HLS Therapeutics (HLS) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $14.5 million, adjusted EBITDA $4.3 million, and cash from operations $2.5 million, with core product sales up 9% year-over-year excluding royalties.

• Promoted products Clozaril and Vascepa saw double-digit sales growth in Canada, with Clozaril up 5% and Vascepa up 21% year-over-year in local currency.

• Operating expenses were reduced by 13% year-over-year, supporting improved profitability.

• The Xenpozyme royalty interest was sold for up to $45.75 million, including $13.25 million upfront, strengthening the balance sheet and enabling $14 million in debt repayment.

• Net loss for Q2 2024 improved to ($5.7 million) from ($9.4 million) in Q2 2023, mainly due to lower expenses and other income.

Financial highlights

• Q2 2024 total revenue was $14.5 million, down from $16.4 million in Q2 2023, mainly due to lower royalty revenue.

• Excluding royalties, marketed product revenue grew 9% year-over-year to $14.1 million.

• Q2 adjusted EBITDA was $4.3 million, or $3.8 million excluding royalties, up 86% year-over-year.

• Cash and cash equivalents at quarter end were $32.5 million, up from $22 million at year-end 2023.

• Direct brand contribution to adjusted EBITDA: Clozaril $7.6 million (Q2), Vascepa -$1.6 million (Q2).

Outlook and guidance

• 2024 consolidated revenue guidance is $58.5–$59.7 million.

• Vascepa revenue expected at $17–$18 million (CAD 22.5–24.5 million), Clozaril at ~$40 million, and royalty revenue at $1.5–$1.7 million.

• 2024 adjusted EBITDA guidance is $15.5–$16.7 million.

• Vascepa is expected to achieve brand profitability and positive contribution to adjusted EBITDA in Q4 2024.

• Further cost savings expected from transitioning Vascepa primary care sales in-house by end of August.