Summary
- As reported by the company March 23rd, 2019 was officially the last day of their relationship with Levothyroxine (levo).
- Although Amneal had already paid the company $50m for the final 16 weeks of levothyroxine distribution Lannett chose not to place Levo sales in discontinued opps last earnings call.
- Now that company (LCI) has to face the music of losing what I estimate as being half of their EBITDA in a single product while trying to pay off debt.
- The most recent press release showed the LCI was only able to pay down a measly $24m on the over $863m debt load the company has accumulated.
Lannett Pharmaceuticals (LCI) is a generic pharmaceutical company that has decided to concentrate on distribution agreements over development of new generic products. It's my contention that this is done from a place of weakness as the profit contribution of Levothyroxine is simply impossible to recreate and the debt service constrains the company's ability to spend meaningful dollars on R&D. Over the next few quarters LCI will have to come clean with regards to their operating results without Levo in the mix and its not going to be a pretty picture.
I detailed my concerns regarding the state of the debt covenants and the earnings profile in my previous report titled, "Lannett: The Debt Covenants And Discontinued Operations Forebode A Storm." The conclusion I propose is that LCI will not produce any meaningful cash flow after they lose the contribution of Levothyroxine (Below)
