Concordia Healthcare Announces Successful Completion of Donnatal® Acquisition

TORONTO, May 15, 2014 /CNW/ - Concordia Healthcare Corp. ("Concordia" or the "Company") (TSX: CXR) (OTCQX: CHEHF), announced today that it has completed the previously announced acquisition of Donnatal®, an adjunctive therapy in the treatment of irritable bowel syndrome ("IBS") and acute enterocolitis, from a privately held specialty pharmaceutical company carrying on business as Revive Pharmaceuticals ("Revive Pharmaceuticals").

"I am extremely pleased with this landmark achievement as it demonstrates Concordia's ability to successfully close a transaction of this magnitude, thereby opening the Company to a new level of acquisition opportunities in the future," said Mark Thompson, CEO of Concordia. "Further, the substantial anticipated revenue to be generated by Donnatal® is expected to have a significant and positive impact on Concordia's net earnings and EBITDA."

Donnatal® is available in two formulations: immediate release Donnatal® Tablets, and immediate release Donnatal® Elixir, a fast acting liquid.  For decades, Donnatal® has delivered gentle relief from the symptoms of IBS.  In addition to the drug, Concordia is acquiring the sales and marketing infrastructure related to the product.

The International Foundation for Functional Gastrointestinal Disorders reports that irritable bowel syndrome affects between 25 and 45 million people in the United States (10 to 15 percent of the population) with a greater incidence in women.  According to the National Institutes of Health, as many as 30 percent of Americans suffer from IBS at some time in their lives. It is not associated with hospitalization and surgery, but it can severely compromise a person's quality of life.

IBS is second only to the common cold as a cause of absenteeism from work. IBS is one of the top 10 reasons for physician visits and the second most frequently encountered diagnosis in clinical practice, accounting for more physician visits than any symptoms other than those for respiratory tract infections.

"Donnatal® is a medication that I have been prescribing for decades.  It remains an effective treatment and provides value for the management of symptoms of irritable bowel syndrome," said Dr. David A. Peura, MD, Emeritus Professor of Medicine at University of Virginia, former President and Chairman of the Board of Governors of the American Gastroenterological Association ("AGA") and recipient of the 2011 Julius Friedenwald Medal, the highest honor awarded by the AGA.

During 2013, Donnatal® generated revenues of US$49.1 million and EBITDA1 of US$40.2 million.

The Company acquired Donnatal® for US$200 million in cash and an aggregate of 4,605,833 common shares of Concordia, representing approximately 16.17% of the Company's outstanding common shares on a non-diluted basis (approximately 14.96% on a fully-diluted basis) after giving effect to the acquisition.  At the closing of the acquisition, Paul Manning, founder of PBM Capital Group and Revive Pharmaceuticals, was appointed to the board of directors of the Company.

Management paid for the cash component of the acquisition through a combination of available cash and debt financing.  Accordingly, the Company entered into a secured credit facility having a principal amount of up to US$195 million, consisting of a US$170 million term loan and a US$25 million operating line (the "Credit Facility") with GE Capital, Healthcare Financial Services and a syndicate of lenders.  The Credit Facility is secured by the assets of the Company and the assets of its material subsidiaries.

Torreya Partners and GMP Securities acted as financial advisors to Concordia. Lazard Middle Market acted as financial advisor to Revive Pharmaceuticals.

About Concordia

Concordia is a diverse healthcare company focused on legacy pharmaceutical products, orphan drugs, and medical devices for the diabetic population. The Company's legacy pharmaceutical business consists of an ADHD-treatment drug, Kapvay® (clonidine extended release tablets), Ulesfia® (benzyl alcohol) Lotion a Head Lice Treatment, and an Asthma-related medication, Orapred ODT® (prednisolone sodium phosphate orally disintegrating tablets). Concordia's Specialty Healthcare Distribution (SHD) division (Complete Medical Homecare) distributes medical supplies targeting diabetes and related conditions. Concordia's orphan division, Pinnacle, markets Photofrin® in the United States.

Concordia operates out of facilities in Oakville, Ontario, Lenexa, Kansas (near Kansas City, Missouri), Bannockburn, (near Chicago), Illinois and Bridgetown, Barbados.

About Revive Pharmaceuticals

Charlottesville, Virginia-based Revive Pharmaceuticals is a privately held specialty pharmaceutical company that specializes in selling, distributing, marketing and manufacturing Rx products that help improve patients' health and quality of life. 

1As used herein, "EBITDA" is defined as net income adjusted for net interest expense, income tax expense, depreciation and amortization. Management uses EBITDA to assess operating performance.

Non-IFRS Measures

This press release makes reference to certain non-IFRS measures. These non-IFRS measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS, and are therefore unlikely to be comparable to similar measures presented by other companies.  When used, these measures are defined in such terms as to allow the reconciliation to the closest IFRS measure.  These measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company's results of operations from management's perspective.  Accordingly, they should not be considered in isolation nor as a substitute for analyses of the Company's financial information reported under IFRS.  Management uses non-IFRS measures such as EBITDA and Adjusted EBITDA to provide investors with a supplemental measure of the Company's operating performance and thus highlight trends in the Company's core business that may not otherwise be apparent when relying solely on IFRS financial measures.  Management also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers.  Management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets, and to assess its ability to meet future debt service, capital expenditure, and working capital requirements.

Notice regarding forward-looking statements:

This release includes forward-looking statements regarding Concordia and its business, which may include, but is not limited to, statements with respect to the acquisition, the impact of the acquisition on Concordia's financial performance (including its net earnings and EBITDA), Concordia's growth and other factors.  Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "is expected", "expects", "scheduled", "intends", "contemplates", "anticipates", "believes", "proposes" or variations (including negative and grammatical variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Such statements are based on the current expectations of Concordia's management, and are based on assumptions and subject to risks and uncertainties.  Although Concordia's management believes that the assumptions underlying these statements are reasonable, they may prove to be incorrect. The forward-looking events and circumstances discussed in this release may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting Concordia, including risks regarding the pharmaceutical industry, the failure to obtain regulatory approvals, economic factors, market conditions, the equity markets generally, risks associated with growth and competition, risks associated with the acquisition and many other factors beyond the control of Concordia.  Although Concordia has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Concordia undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. 

SOURCE: Concordia Healthcare Corp.

For further information:

please visit www.concordiarx.com or contact:

Kristen Van Vogt
TMX Equicom
416-815-0700 x 244
kvanvogt@tmxequicom.com

Adam Peeler
TMX Equicom
416-815-0700 x 225
apeeler@tmxequicom.com

Profil de l'entreprise

Concordia Healthcare Corp.

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