Kamada .(KMDA) - 2022 Q2 - Quarterly Report

Consolidated Financial Statements Consolidated Statements of Financial Position Kamada Ltd. reported total assets of $304.1 million as of June 30, 2022, a decrease from $318.7 million at year-end 2021, with liabilities at $132.6 million and equity at $171.6 million | Financial Item | June 30, 2022 (Unaudited, in thousands) | Dec 31, 2021 (Audited, in thousands) | Change (in thousands) | | :--- | :--- | :--- | :--- | | Total Current Assets | $118,601 | $130,044 | -$11,443 | | Total Non-Current Assets | $185,534 | $188,623 | -$3,089 | | Total Assets | $304,135 | $318,667 | -$14,532 | | Total Current Liabilities | $49,680 | $54,057 | -$4,377 | | Total Non-Current Liabilities | $82,881 | $87,786 | -$4,905 | | Total Liabilities | $132,561 | $141,843 | -$9,282 | | Total Shareholder's Equity | $171,574 | $176,824 | -$5,250 | Consolidated Statements of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2022, revenues rose to $51.7 million, but increased operating expenses resulted in an operating loss of $2.0 million and a net loss of $5.7 million | Metric (Six months ended June 30) | 2022 (Unaudited, in thousands) | 2021 (Unaudited, in thousands) | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $51,683 | $49,139 | +5.2% | | Gross Profit | $18,542 | $18,003 | +3.0% | | Operating Income (Loss) | ($2,048) | $3,410 | -160.1% | | Net Income (Loss) | ($5,749) | $3,624 | -258.6% | | Basic Net Earnings Per Share | ($0.13) | $0.08 | -262.5% | Consolidated Statements of Changes in Equity Total shareholder's equity decreased by $5.3 million during the first six months of 2022, from $176.8 million to $171.6 million, primarily due to a $5.7 million net loss | Equity Component (Six months ended June 30, 2022) | Amount (in thousands) | | :--- | :--- | | Balance as of January 1, 2022 | $176,824 | | Net Loss | ($5,749) | | Other Comprehensive Loss | ($76) | | Exercise of share-based payment | $6 | | Cost of share-based payment | $569 | | Balance as of June 30, 2022 | $171,574 | Consolidated Statements of Cash Flows For the six months ended June 30, 2022, operating activities generated $16.4 million in cash, a significant improvement, resulting in an overall $11.3 million increase in cash and cash equivalents | Cash Flow Activity (Six months ended June 30) | 2022 (Unaudited, in thousands) | 2021 (Unaudited, in thousands) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $16,352 | ($1,178) | | Net cash provided by (used in) investing activities | ($1,191) | $100 | | Net cash provided by (used in) financing activities | ($4,211) | ($791) | | Increase (decrease) in cash and cash equivalents | $11,346 | ($1,781) | | Cash and cash equivalents at end of period | $29,933 | $68,416 | Notes to the Interim Consolidated Financial Statements This section provides detailed context for the financial statements, outlining business activities, accounting policies, key events, segment performance, financial instruments, and subsequent events Note 1: General Kamada is a global biopharmaceutical company focused on plasma-derived therapeutics, strategically expanding its U.S. commercial presence and transitioning its GLASSIA agreement with Takeda to a royalty model - The company's strategy focuses on profitable growth from its commercial portfolio of specialty plasma-derived therapeutics and its manufacturing and development expertise[15] - In November 2021, Kamada acquired a portfolio of four FDA-approved plasma-derived products from Saol Therapeutics to strengthen its U.S. commercial capabilities[16] - Effective 2022, the company's agreement with Takeda for GLASSIA transitioned to a royalty-based model. Kamada will receive a 12% royalty on net sales through August 2025, and 6% thereafter until 2040, with a minimum of $5 million annually[17] Note 2: Significant Accounting Policies Interim consolidated financial statements are prepared under IAS 34, noting upcoming IAS 1 and IAS 12 amendments effective January 1, 2023, with impacts largely unassessed or not expected to affect statements - The financial statements have been prepared in accordance with IAS 34 for interim periods[19] - An amendment to IAS 1 regarding the classification of liabilities as current or non-current is effective January 1, 2023, but the company believes it will not have an effect on its financial statements[20][21][22] - An amendment to IAS 12 regarding deferred tax on assets and liabilities from a single transaction is effective January 1, 2023. The company has not yet commenced examining its effects[22][24] Note 3: Significant events in the reporting period Key events include a significant stock option grant, a labor strike at Beit Kama resulting in a $3.34 million loss, and a $420 thousand reduction in employee benefit liability due to bond yield increases - On February 28, 2022, the Board approved the grant of options to purchase up to 1,345,600 shares for employees/officers, 400,000 for the CEO, and 270,000 for Board members[25] - A labor strike at the Beit Kama production facility, which began on April 26, 2022, resulted in a loss of $3.34 million during the second quarter, recorded in the cost of revenues from proprietary products[28][29] - An increase in the yield of high-quality corporate bonds led to a change in the discount rate, reducing the employee benefit liability by $420 thousand, which was recognized in other comprehensive income[29][30] Note 4: Operating Segments The company operates in Proprietary Products and Distribution segments, with Proprietary Products generating $41.6 million revenue and $16.9 million gross profit, and the U.S.A. and North America as the largest market | Segment (Six months ended June 30, 2022) | Revenues (in thousands) | Gross Profit (in thousands) | | :--- | :--- | :--- | | Proprietary Products | $41,618 | $16,913 | | Distribution | $10,065 | $1,629 | | Total | $51,683 | $18,542 | | Geographic Region (Six months ended June 30, 2022) | Revenues (in thousands) | | :--- | :--- | | U.S.A and North America | $28,562 | | Israel | $12,319 | | Europe | $5,149 | | Latin America | $3,526 | | Asia | $1,760 | | Others | $367 | | Total | $51,683 | Note 5: Financial Instruments As of June 30, 2022, derivative instruments with a $437 thousand fair value liability are Level 2, and contingent consideration with a $23.1 million liability is Level 3 in the fair value hierarchy | Financial Instrument (June 30, 2022) | Fair Value (in thousands) | Hierarchy Level | | :--- | :--- | :--- | | Derivatives instruments | ($437) | Level 2 | | Contingent consideration | ($23,121) | Level 3 | Note 6: Subsequent events The Beit Kama labor strike ended on July 15, 2022, with a new agreement, and a terminated distributor initiated a conciliation hearing on July 18, 2022, seeking damages, with unassessable prospects - The labor strike at the Beit Kama manufacturing plant ended following the signing of a new collective agreement on July 15, 2022[28][38] - On July 18, 2022, an affiliate of a terminated distributor for Russia and Ukraine filed a request for a conciliation hearing in Geneva, seeking damages. The company cannot yet assess the potential liability and intends to defend itself vigorously[38]