Anika Therapeutics(ANIK) - 2023 Q4 - Annual Report

Revenue Performance - Revenue for the year ended December 31, 2023, was $166.7 million, an increase of$ 10.5 million, or 7%, compared to the prior year[239]. - OA Pain Management revenue increased 11% to $101.9 million, driven by global sales growth of Monovisc and strong international growth of Cingal[240]. - Joint Preservation and Restoration revenue rose 9% to$ 54.9 million, attributed to the adoption of new products like X-Twist and higher international sales[240]. - Non-Orthopedic revenue decreased 29% to $9.9 million, primarily due to lower veterinary sales and reclassification of revenue reporting[242]. - Total revenue for the year ended December 31, 2022, was$ 156.2 million, an increase of $8.4 million, or 6%, compared to the prior year, driven by recovery from the COVID-19 pandemic[267]. - Revenue from the OA Pain Management product family increased by 8% for the year ended December 31, 2022, primarily due to higher international sales and growth in adoption of products globally[268]. - Revenue from the Joint Preservation and Restoration product family increased by 4% for the year ended December 31, 2022, driven by improving elective procedure volumes and commercial adoption of new products[268]. - Revenue from the Non-Orthopedic product family decreased by 2% for the year ended December 31, 2022, mainly due to timing of distributor sales and last-time purchases of legacy products[270]. Profitability and Loss - Gross profit for 2023 was$ 103.1 million, with a gross margin of 62%, up from 60% in 2022, due to higher revenue and improved manufacturing efficiency[243]. - Adjusted gross profit for the year ended December 31, 2023, increased by $7.1 million to$ 110.1 million, representing 66% of revenue, consistent with the previous year[253]. - Adjusted net loss for 2023 was $4.3 million, a decrease of$ 2.7 million compared to 2022, attributed to higher revenues and improved operating performance[263]. - The net loss for the year ended December 31, 2023, was $82.7 million, or$ 5.64 per share, compared to a net loss of $14.9 million, or$ 1.02 per share, for the prior year, reflecting a $67.8 million increase in net loss[248]. - The company recorded a$ 62.2 million pre-tax impairment charge on intangible assets in Q4 2023, contributing significantly to the net loss[248]. - Net loss for the year ended December 31, 2022, was $14.9 million, or$ 1.02 per diluted share, compared to net income of $4.1 million, or$ 0.28 per diluted share, for the prior year[277]. Expenses - Research and development expenses increased by 16% to $32.7 million, driven by compliance costs and new product development, including the Integrity Implant System[244]. - Selling, general and administrative expenses rose 13% to$ 95.9 million, influenced by non-recurring costs and increased marketing efforts[245]. - Research and development expenses for the year ended December 31, 2022, were $28.2 million, an increase of 3% compared to the prior year, due to compliance costs and new product development[272]. - Selling, general and administrative expenses for the year ended December 31, 2022, were$ 84.8 million, an increase of 14% compared to the prior year, primarily related to expansion of commercial capabilities[273]. - The company incurred $15.2 million in stock-based compensation in 2023, reflecting ongoing employee compensation strategies[258]. Tax and Impairment - The effective tax rate for 2023 was 3.1%, down from 20.7% in 2022, primarily due to a valuation allowance on U.S. deferred tax assets[247]. - A non-cash impairment of intangible assets charge of$ 62.2 million was recorded in Q4 2023 due to lower growth expectations for Parcus Medical and Arthrosurface[246]. - A $62.2 million charge was recorded to intangible assets related to the Arthrosurface and Parcus reporting units due to slower than expected revenue growth[307]. Cash Flow - Cash used in operating activities was$ (1.8) million for the year ended December 31, 2023, compared to $4.4 million and$ 8.4 million for 2022 and 2021, respectively[285]. - Cash used in investing activities was $5.4 million for the year ended December 31, 2023, compared to$ 7.5 million for 2022[286]. - Cash used in financing activities was $6.3 million for the year ended December 31, 2023, primarily due to$ 5.0 million for an accelerated stock repurchase program[287]. Product Development and Market Release - The Integrity Implant System is on track for full market release in mid-2024 after completing over 100 cases in limited market release[231]. - The increase in adjusted EBITDA was also supported by a slower ramp-up of commercial spending and overall spending control in 2023[258]. Currency and Inventory - Approximately $12.8 million of revenue was denominated in foreign currencies for the year ended December 31, 2023, primarily in Euro and UK pound sterling[311]. - The company does not engage in foreign currency hedging arrangements, exposing it to potential adverse effects from currency fluctuations[311]. - Inventory write-downs are recorded when inventory is deemed in excess of anticipated demand or obsolete, with evaluations based on historical usage and market conditions[303]. - Goodwill is tested for impairment annually, with no impairment recorded for the legacy Anika reporting unit as of November 30, 2023[306]. Revenue Recognition - Mitek accounted for 45% of total revenues for the year ended December 31, 2023[295]. - Revenue from sales-based royalties is recognized based on estimated net sales reported by commercial partners, with adjustments typically made in the following quarter[295]. - Revenue from distributor sales is recognized upon shipment to the distributor, with no significant concentration of credit risk due to a diversified base of distributors[297]. - No deferred revenue was recorded as of December 31, 2023 and 2022, indicating all revenue was recognized in the period earned[300].