
Total Cash
Receipts1,2
|
|
18,844
|
15,447
|
65,082
|
79,366
|
1Total 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.
|
2Total Cash Receipts
and Total Cash Royalty Receipts for the nine months ended September
30, 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 Total Cash Receipts and Total Cash Royalty
Receipts for the three and nine months ended September 30, 2021
include 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.
|
3The Trust entered into the
transactions in respect of Empaveli, Omidria and Zejula during the
third quarter of 2022. In accordance with the terms of the royalty
agreements, the first cash royalty receipts for these assets are
expected in the fourth quarter of 2022
|
4Cash royalty receipts from
Eylea I and Eylea II of US$4,718 were received subsequent to
September 30, 2021
|
5Cash royalties from Zytiga are
received on a semi-annual basis during the second and fourth
quarters of each year.
|
6The Autoimmune Portfolio
consists of an agreement to receive royalties on sales of Stelara,
Simponi and Ilaris. The royalty assets include two royalty streams
on each product, for a total of six royalty streams.
|
7The 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.
|
8Other 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.
|
9For the three and nine months
ended September 30, 2022, the Trust received US$750 related to the
settlement of litigation on a royalty asset held by the one of
Trust's current subsidiaries, which predated the Trust's
acquisition of the subsidiary.
|
|
Liquidity and Capital
On September 30, 2022, the Trust had cash and cash
equivalents of US$20.5 million and an
outstanding principal balance on its credit facility of
US$216.9 million.
The Trust had 38,665,770 units issued and outstanding on
September 30, 2022.
Distributions
On August 3, 2022, the board of
trustees approved a quarterly cash distribution of US$0.075 per unit, which was paid to unitholders
on October 20, 2022. 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 fourth quarter of 2022,
payable on January 20, 2023, to
unitholders of record on December 31,
2022.
Recent Transactions
On July 21, 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 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
million.
On September 12, 2022, the Trust
completed a transaction for a royalty interest in Zejula for a
purchase price of US$35 million. An
additional milestone payment of US$10
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.
On September 30, 2022, the Trust
completed a transaction for a royalty interest in Omidria for a
purchase price of US$125 million. In
accordance with the terms of the royalty agreement, the Trust will
be entitled to receive royalties until December 2030 subject to annual caps
(US$1.67 million in aggregate for the
four months from September 1, 2022
through December 31, 2022;
US$13, million for 2023; US$20 million for 2024; US$25 million for each of 2025 to 2028 inclusive;
US$26.3 million for 2029; and
US$27.5 million for 2030).
Normal Course Issuer Bid
The Trust also announced today the acceptance by the TSX of the
Trust's Notice of Intention to make a normal course issuer bid (the
"NCIB"). Pursuant to the NCIB, the Trust proposes to purchase, from
time to time, if considered advisable, up to an aggregate of
2,493,280 of its trust units (the "Units"), being 10% of its
24,932,808 public float of Units as of November 7, 2022, through the facilities of the
TSX and/or through various eligible alternative Canadian trading
systems at the market price at the time of purchase.
Purchases may commence on November 14,
2022 and 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.
The average daily trading volume of the Units over the most
recently completed six calendar months was 33,117 Units.
Accordingly, for purposes of the TSX rules, the Trust is entitled
to purchase, on any trading day, up to 8,279 Units and to make
block purchases of its Units which exceed such daily limit no more
frequently than once per calendar week. Under the Trust's prior
normal course issuer bid that commenced on October 5, 2021 and concluded on October 4, 2022 (the "Prior NCIB"), the Trust
obtained approval from the TSX to purchase 2,500,000 Units. The
Trust purchased 1,521,050 Units under the Prior NCIB through the
facilities of the TSX and alternative Canadian trading systems at a
weighted average price of C$6.60 per
Unit (US$5.25).
The Trust remains focused on its primary strategy of acquiring
new pharmaceutical royalty streams and using its capital for that
purpose. The Trust's manager believes that there is a robust and
growing pipeline of royalty stream acquisitions opportunities and
is active in reviewing a number of potential transactions. However,
it is also the opinion of the Trust's manager that, from time to
time, the market price of the Trust's Units may not adequately
reflect the value of the underlying assets of the Trust, and the
Trust wishes to take advantage of the market trading prices of its
Units in those instances. The Board of Trustees of the Trust
believes that at such times the proposed purchases would be in the
best interests of the Trust and would constitute an appropriate use
of available funds. All Units purchased by the Trust pursuant to
the NCIB will be cancelled.
In connection with the NCIB, the Trust has established an
automatic purchase plan with its designated broker (the "AUPP") to
allow for purchases of Units during self-imposed blackout periods,
subject to certain parameters as to price and number of Units.
Outside of these pre-determined black-out periods, Units will be
repurchased in accordance with management's discretion, subject to
applicable law. The AUPP constitutes an automatic plan for purposes
of applicable Canadian securities legislation and has been
pre-cleared by the TSX.
Third Quarter 2022 Conference Call & Webcast
Management will hold a conference call on Tuesday, November 8, 2022, at 8:00 a.m. (ET) to review the Trust's 2022 third
quarter 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/LdAO6J9DvJ4. 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 our non-GAAP financial measures and
non-GAAP ratios for three and nine months ended September 30, 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 we record royalty
income and receive the corresponding cash payments on our
royalties, we believe Total Cash Receipts and Total Cash Royalty
Receipts are useful measures when evaluating our operations, as
they represent actual cash generated in respect of all royalty
assets held during a period.
|
Three months
ended
|
Nine months
ended
|
(thousands of US
dollars, except per unit amounts)
|
September 30,
2022
|
Pro
Forma
September 30,
20211
|
September 30,
2022
|
Pro
Forma
September 30,
20211
|
Total
income
|
26,471
|
23,409
|
70,392
|
59,551
|
[-] Other interest
income
|
(28)
|
(4)
|
(33)
|
(7)
|
[+] Royalties
receivable, beginning of period
|
27,498
|
29,679
|
30,148
|
—
|
[-] Royalties
receivable, end of period
|
(36,386)
|
(43,965)
|
(36,386)
|
(43,965)
|
[+] Acquired royalties
receivable2
|
1,366
|
2,930
|
1,366
|
58,120
|
[+] Acquired cash
royalties received2
|
—
|
4,136
|
—
|
6,405
|
[-] Non-cash royalty
income3
|
(11)
|
(194)
|
(190)
|
(194)
|
[+] Interest
receivable, beginning of period
|
—
|
—
|
—
|
—
|
[-] Interest
receivable, end of period
|
—
|
(514)
|
—
|
(514)
|
[-] Non-cash interest
income on loan receivable4
|
(66)
|
(30)
|
(215)
|
(30)
|
Total Cash
Receipts
|
18,844
|
15,447
|
65,082
|
79,366
|
[-] Interest income on
loan receivable
|
(1,406)
|
(544)
|
(4,069)
|
(544)
|
[-] Interest
receivable, beginning of period
|
—
|
—
|
—
|
—
|
[+] Interest
receivable, end of period
|
—
|
514
|
—
|
514
|
[+] Non-cash interest
income on loan receivable4
|
66
|
30
|
215
|
30
|
Total Cash Royalty
Receipts
|
17,504
|
15,447
|
61,228
|
79,366
|
1Cash receipts for the nine
months ended September 30, 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 generated from January 1, 2021 to February 18, 2021
by the assets acquired in connection with the Trust's IPO 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 in 2021
section of the MD&A. Cash receipts for the three and nine
months ended September 30, 2021 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 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 sections of the
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 and nine months ended September 30, 2022 of
nil and US$334, respectively, was used to reduce the obligation for
excess royalty payments received in connection with the Autoimmune
Portfolio (2021 – US$194 and US$194). 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$11 was used to reduce the obligation during
the three and nine months ended September 30, 2022. Royalty income
earned in future periods related to other royalty assets will be
used to repay the remaining obligation of US$144.
|
4For the three and nine months
ended September 30, 2022, non-cash interest income on loan
receivable represents the amortization of commitment fees of US$22
and US$72, respectively, (2021 – US$10 and US$10, respectively) and
the accretion of exit fees receivable of US$44 and US$143,
respectively (2021 – US$20 and US$20, respectively).
|
|
Adjusted EBITDA and Adjusted EBITDA Margin
We believe Adjusted EBITDA provides meaningful information about
our operating cash flows as it eliminates the effects of accruals
and non-cash expenses recorded on the statement of income and
comprehensive income. We refer to EBITDA when reconciling our net
earnings and other comprehensive earnings to Adjusted EBITDA, but
we do not use EBITDA as a measure of our performance. We believe
that Adjusted EBITDA Margin is a useful supplemental measure to
demonstrate the operating efficiency of our 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
|
Nine months
ended
|
(thousands of US
dollars, except per unit amounts)
|
September 30,
2022
|
Pro
Forma
September 30,
20212
|
September 30,
2022
|
Pro
Forma
September 30,
20212
|
Net earnings and other
comprehensive earnings
|
7,614
|
7,635
|
16,405
|
18,201
|
[+] Amortization or
royalty assets
|
13,992
|
11,125
|
40,188
|
28,923
|
[+] Amortization of
other current assets1
|
114
|
—
|
114
|
—
|
[-] Other interest
income
|
(28)
|
(4)
|
(33)
|
(7)
|
[+] Interest
expense
|
1,351
|
383
|
2,617
|
1,111
|
EBITDA
|
23,043
|
19,139
|
59,291
|
48,228
|
[+] Royalties
receivable, beginning of period
|
27,498
|
29,679
|
30,148
|
—
|
[-] Royalties
receivable, end of period
|
(36,386)
|
(43,965)
|
(36,386)
|
(43,965)
|
[+] Interest
receivable, beginning of period
|
—
|
—
|
—
|
—
|
[-] Interest
receivable, end of period
|
—
|
(514)
|
—
|
(514)
|
[+] Acquired royalties
receivable2
|
1,366
|
2,930
|
1,366
|
58,120
|
[+] Acquired cash
royalties received2
|
—
|
4,136
|
—
|
6,405
|
[+] Unit-based
compensation
|
298
|
25
|
849
|
25
|
[+] Board of trustees
unit-based compensation3
|
72
|
—
|
205
|
—
|
[+] Net gain on
interest rate derivatives
|
—
|
3
|
—
|
—
|
[-] Net loss (gain) on
foreign exchange derivatives
|
—
|
(58)
|
—
|
(135)
|
[+] Other
items4
|
—
|
718
|
—
|
718
|
[-] Non-cash royalty
income5
|
(11)
|
(194)
|
(190)
|
(194)
|
[-] Non-cash interest
income on loan receivable6
|
(66)
|
(30)
|
(215)
|
(30)
|
Adjusted
EBITDA
|
15,814
|
11,869
|
55,068
|
68,658
|
[÷] Total Cash
Receipts
|
18,844
|
15,447
|
65,082
|
79,366
|
Adjusted EBITDA
Margin
|
84 %
|
77 %
|
85 %
|
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
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
MD&A.
|
3During 2022, certain members of
the board of trustees elected to be compensated fully or partially
in Deferred Units 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 the Autoimmune
Portfolio 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 and nine months ended September 30, 2022 of
nil and US$334, respectively, was used to reduce the obligation for
excess royalty payments received in connection with the Autoimmune
Portfolio (2021 – US$194 and US$194). 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$11 was used to reduce the obligation during
the three and nine months ended September 30, 2022. Royalty income
earned in future periods related to other royalty assets will be
used to repay the remaining obligation of US$144.
|
6For the three and nine months
ended September 30, 2022, non-cash interest income on loan
receivable represents the amortization of commitment fees of US$22
and US$72, respectively, (2021 – US$10 and US$10, respectively) and
the accretion of exit fees receivable of US$44 and US$143,
respectively (2021 – US$20 and US$20, respectively).
|
|
Adjusted Cash Earnings per Unit
We believe that Adjusted Cash Earnings per Unit provides
meaningful information about our performance as it provides a
measure of the cash generated by our assets on a per unit basis.
The reconciliation for the comparative period has been adjusted to
conform with the current period's composition.
|
Three months
ended
|
Nine months
ended
|
(thousands of US
dollars, except per unit amounts)
|
September 30,
2022
|
Pro
Forma
September 30,
20212
|
September 30,
2022
|
Pro
Forma
September 30,
20212
|
Net earnings and other
comprehensive earnings
|
7,614
|
7,635
|
16,405
|
18,201
|
[+] Amortization or
royalty assets
|
13,992
|
11,125
|
40,188
|
28,923
|
[+] Amortization of
other current assets1
|
114
|
—
|
114
|
—
|
[+] Unit-based
compensation
|
298
|
25
|
849
|
25
|
[+] Board of trustees
unit-based compensation2
|
72
|
—
|
205
|
—
|
[+] Net gain on
interest rate derivatives
|
—
|
3
|
—
|
—
|
[-] Net loss (gain) on
foreign exchange derivatives
|
—
|
(58)
|
—
|
(135)
|
[+] Other
items3
|
—
|
718
|
—
|
718
|
[-] Non-cash royalty
income4
|
(11)
|
(194)
|
(190)
|
(194)
|
[-] Non-cash interest
income on loan receivable5
|
(66)
|
(30)
|
(215)
|
(30)
|
Adjusted Cash
Earnings
|
22,013
|
19,224
|
57,356
|
47,508
|
Adjusted Cash
Earnings per Basic Unit6
|
0.57
|
0.48
|
1.48
|
1.44
|
Adjusted Cash
Earnings per Fully Diluted Unit6
|
0.57
|
0.48
|
1.48
|
1.44
|
_______________________
|
1In connection with the Empaveli
Transaction completed in 2022, the Trust acquired other current
assets, as described under the Empaveli Transaction section of the
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 Deferred Units 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 the Autoimmune
Portfolio 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 and nine months ended September 30, 2022 of
nil and US$334, respectively, was used to reduce the obligation for
excess royalty payments received in connection with the Autoimmune
Portfolio (2021 – US$194 and US$194). 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$11 was used to reduce the obligation during
the three and nine months ended September 30, 2022. Royalty income
earned in future periods related to other royalty assets will be
used to repay the remaining obligation of US$144.
|
5For the three and nine months
ended September 30, 2022, non-cash interest income on loan
receivable represents the amortization of commitment fees of US$22
and US$72, respectively, (2021 – US$10 and US$10, respectively) and
the accretion of exit fees receivable of US$44 and US$143,
respectively (2021 – US$20 and US$20, respectively).
|
6 The weighted average
number of basic and diluted units for the three months ended
September 30, 2022 were 38,657,266 units and 38,694,492 units,
respectively. The weighted average number of basic and diluted
units for the three months ended September 30, 2021 was
40,107,407 units. The weighted average number of basic and diluted
units for the nine months ended September 30, 2022 were 38,684,889
units and 38,710,064 units, respectively. The weighted average
number of basic and diluted units for the nine months ended
September 30, 2021 was 32,908,642 units.
|
|
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 our founding in 1989, DRI Capital
has deployed more than US$2 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 drihealthcaretrust.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 our belief that our strong
balance sheet, combined with the recent increase in our credit
facility, will support further growth, that the cash receipts from
the assets acquired in our transactions are expected to flatten to
slightly increase our cash flow curve through to the end of 2025
and that the Trust is in position to execute on the most attractive
deals. 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.
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 drihealthcaretrust.com.
SOURCE DRI Healthcare Trust