HLS Therapeutics (HLS) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $14.1 million, with Adjusted EBITDA of $4.1 million and cash from operations of $1.5 million; Canadian product sales of Vascepa and Clozaril grew 11% in local currency, led by Vascepa's 30% year-over-year growth.

• Operating expenses, excluding cost of goods, were reduced by 15% year-over-year in Q3, reflecting cost management initiatives.

• Net loss for Q3 2024 was ($4.8) million, or ($0.15) per share, an improvement from ($6.9) million, or ($0.21) per share, in Q3 2023.

• Significant cost reductions and debt repayment improved financial flexibility, with $15 million of term loan repaid, reducing net debt to $52.4 million at quarter-end.

• Leadership changes include the appointment of John Hanna as permanent CFO and Brian Walsh as Chief Commercial Officer.

Financial highlights

• Q3 2024 revenue: $14.1 million, up 11% year-over-year in Canada; Vascepa net sales up 30% in constant currency, with unit demand up 45% and consistent prescriber growth of 66%.

• U.S. Clozaril product sales declined 15% in Q3 and 8% year-to-date, mainly due to wholesaler inventory dynamics.

• Royalty revenues dropped to $0.2 million in Q3 from $2.6 million last year, following the end of Absorica royalties and the sale of Zembrace SymTouch/Xenpozyme royalty interests.

• Q3 Adjusted EBITDA was $4.1 million (down from $5.1 million last year); excluding royalties, Adjusted EBITDA grew 55% year-over-year to $3.9 million.

• Cash and cash equivalents were $17.5 million at quarter-end, with net debt at $52.4 million.

Outlook and guidance

• 2024 revenue guidance lowered to $56.5–$57.2 million (from $58.5–$59.7 million) due to U.S. Clozaril sales and FX headwinds.

• 2024 Adjusted EBITDA guidance raised to $16–$16.7 million (from $15.5–$16.7 million) due to cost reductions.

• 2025 outlook: high single-digit revenue growth and mid-20s percentage growth in consolidated Adjusted EBITDA expected.

• Vascepa expected to contribute positively to Adjusted EBITDA starting Q4 2024.