On November 6, 2019 Lannett Company, Inc. (NYSE: LCI) reported financial results for its fiscal 2020 first quarter ended September 30, 2019 (Press release, Lannett, NOV 6, 2019, View Source [SID1234550514]).

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"Our topline and bottom-line for the fiscal 2020 first quarter exceeded our expectations, largely due to strong sales of certain key products and the launch of Posaconazole late in the period," said Tim Crew, chief executive officer of Lannett. "We continue to build our business and expand our opportunities for ongoing growth. In the current quarter, we are now launching our third new product and plan to launch several more over the next several months. In addition, we secured exclusive U.S. commercialization rights to an approved ANDA for Levothyroxine Sodium Tablets, as well as an advanced development program for generic ADVAIR DISKUS, a drug used to treat symptoms associated with asthma and other respiratory diseases. Both medications are potentially large market opportunities.

"Near the end of the first quarter, we completed an $86.25 million convertible notes offering, due 2026, and used the net proceeds to pay down half of our outstanding Term A Loans. Our existing cash position exceeds the remaining balance of the Term A Loans, which mature in about one year. As a result of the transaction, we lowered our interest expense, strengthened our balance sheet and improved our financial flexibility."

For the fiscal 2020 first quarter, on a GAAP basis, net sales were $127.3 million compared with $155.1 million for the first quarter of fiscal 2019. Gross profit was $42.7 million, or 33% of total net sales, compared with $59.1 million, or 38% of total net sales. Net loss was $12.2 million, or $0.32 per share. Net loss for the prior year first quarter, which included asset impairment charges of $369.5 million, was $287.5 million, or $7.65 per share.

For the fiscal 2020 first quarter reported on a Non-GAAP basis, net sales were $127.3 million compared with $155.1 million for the first quarter of fiscal 2019. Adjusted gross profit was $52.6 million, or 41% of adjusted net sales, compared with $68.7 million, or 44% of adjusted net sales, for the prior-year first quarter. Adjusted interest expense was $15.3 million compared with $16.9 million for the first quarter of fiscal 2019. Adjusted net income was $8.8 million, or $0.22 per diluted share, compared with $16.9 million, or $0.44 per diluted share, for the fiscal 2019 first quarter.

Guidance for Fiscal 2020
As discussed above, the company expects interest and other expense for fiscal 2020 to be lower than previously estimated as a result of the convertible notes offering. Based on its current outlook, the company revised certain items in its GAAP guidance and reiterated adjusted guidance for fiscal year 2020, except for interest and other. The full guidance is as follows:

**A reconciliation of Adjusted amounts to most directly comparable GAAP amounts can be found in the attached financial tables.

Conference Call Information and Forward-Looking Statements
Later today, the company will host a conference call at 4:30 p.m. ET to review its results of operations for its fiscal 2020 first quarter ended September 30, 2019. The conference call will be available to interested parties by dialing 800-447-0521 from the U.S. or Canada, or 847-413-3238 from international locations, passcode 49151826. The call will be broadcast via the Internet at www.lannett.com. Listeners are encouraged to visit the website at least 10 minutes prior to the start of the scheduled presentation to register, download and install any necessary audio software. A playback of the call will be archived and accessible on the same website for at least three months.

Discussion during the conference call may include forward-looking statements regarding such topics as, but not limited to, the company’s financial status and performance, regulatory and operational developments, and any comments the company may make about its future plans or prospects in response to questions from participants on the conference call.

Use of Non-GAAP Financial Measures
This news release contains references to Non-GAAP financial measures, including Adjusted EBITDA, which are financial measures that are not prepared in conformity with United States generally accepted accounting principles (U.S. GAAP). Management uses these measures internally for evaluating its operating performance. The Company’s management believes that the presentation of Non-GAAP financial measures provides useful supplementary information regarding operational performance, because it enhances an investor’s overall understanding of the financial results for the Company’s core business. Additionally, it provides a basis for the comparison of the financial results for the Company’s core business between current, past and future periods. The company also believes that including Adjusted EBITDA, as defined in the company’s existing Credit Agreement, is appropriate to provide additional information to investors to demonstrate the company’s ability to comply with financial debt covenants. Non-GAAP financial measures should be considered only as a supplement to, and not as a substitute for or as a superior measure to, financial measures prepared in accordance with U.S. GAAP.

Detailed reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are included with this release.

Non-GAAP financial measures exclude, among others, the effects of (1) amortization of purchased intangibles and other purchase accounting entries, (2) restructuring expenses, (3) non-cash interest expense, as well as (4) certain other items considered unusual or non-recurring in nature.

*Adjusted EBITDA excludes the same adjustments discussed above, as well as additional adjustments permitted under the company’s existing Credit Agreement.