Anika Therapeutics(US:ANIK)2025-07-30 20:12Part I: Financial Information Item 1. Condensed Consolidated Financial Statements Anika Therapeutics, Inc.'s unaudited condensed consolidated financial statements as of June 30, 2025, reflect decreased total assets and a net loss of $8.8 million for the six months Condensed Consolidated Balance Sheets As of June 30, 2025, total assets decreased to $187.7 million, primarily due to divestitures, with liabilities and equity also declining Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $187,682 | $202,740 | | Total Current Assets | $99,317 | $113,652 | | Cash and cash equivalents | $53,167 | $55,629 | | Assets held for sale | $- | $7,152 | | Total Liabilities | $40,010 | $48,751 | | Total Current Liabilities | $16,081 | $23,306 | | Liabilities held for sale | $- | $4,781 | | Total Stockholders' Equity | $147,672 | $153,989 | Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) For the six months ended June 30, 2025, revenue decreased 9% to $54.4 million, gross profit fell 26%, and the company reported a net loss of $8.8 million Statement of Operations Summary (in thousands, except per share data) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenue | $54,387 | $59,746 | | Gross Profit | $29,044 | $39,464 | | Loss from operations | $(8,464) | $(4,315) | | Loss from continuing operations | $(8,605) | $(4,497) | | Net loss | $(8,843) | $(4,602) | | Diluted EPS | $(0.62) | $(0.31) | Condensed Consolidated Statements of Stockholders' Equity Total stockholders' equity decreased to $147.7 million as of June 30, 2025, primarily due to a net loss and common stock repurchases - Key activities impacting stockholders' equity in the first six months of 2025 included a net loss of $8.8 million and the repurchase of common stock for $4.0 million18 Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash used in operating activities was $0.3 million, with investing activities providing $1.1 million, leading to a $4.0 million cash decrease Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(319) | $(1,195) | | Net cash provided by (used in) investing activities | $1,133 | $(5,211) | | Net cash used in financing activities | $(5,259) | $(3,384) | | Decrease in cash and cash equivalents | $(3,992) | $(10,045) | Notes to Condensed Consolidated Financial Statements Key notes highlight the company's strategic shift to OA Pain Management and Regenerative Solutions, recent divestitures, revenue concentration, and a $40.0 million share repurchase program - The company has strategically shifted to focus on its OA Pain Management and Regenerative Solutions businesses, resulting in the sale of Arthrosurface in October 2024 and Parcus Medical in March 20252532 - The company's sole significant customer, J&J MedTech, accounted for 50% of total revenue for the six months ended June 30, 2025, down from 57% in the same period of 202454 - In May 2024, the company implemented a share repurchase program for an aggregate of $40.0 million. As of June 30, 2025, $15.0 million of this program was completed7879 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 9% revenue decline to lower OEM Channel sales and contracted gross margin, with operating expenses decreasing 14%, aligning with the company's strategic focus Management Overview The company has repositioned as a global joint preservation company focused on OA Pain Management and Regenerative Solutions, driven by HA technology and new product launches after divestitures - The company announced a strategic shift in October 2024 to focus on its OA Pain Management and Regenerative Solutions businesses, leading to the sale of Arthrosurface and Parcus Medical87 - Future success is expected to be driven by over 30 years of experience in HA-based solutions, with a focus on bringing key products like Cingal and Hyalofast to the U.S. market upon FDA approval8792 Results of Operations For the six months ended June 30, 2025, revenue decreased 9% to $54.4 million, gross profit fell 26%, and the loss from operations nearly doubled to $8.5 million Revenue by Channel (in thousands) | Channel | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :--- | :--- | :--- | :--- | | OEM Channel | $31,249 | $38,337 | (18%) | | Commercial Channel | $23,138 | $21,409 | 8% | | Total Revenue | $54,387 | $59,746 | (9%) | - The decrease in OEM Channel revenue was primarily due to a $7.1 million reduction in J&J MedTech revenue, attributed to lower sales volumes ($2.9 million) and lower pricing ($4.2 million)96 - Gross margin decreased to 53% for the first six months of 2025 from 66% in 2024, due to higher inventory reserves, increased manufacturing costs, and a higher percentage of lower-priced international sales99 - SG&A expenses decreased primarily due to $2.4 million in non-recurring shareholder activism costs incurred in the first half of 2024103 Non-GAAP Financial Measures Adjusted EBITDA for the six months ended June 30, 2025, was negative $0.2 million, a sharp decline from $7.4 million in 2024, driven by lower gross profit Adjusted EBITDA Reconciliation (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net loss from continuing operations | $(8,605) | $(4,497) | | Adjustments | $8,427 | $11,896 | | Adjusted EBITDA | $(178) | $7,409 | Adjusted Diluted EPS Reconciliation | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Diluted loss from continuing operations per share (EPS) | $(0.60) | $(0.30) | | Adjustments per share | $0.43 | $0.67 | | Adjusted diluted (loss) income from continuing operations per share (EPS) | $(0.17) | $0.37 | Liquidity and Capital Resources As of June 30, 2025, the company held $53.2 million in cash and $83.2 million in working capital, with $0.3 million cash used in operations and an undrawn $75.0 million credit line - The company holds $53.2 million in cash and cash equivalents as of June 30, 2025118 - Cash from investing activities was positive $1.1 million due to the $4.5 million received from the sale of Parcus Medical, which offset $4.3 million in capital expenditures122 - The company has access to a $75.0 million senior revolving line of credit, which was undrawn as of June 30, 2025119 Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes occurred in the company's market risks or their management during the first six months of 2025 compared to the 2024 Form 10-K disclosures - There have been no material changes in the first six months of 2025 to the company's market risks or its management of such risks128 Item 4. Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures are effective130 - No material changes were made to the internal control over financial reporting during the quarter ended June 30, 2025131 Part II: Other Information Item 1. Legal Proceedings The company is involved in various legal proceedings but does not expect their resolution to materially affect its financial position, operations, or cash flow - The company does not expect the resolution of occasional legal proceedings to have a material adverse effect on its financial position, results of operations, or cash flow132 Item 1A. Risk Factors A new risk factor highlights the failure of Hyalofast's U.S. pivotal Phase III trial in July 2025, potentially impacting FDA approval and future financial results - A new risk factor highlights that the U.S. pivotal FastTRACK Phase III trial of Hyalofast failed to achieve its pre-specified co-primary endpoints in July 2025134 - The trial failure could materially negatively impact or delay the ability to obtain FDA regulatory approval for Hyalofast, which would have a material adverse effect on future revenue and financial results134135 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company completed $15.0 million of its $40.0 million share repurchase program by June 30, 2025, with no repurchases made during the quarter - As of June 30, 2025, the company had repurchased 746,431 shares for a total cost of $15.0 million under its 2024 Share Repurchase Program136 - No share repurchases were made during the quarter ended June 30, 2025136 Item 5. Other Information No directors or executive officers adopted or terminated Rule 10b5-1 trading plans during the quarter ended June 30, 2025 - No directors or executive officers adopted or terminated Rule 10b5-1 trading plans during the fiscal quarter ended June 30, 2025140 Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including corporate documents, incentive plans, CEO/CFO certifications, and XBRL data